language. >> you can watch this and other programs online at booktv.org. now on that book tv, steven harper -- stephen harper, adjunct professor argues that the law profession is in need of reform. mr. harper argues that there is an over abundance of lawyers and reports that, according to estimates by the bureau of labor statistics, 45,000 law students graduate each year, and 73,600 legal jobs will be created this decade. this is about an hour. >> it turns out that lawyers -- by the way, what i am going to do is talk from between yourself minutes. i'll stop center if you start nodding off, and then what i hope happens is that fairly soon
into might comments you will start thinking about things that will cause you to have a question to or may be challenged things that i have to say. that is perfectly fine. as a lot more interesting to me than to hear my own voice. turns out that lawyers leave a lot of contests that no one wants to win. we are among the most clinically depressed profession. we lead in categories like substance abuse and alcoholism and end distress generally. and when you say that to people, when i say that to people it generates some interesting responses. one response i get is, good. you deserve it. and then the next thing you know i am hearing the modern-day version of shakespeare's line in henry the sixth, the first thing we do, let's kill all the lawyers, and we just go from
there. well, the second response that i sometimes get when i tell people these, you know, really unfortunate facts about lawyers and their psychological state is the analyst stream -- endless stream of lawyer jokes. of course. abcaeight ut lawyer is about to light? well, his lips of moving. why is it that sharks never by lawyers? professional courtesy. or the interview that the corporate board has for the next ceo and it is an accountant, a business person, and a lawyer who won the final three candid it's. they get three to them individually, the board interviews each of them individually and as the accountants the last question, how much is two plus two. the captain says, for. they ask the business person. they get through the same regiment of questions. how much is two plus two?
the business person says for. and then, of course, they come to the lawyer who is the last canada for the job. how much is two plus two? the lawyer stands up, walks around, draws the blinds condemns the lights and says, how much do you wanted to be? and then there is the third category of response that has to do with a very personal reaction to it, and those are lawyers to say, yeah, you know what to buy one of those people or maybe a spouse is one of those people or maybe even worse, an adult child is one of those people. and when it gets personal : a psychological distress -- distressed its personal, then we care. i would suggest to you that we ought to care center than that command the reason we ought to care center than that and one of the reasons, as we will discuss when i get to some other reasons
that i wrote the book is that what has happened in the legal profession over last 25 years is that, it's a slice of what is wrong with america. it is a slice of what has happened throughout our culture. let me tell you what i mean by that, and that i will tell you what led me to write the book and give you a sense of the guts of it. we, as a culture, have developed an obsession with short-term thinking. that is the first-ever in the problem. what matters is today's stock price. what matters is the current year's profits. what matters, as you will talk about, if you're a law school dean, is this year's u.s. news and world report moscow ranking. we are obsessed -- and it is not unique to the legal profession at all. as you read the lawyer bubble listen to what i have to say and think about things that happen in your own careers and a year
or occupations and in your own lives you will parlay find yourself nodding along. yes. that rings true. there is a preoccupation with short-term is and that is, unfortunately, crowding out things that matter in the long term. the second to -- what follows from that is the second problem, and that is what we have developed as a culture as a society, a focus, a myopic focus on a short term metric that maximizes the result. so one of the metrics, what can i measure that will allow me to determine that i am on the right path to maximizing whatever the short-term result is. but the problem, i again commend this least of their problem, the problem again is that what you wind up doing when you do that is you exclude things that matter. what you cannot measure gets lost in the equation. but just because you cannot measure it does not mean that it is not important. what is the metric? tell me what the metric is for
the collegiality of an institution? whether it is a law for more hospital or medical practice or an institution of higher education. what is the metric that allows you to assess something like the long-term stability of an institution? that is sort of a global problem, so the question is, what does that have to do with this book and how did the book, about and what, if anything, does the book have to say? and noticed that the feeling is raining of my chair. but not on the books. it is okay. [inaudible] >> we will come to that. it will come to that. i wrote the book -- and let me do a couple of things. let me tell you what led me to write the book because what i just describes you as a phenomenon that will echo as i go through some of these specific things that emerge as part of what i think ails the legal profession as a microcosm of a much broader social problem
and the one thing you will notice as i go through is that the failure to take into account longer term values, longer term considerations, things that matter beyond this year's current profits or this year's current ranking with this year's whenever, the people who are going to feel and are already feeling the worst effects of that are the next generation. and there is an irony in that because every time you hear about a mile, we are doing these terrible things to the next generation, the fact is, we are doing terrible things, but what is happening as a result of this myopia that focuses on short term at the expense of long-term is wreaking true havoc on the next generation, and there is an intergenerational anti-terrorism that pervades all this bill will come through loud and clear, and you will see what i mean as we talk about the two major sections of the book. i started to write this book because the current provost at northwestern was then dean of
