GUEST POST—Don’t Go to Law School (Unless) (Flow Chart Edition)

(Connecticut attorney Samuel Browning obtained permission from Paul Campos to create a flow chart version of the book Don’t Go to Law School (Unless). Mr. Browning’s herculean effort is displayed here as a single graphic taken from his spreadsheet with only some proofreading on my part. I have not read the book, so any unclear points and errors are the author’s own.)

Browning--DGTLSU Flow Chart (2.0)

**********

GUEST POST—Lawyer Oversupply: Does producing more and more Attorneys result in better prices for average consumers? Does it Actually help the new Lawyers themselves? (Part II)

(While I’m out, Connecticut attorney Samuel Browning is contributing a two-part series on attorney oversupply. -LSTB)

Lawyer Oversupply: Does producing more and more Attorneys result in better prices for average consumers? Does it Actually help the new Lawyers themselves?

Link here for Part I.

We are graduating thousands more ABA-accredited law school students each year than there are attorney jobs. This oversupply is at least a third of the total number of graduates each year, it may actually be higher.

Fortunately this oversupply is not leading to increased frivolous litigation, probably because of fixed costs required to litigate, and other inhibitors and constraints within the present legal system.

The increased supply of attorneys, while initially serving to keep some legal fees lower for the consumer, will probably not lead to any more increased savings for the consumer because there are set expenses needed to litigate certain cases, for which the client will generally have to pay.

Part II

Where the glut of lawyers does help consumers, is for legal services that are transactional, involve no court appearances, and can be wrapped up quickly. For example a simple will, with a trust, in Connecticut may run approximately $250 to $350. Registering a LLC might go for $250, as long as organizational papers do not have to be drafted. A power of attorney will go for under $100, and a simple closing done for a seller of a residential property might cost $500 to $600. However for banging heads with another party in court, legal fees rise dramatically. Therefore there appears to be a ceiling in terms of the number of paying, garden variety cases for private attorneys serving private clients to work on. If you graduated from a law school which was not in the top 20, and were not in the top 20% of your class, you will most likely not be hired by “big law” and will most likely work for yourself, or in a very small firm. You also may take court appointed cases for which you will provide services to indigent clients at anywhere between $10 and $50 an hour, with a yearly cap. Most attorneys use such cases to meet expenses and pay bills as versus their full-time work.

Any law school dean who argues that simply increasing the supply of lawyers will allow more poor people or under-represented people to receive counsel either does not understand the legal market (which is possible since many do not actually practice law) or alternately indicates dishonesty on their part. Instead of increasing the number of lawyers, by guaranteeing access to federally subsidized loans for law school, society would be better off if it diverted some of those funds to pay legal aid societies enough money to hire enough lawyers to represent the poor in legal proceedings. In Connecticut, legal aid is mostly funded through interest received from client escrow accounts called IOLTA accounts. Every time interest rates substantially dip, some legal aid lawyers get laid off. See this Connecticut Law Tribune article for a description of the latest meltdown in legal aid funding.

Curious about the number of local legal aid attorneys, I contacted Steven Eppler-Epstein, Director of Connecticut Legal Services, which serves as an umbrella group for the multiple legal aid societies working in Connecticut. Eppler-Epstein told me that presently his organization and other legal aid organizations in Connecticut have approximately 120 lawyers on staff and funding of about $18 million. At their height in Connecticut, such organizations were employing 180 to 200 attorneys. Presently they can only serve one in five people who request, and would be eligible, for services. But funding legal aid is not a priority in our society. Instead, it is my observation that it is more important to fund law school loans and legal education when we already have a glut of lawyers.

Let me provide a hypothetical. Let’s admit we do not know the percentage of law school graduates who are presently defaulting on their loans. But we’ll adopt the conservative figure of 1%. The second assumption will be that each will be carrying approximately $100,000 in law school loans upon graduation We’ll also limit ourselves to a cohort of one year of lawyers since employment prospects were brighter in the not-so-distant past. 1% of 44,000 law school graduates is 440 who default on their loans owing $100,000 for $44 million in wasted educational money. This is relevant to you, the taxpayer, because most of those individuals had some sort of federally guaranteed student loan which the taxpayer pays for upon default.

