Make Love Not War?

While Sacha Baron Cohen assumed the role of Dictator at the Festival Hall yesterday, a group of legal regulators were slugging it out next door. Lord knows what would have happened if both sides met...

Russell-Cooke, a big London law firm, organized a 'debate-seminar-symposium' on Enforcing Regulatory Standards in a Liberalised Market with Lord Neuberger (Master of the Rolls, which means he heads up the civil side of the appeal court), David Edmonds (chairman of the Legal Services Board), John Wotton (president of the Law Society), and Maura McGowan QC (vice-chairman of the Bar).

It was lively. (The hashtag #regstandards on Twitter will give you a flavour of the flow of events.) Lord Neuberger set the tone by chiding the marketization of law and the ever-burgeoning market in regulators. He's talked about this before. Law is something special and the rule of law is central to civilized society. So, are all the changes emanating from the Legal Services Act 2007 good?

David Edmonds met this challenge straight on by stating that outcomes focused regulation (OFR) is the only form of regulation compatible with professional ethics. And that consumers need to be put first--"I fear that I plead guilty to having unremittingly acted in the interests of the consumer." This is in contrast to a speech Neuberger gave in 2010 called "The Tyranny of the Consumer or the Rule of Law." (I know because he quoted from a paper of mine about the brave new world which he didn't like.)

Edmonds' stance is quite simple and not antithetical to Neuberger's own wishes: "In short, I want to see the legal profession adopt the same commitment to consumer care as it does to client care – to embrace modern business ethics alongside those of the profession. They are not mutually exclusive and each reinforces the other." Moreover, lawyers are not the sole possessor of ethical values and "it is demeaning in this debate to imply that non-lawyers are inclined to be less ethical than any other group running a business." (There's more over at Legal Futures.)

I feel that what Edmonds said--and you should read his complete speech--was considered, rational, and not contentious, in the modern world. You wouldn't have thought so from the responses.

First up was the president of the Law Society, John Wotton. He complained that OFR is leading to more detailed regulatory rules and therefore higher costs. But this is the way the front line regulators have interpreted OFR: there's no need for them to take this direction. The Law Society would like less regulation because consumer demand would achieve the same ends. But Wotton recognized that the ABS application process was slow and the Law Society and the SRA need to collaborate more on speeding up that process. Overall, Wotton knows the legal market has changed fundamentally and is subject to forces like globalization. For example, see his speech to the American Bar Association.

Having set out his general view, Wotton then called for ethics to be embedded in legal education. That's not a bad thing perhaps but it isn't the answer to improving behaviours. Secondly, he wanted will writers to be governed by the same rules as ABS. Thus we have pleas for more regulation, not less.

Then it was the Bar's turn. Maura McGowan presented the rule of law as antithetical to the idea of markets. Consumers were not the arbiters, just as Neuberger has asserted. Outcomes were not the defining instances, but it is process that is important. This is where the Bar tries to make a canny move. If you aren't part of the market, you can claim special treatment. Why? Because the Bar has a wider duty to the public and the courts and is beyond markets.

In some ways the Bar has sought and enjoyed the aura of a priesthood. But priests, the clergy and others have always had a necessary and close connection to the market. I always enjoy watching the religious channels on American TV--just incredible performances in the creation of mass adulation. Evangelicals are now the fastest growing religious group in Roman Catholic Latin America, for example.

The Bar thinks OFR inappropriate for itself. The public interest comes first before the consumer interest, which in itself doesn't make any sense.

Moreover, McGowan inveighed against the legal education and training review. It was too much too soon. She accused Edmonds of saying that legal education wasn't fit for purpose. If one reads Edmonds' Upjohn lecture on legal education it doesn't say that: it does deplore the lack of dialogue between education and practice.

We know legal education needs reform. I question whether the legal regulators are the best ones to lead it. After listening to the Law Society and the Bar Council, I'm not optimistic. Well, let's see what they come up with......

I felt both the Law Society and Bar Council wanted to snipe at the Legal Services Board. I don't mind that but as representative bodies of their respective groups they don't seem as clued up about what is happening in the legal services market as they should be. The Bar isn't standing still. See how Riverview Chambers is shaking up the orthodoxy with its fixed fee packages (with a new one for divorce).

It was clear that they really only see from the perspective of the profession, which is too blinkered. They need to become aware of the market and how the market, and its buyers, view them. That was beautifully summarized when someone said, "Consumers don't actually want to buy legal services."

Perhaps the last word should be left to a speaker from the floor who remarked that being complained about to the Legal Ombudsman wasn't a bad thing but actually was a good thing as one could learn what the complaints were telling you and therefore improve. The panel speakers didn't really embrace that one wholeheartedly. No surprises there...

Make Love Not War?

Time to Cut the Silken Thread

(thanks to swatman67)

Here is the op-ed piece I've published in The Lawyer today on the end of Queen's Counsel.

Time to cut the silken thread
9 April 2012

The QC system should be done away with, and the legal services market brought into the 21st century
It’s time we got rid of the Queen’s Counsel (QC). It is archaic, woolly in definition, and the only state-sanctioned ’quality’ mark I can think of.

These letters patent are issued by the Queen. We live in an age of transparency and accountability, and neither the process of selecting nor monitoring QCs is fit for this purpose. By all means have a distinction that speaks to expertise, but something as vague as expert at ’advocacy’ is woefully insufficient.

The selection panel is a mix of the great and the good, with ’lay’ members taking up half the positions (are barristers the only professionals that seek to liken themselves to the clergy by their use of the term ’lay’?). References are taken from the judiciary, practitioners and clients, but the judiciary still plays the biggest role behind the scenes.

There are other peculiarities. The cases that the panel wants candidates to write about should come from the previous two years of practice, not earlier. This is not like the Nobel Prize, where your whole body of work is scrutinised. No, the criterion is your excellence at the time of application. If there have been complaints about applicants they only have to disclose if they have admitted liability. Again, a strange benefit to those who never apologise or explain.