the college of arts and sciences, a good friend, he came up to one day and said, why don't you do a linkage seminar for our undergraduates. i had been teaching at the loss keep -- law school of trial practice for many years. skills oriented class, not anything that was sort of lucy deasy humanities touchy-feely stuff. i said, well, the linkage seminar sounds interesting. it was the sort of thing that was designed to bring practicing, real people as opposed to, i guess, academics into the classroom and then give students a concrete way to think about their own lives in the context of things that than i want to do for a living. a lawyer was a natural thing. lots of undergraduates, pre lot is one of the most popular undergraduate majors in the country. has been for a long time, and it still is. and i said, well, that is fine, bubble would i teach. and he said, perhaps i have not asked him, but to his great
regret, whenever you want to. so i had been puzzling about the problems of attorneys psychological distress for about eight or ten years prior to that the mandela said the qualify this by saying, i am the exception. six out of ten lawyers who have been practicing with engineers affirmatively counsel young people to stay away from moscow. they say stay away. six out of ten, which is a terrible, terrible reflection, i think, on the profession. but i am one of the four. i had a great career in the law, provided, and so i come at all of this month very positive perspective and a very positive place. and so i said, okay. i had been worried and concerned about what i perceive myself of the primary auction years as this increasing difficulty among many lawyers to maintain balance, to be able to live lives that allowed them to, for
example, see their kids at night for dinner, to be allowed to do what i did, which was cudgel of mike kinsley in gross up of teams. and those things are difficult when i was coming up through the big firm that i want spending 30 years at. today i think there probably -- they may be impossible in most places. so i decided that one of the reasons -- one of the things that contributed to attorney at happiness was a disconnect between expectations and reality people rob thinking that being a lawyer means they're going to be a cliche floridian epic to the episode of the good life. do the wedding cross-examination at the end of the episode, when the case for the big client, become an equity partner after only four years, by the way it turns out. then go home to their kids. but the philandering husband to one side. or pick another one. law-and-order. the characters of law and order
or even go back further in time, the iconic attica's fans in to kill a mockingbird. all of these images go to frame what people think as young people think being a lawyer will turn out to be. in fact, one third of people who decide to go to law school make that decision before the era of high-school. another one-third make that decision before they have completed their sophomore years of college. there is another third who, i think, many of them wind up going to law school because it is a default solution because they cannot figure out what to do next. in the last batch of a liberal arts major hit is not know what to do next. for a long long time. but as a result of that all of them have a certain expectation about what being a lawyer is going to be. and the reality, it turns out, is dramatically different from that. and when you have that kind of disconnect between expectations and reality, it is a prescription for, i think, career dissatisfaction.
have students understand what it meant to be a lawyer and what the challenges of being a lawyer work and what the real life of being a lawyer was like, and it started, part one of the book, with law schools. part of the problem of law schools has become, again, going back to the short-term thinking that i mentioned earlier, the myopia that has afflicted law school deans who have truly guided their institutions according to the methodology of the u.s. news and world report rankings. it is an ironic turn of events because in 1987 the rankings did not exist. the first time that the u.s. is world report came out of law school rankings was in 1987. they rank the top 20 schools and people went, and. by 1997 there were of sufficient power the 160 of the one under 79 law schools wrote an open letter to all prospective students sang the methodology is so bad.
please do not let them -- don't let the rankings are unduly influence your judgment, which, it turns out, was advice easier for them to give them to take because i will give you an example. what wound up happening is in the drive to increase this year's u.s. news ranking, law schools have begun teaching to the test. it is not just happening in law schools. it is happening everywhere. what does that mean? would give you an example. if you went to years ago and asked the overall employment rate for new graduates coming of law school, the number you would it was somewhere around 92, 93, 94%. that was pretty good. 2008, nine, you're in the middle of a recession, looking at unemployment rate for an entire profession. this is all law schools. '93, '94, 95 percent. , boy, that looks pretty
good and is what you would have found on most hostile websites. what you would not have found anywhere was what the definition of employment. it included part-time jobs. it included short-term jobs. it included people who were waiting tables with law degrees. it included people who were burry says that coffeeshops. it included people who were babysitters. if you were employed, that is what employment. so feeding right into the confirmation buyers of these students to think that law is a great career with all of these wonderful things taught behavior of genes that is essentially telling them, you're going to get a job here. we will was the true number? the actual number, last year the aba's requiring law schools to fess up to the stuff. the actual number, turning out twice as many lawyers as there are jobs for them every year.