Recommendation

If our government had a clue, what they would be doing is the following. A) Only agreeing to loan federal money, or make federally guaranteed loans to a limited number of law students a year, a number that reflects the reality of how many jobs there actually are available for graduates. B) Those who could not access such subsidized loan money would have to obtain private loans, which would dissuade many such people from becoming lawyers, even if the law was changed to allow for them to be discharged by bankruptcy. C) Some horrible fourth tier law schools would not have enough paying students and would go out of business, shutting law schools the ABA should have closed long ago. D) With the surviving law school graduates having more economic opportunity we would have fewer defaults of federally loaned, or federally guaranteed money, so we could transfer some of the money that was never loaned out, and defaulted upon, to pay for legal aid, and public defender services for the poor, which will help society and create a more stable market for law graduates.

Notes

1). The precise amount of debt law school students are carrying has been the subject of disagreement. In 2003 the ABA said that the typical student graduated with debts of “around $80,000”. See page 6, note 15 which cites Lifting the Burden: Law Student Debt as a Barrier to Public Service, the final report of the ABA Commission on Loan Repayment and Forgiveness, 2003, at 14. In 2009 Forbes Magazine said that the average law school graduate owed $100,000 in educational loan debt. Given the passage of eight years, I now believe the higher figure to be more accurate. These figures do not appear to include the outstanding loans incurred during the law student’s undergraduate years, which will also typically run in the tens of thousands of dollars.

GUEST POST—Lawyer Oversupply: Does producing more and more Attorneys result in better prices for average consumers? Does it Actually help the new Lawyers themselves? (Part I)

(While I’m out, Connecticut attorney Samuel Browning is contributing a two-part series on attorney oversupply. -LSTB)

Lawyer Oversupply: Does producing more and more Attorneys result in better prices for average consumers? Does it Actually help the new Lawyers themselves?

We are graduating thousands more ABA-accredited law school students each year than there are attorney jobs. This oversupply is at least a third of the total number of graduates each year, it may actually be higher.

Fortunately this oversupply is not leading to increased frivolous litigation, probably because of fixed costs required to litigate, and other inhibitors and constraints within the present legal system.

The increased supply of attorneys, while initially serving to keep some legal fees lower for the consumer, will probably not lead to any more increased savings for the consumer because there are set expenses needed to litigate certain cases, for which the client will generally have to pay.

Part I

If 44,000 Law School Students are graduating each year they all must be going out there, and filing law suits, litigious behavior is on the rise! They will of course be able to pay off their law loans by creating work for themselves, chasing ambulances.

In Connecticut, where I practice law, this is definitely not the case. Let’s start with the following observation about state courts, which handle approximately 90% of all court cases in America. Private attorneys only have control over whether the caseload in civil cases goes up and down. In criminal and traffic cases which make up about a third of the docket in a Judicial District in Connecticut, cases are initiated by the police who make arrests, and the prosecutors who decide whether to prosecute. It’s out of the hands of the private bar, except when they personally get arrested themselves, but typically this only creates one or two criminal cases at a time.

Similarly marriages break down long before attorneys get involved, and evictions are filed because people stop paying rent. The Connecticut Law Tribune pointed out in 2010 that “approximately 75 percent of all family cases have at least one pro se party and the percentage is not that much lower in general civil actions.”

If the family docket is approximately another third of a typical court’s case flow, (and it was by file volume in Connecticut’s Middlesex Judicial District where I used to work) then only approximately a third of cases are civil, and therefore can be created by enterprising attorneys. Daniel Schwartz has previously discussed these issues on his legal blog and using statistics provided by the judicial branch, pointed out that the numbers of most types of civil cases have remained relatively stable between 1992-1993 and 2009-2010 for example:

92-93 97-98 03-04 09-10
Administrative Appeals (ALL) 2,347 1,416 1,630 1,661
Collections 18,592 15,339 12,600 25,930

Torts

(This includes slip and fall,

and defective premises suits)

5,967 6,516 4,925 4,852
Vehicular Torts 9,980 12,899 11,599 10,183
Foreclosures 12,303 11,834 10,046 26,728

As Attorney Schwartz observes, “The number of foreclosure cases has doubled in the last 18 years (up to 26,728 cases in 2009-2010) and the number of collections cases is at its highest levels (up to 25,930 cases in 2009-2010).” But “take these cases out of the overall numbers because they are economically-driven, you come up with an amazing statistic: The overall number of civil cases filed has actually gone down over the last 18 years – from 26,725 to 25,617.”

What Schwartz does not say, is there is another factor driving this increase in lawsuits. The plaintiffs, (banks in the case of foreclosures) and corporations (in the case of collections) are part of the propertied establishment. They have the money to pay for lawyers, lawsuits, and filing fees, and therefore are in position to initiate lawsuits at their choosing. This does not mean that they have created many additional legal jobs. If you go to the property/foreclosure docket in most Connecticut courts, you will inevitably see a solitary attorney from such foreclosure firms as Hunt, Liebert, Jacobson P.C. overseeing up to 100 foreclosure files a day. The number of foreclosure and collection cases has risen far faster than the number of attorneys paid to work on them.