The most peculiar part is that it is a reward for advocacy that privileges one part of the legal profession over all others. Take the 2011 competition: out of more than 200 successful applicants two were solicitors and none were legal executives. If you take the legal profession as a whole, advocacy is a minority sport because most of the work handled is transactional. So if prizes are to be awarded to lawyers, why not all of them?

Moreover, the results show that it is the same old story - if you are a white, male barrister in civil practice your chances are much greater than anyone else’s.

So, in the new outcomes-focused legal world is there still a place for this archaic institution? The answer is no. It raises costs, often leads to doubling of resources on cases, but worst of all does not signify any measurable quality. It’s not as if QCs have to go in for a legal MOT every few years to see if they are up to the job. The Legal Services Consumer Panel has suggested incompetent QCs should lose the title.

Bizarrely, during the time the raison d’être of the silk was being debated, some arguing in its support said that its loss would raise costs and that the junior bar would have no standard of propriety to aspire to. Perhaps the most outlandish argument was that barristers are quasi-public servants and that the QC had a quasi-judicial role. Judicial? Well, this was said by a QC.

If we want to reward specialisation and expertise, let’s do it on a profession-wide basis, without the involvement of the state. Let’s make it open to all. Let’s drop the reference to the crown. If we need something, we could use Senior Counsel, but not if it merely replicates the QC.

Let’s make it a testable process, with outcomes that require continuing sanction. Let’s bring the legal services market and its providers fully into the 21st century.

----------------------------------------------

If you google "queens counsel" you also get this little chap. His name is "Queen's Counsel z Vejminku, golden boy". If you want a little cocker spaniel like him, his family are in the Czech Republic.

I suppose there is a similarity between his ears and the QC's wig......

Time to Cut the Silken Thread

The Legal Services Act Takes Off in the US?

(Concatenation by silentmute, with thanks)

There has been an interesting concatenation of events recently. The first Alternative Business Structures (ABS) were licensed this week with the Cooperative Legal Services (=Tesco Law) among them. Rather more prosaically and conservatively the New York State Bar Association finally decided to prohibit US law firms from taking external investment. Rule 5.4 would remain sacrosanct--never traduced.

This occurred, unfortunately, as the International Task Force of the New York City Bar Association (ABCNY) came to London on a fact-finding mission to see how the Legal Services Act works and if it could be introduced into New York. The ABCNY is one of the oldest bar associations in the US and represents most of the larger law firms, so it has considerable authority in the American legal establishment.

Various bloggers and critics (here and here) have debated whether the introduction of UK Legal Services Act style law practices would be a good thing both in the public and consumer interest. 

Nevertheless reaction to the forces of conservatism and NIMBYism has set in. North Carolina, which has been considering a bill, for over a year, to allow external ownership in law and accounting firms, has decided to move ahead having finally reached a consensus on the issue. North Carolina believes that neither New York nor the ABA's 20/20 Commission should have the last word on this.

A member of Senator Fletcher Hartsell's staff, who is sponsoring the bill, said, "This provides an opportunity for North Carolina that we can't miss. If we take this through, North Carolina could become to law firms what Delaware is to corporations. We see most of the major AmLaw 200 firms opening offices or headquartering here."

It is rumored that the senator's staff in conjunction with the North Carolina Bar Association (which has thrown its weight behind the move) have been talking to the Legal Services Board and the Solicitors Regulation Authority about how the Legal Services Act regulatory structures are working and also how outcomes-focused regulation might be applied in the US.

Other commentators have come out in support. Anthony Davis argues that the US needs a national lawyer regulator with common ethical standards. It's possible that North Carolina's move into external ownership could be the opening that national regulation needs. This would clearly put New York and the ABA on the back foot.

If North Carolina continues with this kind of commitment I candidly contemplate a new professional order emerging. If we add in the moves of the Troika in Europe on liberalizing legal professions, this could become an unstoppable movement. The world of law, law firms and professionalism will never be the same again.

The Legal Services Act Takes Off in the US?

Why Do We Need the Legal Services Board?

Public bodies such as the Legal Services Board have to undergo triennial reviews to see if they should continue and if so in what form. 2012 is the LSB's turn.

The Ministry of Justice is the reviewer and has held some seminars to canvass views among those interested. I am interested so I have just submitted my views on the future role of the LSB. They focus on research and coordination. This latter point will appeal to those who have read Steven Lukes' little but invaluable book, Power: A Radical View. I consider the LSB to embody the ideas of the second and third dimensions of power as Lukes represents them. It is not domination as such but the ability to create environments where the participants want to engage in collective action. If one can set the agenda, that's far more powerful than merely telling someone to do something.

Here are my views. My statement is short and relates to the role of the LSB in coordination and research.

Let me take coordination first. Contrary to the way we speak there is no single legal profession but a set of professions that have varied in type and number over the centuries. For example, there were approximately 12 legal professions in the 15th century. Apart from the judiciary and some parts of government, there has not been any significant coherent regulation of the legal professions until recent times. One result is that different professions saw themselves as competing fiefdoms fighting over turf, eg, rights of audience in the courts, control of judicial appointments and control of conveyancing. These turf battles have generally favoured the professions' self-interest at the expense of the client's interests. This is not to say that legal professions have not done magnificent work in areas like pro bono and legal aid.

Although there have been reviews of the legal services market and professions before, any attempts at reform have been piecemeal and resisted strenuously by the professions. Indeed the OFT reports on professions through the Clementi Review to the Legal Services Act 2007 represent the first major wholesale analysis and reform of the professions and their regulation. The Legal Services Act has introduced a systematic process of regulation that allows for degrees of self-regulation to command and control where necessary. At the same time it has opened up the framework of the legal services market and introduced, in a formal way, the greater participation of "non-lawyers" as active producers in this market.

These are tremendous changes running counter to centuries of tradition. It takes time for such change to bed down and be accepted. For lawyers to realize they are one of several "producers" in the legal services market as opposed to the only participants is shocking. The results of these changes and shocks to the system are profound and as such require managing. They cannot be left to chance alone. The problem of management is a subtle and delicate one that must manage expectations and potentialities.

