August 31, 2009
David Lat Talk Recap
David Lat, the famous and talented blogger from Above the Law, gave a lunchtime talk today at Santa Clara Law entitled "The End of the World as You Know It: Reflections on the Future of the Legal World." (The talk title was almost as long as the talk). I'm a regular reader of Above the Law, so many of his remarks didn't break much ground compared to the themes already fully vetted in gory detail on the blog. Nevertheless, David always gives an entertaining talk filled with pearls of wisdom, so I never pass up a chance to hear him. A recap of his remarks:
David first described three structural changes affecting the legal industry.
1) erosion (not the death) of the billable hour. Clients want good value, and they want predictability over their expenses. Both factors are driving clients and firms to alternative billing arrangements, such as fixed fee projects and all-you-cat-eat retainers.
A comment on this: when I was in-house, I was a fan of fixed-fee arrangements for their budgetability/predictability. As manager of the company's legal expenses, I needed to keep my expenses within my quarterly budget, so fixed-fee deals were very beneficial to their predictability. One thing I absolutely HATED was when I would get hourly time billed months or even years after the actual work was done--and therefore after the quarter when the money was allocated, meaning the charge would hit a subsequent quarter's budget. I won't name names, but one firm sent me a bill for time TWO YEARS after the work was done. I didn't pay it.
For what it's worth, when I do my side gigs, I also prefer to do fixed-fee projects or monthly retainers. I often end up earning a little less than I might if I billed hourly, but (1) I always feel like I get a fair deal, especially when both the client and I take some risk on the outcome, and (2) I like that clients don't calculate the marginal cost of contacting me (i.e., I don't want to talk with my lawyer because it's going to cost $50 for a brief phone call, and I don't know if that call is worth $50), which means they contact me earlier in their processes when my advice is actually more useful.
2) erosion of locksteps, which is moving towards an increase in meritocracy. The challenge with this movement is setting an appropriate valuation on merit. People aren't entirely clear how to assess quality.
3) erosion of stable employment relationships. The days are gone when lawyers would view the decision to join a firm as a two-way lifetime commitment. Now, attorneys (including partners) are moving between firms regularly, practice groups and offices are spinning off, partners are being de-equitized, and of course, the ubiquitous and dreaded layoffs. There is also an increased customization and flexibility of associate positions. As David said, we might see a "gazillion different titles" for attorneys working for a firm--a trend towards "title proliferation."
David then moved to address what these changes mean.
On the downside, there has been a decline of trust in the industry. For example, a fixed-fee arrangement can be driven, in part, by clients distrusting their attorneys' efforts to keep costs down. But there is also a lot of intra-firm distrust.
On the upside, there has been increased independence in the industry, although this may require attorneys to become more entrepreneurial.
David concluded with two pieces of advice:
1) Stay informed about firms and the industry (an admittedly self-serving piece of advice)
2) Network! In times of crisis, relationships are key. He recommended that students get business cards and hand them out freely. He also recommended that students get to know their classmates and professors as part of network-building.
In the Q&A, a student asked him what changes law schools should make. David rattled off a bunch of ideas in quick succession, including:
* make law school two years (a move I wouldn't necessarily oppose but it is inconsistent with current accreditation norms for the foreseeable future)
* make law school cheaper
* fewer law schools
* more training in the field (like articling)
I asked him about the consequences of a movement from focusing on top-of-market compensation for attorneys, which ATL did obsessively in 2007-08, to multiple compensation models. David expressed concern that customized/individualized compensation would give law firms the ability to reduce their overall associate compensation because there is less transparency. At the same time, both he and I wondered if this reduced transparency might have a salutary benefit of defusing the excessive focus on compensation benchmarking, which might allow attorneys to reset their compensation expectations to how much they need to live a comfortable and satisfied life.