By contrast, if John or Jane Public wishes to hire a private attorney they usually have a great deal of difficulty coming up with a retainer fee, of say five to ten thousand, which they would need for a contested divorce. If they are being evicted, or sued for purposes of collections, they will typically have no disposable money to hire a lawyer. So any suing by the little guy, is going to be highly limited unless an attorney decides to take the case on a pure contingency basis.

In the past personal injury attorneys could often, and relatively easily, call up insurance adjusters and obtain, say $20,000 settlements for limited injuries, without having to first file suit. In the last 20 years, insurance companies, and other monied defendants have become progressively tougher and tougher, resulting in PI lawyers having to sink, more and more capital into their cases (with probable exceptions of some plaintiff friendly urban areas like New York City, and the state of West Virginia). This of course leads to choices about which cases to take, and which ones to spend resources on.

Let me provide an example, I once looked into handling a case in which a mentally ill woman was in the bathroom when her ceiling collapsed upon her and a relative had to drive her to a hospital. She had aches and pains but it was a soft tissue injury case. She also did not attend more than one of her physical therapy sessions, and since she was on disability she had no economic damages. Add to this a lien by the state of Connecticut for prior medical treatment which would have taken half of any settlement, I had to do the following math. The case was worth maybe $15,000 /2 = $7,500 – deposition expenses, and filing fees, we were looking at a recovery of possibly $5,000 at best of which I would receive only 1/3rd. So I passed. Such calculations underlie most attorneys’ economic decisions whether to take a particular case.

In Connecticut, a civil filing fee is typically $300, and there is an additional fee for having the case heard by a jury of $425. Let’s suppose you have four depositions to take, a plaintiff, a defendant, and two witnesses. Typically a court reporter will charge $3.50 a transcript page, with a page per minute of deposition time. Let’s suppose three hours of deposition for each party, and two hours for each witness. That’s ten hours, or 600 pages of transcript. At our per page price, that’s $2,100 plus an appearance fee for the court reporter each time they show up. It could be more or less than $100, but that brings us up to $2,500 for a routine civil case. If you bring in experts (especially medical doctors) they will typically charge you $325 per hour or more door-to-door.

In short, for a simple, bare bones contested, civil matter an attorney can easily spend $3,000 to $3,500 just to get his case ready for trial, which is the most likely point the opposing side is willing to talk about a decent settlement offer. Jury selection and a simple trial itself will take between one to two weeks of time. Let’s call that 80 billable hours. At $200 an hour, the Attorney would be shooting for a return of $16,000, or at contingency rates, an award of approximately $43,000 to make trial worth their time.

There are many administrative hearings that would cost less to do, and there are also trials which are much more expensive, but the math indicates that when John or Jane Public walk in the door to retain Al Solo Attorney, Al either wants a strong case, to go pure contingency, or he’s going to want a retainer fee, that will typically be over $3,000 and more typically over $5,000, unless say, there is a statute that permits the awarding of attorney’s fees, or alternately, it’s a couple-hour affair like a small claims court case.

The result is that plaintiff’s attorneys and defense attorneys who are representing private individuals either will take cases they view as strong, or they will demand a multi-thousand dollar retainer to make sure they do not lose money if they do not collect a judgment. There are of course many well-funded plaintiff’s firms which have no problem taking the majority of their cases on a contingency basis. However the more under-employed new lawyers law schools graduate each year, the more under-funded solos end up in the market, and these attorneys are hardly in the financial position to forgive retainer fees and bankroll the expenses of many, if not most of their cases.

The two other largest categories of cases other then civil are criminal and family law. In criminal cases, because of the sterling quality of most defendants, defense attorneys demand a hefty retainer up front, because they otherwise have no assurance of being paid. Divorce actions which can drag on for years, and can be bitterly fought, also occasion such retainer demands. As a result no matter how many attorneys one were to create, there is a ceiling of private individuals who can pay their retainer fees, and a finite number of cases that are promising enough to be taken on, at no cost to the plaintiff. At least in Connecticut, if you adopt a pay-as-you-go approach with a client of limited financial means you are never going to receive a normal attorney’s wage from a case. I once had another lawyer attempt to refer me a contested family case from a court 30 miles away when he left the practice of law. He had been doing it as a favor, and he didn’t seem to understand why I wouldn’t take it for a flat fee of $125 per court appearance. If you want to earn minimum wage as an attorney you shouldn’t accept such arrangements.