The present setup is fragmented and based on traditional divisions between different professions. There is nothing wrong in this as it reflects the situation we are faced with. It does, however, mean that the differences and distinctions between the professions continue to resonate in the market. Turf battles have not disappeared; they have been reconstructed. Not only are the Approved Regulators asked to regulate their own professions and activities but in some cases--where ABS are concerned--other professionals. One of the risks inherent in this situation is that of regulatory arbitrage, which should be best avoided.

To achieve a coherent regulatory process takes time and continuing communication among the different parts. Experience shows us that without the intermediation of a knowledgeable body this communication may only be partial at best. In part the role of the LSB is to act as an intermediary to ensure the Approved Regulators adhere to the letter and spirit of the Regulatory Objectives laid out in the Legal Services Act.

The role then of the Legal Services Board is to facilitate communication, consistency and coherence between the Approved Regulators, and to ensure the legal services market serves the needs of consumers and the public interest. The changes being wrought in the legal services market are creating challenges never hitherto faced by the professions. New providers, new organizational structures, and new modes of delivery need proper coordination across the differing regulatory structures which the intercession of the LSB can help deliver.

The introduction of Alternative Business Structures is a case in point. There was much speculation about whether the introduction of ABS would imitate the "Big Bang" in financial services. Clearly this has not occurred but the drive towards ABS is gathering speed. These are unknown quantities which lawyers have not traditionally had to contend with. Without the facilitation of the LSB the ABS process would have been strewn with obstacles. Besides encouragement the LSB possesses powers to compel where obstacles resist removal. The possession of such power is often sufficient in itself to smooth out implementation.

From this perspective the role of the LSB is to exercise power in a way that does not coerce or cajole but rather sets the agenda and determines the environment of the debates needed. This is not brute force; it is engagement and it is what makes the LSB so valuable. It is also what makes the LSB necessary. The constitution of the Approved Regulators will not support these processes. Until they have matured (and the legal services market) and fully adapted to their roles, they require the presence of the LSB, however welcome they consider it.

I now turn to research. Previous incarnations of the Approved Regulators, eg, the Law Society and Bar Council, have from time to time undertaken research on the professions and legal markets. It has not been a sustained process. We need more research on the legal services market to understand how it works, what it does, who its occupants are and so on. I have been engaged in research in this area for some years, but I realize we need more. One of the key services of the Legal Services Board has been to engage in research, both as research funder and as facilitator. This is invaluable. In the few years of the LSB's existence research on the professions and the legal services market has increased dramatically. Moreover, the LSB has taken on the role of analysing the research done and attempted to systematize it so we can see the gaps. Legal services are no different from medical services in that decisions about the allocation of resources, what constitutes the proper operation of the market and its providers are best taken on the basis of evidence rather than conjecture or anecdote. We know from earlier reviews and reports little sustained research was done which created doubts about the quality of decisionmaking.

The Legal Services Board's explicit aim to make all research available is to be applauded and will help to dispel many of the mists that enwrap the provision of legal services. The Approved Regulators have not yet sought to take on this role and therefore the LSB is necessary and will continue to be so for some time yet.

I am therefore convinced the Legal Services Board should continue in its present incarnation. Without it the legal services market would be diminished.

Why Do We Need the Legal Services Board?

Will There Be Fallout from Clementi?

I've revised, updated and expanded my paper, "Will There Be Fallout from Clementi? The Repercussions for the Legal Profession after the Legal Services Act 2007". It's available from SSRN here.

I have sketched out some of the new types of business that are now being promoted under the Alternative Business Structure regime which came into force in January 2012. There have been over 130 licence applications to the SRA. And don't forget the first ABS was approved by the Licensed Conveyancers last October.

What the legal services landscape will look like say five or ten years from now is anybody's guess. It's wide open.

Say goodbye to the legal profession and welcome the legal services providers......

Will There Be Fallout from Clementi?

PI(I)GS Might Fly!

(thanks)

The Troika is upsetting big bar associations because it is demanding the liberalization of professions in countries it is bailing out. Key complainers are the American Bar Association and the CCBE. (Thanks to Peter Lederer for the H/T).

The Wall Street Journal Law Blog reported that the ABA and CCBE have written a letter to Christine Lagarde, head of the International Monetary Fund and former head of the world's largest law firm, Baker & McKenzie, asking her to pass on their concerns at the end of independence of the bar to the heads of the European Union and the European Central Bank.

The WSJ Law Blog says:

The American Bar Association and the Council of Bars and Law Societies of Europe say measures in Ireland, Greece and Portugal threaten “one of the core principles of the legal profession: regulation independent from the executive branch of the state.” 

Although only three countries are listed we know it won't be long before Italy is included once it receives its subvention from the Troika.

I've analyzed some of this before and it's clear that the Troika isn't signalling the death of the legal profession. Far from it, it is demanding proper regulation and accountability which lawyers have avoided. Colin Scott, dean of UCD Law School, cogently argues:

It is not unprecedented for government to appoint independent regulators to oversee the legal profession...it is normal for independent regulators within our system of democratic governance to be subject to a variety of mechanisms of accountability to ministers, not least to provide reassurance that the regulator will not be captured by those it is set up to regulate. Few are wholly independent in a modern state better characterised as exhibiting characteristics of interdependence. As an example, the legal profession is dependent on the state for fees across much of the criminal justice system and in respect of many civil matters too. No one argues that the taking of instructions and fees from government compromises the professional independence of lawyers.

There are two strands to the Troika's thinking on the legal profession and professions more generally. The first is proper regulation as Colin Scott refers to above. (And, in the case of Ireland, for example, the Justice minister is being responsive to concerns.) The second is that in many countries the professions are closed off from many who would like to participate. Not because they are incapable but because they don't possess the social capital that enables them to enter and practice. (Ample cites on professional closure here.)

The Troika's moves are an attempt to open up the labour market so it is accessible to all not just a few. One only has to look at how many law firms in continental Europe are dynastic family organizations.

