Looking over the front page of Minnesota Lawyer this week brought something to interesting to mind. At the top, Barbara Jones had an article on the $52 million bridge settlement. A total of 17 firms — including some of the state’s preeminent trial lawyers — handled the entire case pro bono. The lawyers donated tens of thousands of hours of time and agreed to forgo tens of millions of dollars in fees as part of a massive public service effort.
At the bottom of the page, Michelle Lore had an article discussing a recent survey showing that close to half (42 percent) of solos and small firm practitioners in the state now report that they don’t have enough work to keep them busy. (The number of lawyers in need of work has grown in each of the five years the survey has been taken.)
There is a little talked about but nonetheless real chasm between the haves and the have nots of the legal profession. And it’s growing. On the one side are the big firm lawyers and highly successful smaller firm attorneys who handle big-ticket personal-injury litigation and the like. On the other end of the spectrum are small firm lawyers struggling to scrape out a living.
The first group of lawyers — the ones making a very good living — has been on the wane for some time, although the layoffs and hiring slowdowns and freezes of the current economic downturn added gasoline to the fire. Meanwhile, the pool of lawyers fighting to eke out a living has exploded. This latter group includes a ballooning number of unemployed recent law school grads forced to hang out a shingle. It also includes public-interest lawyers, who make less than many folks who have invested a lot less in their education.
When most members of the public think of a lawyer, they almost exclusively think of the well-heeled group, even though the second group is much more prevalent. This explains why law school applications continue to boom.
I don’t have an answer for this conundrum, I merely observe it. There are those who believe in a form of Social Darwinism for lawyers who think the problem will take care of itself, with the least successful in the group being forced out. (While it has always been thus – law firms are businesses after all – the numbers of those forced out would, of course, have skyrocket in the absence of more legal work or fewer new lawyers).
Another possible consequence could be a downward pressure on the price of legal services. This could come back and bite even the more successful lawyers in the proverbial buttocks. Big firms are now turning away excellent candidates whom they once would have hired and therefore taken out of the marketplace. Those lawyers don’t disappear – they become competitors, joining smaller firms or starting their own practices. How long before cost-conscious clients discover they can essentially get the same quality of representation from lawyers whose fees don’t represent the heavy overhead of a big firm?
It’s clear that the growing divide between lawyer haves and lawyer have nots is not sustainable. If you’re a “have,” it’s tempting to ignore the warning signs — just as those in the top strata of the housing market did when entrants were flooding into the bottom with subprime, adjustable-rate mortgages. But do so at your own peril. We all know what happened to the housing market. History’s lesson here is simple: If you’re going to take a “Let them eat cake” attitude, best prepare for the revolution.
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Corporations and high net worth individuals are (generally) doing OK right now. I won’t go into the reasons for that, but it’s hard to deny the profits being posted, or the increase in the numbers of the high net worth individuals. So it doesn’t surprise me that lawyers who serve high net worth individuals and corporations are able to get by in this economy.
Then there are those in the shrinking middle class, and those in the growing lower income brackets. Who can deny the heavy burden on those individuals right now? And likewise, those lawyers that serve them are likewise facing tough times.
A fair point.
I also talked here exclusively about the top tierred lawyers in terms of financial success and the growing struggling class (which is substantially outpacing the high-paid tier as a growing demographic). I did not specifically address the middle tier of lawyers (i.e. those who are not struggling to keep the lights on, but who also aren’t going to be taking their yacht to their third vacation home anytime soon). It’s easier to spot what’s going on at the outer edges than to pinpoint precisely what’s happening in the middle.
Who do the middle tier of lawyers, as you have defined them, usually have as clients? What does their work depend on? If it usually depends on small businesses, the middle class, and the work generated by local and state governments — well then, I’d think times were bad.
Just stating the obvious here: Small businesses are being devastated, in part due to reduced credit lines and consumer de-leveraging. Also local and state governments are on the ropes financially. And the middle class is arguably under more pressure now than ever before, as salaries are in a deflationary spiral. Middle class individuals are going to think twice about discretionary legal services, and be very price conscious when they have to spend for legal services.
