Regent law, May 2013

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This presentation was given at the Regent Law Summit in Norfolk, Virginia on May 17, 2013. It summarizes the changes occurring in the legal profession from the end of World War II to the present. It also reviews trend data and entry of nonlawyer entrepreneurs in the legal industry. The presentation ends with a discussion of the implications for legal education.

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  • corporate or gov’t – made $6,300.Non-salaried lawyers in private practice – i.e., the owner of the firm – made $5,199Gov’t made $5,518. Lawyers in 9+ firms made 5x solo lawyers Limited specialization Your incomes today come from specialization
  • More regulation More litigation, commercial, often pertaining to litigation. More innovation, often from Wall Street More complex business that span state and national boundariesLawyer Per Capital: 1 lawyer for every 700 Citizens in 1950 1 in 280 in 2000The work was there to support it. But we were more specialized – and productive.
  • Axiom, Clearspire, Novus Law, Pangea3, LegalZoom, RocketLawyer, Huron Consulting Group, Practical Law Company, MindcrestAll of these companies are financed by non-lawyer investment.Innovation does not need an amendment of Rule 5.4 to happen. ABA Commission on Ethics 20/20Rather, 5.4 is a bar to traditional law firms WITH STRONG BRANDS collaborating with brilliant nonlawyers with technological knowledge.
  • All of these companies are financed by non-lawyer investment.Innovation does not need an amendment of Rule 5.4 to happen. ABA Commission on Ethics 20/20Rather, 5.4 is a bar to traditional law firms WITH STRONG BRANDS collaborating with brilliant nonlawyers with technological knowledge.
  • Susskind’s continuum:Bespoke -> Standardized -> Systematized -> Productized -> CommoditizedLawyers want to stay in bespoke = Unique, Custom-made -> It costs more; and it is more familiarBut customers want to the cost saving and high quality of moving the continuum: prices go down, quality goes up.Further, Systematized/Productized space can be very lucrative -> But you most continually innovate to stay there.What skills?: IT, Systems engineering, Finance, Marketing, Law Work together Lawyer is not incharge
  • Re Validity, Let’s start with a simple model. Excellence lawyering is combination of cognitive ability (brain power) + (personality attributes, motivation, character, e.g., outgoing person, with a strong work ethic, who has excellent integrity and judgment. We want to see if this is true by collecting data on job performance and correlating with academic markers and personality attributes. 26 dimensions of lawyer effectiveness:Analytical reasoningWritingFact gatheringDeveloping relationsStress managementOral communicationsBig takeaway: Academic predictors are correlated with only a few of the 26 success factors, and some negative (e.g. LSAT and grades negatively associates with networking and biz development; UGPA negative associated with practical judgment and ability to see the world through the eyes of others. but the personality assessments were correlated with all
  • Regent law, May 2013

