A Hard Link’s Night–Bill Henderson on the Credentials Bubble

The law school tuition bubble community has been runnin’ me ragged with their damn posts, so today’s link title is earned.

Debra Cassens Weiss tasks me too with, “Will the Law School Credentials Bubble Burst? Law Prof Calls Trends Unsustainable,” refering to the US News article Indiana-Bloomington Professor Bill Henderson commented in a couple days ago.  However, she links us to a paper he wrote for NALP last year titled, “The Bursting of the Pedigree Bubble.”  Here, Henderson teaches a few things about legal practice history I didn’t know before, aside from the common suspicion that variation among law schools is exaggerated.  Summary and my comments follow.

  • The credentials bubble has burst.

Henderson and I characterize the situation differently.  Yes, the “market value” of the J.D. has dropped (elite or otherwise).  Meanwhile, the “perceived value” of the J.D. is still increasing. The differential, market value minus perceived value, is the size of the tuition bubble.  Consequently, the J.D.’s market-value drop has inflated the tuition bubble considerably. That bubble has yet to burst, but it will.

  • The “Cravath System” (Biglaw’s early 20th century genesis) didn’t hire the best lawyers, it created them.  The system had low attrition because partners made cashsacks and everyone else’s experience was still worthwhile.

It’s important to clarify that this was in an era when the U.S. economy was booming, particularly its industrial sector.  It’s utterly unlike the Reagan economy of debt-fueled consumption that’s finally failing after thirty years.  In the time period Henderson is writing about, there were simply more opportunities and growing demand for corporate legal practice.

If the best lawyers are created by firms, then what good are law schools?  Are they just middlemen?  Perhaps the ABA should accredit firms and government bodies to train lawyers and have them take a bar exam rather than pay into the bubble.

  • In the past, people went to East Coast schools and then returned to their home states to practice law.

This is a theory I had a while back: many postwar law schools opened where the population has shifted (south and west).  Now, most law students expect to practice where they study, which partially explains the East Coast’s law student over-saturation: schools didn’t shut down when they should have.

  • Legal education has changed, but the Biglaw business model hasn’t.  Thus, partners are surprised by how young attorneys hate Biglaw, expecting a more balanced workload.  The pre-War Cravath system was great at culling the wealthy and the industrious, but not so the post-industrial middle class.  Quote from hiring attorney: “If I hired a lawyer from Harvard and he doesn’t work out, it’s his fault. But when a candidate from a regional school washes out, it’s my fault.”

Sounds like the hierarchical nature of law firms is a problem too.  I also think Henderson glosses over the advent of rat-race billable hours.  I’m no expert on legal practice history, but before the 1980s, lawyers weren’t billing nearly the number of hours that they were pre-recession. In other words, younger attorneys don’t wash out of large law firms because of generational and class values but because they feel the commitment won’t really pay off in the future, i.e. making partner. The maturation of the legal sector fuels young attorneys’ dissatisfaction rather than laziness or entitlement.  It certainly doesn’t help them if they’re all but trapped at a Biglaw job because of their enormous debt.

  • Everyone in law school is above-average in intelligence, and success only tracks intelligence to a point, so Biglaw is looking at the wrong factors.  Referring to an industrial psychology survey’s results worth italicizing, “[B]etter academic credentials were negatively associated with other success factors, such as networking, building relationships, practical judgment, ability to see the world through the eyes of others, and/or commitment to community service.”

Maybe the LSAC will alter the LSAT accordingly?  We can only hope.

While Henderson believes a renewed commitment to the Cravath system (one centered on client services provided by warm-fuzzy personalities rather than Myers-Briggs INTJ sociopaths [1]) will salvage Biglaw’s reputation and the benighted juris doctor, I think the over-saturation of the legal labor market is the greater issue.  Biglaw isn’t the only law, and the growing class of never-employed attorneys can’t practice without training.  Instead, the first step to salvaging the J.D. is obliterating the tuition bubble, and the J.D.’s market-value drop represents only the beginning of the legal labor market’s painful reform.

1. I am aware of the MBTI’s methodological criticisms, but if you must know, I’m an INFJ.

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