Guest Post: A Few Humble Suggestions to Burst Your Bubble

“Everitt Henry” inaugurates the first of what I hope are many guest posts.  Everitt declined to provide any doodles, much to my chagrin.  If you’d like to write for the blog, let me know.  Your content is your own, but I will do some minor proofreading because I’m nice.

A Few Humble Suggestions to Burst Your Bubble

On my first day of law school, I heard something that should have clued me in to the state of legal education today. Should have, I say, because at the time I was all too enthusiastic, too optimistic, and perhaps a bit too naïve to hear what was said in the way it deserved to be heard.

It was a hot August day outside when I sat down in a crowded, air-conditioned auditorium of bright-eyed future lawyers, fellow first-year law students eager to begin their studies and make their mark in the legal world. After the normal, cursory introductions, congratulations, and wishing us to be grateful we were not in medical school, a law professor approached the podium and gave, as part of his welcome speech the following comment:

“We used to say,” he started, “look to the person on your left. Look to the person on your right. One of you will not be here next year.”  He continued:

We don’t say that anymore. Law school is simply too expensive for us to fail that many of you.

At the time, I felt a bit of relief, because hey, that means I won’t fail out of law school. If I had thought about the statement a little longer, however, that relief would have much more easily turned to dread: that professor’s statement means no one will fail out of law school. The untouched gist of his statement was much more disappointing: “You want a law degree? Okay – here’s a law degree. After that you’re on your own.”

This was back in 2008 – before the market fell off a cliff and took tens of thousands of law jobs with it, many of which will not return.  Still, my law school has brought in record numbers of  budding, eager-eyed law students since then, despite the obviously decreased demand for their graduates’ services. And my law school has not been alone in escalating both student rolls and tuition amounts. The events of the past couple years have made one thing fairly clear to me…

… that the Gatekeeper has turned in his keys for a tollbooth.

When one stops to think about it – it’s quite an interesting transformation. The traditional role of the law school was to be a gatekeeper to an intrinsically challenging, yet rewarding profession: the profession of law. This meant bringing in qualified applicants, and certainly law schools still strive to do that. Those qualified applicants are equally willing to pay for the education and access to the legal profession.  But, being a gatekeeper also means weeding out the weak performers. If you can’t perform in law school, where the hypothetical cases are set up ripe for your analytical abilities, where everything takes place in a relatively risk-free environment (you’re not going to get disbarred or sued for your performance in class), then how are you going to perform in the real legal profession? If you can’t perform in law school, law schools should have the duty to inform you of that, and stop you from spending yourself into oblivion. It is here that many law schools have abdicated from their gatekeeping role, passing the real risk of loss onto the students and the legal market. In the process, law schools and their recruited classes grow in number, standards wane, and even the importance of the grading curve ultimately disappears. The evaluative role of the law school is, and will remain, under assault—and schools are more than content to leave their role as gatekeeper behind and erect themselves as  a tollbooth, nothing more than a cost that must be paid, in order to make an attempt at courting a legal career.

This fact has not been lost on legal employers, who have been frank that the quality of law school graduates has gone down, and they are no less willing to pick up the slack left by law schools unwilling to police their own student ranks. Instead, with the glut of lawyers on the market, legal employers can instead cut out most newly minted law students by simply requiring ‘experience,’ something no graduate has.

Some, including the host of this blog, have contended that these policies are leading to an education bubble that is about to burst, much akin to the housing bubble burst of 2008. Indeed, many vitriolic blog entries comparing law school to an ‘originate and sell’ type scheme are out there for individual consumption. I am more of the opinion that these commentators are partly correct—there is a bubble out there. The bubble, when it bursts, however, will only severely affect the lower ranked, newer law schools. Those schools hovering at the top—the Harvards and Yales of the world—will easily survive even the worst lawpocolypse. I certainly wouldn’t argue that this is just a bottleneck that will disappear with the economic rebound.