    1. 1. Overview of the Legal Marketin the Year 2013Regent Law SummitMay 17, 2013William D. HendersonIndiana University Maurer School of Law
    2. 2. Agenda1. Overview of market2. Q&A3. Issues facing practicing bar
    3. 3. 1. Overview
    4. 4. Legal ProfessionCirca 1905, 1945, 1985
    5. 5. Legal Services IndustryLegal IndustryLegal ProfessionCirca 2012Asia, Automation, Abundance
    6. 6. Private PracticeCirca 1948• 163,000 Lawyers• 45.0% w/ collegedegrees; 74.5% w/ lawdegrees• 1.64 lawyers per firm• 1.9 % lawyers in firms of9+ partnersSource: Blaustein, “The 1949 LawyerCount,” 50 ABA J 370 (1950)Solos,61%Partners,24%Associates4% Gov’t,In-House11%Lawyers by Role
    7. 7. 20th CenturySupply Demand
    8. 8. Heinz-Laumann“Two-Hemisphere” TheoryGrowth drivenby businessdemandCorporateLitigationOfficePractice forCorpsOfficePractice forPersonsPersonalLitigationGrowthdriven byPopulation1975
    9. 9. Heinz-Laumann“Two-Hemisphere” TheoryGrowth drivenby businessdemandCorporateLitigationOfficePractice forCorpsOfficePractice forPersonsPersonalLitigationGrowthdriven byPopulation1995
    10. 10. US Lawyer Population(1951-2000)0200,000400,000600,000800,0001,000,0001,200,0001951 1960 1971 1980 1991 2000YearLawyer Population
    11. 11. US Lawyer Population(1951-2000)01002003004005006007008000200,000400,000600,000800,0001,000,0001,200,0001951 1960 1971 1980 1991 2000YearLawyer Population
    12. 12. 988,8981,122,7231,074,9940100,000200,000300,000400,000500,000600,000700,000800,000900,0001,000,0001,100,0001,200,0001998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010TotalNumberofEmployeesYearTotal Law Firm Employment, 1998 to 2010Total Employment 2 per. Mov. Avg. (Total Employment)Generated byWilliam Henderson(June 2012)
    13. 13. 010,00020,00030,00040,00050,00060,000Incoming 1L Classes, ABA-Accredited Law Schools1985 to 2011Incoming 1L Class, All Schools 2-Year Moving AverageSource: ABA Section on Legal Education and Admission to the Bar,Chart generated by William Henderson (July 2012)15% increase in Law Schools (175 to 201)19% increase in 1L enrollment
    14. 14. 0%10%20%30%40%50%60%70%% of Entry Level Jobs in Private Practice1985 to 2011% of Entry Level Jobs in Private Practice 2-Year Moving AverageSource: NALP Bulletin, July 2012, charts generated by William Henderson
    15. 15. Outcomes for the Class of 2011Bar PassageRequired, FTLT, 55.2%JD AdvantagedFTLT, 8.1%ProfessionalFTLT, 3.9%OtherOutcomes, 32.8%
    16. 16. Outcomes By USN Rank83.1%59.9%53.6%48.2%45.1%10.9%30.2%33.3%37.3%41.5%0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Top 14Tier 1Tier 2Tier 3Tier 4BarPassage FTLT JD Advantaged FTLT Professional FTLT Other Outcomes
    17. 17. Market in 2013Supply Demand
    18. 18. 0%20%40%60%80%100%120%140%160%%GrowthinEmployees Change in # of Employees since 1998Legal Services IndustryLaw Offices vs. All Other Legal ServicesOffices of lawyers All other legal servicesSince 2004:Law Offices: -47,729 jobsAll Other Legal Services: + 7,696Generated byWilliam Henderson(June 2012)
    19. 19. Susskind’s ParadigmBespoke Standardized Systematized Packaged CommoditizedNeeded human capital:• Information technology• Systems engineering• Finance• Marketing• Project Management• Law
    20. 20. Legal Services IndustryLegal IndustryLegal ProfessionCirca 2012Asia, Automation, Abundance
    21. 21. 2. Questions
    22. 22. 3. Issues facing practicing bar
    23. 23. Law Firms40%In-House Legal5%Government20%Public Interest /Defender 10%Judiciary15%Other10%
    24. 24. 4. What do we do next?
    25. 25. 1. Yellow: Tech and practice management2. Pink: Externship for practical skills3. Green: Initiative for ethical formation /character4. Orange: Marketing and client development/ Market development
    26. 26. Arc Informed bytheory and dataCareer ArcPracticeMasteryTimeArc underTraditionalmodelGraduation“Whether you think youcan, or you think you cant--youre right.” Henry Ford.
    27. 27. Skills, Personality, Drive= Training +Playing Time+HighPerformanceHigh Performing LawyerSuccess FormulaSmarts (IQ) +30
    28. 28. CognitiveAbilityFrequency
    29. 29. CognitiveAbilityPerformance
    30. 30. EndMany thanks!wihender@indiana.edu

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