In the 1980's and 1990's it seemed that getting a law degree was the
ticket to the big time - a way of stepping up from the middle class to
the upper classes - perhaps even striking it rich. And this has been a
narrative in our country for some time, although it is a flawed
narrative.
Abraham Lincoln became a lawyer, and while his law career went better
than his career as a retail merchant, Lincoln never became more than
comfortably middle-class from his practice. Even back then, few lawyers became rich.
My Grandfather went to law school after his Father committed suicide.
The family was nearly broke, although his Mother - a formidable woman,
apparently - managed to keep the family together by buying and selling
second mortgages. He became fairly upper-middle-class, moving to
Larchmont, New York and becoming Mayor of that village. While he drove
Cadillacs, his house was fairly pedestrian by Westchester County
standards. He was well-off, but hardly "rich".
Even during the go-go years of the 1980's and 1990's, most lawyers ended
up with a good job, not a fortune of money. Becoming a Lawyer was a
way of hanging onto a middle-class lifestyle not a means of moving up a notch in the social ladder. While I made "a good living" in the Patent Law field, I ended up making more money
in Real Estate. However, having a law degree and the requisite credit
rating (and income) was what made my Real Estate investments possible.
Today the law business seems to be in shambles. While there are still
big mega-firms out there billing hundreds of dollars an hour, the norm
for most lawyers, particularly recent grads, has been to scramble to
make a living. The "lost generation" of 2000's grads may never make
much money in the field, as they entered the market when the business
was in the toilet (in 2008) and they are past their "sell-by" date
today.
Yes, Lawyers are like fresh fruit - they are only good while
ripe. Look in the classified ads in any law journal or online.
Everyone wants a young associate with "2-5 years experience" in the
field. Someone whose brain is bright and fresh and is up on the latest
case law. Young and smart, but dumb enough to work long hours for
fairly low pay - on the implied promise they might make partner some
day.
No one wants a 10-year associate. And certainly no one wants someone
like me, with nearly 30 years in the field. So the poor sods who
graduated in 2008 will find it hard to get work - ever. The jobs
becoming available today will be taken by graduates from 2014 onward.
(Even in our courts, this is true. Much fuss has been made about
replacing Antonin Scalia, but the reality is, all of his opinions were
drafted by an army of law clerks - young graduates who go to work for
the Supreme Court and create new law for all of us. The old
white-hairs on the bench are merely their supervisors. It is kind of
scandalous, if you think about it - the highest court in the land
staffed largely by the youngest and least-experienced lawyers.)
Now, of course, this could all turn around perhaps, as law school enrollments decline.
But that could take years, and if you are like the young lady shown
above - still struggling to pay off law school debt and not finding
"real work" in the field, a future lawyer shortage will be too little,
too late to solve her personal problems.
So what caused the meltdown in the law business? In part, it is a
number of obvious things, but also in part, some things that are subtle
social and legal trends. And I think some of these trends may be
non-reversible.
1. Supply and Demand. This is, perhaps, the biggie. When I was in law school, demand was high. People would pay you to go to law school. So I did. Today, people are borrowing huge sums of money
to go to law school. It is an entirely different paradigm. Hiring
was up in the 1980's and 1990's, so a lot of people went to law
school. But since it is a pipeline of about 3-4 years time, the
supply/demand curves can be entirely different by the time you graduate.
As we shall discuss below, there are factors on the demand side
that are bringing down wages. People are litigating less, courts are
making lawsuits less attractive, and more and more litigation tasks (and
other legal tasks) are being handled by paralegals - just as nurse
practitioners are handling more and more "doctor" jobs today.
But the biggest problem, I think, was supply. Too many people thinking
they were going to strike it rich as lawyers and deciding to go to law
school. And why they thought this was the media, as we will see below.
2. Women in the Workforce. No, seriously. It appears
that since women are valued less than men in our society, any field in
which they go to work in, not only do they earn less money, but the money made in the field drops overall.
Now, this could be merely an expansion of the Law of Supply and Demand
as in #1 above. Since the 1960's, the dual-income household has become
more of the norm than the exception, nearly doubling the size of the
workforce by itself - in an era where automation has taken over more and
more jobs.
