June 23, 2015

SO WHAT IS AILING THE AMERICAN LAWYER?  In my new book I divide the causes into four different “deaths,” in homage to the late, great Larry Ribstein’s famous article “The Death of Big Law:” death from above, death from below, death from the state, and death from the side.

“Death from above” assesses the challenges facing Big Law.  Big Law grew exponentially in size, revenues and profits between 1950 and 2008.  But what goes up eventually goes down, and corporations grew tired of seeing the price of legal work outrun inflation.  Clients responded by pressing for more fixed price billing and using a combination of insourcing, outsourcing, and computerization for more straightforward legal work.

Paradoxically, clients have continued to pay more for true “bet the company” transactional and litigation work.  This is why the post-2011 uptick in revenues and profits have accrued almost exclusively to the richest, “best” firms: clients will pay ever more for specialized work (think of the Apple-Samsung litigation), but ever less for less complicated, more rote work.  Big Law is living out Matthew 25:29 – “For whoever has will be given more, and they will have an abundance.  Whoever does not have, even what they have will be taken from them.”

“Death from below” applies Clayton Christensen’s theory of disruptive technologies to describe how computerization is replacing bread and butter legal work.  LegalZoom, Rocket Lawyer, and others are horning in on traditional areas of practice like drafting incorporation papers and wills.  Websites offering free or very inexpensive legal advice have also proliferated.  So far, these websites are harvesting only the lowest hanging fruit, offering the equivalent of pre-made forms.  Over time increased volume and the feedback loop of the internet economy will make these products more sophisticated and an even bigger threat to lawyers.

“Death from the state” argues that courts and legislatures have successfully reined in litigation since the 1980s.  Regardless of whether you think this is great or bad policy, it is clear that tort reform has made tort law less lucrative for all the lawyers involved.

“Death from the side” tell us why there has been a thirty-year decline in solo practitioner earnings.  Duh, there are too many lawyers and too many law grads.  A recent comparison of the number of Juris Doctor holders, the number of licensed lawyers (not all of whom work as a lawyer), and the Bureau of Labor Statistics (“BLS”) estimate for the actual number of lawyers reveals that since the 1980s JD holders have vastly outnumbered practicing lawyers.  If the BLS count is right, almost half of the individuals who earned a JD in the last 40 years are not working as lawyers.  During the same period NALP data shows that roughly 1 in 3 law school graduates were unable to find work that required a JD.  And note that law school graduates who do not practice law earn less and are less satisfied with their careers than their lawyer counterparts, so don’t get me started on “you can do anything with a law degree.”

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