Mississippi Litigation Review & Commentary : Mississippi Personal Injury Lawyer & Attorney : Phillip W. Thomas Law Firm : MS Litigation Review & Commentary

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This recent New York Times article provides a lengthy analysis of the border-line scam of law school. Law students are going into debt to the tune of tens or even hundreds of thousands of dollars only to find out that there are no jobs for lawyers in this economy.

Along the way the article has some great lines:

“Avoid this overpriced sewer pit as if your life depended on it,” writes the anonymous author of the blog Third Tier Reality — a reference to the second-to-bottom tier of the U.S. News rankings — in a typically scatological review. “Unless, of course, you think that you will be better off with $110k-$190k in NON-DISCHARGEABLE debt for a degree that qualifies you to wait tables at the Battery Park Bar and Lounge.”

Apparently, there is no shortage of 22-year-olds who think that law school is the perfect place to wait out a lousy economy and the gasoline that fuels this system — federally backed student loans — is still widely available.

And all those losers can remain cash-poor for a long time. “I think the student loans that kids leave law school with are more scandalous than payday loans,” says Andrew Morriss, a law professor at the University of Alabama.

This gets to what might be the ultimate ugly truth about law school: plenty of those who borrow, study and glad-hand their way into the gated community of Big Law are miserable soon after they move in. The billable-hour business model pins them to their desks and devours their free time.

Hence the cliché: law school is a pie-eating contest where the first prize is more pie.

“This idea of exceptionalism — I don’t know if it’s a thing with millennials, or what,” she says, referring to the generation now in its 20s. “Even if you tell them the bottom has fallen out of the legal market, they’re all convinced that none of the bad stuff will happen to them. It’s a serious, life-altering decision, going to law school, and you’re dealing with a lot of naïve students who have never had jobs, never paid real bills.”

The bottom line is that taking out a loan to go to law school is a losing bet. It's like betting the hard ways at the craps table. There might be a big pay-off if you hit. But the odds are that you won't. Smart money stays away from losing bets.

Law school might make sense for students who will get a full scholarship or who do not have to go into debt to attend. For everyone else, it is probably a mistake.

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The Pop Tort Blog has a post about a new report from the National Center for State Courts. Here is a link to the report, which covers 2008 (its most recent reporting year).

According to the Report, tort filings are dropping significantly. Meanwhile, debt collection actions are flooding civil courts.

Here are some of the report's statistics for Mississippi. Again, this is for 2008:

contract cases—43,456 (includes 34,971 debt collection cases (80%).

tort cases—5,545 (11% of filed cases) (includes 1,595 car wreck cases (39% of tort cases).

medical malpractice cases—241 (4.3% of tort cases).

According to my math, this means that medical malpractice cases represented one half of one percent of all filings in 2008. On top of that, defendants win most medical malpractice cases that go to trial.

Yet insurance companies can brainwash doctors into thinking that plaintiff lawyers are a bigger threat to doctors than insurance companies who refuse to pay the bills of patients that should be covered by the patient's insurance. Amazing.  

The work is never going to rebound for large defense firms who made a killing during the litigation boom in the 1990's and early 2000's. Mass tort litigation in Mississippi is dead compared to how it was back then. Some of the biggest plaintiff lawyers from that era are in jail. Other plaintiff lawyers have closed their practices or transitioned to criminal law, domestic, bankruptcy or other types of non-tort litigation work.

Making matters worse, out of state lawyers squeeze out Mississippi firms for much of any major litigation that is filed in Mississippi. Some Mississippi defense firms that are surviving in this climate do it by borrowing a page from national counsel's playbook and compete for work outside of Mississippi. That makes sense to me. In my experience the “national counsel” from outside Mississippi are rarely as talented trial lawyers as their Mississippi “local counsel.”     

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This article on the ABA Journal News website discusses the issue of law schools failing to disclose the dim job prospects to students. The article states:

While those at the very top of the starting salary scale might earn $160,000, the median among all lawyers is $60,000. So, for those in the middle of the pack, "if you have debts over $100,000, some reaching $150,000, it will be very difficult to pay that debt," he says.

David N. Yellen, dean of Loyola University Chicago School of Law and chair of the ABA subcommittee that considers what consumer information law schools should be required to report, tells the Law Bulletin that law schools need to be more transparent about job prospects.

"I believe the time has come to mandate that law schools publicly disclose more information about job outcomes," Yellen is quoted saying.