Unfortunately, when the ABA and CCBE says

Bars and Law Societies around the world have always been open to reform: they follow very closely societal, economic and any other changes within their own countries and worldwide, evaluate the impact of these changes on the profession and take the necessary steps to adapt.

 it is very hard to believe them. I don't think the IMF will budge and nor should it.

PI(I)GS Might Fly!

The Troika Rampages Across Europe...

The effect of the Troika's actions on the regulation of Irish legal services has been severe and radical. The combined might of the IMF, the EU, and the European Central Bank is considerable.

Ireland, however, is only one of its beneficiaries. Italy, Greece, and Portugal are also feeling the heat of change chasing them. As I said yesterday, there's nothing like a good crisis to compel change.

When the apparatchiks of the IMF visit they are very good at fossicking out illiberal tendencies in trade and professions. This means that lawyers can no longer hide behind their former privileges. In Ireland's case the Troika saw that the Competition Authority had reported on professional legal service change in 2006. 

With a hat tip to Jonathan Goldsmith the Troika isn't holding back. Its demands include the implementation of ABS, freedom of association among lawyers (and other professionals), external ownership and investment of law practices, all of which must shock average Continental (and perhaps civilian) lawyers.

Their historical collaboration with the state, as opposed to the legal profession-market relationships of Anglo-American lawyers, appeared to protect them against radical change since state and profession aims were identical. (See Dietrich Rueschemeyer on comparing professions.) No longer it seems. If the labour market is inefficient then it must opened.

The IMF sees these changes as streamlining the public sector as well as liberalizing markets. Effectively government must be reigned in, and state enterprises privatized, while the market (hopefully) flourishes.

For example, in Portugal the IMF proposes judicial reform along with a revision of the civil code of procedure to reduce case backlogs and increase judicial efficiency. It also says all limitations on practice to be eliminated unless justified or proportional (see page 94 of IMF report).

The IMF reports (linked) for Greece (one and two), Ireland, and Portugal are available. Italy is yet to be drawn up.

What has been viewed as an English peculiarity is now becoming the norm--external investment, ABS and more. Don't waste a crisis.....

The Troika Rampages Across Europe...

Tesco (Ireland) Law?

Ireland is about to head towards Tesco Law. Turns out that Tesco is in Ireland also, so that helps. Last Friday (25 November) I spoke at a conference at University College Dublin on Regulating the Legal Profession.

Ireland has introduced its own Legal Services Regulation Bill (PDF of Bill here) which is based on a report by the Irish Competition Authority published in 2006. The first sentences of the executive summary are trenchant

The Competition Authority has concluded that the legal profession is in need of substantial reform. The profession is permeated with unnecessary and disproportionate restrictions on competition which should be removed so that consumers can benefit from greater competition in legal services.

That these changes are occurring is testament to the intensity of the financial crisis in Ireland. Among the many changes required by the IMF, the ECB, and the EU (the Troika) in exchange for a rescue package was 

To increase growth in the domestic services sector

Government will introduce legislative changes to remove restrictions to trade and competition in sheltered sectors including:

- the legal profession, establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs.

One journalist at the conference joked that "You should never waste a good crisis if you want to get something changed." The Irish government was given slightly less than a year to introduce these changes. The Irish legal profession had been successful before at fighting off change until now.

The conference, organized by Colin Scott, Dean of UCD Law School, attempted to bridge the divide between regulators and practitioners and academics so that a useful conversation might flow. Something flowed at least.

For Julian Webb (who spoke on the Legal Education and Training Review) and myself it was like looking back through a time tunnel to five years ago in the UK when the legal profession was so defensive about the changes being introduced by the Legal Services Act 2007.

The Irish bill essentially proposes the same things that the British have done--separate and external regulator, separating representative and regulatory elements of professional legal bodies, reformed legal training, more open and unrestricted access to lawyers' services either through firms or ABS, and external complaints procedures.

The practitioner speakers at the conference saw these proposals as threats to the integrity and independence of the legal profession. They desire to kill the bill. That isn't going to happen. If they want to pick a fight that they have some chance of coming out of alive then it will be in the negotiations over the details of regulation after the legislation is passed. They know this but still feel as if they must go through the motions. It's a waste of political capital.

I feel we've started a dialogue of sorts. This was helped by trying to put the Irish experience in a less parochial context. Lynn Mather of Buffalo gave a keynote speech on lawyers, the market and the state which theorized some the issues that legal professions face. I placed the regulatory push into its global context. And Colin Scott distinguished meta-regulation from mega-regulation which you can get an idea of from his inaugural lecture, Regulating Everything.

From both economics and sociological perspectives there is no doubt that these changes will occur. More conferences and workshops will be needed to develop the conversations.

Tesco (Ireland) Law?

What Should We Be Teaching in Law School?

(thanks to New Yorker) 

There is one thing wrong with the question in the title and that is whether in fact we should have or need to have law schools. The more I think about what the UK Legal Education and Training Review has to do, the more I feel for them. Probably since the days of 1870 at Harvard Law School has there been such an air of turmoil around legal education.

It's clear we don't know what we are doing or why. David Segal's article in Sunday's New York Times, "What They Don't Teach Law Students: Lawyering" speaks to an American dilemma but one that shortly will become an English one too.

The gist of his article is that law firms have to take on the task of training their associates to be "real" lawyers, not just pretend ones out of law school who don't know anything. Moreover, law faculty have no incentive to change this because their reward patterns aren't directly tied to their students getting jobs but to the articles they publish. Teaching also takes a junior role to scholarship.

In part this is because law schools appeared to be trade schools without any serious role in the academy except to bring in money. Now this has become institutionalized because the entire economic infrastructure of law schools is built on a state-guaranteed loan system. Some might say redolent of Fannie Mae and Freddie Mac. For Brian Tamanaha they're a drug.

Law firms are finding that clients refuse to pay the costs of training associates straight out of law school:

Last year, a survey by American Lawyer found that 47 percent of law firms had a client say, in effect, “We don’t want to see the names of first- or second-year associates on our bills.” Other clients are demanding that law firms charge flat fees.