When I was in law school in the early 1990's, women were, for the first
time, outnumbering men in school. Law School seemed like a good choice
for women, as the field was more egalitarian (not entirely so, but more
so) than other traditionally male-dominated fields like Engineering or
Investment Banking. Law and Medicine are two fields where women are
rapidly filling up the ranks, and this is not a bad thing, of course.
But whether wages in both fields are stagnant because women are in the field (and are perceived as less valued) or whether supply in both fields has gone up, is a good question. But it is an unusual and unexpected factor.
Of course, the irony is, to women, that once again they are getting a
raw deal. Just as they start to take their rightful place in a field of
endevaor, wages go into the dumpster.
3. The Rise of the Paralegal: In a recent article in the Journal of the Patent & Trademark Office Society
(sorry, I have no online link, articles are not available online) an
author opines that there will be a shortage of Patent Attorneys in the
next five to ten years, as the number of people taking the Patent Bar
has declined. But his charts and graphs show something astounding -
the number of people taking The Patent Agent's Exam has
skyrocketed. Patent Agents are registered to practice before the USPTO
and have an Engineering Degree, but no Law Degree. They are sort of
like super-paralegals who can practice a very narrow area of law. So,
the decline in Patent Attorneys is accompanied by an increase in Patent
Agents. It may be that no "shortage" of Attorneys occurs.
In other fields, the same is true. For law firms, a larger and larger
amount of work is being done by paralegals. In the old days, law
clerks or first-year associates would be tagged to do the drudgery of
legal research or preparing routine legal documents. Today, full-time
paralegals do this work, accompanied by computers which store most of
these documents as forms that can be readily customized for each
client.
Very little legal work is innovative or unusual. If you are making
novel arguments in a legal venue, that is often a sign you are in
trouble - or very, very smart. But in most cases, a Will, Trust, or
Personal Injury case is pretty routine, in terms of pleadings and
documents. And these routine documents can be prepared by Paralegals.
And increasingly, as we shall see below, people are realizing that such
cases are best settled from the get-go, as litigation means only
enriching the attorney and your own expense.
A final word on paralegals: This is one area where outsourcing
has taken its toll. Not a day goes by that I don't get an e-mail plea -
or even a phone call - from an Indian Patent Firm who wants me to "farm
out" my legal work to them. Initially this started out with the
drudge work of Patent searching or drawing preparation. But
increasingly, these firms are making pitches for amendment and even
application preparation. I am not sure how many firms - if any - are
farming out this work overseas or what the quality of work is. However
it is an indication that any job can be outsourced if you are creative enough.
4. The Law Firm as Ponzi Scheme. I have talked about this
before and alluded to it above. In any large firm, there are a few
Senior Partners who make a lot of money, some Junior Partners who hope
to make a lot of money, and a lot of Associates who work long hours and
think they are making a lot of money. Stick around at the firm for a
few years and you realize that a lot of these Associates end up going
down the elevator with a photocopy box of desk ornaments and personal
effects.
Simply stated, the odds of making even Junior partner are about 1 in 10,
and making senior partner, maybe 1 in 100. Yes, there are a few
lawyers out there who make millions a year. Most of use make
thousands. Some of us are on food stamps.
And it has always been thus. The television (see below) likes to
romanticize the practice of law and make it out that we all are making
tons of money. But the reality is, more than half the graduates,
perhaps 90% or more, don't get those high-paying jobs you see on
television
5. America Wakes Up to Lawyer Antics? During the 1980's and
1990's, the law field was all go-go-go with stories about young law
clerks being wooed by big-city law firms with things like luxury
apartments, limousine rides, and free tickets to the firm's box seat at
the ball game. Work? That was secondary. During that era, lawyers
could charge what the market would bear, and the market would bear a
lot.
But since then, America - particularly Corporate America - has wised-up
to the antics and billing practices of attorneys. As one in-house
attorney explained it to me, their medium-sized electronics firm was
bringing in $5 Million a year in profits on $100 million in sales.