With all the money flowing into the coffers of large corporations, the only way that money will “trickle down” to the rest of us is if there is some reason for those corporate coffers to be spent on creating jobs and increasing pay. But there are many reasons why corporations are avoiding those expenditures right now. Hoarding is the name of the game.
In summary: I’d be surprised if what you defined as the middle tier is not shrinking quickly at the moment, mirroring the polarization in our society as a whole.
The bigger question is, and you addressed it: what is going to be done about this? Through the courts, our profession is empowered to bring about change without a blood-and-pitchforks revolution. As we contemplate the economic fate of the majority of our profession, perhaps we can also contemplate the economic fate of the majority of our society.
By middle I was including lawyers in well-established mid-sized or smaller niche practices, certain public sector lawyers (judges, prosecutors with significant senority, federal government lawyers, law professors). Definitely they are decreasing as a total percentage of the bar — as new lawyers pour into the “struggling” category at an unprecedented rate, but I don’t know if their absolute numbers have changed that much.
Of course, not everyone would include these same groups as part of “the middle” as many jobs not requiring a legal education pay as much as say a governemnt lawyer gets, for example. However, a steady paycheck and good benefits are nothing to sneeze at in the economy. And they’re certainly something that a lot of young lawyers would find enviable.
Whenever I think about a steady paycheck, I’m reminded of the following exchange from a classic mid-80s movie . . .
Janine Melnitz: Do you believe in UFOs, astral projections, mental telepathy, ESP, clairvoyance, spirit photography, telekinetic movement, full trance mediums, the Loch Ness monster and the theory of Atlantis?
Winston Zeddemore: Ah, if there’s a steady paycheck in it, I’ll believe anything you say.
It’s hard to argue with the wisdom of a well-placed “Ghostbusters” reference …
Excellent piece and insightful observations Mark. I concur with your analysis and await the impact of this widening rift on the profession with trepidation. Although it is simplistic, the primary cause is too many lawyers. All of the law school aspirants and applicants I talk with are deaf to the issue, however.
John: that’s been my experience as well. Law school applicants never think they’ll be unemployed; they’ll just work that much harder than everyone else, etc etc etc. Law schools certainly have no incentive to stop admitting so many students when the tuition revenue’s rolling in. And lenders have no incentive not to lend; you can’t get out of your student loans, short of dying. The only way I see to slow the flood of new attorneys would be to allow some amount of dischargability in bankruptcy for private student loans.
I think the problem is that there are waaaaaay to many bad lawyers. Not just lawyers who are not Johnnie Cochran but who are downright terrible. You can spot them in the courthouse, usually wearing a wrinkly blazer, have failed to read the rules, often are untimely in their submissions to the Court and generally are lazy. Those are the lawyers who, I submit, are the second tier. The small firm/solo’s who can’t make a decent living and complain about it. The good lawyers are hustling, networking, taking appointment contracts, advertising, working to make their office more efficient.
Mr. Jay Foonberg called a law license ” a license to print money” and I’ve found it to be true. I’m at a small firm and doing better than I ever imagined and have done so for 10 years and the people I consider very good lawyers (and who understand how to market) are doing well too.
What has to happen is one of the law schools has to close and the bad lawyers who are doing a disservice to the legal community as well as themselves need to consider a new line of work. As my old ROTC Colonel said in the days of the RIF, “The Army always has room for good officers” and it’s true in our field, the legal field always has room for good lawyers.
The ROTC’s colonel’s words put me in mind of a quote by Daniel Webster, reputed to be one of the top courtroom lawyers of all time. When he was young and considering the legal profession, he was told by someone attempting to dissuade him that he shouldn’t do it because the profession was already overcrowded. He famously responded, “There’s always room at the top!”
The problem is, of course, that not everyone can reach the heights of a Daniel Webster. These days, even being in the middle can get you in trouble.
That said, you provide a great two-part recipe to maximize your chances of succeeding in any environment: 1. Be excellent; 2. Let everyone know about it.
