Law Firms, Ethics, and Equity Capital: A Conversation

The correspondence collected here represents an effort to start a conversation. Pending legislation in the United Kingdom, based on what is known as the Clementi Report, would permit non-lawyer equity investment in law firms, subject to regulatory oversight. In other words, UK law firms could become publicly-traded businesses. This legislation has been proposed as part of reforms heralded as improving the delivery of legal services to consumers. By contrast, such investment in law firms is forbidden by ethical rules in the United States. What will happen when the two countries with the most dominant global law firms begin to move along such different paths? Australia already allows such investment, but the prospect of major UK firms raising capital in the equity markets has the potential to produce seismic shifts in the global market for legal services. It also could have far-reaching implications for the legal profession that we can only dimly anticipate. Until now, there has been remarkably little discussion -- especially in the United States -- about the possible effects of the UK legislation. This paper attempts to redress that situation. It consists of an exchange among Bruce MacEwen, an expert on law firm economics and editor of the on-line publication Adam Smith, Esq.; Mitt Regan, a Professor at Georgetown University Law Center, an expert on the legal profession; and Larry Ribstein, a Professor at the University of Illinois College of Law, an expert on partnership law

2013 Report on the State of the Legal Market

As we enter 2013, the legal market continues in the fifth year of an unprecedented economic downturn that began in the third quarter of 2008. At this point, it is becoming increasingly apparent that the market for legal services in the United States and throughout the world has changed in fundamental ways and that, even as we work our way out of the economic doldrums, the practice of law going forward is likely to be starkly different than in the pre-2008 period. The challenge for lawyers and law firms is to understand the ways in which the legal market has shifted and to adjust their own strategies, expectations, and ways of working to conform to the new market realities. While there is certainly evidence that some firms and lawyers have begun to make these adjustments, many others seem to be in denial, believing (or perhaps hoping) that the world will go back to normal as soon as demand for legal services begins to grow again. Legend has it that in 1519, when he and his cohort of some 500 soldiers and 100 sailors landed on the shores of the Yucatan intent on conquering the large and powerful Aztec empire, Spanish conquistador Hernando Cortez promptly ordered his men to burn the ships. Cortez knew that, unless more tempting alternatives were removed, it would be difficult to motivate his men to take on an empire with a large army that had been in power for more than six centuries. Hence, his bold and decisive order. The legal market today is an increasingly difficult and challenging environment, one that calls for clear thinking, strategic focus, and flexibility in addressing rapidly changing realities. To an unfortunate extent, however, many lawyers and law firms seem stuck in old models–traditional ways of thinking about law firm economics and structure, legal work processes, talent management, and client relationships–that are no longer well suited to the market environment in which they compete. Perhaps it\u27s time for us, like Cortez, to burn the ships–to force ourselves to think outside our traditional models and, however uncomfortable it might be, to imagine new and creative ways to deliver legal services more efficiently and build more sustainable models of law firm practice. This report describes the trends that have been observed in the legal market in 2012, exploring the longer term implications of those trends for the future, and suggesting some ways in which lawyers and law firms can better position themselves to deal with new emerging market realities

Law School, Debt, and Discrimination

Law school is more than a professional training ground. Our graduates play a special and privileged role in the nation’s politics and culture. They know—or should know—the language of the law, the vehicle broadly capable of moving society from where it is to where it aspires to be, and ideally aimed at achieving justice in the case of individuals wronged by the state, a neighbor, or simple bad luck. This special role for lawyers adds significance to questions of who goes to law school and what law students do after they graduate. Law graduates’ career decisions have practical effects on access to justice; for example, new lawyers may choose to serve, or not to serve, poor, historically subordinated communities. Decisions about careers also link access to justice to student financing of law school. The more law students must borrow to pay for their education, the more pressure they are under to pursue higher-paying jobs to manage repayment. While empirical evidence of the impact of indebtedness on decision-making is scarce, the data we do have suggests that more borrowing for law school correlates with a lower likelihood of seeking a career devoted to the public interest. The correlation makes sense, because public interest careers tend to pay less. The more students must pay for law school, the more likely it is that they will seek more lucrative careers

Legal Profession

During 1967, the California courts made decisions dealing with admission to the bar, discipline, the statute of limitations in legal malpractice, and just compensation. The legislature also affected the legal profession by expanding the power of local government to employ private counsel, by changing the rules governing admission of out-of-state attorneys to the bar, and by changing certain fee provisions. The California Supreme Court decided several important bar admission cases. In Hallinan v. Committee of Bar Examiners and March v. Committee of Bar Examiners, the Committee of Bar Examiners made value judgments and, in effect, by refusing certification, attempted to punish past conduct of the applicants

Legal Profession

Covers cases on disciplinary actions related to contingent fee contracts in divorce actions

Implicit Bias and the Legal Profession\u27s Diversity Crisis : A Call for Self-Reflection

Racial and gender disparities persist in the legal profession. A 2013 study commissioned by Microsoft revealed that the diversity gap in the U.S. legal profession has worsened, lagging behind other professions. While many efforts have been undertaken, diversity remains elusive. One reason the diversity efforts have been unsuccessful may be due to a lack of focus on a key reason for the persistent disparities—the “reforms are unlikely to stick until people understand how race actually operates in the brain. The goal of this article is to apply social science insights to understand and address the diversity “crisis.” Social science studies demonstrate that the continued underrepresentation of women and minorities in the legal profession is unlikely due predominately to explicit or “first generation bias,” which involves “deliberate exclusion or subordination directed at identifiable members of disfavored groups Rather, this bias has been supplanted by “second generation” forms of bias, which are attributable to implicit bias