Law jobs as a result are harder to get. Recently in New York a lawyer, who is an adjunct professor at one of the elite law schools there, told me how all adjunct faculty at the elite schools in the north east of the US are being asked to try and place their students. It seems not all are getting jobs.

Whether law schools should become trade schools again isn't the reason I'm writing. There is something wrong with law schools and legal education and they need fixing. Their curriculum follows a path that seems to lead nowhere. And this is true in the US and the UK.

Students are bored, overworked and frustrated. We ought to be able to design a curriculum that excites them and commits them intellectually and emotionally to law. Unfortunately I don't think the legal profession is good at doing that.

Law Without Walls--which is entering its second year--has begun the redesign process and has generated more excitement than any other legal educational venture that I can think of.

So, do we need law schools? While we ponder this I'm sure new educational ventures will come along and stealthily extract the law school consumer base and it could be too late for law schools to repair the damage. Is the law school the best medium in which to learn law?

UK law schools are about to commit seppuku soon. They are to charge tuition fees considerably higher than hitherto but with no concomitant increase in quality or innovation in the curriculum. Indeed, most likely students will be paying more for less as universities freeze hiring or make staff redundant. It won't make the "student experience" anymore satisfying. Indeed, I think it will lead to law schools closing down or shrinking so much that they become adjunct departments to business schools or such. They might as well become paralegal training centres.

All law students--here and in the US--should read David Graeber's Debt: The First 5,000 Years. It's a tremendous read showing how the phenomenon of debt is at the root of our social and economic structure. Law students, and others, need to understand the phenomenology of debt and how it rules their lives. If they do, law schools will have no option but to reform. But how?

What Should We Be Teaching in Law School?

Lawyers, the Comorra, and Dutch Auctions

(thanks to movieaddicts)

There's a scene in Gomorrah (about the Neopolitan Comorra) where dress-makers compete to win an haute couture contract for a major clothing designer. They are asked to bid for the work in money and time--the lowest amount for each. Pasquale pleads with his boss not to go below a certain number of days which of course he does to win the contract. It's a reverse auction. These are also known as Dutch auctions, in contrast to "normal" English auctions where the price ascends not declines (see Smith 1990: 120). Later in the film Pasquale sees Scarlett Johansson on TV wearing one of his dresses.

Dutch auctions are very desirable for buyers of services although not so good for the sellers. Lawyers are now finding out what it is like to be on the receiving end of a Dutch auction. With a hat tip to my friend, Peter Lederer, the Wall St Journal has run a fascinating article on the machinations of corporate counsel to impel lawyers and law firms to embrace reverse auctions. (Here's an alternative location if it's hiding behind Murdoch's paywall.)

Here's the opening:

Spurred on by budget pressures, companies' use of a controversial auction process to negotiate contracts with law firms has surged in recent years, a trend that could eventually reduce the revenue attorneys can expect to reap from clients.

Several big companies—including GlaxoSmithKline PLC, eBay Inc., Toyota Motor Corp. and Sun Microsystems—have used the tactic, known as reverse auctions or competitive bidding, to pressure law firms to lower prices, especially on high-volume work such as tax filings and intellectual-property transactions. Many lawyers now worry these auction-based pricing strategies are spreading to more complex projects.

"Is it making all of us uncomfortable? Yes. Especially when you start to move away from the more routine sort of work," says Toby Brown, the director of pricing at Vinson & Elkins LLP.

What is interesting is that this isn't being done through beauty parades and pitches but instead through websites where law firms bid against each other and against the clock. Sounds like a chess game, no?

Despite the tender feelings of law firms and lawyer that this might all be a bit infra dig--"not very professional is it, old chap?"--it's gathering pace and market share.

Ariba Inc., the maker of one of the main reverse-auction software tools, claims that around 40% of today's market for legal work—a threefold increase from just a few years ago—is contracted through electronic, online means, most of which involve a reverse auction, according to Sundar Kamakshisundaram, a marketing manager for the company.

And David Baumann, general counsel for TechNexxus LLC, which helps companies cut down on legal, technology and business-services costs, says more than a third of the work they do involves reverse auctions, about four times more than in 2008.

Lawyers will plead that their work is complex and varied and can't be priced like other products. It doesn't really wash when one sees investment banks pricing complicated deals every day. How many other suppliers are able to say, "I won't tell you the price now. Wait until I think I've done enough, then I'll let you know."
As one general counsel so aptly put it:

"Every lawyer will tell you that every piece of work they do is incredibly important and risky and has to be custom-made, and that's just nonsense," says Jeff Carr, FMC Technologies' general counsel. "No matter how legally brilliant you are, there is always an alternative."

What's the difference between a loaf of bread and a lawyer? You eat one and the other eats you.

*****************

Smith, Charles W. 1990, Auctions: The Social Construction of Value. California.

Lawyers, the Comorra, and Dutch Auctions

Waiting for Godot...or ABS?

October will pass without Alternative Business Structures and it looks likely it will be the end of the year before we see them, unless you are a licensed conveyancer that is. In part this is due to the way parliamentary business is done and also to the manner in which appeals against Solicitors Regulation Authority decisions will be conducted. There is also the vexed question of what criminal convictions have to be disclosed by potential investors in ABS.

I'm sure we'll get there in the end even if parts of the legal profession wish this would all go away.

I was struck by Dan Bindman's column on Legal Futures, "Are you an ABS optimist or pessimist?" It's worth reading for the views represented on the potential effects of ABS. Dan ultimately says,

One thing is certain: the new entrants will have little regard for broader notions of access to justice, or the social value of having an independent legal profession to police the three-way interface between the state, the market and the individual.

We don't know this of course. And Dave Edmonds, chair of the Legal Services Board, comments,

Dan Bindman’s article poses the right questions. But I quarrel strongly with his assertion that new entrants will “have little regard for broader notions of access to justice”. Why will they not? Many of the most ambitious and innovative lawyers operating in the present marketplace have a very high commitment to this fundamental cause. My belief is that extending the ability of citizens to secure affordable legal advice from new forms of law firms (which will be in the main run by lawyers and properly regulated by regulators for whom access to justice is an underlying principle) will enhance access to justice, not diminish it.