If $60,000 is the nationwide median salary for lawyers, then the median in Mississippi has to be lower. And job prospects for lawyers are at an all time low. 

Hardly a week goes by that I don't hear a rumor about layoffs at a big or medium size firm, get a phone call about a lawyer looking for work or hear a story about a former law grad delivering pizzas. Just yesterday I was looking up a lawyer on a Jackson based firm's web site. I was shocked to see how much smaller the firm was than 5–10 years ago. The firm has shrunk down to the point where most of the lawyers were at the firm 15 years ago.

I'm starting to get the feeling that many Mississippi lawyers who graduated from law school in the late 90's and early 2000's during the mass joinder litigation boom have disappeared.  I have no idea where all the lawyers who were working in Mississippi litigation ten years ago—but aren't now—went to.

Meanwhile, I heard recently that the Mississippi College Law School just increased the size of its first year class. They should be shrinking their classes instead of growing them. MC Law School is not alone on this issue. But law schools are such profit centers for schools that they will not do the right thing on this issue.

For many people, starting law school in this legal economy is a sucker bet. I can understand it for people who really want to be a lawyer and are willing to suffer to make it happen. But that applies to what? 10% of a first year class at the most? Everyone else is there because they are smart enough to get in and don't have a better idea for what to do after college.

People might be better off going to a trade school after college. If you learn a trade, are good at it and can succesfully run a business, you probably have better income prospects than a lawyer right now. Not to mention the fact that many lawyers hate practicing law.  

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The Legal Marketing Blog commented today on Tuesday's ABA Journal online article reporting that corporate legal departments cut spending for the first time in 10 years. This is not news to Mississippi attorneys, who have been struggling with a recession in the legal industry for approximately six years.

LMB states:

What it all means is that law firms are going to have to get real smart, real fast when it comes to project management. With a reduction in spending by legal departments, two things are going to happen:

1. Smaller and mid-size firms will pick up more work that normally was done by larger firms, simply because they can do it cheaper and just as effectively in most cases; and
2. Larger firms are going to be adopting project management religion very quickly, so that they can do the work more efficiently and effectively on less dollars, if there is any hope of maintaining their standard of living.

That creates important marketing and business development opportunities for firms that understand the ramifications of lower legal spending levels.

If what has happened in Mississippi is any indication, it also means fewer jobs for lawyers and their support staff and less pay for those with jobs. Support staff are often ignored when this topic comes up, but the legal recession affects the families of a lot of support staff who are not lawyers.

How law schools can continue to increase class sizes in this climate is beyond me. The notion that a law degree has value independent of a legal career may be correct. But the statement in a vacuum is misleading. An empty aluminum can on the side of the road has value. But you shouldn't go tens of thousands of dollars (or more) into debt to acquire that value.   

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John Tucker is a former partner with the prominent Chicago based law firm Jenner and Block. Before retiring to concentrate on writing, Tucker had an outstanding career as a litigator than included arguing two cases before the U.S. Supreme Court and serving as trial counsel in several high-profile cases.

Tucker’s trials included defending the “Chicago Eight”, who were prosecuted for conspiracy and inciting to riot following protests at the 1968 Democratic National Convention, and representing the plaintiffs in the Contract Buyers League cases in Chicago, which sought to end housing discrimination against African-Americans in Chicago.

The book contains much wisdom about trials, litigation, and the practice of law. My favorite observations about litigation included:

• A client's gratitude is a fragile reed.
• Litigation can be conducted calmly, with polite respect for your opponent and his client, without losing anything in the way of effectiveness. Litigation can also be conducted like a street fight,  without really gaining anything.
• The trial of a case is a competition, and if you plan to make your living doing it, you better have a competitive nature-an intense desire to win. That desire must be accompanied by an understanding of the rules and a willingness to play by them.
• In the American legal system, a lawyer's job is not to seek justice, but to win the case for his client. The primary objective of our legal system is not to determine the truth, but to resolve  disputes peacefully. Besides, in most cases where the facts are disputed, no one but the clients know for certain where the truth lies, and often they aren't really sure.
• Of all the mistakes made even by experienced trial lawyers the  most common is failure to adjust to changing circumstances in the  heat of battle. Time and again, lawyers plow ahead with questions  they had planned to ask on cross-examination even though a witnesses previous answer has rendered the planned questions unnecessary, or even dangerous.
• The most important thing a trial lawyer does is develop a logical  theory of the case that can be supported by the evidence.
•  Courtroom lawyers and people who play sports are engaged in an endeavor where there is a  winner and loser of every contest, and no matter how good they are, sometimes they lose.In fact, in both endeavors it is often true  that the better they are the harder their contests and the more  often they will lose. You don't have to like it-in fact, you had better not-but you won't last long if you don't learn to get over it, or at least put it far enough behind you to go on to the next case.
• A  trial lawyer can be quiet or loud, gregarious or shy, pretty or ugly,  and just about anything else you can think of except lacking in self-confidence.