At the end of the day, bubble or no, when student default rates hit epidemic proportions, law schools will have a lot to answer for—and will suffer in reputation if not financially for their role in leading scads of bright, young, energetic students into crushing debt and a lack of job prospects. Indeed, law schools need to figure out a way to save themselves from their own doing. Here are a couple of humble suggestions from an innocent bystander:

1. Alliances and Mergers

The first problem law schools currently face is overpopulation. There are too many law schools, producing too many lawyers who then have nothing to do. Some small, lower level law school alliances or mergers alone would help to reduce the insane output of law graduates. Take Ohio as an example. Ohio currently has two law schools in Columbus, two in Cleveland, one in Cincinnati, one in Dayton, one in Toledo, one in Akron, and one in Ada. Does this one state really need nine law schools? Perhaps the Dayton, Toledo, Akron, and Ada law schools tout their own programs on learning practical law and some regional advantage – i.e. if you’re studying law in Akron, it will be easier to get a legal job around Akron.

Ironically, all of these small town schools could accomplish the same thing by merging into one law school, having a combined first-year curriculum on one campus (so all 1L’s have to study in, say, Ada for one year), and spread upper level students across Toledo, Dayton, Akron, and Ada as the job demand in each city rises and falls. The schools could work out a deal to share tuition proceeds of all students, AND, most importantly, their alumni might be willing to donate back to the school that has helped them secure a practical legal education, a regional advantage over the bigger schools in Cleveland, Columbus, and Cincinnati, AND treated them like students they expected to see employed in three years.

What’s standing in the way of this? Small school ego, perhaps. Not wanting to shrink one’s law school faculty? Perhaps. The fact that the status quo still helps make these schools money? Probably.

But creating an alliance like the one described above not only makes you money (albeit less) in the short run, it also makes for happy alumni in the long run, and happy alumni give back to the schools they felt helped look after them.

2. Hyper-specialization

In the old days, the liberal arts degree graduate turned lawyer was an employable prize that could (probably) get the job done. For at least the last 20 years, that really hasn’t been the case. Law firms want specialized, capable people right off the bat. Tax firms prefer those with CPAs, IP firms prefer engineers—and with the glut of lawyers out there, these firms have the capacity to be that demanding in their hires.

Yet law schools still prefer a curriculum that relies on general education and “thinking like a lawyer.” Thinking like a lawyer isn’t anywhere near enough—and employers are making their voices loud and clear in this respect. With the legal field becoming hyper-specialized, a law school that does the same can enhance its competitiveness and its appearance to prospective students. Solid, specialized law schools could corral academics to produce much more significant work in their specialized subject areas, market and attract students with a legitimate interest in those areas (and thus more likely not only to stick around those three years, but also to excel, land jobs, and return money and prestige to the school), and when you’re a specialized law school, it’s easier to figure out where you can make cuts to make your specialized education more competitive per dollar. If you’re a law school specializing in business law, you won’t need ten criminal law professors on staff.

There’s plenty standing in the way of this, however, so I don’t predict law schools making this adaptation, which is unfortunate. Law school faculty not within their school’s specialization are not going to be happy, and there would be a big question out there as to what you do with already tenured professors. And then there’s the question of what do you do with students who come to school and want to switch specialization? My curt answer would be to enter into an alliance with a school of another specialization and allow for easy transfer procedures between schools… but that would require law schools to act and think cooperatively, a concept alien to most law schools seeking to game the US News & World Report rankings as best they can. Of course, the Harvards and Yales of the world are not going to go along with this plan at all, but that’s to be expected when they will feel the pressures of any law education bubble the least.

On a final note, I do have one suggestion for those of us who are not legal educational institutions: help get accurate information out there. The US News rankings are gamed by law schools nationwide, to the point where the ‘employed graduates’ statistics are simply unbelievable to anyone who has spent more than a year in law school.

Law School Transparency has invited law schools to give an accurate disclosure of employment numbers, almost all of which have refused to do so. That shouldn’t prevent the truth from getting out there, however. If more law students are willing to share what their legal education has provided for their future, the law graduate community can make a much more accurate resource depicting employment probabilities a J.D. holder actually has upon graduation. Here is my suggestion:

3.  Grassroots Law School Transparency

The major challenge in collecting data directly from graduates is verifying the data you get is actually from law students at specific institutions, from specific institutions, and is accurate. This is not impossible to achieve, however. Most law schools release a paper bound student directory of their current enrollment. I would gladly send my copy to anyone willing to collect various law school directories from various institutions over the last couple of years, email the names through their law school email accounts, and ask the following five questions:

  1. Are you currently employed?
  2. If yes, are you employed in the legal field? If not, in what field are you employed?
  3. Did you have this job before graduation? After?  Provide month/year of employment.
  4. Provide a rough estimate of your base salary.

That’s what it would really take to get the truth out there, and it is no small undertaking. Until then, though, things will keep moving ahead, but to all incoming law students I would say this: Look to the left of you, look to the right: one of you might have a job by the time you graduate.

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