Read the other comments also--there's good stuff there.

When it comes to dynamic change the legal profession has always been in the vanguard of resistance. It's almost a reflex action. Legal aid was resisted when introduced in the 1940s. Then lawyers learned how it would benefit them. They love it now! But that's going.

Lawyers were opposed to neighbourhood law centres because they thought they would take away business. Instead they promoted it. Their funding is being cut now.

The legal profession has a good eye for resisting winners and on that basis I think they might be on to something with their opposition to ABS. Just don't leave too late...

Waiting for Godot...or ABS?

What Is Legal Education For?

I've been participating in a new educational venture for the past couple of months called "Law Without Walls" (LWOW). It sees current thinking on legal education as being out of touch with the modern world and other dynamic ways of thinking. In other words, it has become stale and narrow. There's not a lot to argue about there.

What is interesting is that the arguments for radical change in legal education in the US are built around the way the legal profession has responded to the financial crisis. The germ of this was that the US legal profession made explicit what had been covert for a time: the tournament for partnership has been dead and long gone. It wasn't sleeping like Monty Python's Norwegian Blue parrot.



Legal education has risen up the agenda in the UK. The three largest legal professional regulators are reviewing education in and training because of the impending arrival of alternative business structures in October 2011.

I may not be the best person to talk about this as I'm a legal academic; sort of, I own up to being a sociologist as well. However, I read an article in The Lawyer by Nigel Savage who terms himself 'Chief Executive' of the College of Law. (I presume by calling himself this he divests himself of all pretensions to being involved in education. If so, fair enough.)

The upshot of the article is that Nigel ain't too happy with the way things are going. It's all happened too late, which is a bit true. This could have been started earlier but when it comes to officialdom, things take time. Even the feistiest of chief executives don't always get their just deserts. Also Nigel wants legal education to be relevant. Hmmm.

I agree that legal education needs shaking up. I think it's last rethink was somewhere around the 1960s with bits of tinkering since. But to be fair, it hasn't really altered since the 19th century, which for a system built on precedent is going it.

There are fundamental differences between the UK and the US in legal education. We educate undergraduates in law and they teach only graduates. Despite this law schools fall unhappily between serving a profession and inculcating liberal values. Two French sociologists said some time ago that all professions were a marriage of technicality and virtuality (practice and theory [?]). So indeterminacy was central and apprenticeship was necessary to impart the correct ways of thinking.

To me this is the fundamental contradiction of Nigel's article, the conflation of education and training. Although this is not bad in itself, they need to be acknowledged as distinct modes of learning with their own values. Nigel sees education as serving the only the needs of training. And this is how many politicians see education--as a means of wealth creation for the economy. It's almost as though the Greeks never existed.

We have been shy in the UK at vocational learning. We persist with the idea that everyone ideally everyone should pursue the academic route whether it's best for them or not. So maybe it is time for a fragmentation of legal education, a scaling of legal education, a disaggregation of legal education. In part we do this with the transfer route where someone with another degree can take a one-year 'conversion' course into law.

Alternative business structures are only one new part of the new legal regime under the Legal Services Act 2007. Their recruiting and training needs may not be as demanding as conventional legal practices: I don't know. But I don't want to see the professional dog in the guise of the SRA, BSB et al to be seen shaking the tail of legal education because we are not the tail. Tails are important yet we as educators are more important than that. Perhaps there is not sufficient theory in the law curriculum; perhaps we could broaden our scope and be more interdisciplinary: I hope so. And I hope we don't become appendages to training. If we do law will suffer and so will the people who turn to law.

What Is Legal Education For?

The Future of the Legal Services Board....

Neil Rose at Legal Futures discusses whether or not the Legal Services Board is needed or not, or at least in the future. He points out that it is on the list of schedule 7 of the Public Bodies Bill (the bonfire of the quangos). What he doesn't point out is that the bill is not sailing smoothly through parliamentary waters and schedule 7 may yet be breached and sink.

The UK coalition came into power promising to cut government waste--well, don't they all?--and compiled a list of "useless" quangos. Schedule 7 is a list of possibles. Besides the LSB it includes in the legal sector the Legal Services Commission which deals with legal aid and other access to justice issues, and the Civil Justice Council and the Criminal Cases Review Commission. (And in the spirit of disclosure the Arts and Humanities Research Council for which I review and decide on fundable research projects is also on the list.)

Of course as comes clear in Neil's article is that the Law Society and by extension, the Bar Council, would love to see the LSB disappear. Why? The LSB is finally holding the legal profession to account, something which has been needed for many years. Moreover, the professional associations haven't been able to regulate their own groups with any great success for the public or consumer interest.

The Legal Services Board may be new but in its short career it has managed to put diversity in the profession so clearly on the agenda that it can't be any longer ignored. It is the first of the regulatory groups to take a rational approach to regulation in the legal profession. Stephen Mayson's paper on reserved activities demonstrates that the legal profession isn't too adverse to taking advantage of historical accident.

The legal profession has shown itself to be dangerously complacent at times. It is too important to permit that to occur so we need institutions whose task it is to rattle a few cages.

---------------------------------------------------------------

Coda: Two other quangos for which government has no time are the UK Film Council, which in this its final year is reaping the benefits of a BAFTA and potential Oscar winner, The King's Speech, produced for less than £10m. The second is the Forestry Commission. The government came up with the truly daft idea of selling our woodlands to private developers who would somehow promise to keep them open for public use. Last time woodlands were sold the public were locked out. There's been such a public stink over this that the government is rethinking, ie. forgetting it.

The Future of the Legal Services Board....

Law School Goes Ninja?

Ever since the New York Times (9 Jan 2011) wrote about the debt accumulated in law school, stories about the changing market for law graduates have been emerging. The key finding is that there is now a bifurcated market for law graduates.