This is a bit off the point, but Steven Harper’s recent novel, The Partnership, while depressing in many ways, presents an interesting view about lawyers–associates and partners– in big law firms and economic forces.
I wonder if the gap is widening or just more noticeable. Malcolm Gladwell points out in his book, The Outliers, that the success gap among lawyers has existed for decades an often depends on the state of the country….in other words, timing is everything.
@John-Yes, I agree there are too many lawyers for the work available right now. Although it does not surprise me that law school aspirants are deaf to the issue. No young hopeful thinks it will be them left without work when the music stops. The market will eventually adjust in some fashion, although the mortgaging of futures with student loans that is going on now will make those “adjustments” tragic in some cases.
@Prof. Heidenreich — Thanks for the book recommendation. I’ll have to check it out. Right now I am reading an interesting book on economic forces called “The Long Tail.”
@Heather — Good point. As I recall, Gladwell points out in his book that there is a permanent economic consequence to those who start in their chosen field during a time of economic upheaval. Because you don’t get the good entry level job you otherwise would have gotten, your life (on average that is) spins off on a trajectory that leads to less successful career.
On the other hand, that’s not to say that the new track doesn’t make the individual happier. And even if Gladwell is right, there is plenty of room for individual exceptions.
I would place myself in the underemployed category; I have a firm which generates about a third of my income while full time work in the CLE world with Thomson Reuters provides the other portion. I have found that client business is out there, but it is not exactly easy to find.
One factor which is not readily discussed is risk tolerance in pursuit of jobs or business. I cut back from full time practice to have a stable base income through my Thomson employment because I have a home mortgage and family in local schools; I am “settled,” at least for the next four years. My ability to tolerate income swings is likely far lower that a young, less established lawyer who may be able to roll the dice on outstate or out of state work more readily, or work with the ebb and flow of income from solo practice.
One other note, I think trying to compare the success of lawyers who graduated 10 years ago with perhaps $30,000 in debt to new graduates with $150,000 in debt is disingenuous at best.
@JohnM- Thanks. Of course, the problem with working in the corporate world there are problems there as well. Been meaning to post on this, but Thomson just laid off a bunch of folk in their keynote division.
Gladwell wasn’t so much talking about starting a firm with or without debt. He was talking about somebody who, say, would have got a job at a Big Firm in a better time, turned out to be a top associate, became a partner and then rose to managing partner. But graduating in a bad time, they do document review work for a while, can’t find a permanent legal job and leave the legal profession for something else. Two vastly different income trajectories controlled solely economic forces.
Being a former English major, I would add that this line of thinking was around long before Gladwell. Thomas Grey in his “Elegy Written in a Country Churchyard” goes in depth into this idea — with the “unsung Miltons,” etc., who would have been great, but for a twist of fate (in their case, they were born poor country folk at a time when English society was class conscious and there wasn’t much opportunity to be self-made or to get an education if you were born into the working class.)
For all we know, the greatest software programmer who will ever exist never was “discovered” because he/she had the misfortune to be born during the Roman Empire. Without opportunity, talent is wasted.
I think that debt, though, is a very real economic force that does factor significantly into the career choices people make, and the opportunities that are realistically available to them. A new lawyer could, for instance, theoretically choose to work at a public interest law firm like Legal Aid or SMRLS, making $45,000 a year. But if that lawyer has $150K in student debt requiring over $1K/month in loan payments, is that opportunity really available, in a realistic and meaningful way?
@Leah — I grant that debt is an important economic force if you look at the long-term. I was only factoring the debt issue out as a recent disruption because its been around a lot longer than the current economic trouble. But you are right that it’s yet another reason this is not an opportune time. If the disruption happened in say, 1970, it would have been a lot easier for a grad with little or no debt to land on his/her feet. For that matter, the “lucky grads” who land the big firm job may not actually want that “opportunity,” but have to take it to responsibly pay back their debt.
Let’s face it — the law-grad debt situation is horrific no matter how you slice it.