Their legal bills were about $2 Million a year. If they could cut their
legal expenses in half, they could show a 20% increase in profits -
which would drive the stock price through the roof.
In another case, two electronics firms were suing each other and we were
enjoying billing one of them about $100,000 a month in legal fees. I
am sure the opposing side's firm was doing the same thing. The CEO's
of both companies did the unthinkable - they went out to play golf
together, and by the 18th hole, and worked out a settlement agreement
that would put an end to the endless (and unprofitable) litigation and
allow them both to confront their real nemesis - the threat of cheap
foreign-made products.
It is said that no one wins lawsuits but the lawyers, and that is indeed
true. We get paid, generally, win or lose. And even "the little guy"
is wising up to this. If you google "unhappy with personal injury
settlement" you will see pages of postings. People are realizing that
hiring a lawyer to "litigate" (and I use that term loosely) their case
resulted only in endless delay of the settlement and a smaller payout in
many cases - as opposed to what they could have negotiated with the
insurance company.
6. The Myth of the Law Business. Television shows loved to depict life at a law firm as romantic - literally. Shows like L.A. Law or Alley McBeal
depicted law firm life as one fabulous lunch date after another,
followed by a little sack-time with your law partner. Once in a while,
you'd go to court and say outrageous things to a Judge, who, impressed
by your wit and wisdom, would acquit your client.
Of course, this is not reality, just television. Today, more realistic
portrayals of the life of lawyers - as low-paid drudges or folks living
marginally- are becoming the norm. Shows such as "Better Call Saul"
depict lawyers as losers and quasi-criminals. And perhaps this is a bit
of an exaggeration in the other direction, but at least a less
glamorous portrayal.
When I was in law school, you could tell the types who went there
because of television. They clearly thought that working in a law
firm was going to be like on TeeVee. And they thought that law school
itself would be like television as well. They were disappointed in
both. It turns out that both are just a lot of work, and the pay isn't
all that great.
If your idea of what it is to be a lawyer is based upon some television
show - even if you won't admit to this - you might want to re-think a
law career.
Oh, sure, you'll still hear of jury verdicts with outrageous damage awards. But these are usually reduced severely on appeal - and you never hear about that. In the famous "McDonald's Hot Cup of Coffee" case, the lady won $3.8 million at trial (not $5M as often reported) but it was reduced to a little more than $600,000 on appeal. McDonald's probably spent more on legal fees. It was hardly a lottery-like payout as people like to claim.
This doesn't stop lawyers from advertising that they will win big settlements for your car crash or whatever. But the reality is, if you get into a fender-bender, you are not going to receive a life-changing amount of money. You may not even receive enough to buy a new car. You may not even get enough to repair your old car and pay your hospital bills - after paying legal fees. And you do pay them, with contingency-fee attorneys.
In other fields, similar curtailment of abuse has occurred. Class-action suits were once huge money-makers for law firms. You have probably been a member of such a suit and never realized it. A clever law firm finds some billing discrepancy or some disclosure issue or some other situation were a big company has arguably cheated a lot of people out of a little money each. They file the case in Illinois (one town there claiming about half of all such suits filed in the country - until recently) and then almost immediately offer to settle for a token amount (for the plaintiffs) while the law firm rakes in millions.
So you get a coupon for a free car wash, which supposedly "makes you whole" for having a car with a dangerous fire defect. The Law Firm gets $5.6 Million. That's how the game is played. A bit of corporate shakedown, and no one comes out ahead - except the lawyers. But that was the good old days. You can still file such a suit today, but it is harder to certify the class and thus you have to have a more substantial claim than in the past. The days of the drive-by class-action suit are largely over.
Even in the Patent field, the glory days of Kodak v. Polaroid may be over. The courts have reined in interpretation of Patents, and new rules and laws have made it harder to get broad Patents allowed. While Patent "Trolls" continue to annoy many large and small companies, there are signs that these changes to the laws are having effects. And no longer is it possible to put your competitor out of business with a Patent suit, if indeed it was ever possible.
And bear in mind that in each of these cases, not only does this mean less work for Plaintiff's lawyers, but less work for defendant's lawyers as well. Like I said, we make money from both sides of the transaction.