This is something Bill Henderson has been commenting on for a while now. Law job starting salaries are now located at two points: high--$160,000 and low--$60,000. Whereas we used to see this as a spread across the two hemispheres of law, it's now observable mainly in the corporate hemisphere. Essentially, the high earners are on a potential partner track (not guaranteed though) while the others are grunts.

So when Above the Law writes about law graduates having a barely legal future, the situation begins to get serious as perceptions gather strength. The cause? American Lawyer reporting that WilmerHale has opened an inshore outsourcing centre in Michigan and is advertising for "discovery attorneys" who will do document review at a full-time salary of $60,000.

The call is that law schools must respond to these changes but how? With the tyranny of US News & World Report law school rankings hanging over their heads it is rather difficult to see how they can do much. Potential law students will have to rely on less than neutral and objective evidence for some time longer.

Above the Law argues for two hemispheres of legal education. One that graduates the future partners of BigLaw and another that produces "discovery attorneys". 

Although some think this is peculiarly American problem, it is one that's crystallizing here in the UK also. I've referred to corporatizing legal education here--designed for instant practice. This is in spite of many law school academics thinking they are providing a liberal arts education.

What we've seen in the UK is a disjunct between the numbers of law students coming into the academy and the numbers of jobs available. For many the problem is that the academy is producing too many law graduates and should be more sensitive to job availibility rates. I have dealt with some of this elsewhere.

While we don't have the US News & World Reports  to worry about, we do have newspaper rankings and national student satisfaction surveys and more. University vice-chancellors and deans fret over these interminably. They aren't, however, as catastrophic as the American versions. Yet from next year universities' funding models will be radically overhauled and students will be enmeshed more deeply as consumers and consequently more demanding.

The UK has its hemispheres and we can see the differential hiring procedures occurring. There is a rise (but I don't have statistics) in the hiring of contract lawyers. But there is also a big rise in the use of paralegals and I don't mean those trained to be paralegals. Rather the unemployed would-be lawyers are turning to paralegaling in the hope that a training contract might open up while they are there.

What will entrench the stratification of the market is the opening up (de- and re-regulation) of the legal services market that's now taking place. Fewer jobs will need to be done by fully-qualified lawyers. They can instead be carried out by a range of people qualified for certain legal and quasi-legal tasks. This is where corporatized law meets Tesco Law.

The US legal profession still thinks it can maintain a headlock on the control of the profession. How long for? At the expense of a cheap shot, Mubarek is finding a 30-year rule coming to end; Tony Blair only lasted for 10 years before he was ejected. Permanent monopoly becomes increasingly hard to justifiy, especially in a global market.

Law School Goes Ninja?

Robert Rosen and "Lawyers in Corporate Decisionmaking"

Robert Rosen's wonderful dissertation has been published by Quid Pro Books. Here's the description by the publisher:

The recognized study of the disparate roles that corporate attorneys play in representing and advising their institutional clients. Long passed around and cited by scholars and lawyers as an unpublished manuscript, the book is also accessible to a wide audience and includes inside interviews. Professor Robert Rosen insightfully explores the choices that lawyers, managers and executives make about how lawyers are involved in corporate processes.
In the companies studied, Rosen showed that corporate lawyers were repeatedly intertwined in decisions—beyond those regarding mere legal compliance—ranging from finance to production to sales to returns to litigation. But the how, when and consequences of their involvements varied. The book analyzes these variations. It examines relations between inside and outside counsel and the management of the corporate legal function. It locates them in a taut framework of organization theory and institutional behavior, a frame and application since referenced for its cogency and explanatory power.
The author, now a senior professor at the University of Miami Law School, repeatedly calls on attorneys to understand the organizational context of their work. His book repeatedly calls out attorneys who ill serve their clients because they failed as organizational analysts. It has since been recognized by legal, ethical, and sociological theorists as a rich resource of corporate analysis and the divergent roles that lawyers play.
The groundbreaking research was conducted at six major manufacturing companies as Rosen interviewed a triad of inside counsel, outside counsel and managers who worked on particular problems. This novel method allowed self-serving statements (especially by the lawyers involved) to be checked and placed in realistic context. More important, because it triangulated how the legal problem was understood, the method brought out how the legal task had been structured. The frames that the lawyers, managers and organization imposed on the legal problems varied widely—and the sources and consequences of these variations are detailed and explained.
The book’s latest edition is now available from Quid Pro Books, but the manuscript has already had scholarly impact and praise. For example, the Yale Law Journal noted in 1996 that “Rosen’s important manuscript is widely cited in recent literature on legal professionalism.” It has been cited in articles in the law reviews of Boston University, Indiana-Bloomington, University of Maryland, and Emory, and the Law and Society Review. At bottom, researchers and pundits on corporate theory and lawyers’ roles have already had to account for this telling study, and at last they can readily reference it in a quality published format, in ebook and paperback editions.

My own take on the book is also quoted there:

Rob Rosen’s study of in house counsel is a deft, subtle dissection of a complex world where nothing is as it quite seems. In interviewing in house counsel, outside counsel, and clients, Rosen captures, in a Rashomon-like way, the moral character of lawyers’ work–their choices, their pitches, their claims–by which they justify what they do. We see inside the professional black box.
– John Flood, Professor of Law and Sociology, University of Westminster, London

Robert Rosen and "Lawyers in Corporate Decisionmaking"

Research Does Have Impact

(thanks to Northern Arizona University)

The Legal Services Board has today published a paper published a consultation paper on its diversity priorities. The paper sets out its case thus:

This paper discusses our policy proposals in relation to increasing diversity and social mobility at all levels of the legal services workforce. It focuses on the role of providers (firms and chambers) and approved regulators in this process, and does not  directly address the separate but related issues of:

ensuring access to legal services for diverse groups of consumers the potential for reforms to the existing framework for legal education and training, which could create additional opportunities to open a career in legal services to the widest possible pool of talent.

What I find cheering about this is that it is based on the recommendations made by my colleagues' recent research on diversity. It's great to see a regulator taking care to make evidence-based decisions.

The consultation is open to 9 March 2011 and all responses are welcomed.

