money – Law and Innovation 2

As future lawyers, about to embark on a legal career, there is concern that we may be focusing on the wrong rewards…

The New York Times article, Lawyers with the Lowest Pay Report more Happiness, written by Douglas Quenqua, suggests that individuals entering the profession are concerned with wealth, status and stimulating work. However, recent research has found that high income and partnership track positions have no correlation with a lawyer’s happiness and well-being. In fact, lawyers in public service positions reported greater happiness. This research study was based on a psychological model of human happiness called “self-determination theory”. The model is based on competence, autonomy and connection to others.

Young Associates in Trouble, a research paper by David Zaring and William Henderson, concludes that most new lawyers are attracted to working for large, prestigious law firms despite their reputation as difficult places to work. The research conducted by Zaring and Henderson suggests that compensation, partnership and resume value are among the reasons these leading firms remain a fixture for new graduates. The authors accept that some young lawyers may see their experience working at an elite firm and the prestige associated with these institutions as a jumping off point into a more enjoyable career path. However, the author’s data indicates that individuals who remain with large firms over the long term do not show higher satisfaction in partnership than they do as junior associates. This is due to a work-life balance that does not necessarily change as the employee moves up the hierarchy.

An explanation for the unhappiness exhibited by young lawyers may begin at law school. Here, students are pushed towards mainstream, elite firms. Large firm marketing, “OCI’s”, and competition among colleagues may be to blame for this.

The articles above suggest that law students do not appreciate what they are signing up for when entering a new firm. Better information from school career centers, depicting “firm life” in large and small firms and urban to rural centers could solve this problem. My view is that there is a general lack of alternatives to big name firms. Schools do not provide students with the necessary explanation of alternatives to firm employment and students lack the knowledge of replacement options.

We have all been told that the profession is changing rapidly and how this may affect our employment opportunities in the near future. It is time for graduates to turn their mind to careers that fall outside of the institutionalized model. Pursuing innovative legal careers may be a solution to the happiness and work life balance young lawyers seek, without sacrificing both lucrative and stimulating work. By taking the approach that change means opportunity, the transformation of the legal landscape should be viewed with excitement rather than fear.

In Chapter 6 of Richard Susskind’s book “Tomorrow’s Lawyers”, he discusses the status quo of how law firms have operated historically, and just how risky these traditions may be in the current global economic and social markets.

In working for a medium sized full service law firm this past summer, I absolutely agree with the concerns surrounding the sustainability of the traditional model of law firm operations. Considering costs associated with the practice in addition to the “extras” which the large firms consider to be a part of the basic “necessities”, it is clear that the amount of money being generated and spent goes beyond what can reasonably be sustained in the current economy. These include corporate lunches, dinners and parties. Although my firm is a medium sized firm, the partnership was always keen on ensuring that the lawyers felt appreciated by hosting lunches, dinners, marketing and networking events in addition to an annual retreat.

It would be a lie to say that I was not happy to receive such generosity and appreciation by my superiors and colleagues, however, I have to be honest in admitting that these “extras” are not as “necessary” as we’d like to think they are.

When I think about where the money comes from to provide such gifts to the lawyers at the firm, I always end up with one source; the clients. It seems problematic to use funds allocated and paid for legal services towards personal expenses in house. However, this has always been “the way”.

Susskind notes that “lawyers have for many years performed routine work for which they have been overqualified and for which, in turn, they have been overcharging”.

Does the above statement explain why the traditional model has become entrenched in firm culture? I would argue that the compensation received from clients for legal services must cover the special knowledge, understanding and reassurance that a lawyer provides their client. Namely, clients pay to have a lawyer deal with their matter in order for them to feel as relaxed as possible with their predicament. The specialized and privileged access to information granted to lawyers is also a chargeable service in my view. Considering the average law school education amounts to sixty or so thousand dollars excluding undergraduate or postgraduate studies, it seems understandable why young lawyers are eager to join a firm where they will have the potential to grow into a gainful practice that follows the traditional model.

Susskind is correct however in stating that “to survive and thrive I suspect most will need to [make] changes to enable the changes from their current approach to a new, sustainable, longer-term business model.”

Personally, I think the primary issue is that clients are able to access plenty of information online through a variety of platforms, including digital lawyer substitutes. These substitutes offer users an online, self-serve options in drafting routine documents such as leases, powers of attorney, etc. Other sites offer legal advice, etc.

If law firms perceived these substitute services as legitimate threats to their business then change would likely arise. However, law firms, specifically the large global firms, do not recognize the threat and therefor are not motivated to change. Maybe this is the root of the problem?

History tells us however, that giants can be defeated by the “little guy”.

Tag: money

“More money, more problems?”

tradition