Tuesday, March 20, 2012

Surfeit of Lawyers? A Market Reacts

 University of Wisconsin Law School

One of the benefits of the internet and the ability to quickly access and assess information is that markets are much more agile in reacting to changing market conditions.  One such market is the one for new lawyers.  This market's volatility affects undergraduate majors, the number of lower-end law schools (non-government supported) able to survive, class size in law school courses, starting salaries for young lawyers, and the rental market for office space for law firms, among other effects.  Job placement rates of new lawyers coming out of law school have fallen dramatically, and unhappy graduates, saddled with enormous loan debt, are turning to lawsuits against their former schools, claiming they were induced to embark on a costly legal education based on fraudulent data on placement rates and starting salaries issued by their schools.

The New York Times is reporting today that the number of people signing up to take the Law School Admissions Test (LSAT) has dropped by 25% between the 2009-2010 academic year and the current one: 
The decline reflects a spreading view that the legal market in the United States is in terrible shape and will have a hard time absorbing the roughly 45,000 students who are expected to graduate from law school in each of the next three years. And the problem may be deep and systemic. 

Many lawyers and law professors have argued in recent years that the legal market will either stagnate or shrink as technology allows more low-end legal work to be handled overseas, and as corporations demand more cost-efficient fee arrangements from their firms.
. . .
 “For a long time there has been this culturally embedded perception that if you go to law school, it will be worth the money,” said Kyle McEntee of Law School Transparency, a legal education policy organization. “The idea that law school is an easy ticket to financial security is finally breaking down.”
 . . .
“What I’d anticipate is that you’ll see the biggest falloff in applications in the bottom end of the law school food chain,” said Andrew Morriss of the University of Alabama School of Law. “Those schools are going to have significant difficulty because they are dependent on tuition to fund themselves and they’ll either have to cut class size to maintain standards, or accept students with lower credentials.”
If they take the second course, Mr. Morriss said, it would hurt the school three years later because there is a strong correlation between poor performance on the LSAT and poor performance on the bar exam. If students start failing the bar, then the prestige of the school will drop, which would mean lowering standards even more. “At that point,” Mr. Morriss said, “the school is risking a death spiral.”
The use of technology to reduce demand for lawyers mentioned in the article is something many lawyers have considered.  I have thought for quite a while that there is little reason why IBM's Watson couldn't be programmed to do what needs doing in order to dispense reliable legal advice in many instances.   The popularity and growth of user-supported wikis also seems consistent with the ultimate development of a legal wiki that would use well-planned decision trees and hyper-links to send viewers through the relevant issues presented by a particular legal problem.  Such a wiki would seem to be even better suited to walk people through contract drafting that might well serve to avoid costly court disputes in the long run.

I'll give an example of how such a wiki might prove useful in reducing the demand for lawyer services.  Three years ago I defended in a Wisconsin state court a high-ticket luxury product manufacturer from the deep south.  The manufacturer had been sued by a Wisconsin distributor of its products.  The southern manufacturer had unilaterally terminated its business relationship with the Wisconsin company not knowing there was a Wisconsin Fair Dealership Law on the books that regulated how such a relationship could be legally severed.  The result of the out-of-state manufacturer's lack of knowledge of this law was a very costly lawsuit and damages owed to the Wisconsin company.  Much of this reallocation of the manufacturer's resources might have been avoided if there had been a legal wiki set up four years ago for it to have accessed which discussed "Wisconsin product distribution laws" or "Selling your products in Wisconsin" or "Terminating your business relationship with a Wisconsin company."  All those type wiki entries could have hyper-linked into the Wisconsin Fair Dealership Law on the same site, which in turn hyper-linked into "Rights of dealers as to termination."  At a minimum, the manufacturer could have learned enough to hire a Wisconsin lawyer for a very small fraction of the cost of its ultimate lawsuit to guide it towards either a proper termination of the dealer or the imposition of new contract requirements on the Wisconsin distributor that would have avoided the need to terminate the relationship.

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