Research Does Have Impact

65th session of Philosophical Foundations of Law and Finance (Friday 10 Dec, 6-8pm, Room 5.16, 309 Regent Street, University of Westminster)

Dear all,

this session of the Philosophical Foundations of Law and Finance promises to be attractive for all of you who are interested or even curious about the hiring experience with an investment bank. We will be graced from 7-8PM by the presence of our special guest Patrizia Cozzoli, CFO of Barclays Capital and the person in charge of hiring. During this time Patrizia will guide us through the bank’s procedure, policies, expectations and most importantly hints regarding hiring prospective employers and interns. We highly recommend participation in this Friday’s session as one of those rare occasions where you can meet the person who really matters. 

Before the arrival of Patrizia, from 6-7PM, the subject of our talks will be "Why Law and Finance are Social Experiments Gone Wild?". We will read and comment on the New York Times article To Test Housing Program, Some Are Denied Aid, (http://www.nytimes.com/2010/12/09/nyregion/09placebo.html?_r=1&sudsredirect=true)  drawing analogies to financial product experiments in the real world. Joe will also take up Professor John Flood's ideas of "legal profession" versus "legal processes" presented at the Legal Theory seminar at the University of Westminster, School of Law, and apply the distinction to "financial profession" versus "financial practices." He will advocate the need for a fundamental theory which enlightens us on the continual discovery of "humanity" versus "machinery" in our human-to-human communications.

Best regards,

Rezi & Joe

65th session of Philosophical Foundations of Law and Finance (Friday 10 Dec, 6-8pm, Room 5.16, 309 Regent Street, University of Westminster)

The Changing Face of Legal Process Outsourcing

(thanks to xsquare2)

The biggest media company in the world, Thomson Reuters, has bought the legal process outsourcer, Pangea3.

Jordan Furlong analyses the deal very carefully and demonstrates that this deal has the capability of changing the nature of the legal services market. (H/T to Peter Lederer) Is this to be the law firm of the future?

What astonished me is the list of firms contained within the Thomson Reuters stable. Jordan lays them out as follows:

• WestLaw: Legal research, legislative and case law resources
• West KM: Knowledge management services for lawyers
• ProLaw: Law practice management software
• Serengeti: Legal task management and workflow systems
• Elite: Financial and practice management systems
• FindLaw: Website development and online marketing
• Hubbard One: Business development technology and solutions
• Hildebrandt Baker Robbins: Law firm management and technology consulting
• GRC Division: Governance, risk and compliance services
• IP Services: Patent research and analysis, trademark research and protection
• TrustLaw: Global hub for pro bono legal work
• BAR-BRI: Bar training course
  
• Pangea3: Legal process outsourcing services

No law firm can match the range of services on offer here, especially if they are combined in synergistic ways. And it comes close to my idea of Google becoming a law firm...sorry supplier of legal services. Who is going to match it?

One interesting aspect is that this could be the end of legal process outsourcing. Does that sound a little bizarre? Yes but what I mean is that LPOs have shown the way. Now they will become become components in the giant consulting firms--part of the service delivery chain, rather than being the service deliverer. Pure LPOs have served their purpose. A short but sweet life. It's their processes that are valuable not necessarily the companies themselves.

This then puts the new mega-LPOs on a different level and on a global level firms like Thomson Reuters are going to be hard to beat on price and quality. Watch out law firms....

PS. Disclaimer: I recently gave a talk for Hildebrandt Baker Robbins in London. Number 8 in the list.


PPS. The ABA Commission on Ethics 20/20 has now issued a discussion document on outsourcing.

The Changing Face of Legal Process Outsourcing

More on the Proposed Legal Education Review

(thanks to blog.attorneycredits.com)

Look what happens when you google legal education--Tony Soprano pops up! What are we coming to?

Following on from my previous post, there have been some interesting contributions around the blogosphere worth reading.

Richard Moorhead at Lawyer Watch warns us that there is very little evidence around and we are going to need proper research for this review to work. Amen to that.

Stephen Mayson in his paper--with which I agree in part--argues for removing the training contract. Why not? It's really a form of indentured servitude that lets the legal profession get recruits on the cheap and erects a barrier to entry.

And Charon QC has more links on this. It's going to run and run. And I have a feeling that it's not going to turn out the way the legal profession thinks it will. At some point the Law Society and the Bar Council will have to wake up to the fact they are not the only players in the game now--bit of a rude shock though.

More on the Proposed Legal Education Review

Legal Regulators To Investigate Legal Education and Training--So What?

(thanks to starpulse.com)

Legal Futures reports that the three main legal regulators--Solicitors Regulation Authority, Bar Standards Board, ILEX Professional Standards--are to "review" legal education and training. The aim is to calibrate legal education against the objectives in the Legal Services Act.

All in all, a laudable initiative.

I just wish that was all there was to it. I recently went to a symposium on the teaching of legal ethics in the UK where a disturbing subtext ran throughout. It is that law schools are producing too many law graduates for the legal services market. Both the Law Society and the Bar Council have been assiduously promoting this view.

Let me state my position: it's pernicious. The reasoning isn't difficult. In a variety of ways the legal profession has desperately clung to the idea of enforced closure as a way of maintaining its privileges. These having come under attack, rightly so, through the LSA and the enlightened oversight of the Legal Services Board, are no longer sustainable.

So, who else can be assigned the blame for the woes of the profession? The law schools are next on the list.

Law schools are on the whole part of the university system and have a range of values and ideals to pursue. But they aren't the servants of the legal profession. That is only one of their stakeholders.

In fact if the legal profession and its bodies engaged more fully with the academy we could have a real dialogue instead of one based on "evidence-lite soundbites" by profession leaders. The UK legal profession falls behind the US in this regard.

The academy doesn't produce too many graduates: the market isn't sufficiently liberalized to take them. Despite that, I think the regulators' review has the potential to engage all those concerned in legal education and the profession in a serious, thoroughgoing, rational investigation and debate.

At least I hope so.

Legal Regulators To Investigate Legal Education and Training--So What?