SBM Blog

The importance of economics in law practice

Check out a very interesting post on MiLWBlog written by Traci Gentilozzi that demonstrates how vital a tool the results of the State Bar's Economics of Law Practice Survey have become in setting lawyers' fees in Michigan.

SBM is about to launch the next Economics of Law Practice Survey. We ask all attorneys in Michigan to participate in it to make the results as meaningful and accurate as possible. 

Posted by Samantha Meinke

Feeling Bullish About The Future Of The Practice of Law

Read Keep Calm and Carry On, 27 Geo. J. Legal Ethics 55 (2014), by Rene ́Reich-Graefe of Western New England University School of Law, who takes on those who forecast a relentlessly negative future for the legal profession:

Somehow, in the current climate, it seems easier for lawyers and legal educators—to the point of complete hysteria and delusion—to embrace the purported ‘all-goes-to-hell’ status quo of legal education and the legal profession. Pessimists may love this stuff. As a collective response of our profession, however, it seems time—indeed way past time—to stop such nonsense.

Lawyer retirement, population growth, and wealth transfer, he says, are the ticket to future lawyer prosperity. Money quote: 

[R]ecent law school graduates and current and future law students are standing at the threshold of the most robust legal market that ever existed in this country—a legal market which will grow, exist for, and coincide with, their entire professional career.

Not so fast, says Bill Henderson at Legal Whiteboard. Because technology.

A Kente Cloth Graph Of Changes In Law Grad Employment

John Steele at Legal Ethics Forum warns that we don't know who created it or whether the graph is accurate but he's sure right that the graphing is spectacular. Check it out. For the latest on law grad hiring, see this ABA data and ABA Journal's "Barely half of all 2012 law grads have long-term, full-time legal jobs, data shows."

Apps That Threaten BigLaw?

This story from the Los Angeles Times says the time has come:

Technology is creeping ever faster into the $200-billion U.S. legal field, shaking up an industry that has long been defined by tradition and dominated by white-shoe firms.

Future Lawyering: Goodbye Marathon, Hello Wind Sprints?

Think hare, not tortoise. At the ABA Journal and in an expanded white paper, legal futurist Jordan Furlong presents a view of an emerging legal market in which vanishing job security will demand agility for success. Permanent full-time salaried employment, he says, is vanishing across all industries and workplaces, and may even have been a Boomer phenomenon that is fading with that generation.  Competent, ethical, hard-working lawyers will still need to solve problems and create value for clients, he says, but the successful lawyer will need to be:

• Agile, requiring flexible availability and multiple short-term engagements.
• Technology-enabled, using tools that automate or streamline repetitive processes.
• Multidisciplinary, delivered in conjunction with other professionals and trades.
• Creative, invoking rarely used skills and talents that, as it turns out, we actually have in abundance.

Art: Lapin Agile.  Per the blog Cerebral Boinkfest, the painting is the work of Andre Gill, who painted the sign for a neighborhood nightclub in Montmartre.  Locals called it "Le Lapin à Gill" (Gill's rabbit), which eventually became "Lapin Agile" (nimble rabbit).

When Making $375K A Year Doesn't Cut It

The New York Times takes its readers inside the economic life of law firm partnership in "A Lawyer and Partner, and Also Bankrupt," describing the distress of a mergers and acquisitions partner in a prestigious global law firm in New York City. Indiana University law professor William Henderson offered this explanation:

For the last 40 years, all firms had to do was answer the phone from clients and lease more office space. That run is over. The forest has been depleted, as we say, and firms are competing for market share. Law firms are in a period of consolidation and, initially, it’s going to take place at the service partner level. There’s too much capacity.

A Fresh Start: Michigan Bankruptcy Firm Files For Bankruptcy

The Wall Street Journal's "Top Michigan Bankruptcy Law Firm Files for Protection Too" reports on the bankruptcy filing of Frego and Brodsky. James Frego told the WSJ Bankruptcy Beat “The relief is there for everyone ... from the person who is on a fixed income and earns less than $1,000 a month to a company as big as General Motors.”

Bipartisan Tax Reform Could Have Major Implications For Large Law Firm Partners

A National Law Journal story, "Law Firms Wary of Tax Provision," reports that parallel tax reform packages being drafted by Michigan Congressman Dave Camp, chair of the House Ways and Means Committee, and Montana Senator Max Baucus, chair of the Senate Finance committee, would change the way professional service firms pay taxes in a way that could tag law firm partners with major upfront tax costs. The draft legislation would require an accrual method rather than cash method accounting for firms with gross receipts of greater than $10 million. The national assurance leader for PricewaterhouseCoopers' law firm services practice told National Law Journal:

Firms should not be sitting back waiting to see if and when this goes through. They should be setting up work streams to model it out and think about how it's going to impact their organization, and make sure there are no negative consequences.

Acknowledging the inherent uncertainty surrounding such major reform, the ABA's government affairs director nonetheless pointed out that the potential revenue boost that the change provides the government makes it "very tempting to use this regardless of the public policy implications."

Where Lawyers Fall In The ACT "World Of Work"

Conglomerate Blog's Christine Hurt and her daughter are in the college search phase of life, which has brought Hurt into contact with the ACT "World of Work" map. While acknowledging the value of legal practice to people in general, she questions the decision to locate the practice of law entirely within the "working with people" wedge of the wheel:

Of course, the practice of law is a helping profession, but if your instincts tell you that you would like to work closely with individuals to help them, then law school is a pretty expensive way to do that.  Yes, some lawyers do work one-on-one with individual clients to solve daily problems, and there is great satisfaction in those jobs.  And, lawyers have the tools to help in ways that social workers can't.  But if you go to law school to do that, you may find yourself in a job very far removed from that in order to recoup your investment. 

I think she's exactly right. One advantage of a law degree is that legal practice accommodates many combinations and variations of aptitudes,inclinations, satisfactions. The work of an appellate lawyer, a transactional lawyer, a criminal defense lawyer, and a commercial litigator, for example, should each be located in different locations on the map. Nice try, ACT. But try again.

Law Schools Losing Money?

Paul Campos, the University of Colorado law prof (and Michigan grad) who gained fame and notoriety as the anonymous "scamblogger" of the since-retired Inside the Law School Scam blog, writes on on his new blogging homesite, Lawyers, Guns & Money, that he has looked at the operating budgets of a "representative sample" of law schools and estimates that 80-85% of law schools are losing money -- about 15% in real terms down from three years ago.  He says that the estimate is conservative because it treats the state tax subsidy at public schools as operating revenue rather than an operating subsidy and assumes that no universities mintain policies that treat law schools as "cash cows."