The book also contained a few laugh-out-loud observations, including:

• The judge, J. Sam  Perry, was a senior member of the court. Perry had grown up in Alabama, but spent most of his adult life in the same western  suburb where Tom Sullivan grew up. Perry was no legal heavyweight, but he had a reputation as something of a populist, with  sympathy for the underdog. On balance, we thought he was not  too bad a draw. We didn't realize until the trial started that an Alabama populist-at least one of Judge Perry's age-is still from Alabama.
• A lesson in the virtues of law-firm seniority.  In January and February a senior-partner conducted a series of depositions in Florida and Puerto Rico while Tucker (a junior associate) held down the fort in Minnesota and  North Dakota.

The book also succinctly captured the dilemma faced by young trial lawyers working in large law firms:

• The current emphasis on the bottom line [in big law firms] has a special impact on trial lawyers. Profit expectations require hourly rates to be set so high that only major corporations can afford them, and their cases almost never go to trial. You may get moderately rich as a "litigator" for big companies, but if you try a case only once every five years, you won't become much of a trial lawyer.

Most of the cases that Tucker writes about were pro bono cases. Tucker was lucky that his firm allowed him to spend so much time working on pro bono. But he recognizes that in today’s world, few firms would allow associates to devote so much time to pro bono matters. Tucker notes that many of today’s top litigators had to leave their big firm and start their own practice in order to develop their trial skills.

My only negative comment about the book is that I did not find a couple of the cases that Tucker wrote about to be interesting. But overall, it was a great book and I highly recommend it for litigators. 

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With the legal job market in shambles, there is a growing number of blogs devoted to criticizing law schools for not doing more to educate potential students about the difficulties in finding a job after law school. Examples include:

Third Tier Reality– My goal is to inform potential law school students and applicants of the ugly realities of attending law school. DO NOT ATTEND UNLESS: (1) YOU GET INTO A TOP 8 LAW SCHOOL; (2) YOU GET A FULL-TUITION SCHOLARSHIP TO ATTEND; (3) YOU HAVE EMPLOYMENT AS AN ATTORNEY SECURED THROUGH A RELATIVE OR CLOSE FRIEND; OR (4) YOU ARE FULLY AWARE BEFOREHAND THAT YOUR HUGE INVESTMENT IN TIME, ENERGY, AND MONEY DOES NOT, IN ANY WAY, GUARANTEE A JOB AS AN ATTORNEY OR IN THE LEGAL INDUSTRY.

Exposing the Law School Scam– This blog is written by a coalition of lawyers dedicated to exposing the "law school scam." In particular, we are interested in exposing the dramatic oversupply of lawyers, and how that oversupply has been caused by bogus employment and income/salary statistics used by most law schools to induce applicants to apply to law school. Also, we are concerned with how the legal establishment is complicit in this "law school scam."

Esq. Never– One law school graduate's attempt to find a fulfilling career in spite of his legal education.

These blogs also provide links to other blogs devoted to slamming law schools and the legal profession.

Mississippi’s law schools need to educate applicants about the realities of the difficult job market. My non-scientific polling of current law students indicates that law schools do not warn students about the weak job market until after students are enrolled and are finding it difficult to find clerkships and permanent jobs. Of course, by that point the train has left the station. 

I agree with the comments by William Henderson, a professor at the Indiana University School of Law. Harrison states that “all [students] believe they are going to be in the top 10% of their class, and they have this vision of the profession that doesn’t exist. And law schools don’t try to dispel those myths to potential applicants.”

The realities are different. Everyone who gets into law school is intelligent—at least on some level. [I concede that many are idiots on other levels, but that is a discussion for another day.] But over 90% of those who start law school will not finish in the top 10% of their class. The reason that it’s over 90% is that people will quit along the way. For instance, if you start with a class of 200 and 50 quit before graduation, there are 15 people who finish in the top 10%—not 20.

A handful of students starting Mississippi law schools will get a job at a big firm with a starting salary north of $80,000. And some people who don’t measure happiness by the amount of their salary consider the big-firm grads the losers in the class, due to the difficulties in having a balanced happy life in big law.  Other grads will be scrambling for jobs making less—sometimes far less. Often these individuals end up bitter because they are not making more money, which means that they are unhappy and do a bad job at work.

At the end of the day, most legal industry jobs end up like most jobs. As in other industries, the profession is filled with people who are unhappy and feel like they are underpaid.  But that is not what people expect to happen when they decide to go to law school.

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According to Law.com the legal sector lost 5,800 jobs in October with more layoffs at large firms than at any time in the last 30 years. The blogs Above the Law and Law Shucks also track the carnage on a weekly basis. Law Shucks states:

The National Law Journal has put out its 2009 survey of the largest firms in the US, and the numbers are just about as awful as would be expected. Headcount is down pretty much across the board, with the total number of lawyers employed by the 250 largest firms back at 2005 levels, wiping out three years’ growth.

In our view, the data support what we’ve been saying all along: firms are grossly underreporting layoffs and stealth layoffs are running rampant.

 In the Jackson area Currie Johnson recently laid off five associates and McGlinchey laid off two in its Jackson office. These numbers may not sound like a lot until you compute the percentage of lawyers in these offices who were let go.

The down economy for law firms in Mississippi started around 2004 with the Mississippi Supreme Court's opinion in Janssen v. Armond, which eliminated joinder of large numbers of plaintiffs in mass tort cases. This caused a huge hit to many defense firms who had a large presence in mass tort litigation. Mississippi firms slowly began to lose attorneys as natural attrition and stealth layoffs led to a reduction of the associate ranks.

Today many Mississippi firms look top heavy, with a lot more partners than associates. That's how firms looked in the early 1990's. The litigation boom of the late 1990's and early 2000's allowed firms to become leveraged by adding associates, of-counsel and paralegals. That meant more jobs for associates and more income for partners.

Ironically, associates in Mississippi who were forced to find new jobs several years ago turned out to be lucky. The economy was fine and it was usually not that hard to find another job. While finding another job often required leaving the state, some would say that is a positive. Today, it is much harder to find a job.

I do not expect the job market to significantly recover with the economy. Corporations and insurance companies are in a trend of bringing more legal work in-house. This is resulting in more lawyers going in-house from private practice. But since most of those types of jobs are outside Mississippi, the trend is a negative for Mississippi attorneys.

I'm not sure what will happen to the legal industry over the next 100 years. I hope a hundred years from now there are more lawyers who are practicing because they want to help resolve disputes and less who are practicing because they thought that it would be a path to making a lot of money.

There are too many well paid but unhappy lawyers who don't like the practice but are dependent on the income. I would like to see a leaner profession where most lawyers like the practice and do not attribute income with happiness.  It may take fewer lawyers and less money to make this dream a reality. 

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Forbes.com has a good article on the business of big law firms and the pressure on firms to change the way that they do business. According to the article, the global economic crisis is accelerating trends that will alter the structure of law firms and the way that they do business. The article covers a lot of ground including the importance of "leverage" to law firm profitability, firm management and the expected trend away from the billable hour. Here are some of my favorite passages:

Law firms refer to the ratio of partners to associates as "leverage." In good times, the arrangement produces strong profits, but when revenues fall, highly leveraged firms can find it particularly difficult to sustain all those associates. As a result, if revenues at a law firm decline 10%, profits can fall 30%

"Most large firms are leveraged up for big deals. With no big deals coming through the door, there's not a lot of work for associates so firms have to [cut] employees. There's definitely going to be a sea change in the law industry as a result of the credit crisis."

Beyond staffing, Borghese says firms face pressure from clients to move away from a payment model based on hourly rates. "Billable hours will always be here, but you will see more of a movement toward retainers and fixed fees."

Susan Hackett, general counsel of the ACC, says the new approach to value is necessary because law firms had become so expensive that their fees often outstripped the value of the problem they were brought in to resolve. "You can have many lawyers and paralegals all billing on a matter worth $50,000 of exposure adding up to a grand total of $250,000. That's crazy."

 In many firms, he notes, the highest fee-producing lawyer is viewed as a good lawyer and is automatically chosen to run the practice group, whether or not he or she is an effective manager.

One thing that the article gets wrong is its suggestion that clients always want alternative billing and lawyers always resist by demanding hourly billing. There have been several instances where I have proposed flat fees to corporate or insurance clients. In each instance the client rejected the concept  and we stuck to hourly billing. I have yet to see in-house counsel embrace alternative billing in my practice.