a graduate of 46,000 lawyers last year. there were full-time, long-term jobs that required a legal degree for 56 percent of them. and the projections from the department of labor is that that will continue doubling of lawyers to available jobs will continue at least through the end of this decade, 2020. so, what are you supposed to do? so, i'll give you another example from law schools. one of the criteria for u.s. news and world report and apology purposes is expenditures per student. the more money you spend the better you are ranked. are there any brakes on tuition? tuition has quadrupled in law schools since 1985. it has not done that in any other institutions of higher education. has doubled in the last ten years, and it has doubled because there is no check on it, and there is no check on it because the money to fund the
tuition that causes teens, that allows teams to continue to spend more and more and more money comes directly from federally insured loans which are as easy to get as a signature. but here is the head, here's the catch. if you're a student and take out a federally insured loan, and right now 85 percent of new graduates are leaving law school with more than $100,000 of educational debt, that is a home mortgage without a house, you think, well, what are you going to do with that? the answer is to me you're going to die with it because he cannot carry that a bankruptcy which puts it in the same category as alimony, child support, and certain criminal fines and penalties. so you wonder where this is all landing, and the answer is, it is lending them the next generation of people who, as they try to let think in their 40's, when they're in their 40's about how they're going to send their own kids to college, there will still be in the position of trying to pay off their loans to mom's.
so, that is sort of the a sense of the problem that you have at the level of law schools, and what happens in the kinds of problems that you get into when there is no financial accountability that in a way that allows teams to maximize short-term metric. from member, the key is the u.s. news rankings. the key is to keep filling up your own law school seats. so, even as the demand for lawyers to shock, the supply of lawyers has continued to grow. there are a dozen law schools that open the last ten years, and a dozen more on line waiting to open in the next five. and what are they going to do? could question. "well, some of them -- 10 percent of them will wind up working in what is part two of my book, which is the nation's biggest law firm. there the problem, a similar one, focusing on short-term thinking. and this is not @booktv the
reason i focus on that piece of the profession is twofold. i spent 30 years there, so i know a pest to come aid is at least supposed to be the pinnacle of the profession. it is supposed to be the guiding lights that shows all of the rest of the profession. what has happened at the largest law firms, the in l.j. 250 or the m lot 200, picture category. you're going to pick up the same firms, the same kind of phenomenon, although the analog there is to the u.s. news and world report ranking, something called the am law 100 or 200. in 1985 the american way started drinking law firms, and then rent them according to growth, size, and profit. all the sudden things that were not topics of discussion and polite company, like how much of the people made, became open and
available for everyone to see. and what has happened as a result is law firms have coriente themselves, and a half to qualify this by saying that not all law firms are like. there are differences among them, and there are exceptions to the rules that i am going to be describing, but in general, the prevailing model of the big law firm today, the ones you read about as doing all of the most important stuff, and they do import stuff, it's focused on a short term metric. in the short term metric is profits for partners. profits for partners this year. and so what does that mean? well, what that means is if you're a partner in the law firm, your incentive is to or clients so that you can progress for them. your incentive is to do what you can to maximize profits the way you maximize profits is by having as few honors as possible that means you're going to pull up the ladder on the next generation of the wires, and
that happens -- that has been happening. law firms use the metric called leverage. in the 1985 the average, which was the ratio of all lawyers to the number of owners and the firm was just under one and three-quarters. not that much different. now the ratio of all lawyers to the number of donors is three and a half. it has doubled. how do you -- out the -- so, you increase profits by squeezing that metric. you squeeze that matra coupling of the latter on the next generation and allowing fewer people into the club, and you do it by increasing what has become the bane of most lawyers existence, something called the bill of -- the billable hour. it is a straight for phenomenon. lawyers convert their time into money by something called the billable hours. if you can bill the time to a client and jars and your hourly rate, however it is, that is valued.
the problem is, back in the days when i was, for example, a young associate coming up in my firm, nobody talked to me about billable hours. it was not an issue. there was not anything that there is now, which is a mandatory minimum billable hours requirement of in most firms 1900 to 2,000 hours a year, but does not sound like a lot, but in order to do that you have to work 64 weeks and you will be giving of beatings and weekends to do it. some people thrive on that kind of life, and that is fine. i have no problem with that at all. so my best friends had been 27, 48, 29, 3,000 hours, they thrive on them love it. and they were profit centers for my firm. but i think a lot of people would like to have a choice. but the current model does not give them a choice. the current model is maximize
short-term profits and the late to do that is by increasing billable hours, increasing our rates, and increasing leverage. and then there is a further phenomenon that you add to that which has to do with the behavior of the partners themselves to our really trapped in this sort of business model and the behavior. the behavior is essentially you are going to get rewarded based upon the buildings that you control. you will be rewarded based on the revenue and profit they built to bring into the firm which means that the incentive for an individual partner is still up build what i would call us at -- plant silo. and the best way to do that is to keep them away. the result of that, you can begin to see the dominoes as they start to fall. where is the incentive to mentor the next generation that will take over and transition into responsibility for my client? well, what if they let that
person more than an like me? where is the incentive for me to par with any part of my book of business if what i might want to do is move to another law firm and take that book a business with me every damn what you see going on now throughout the profession is staggering and stunning in terms of the lateral movement among the major partners in big law firms, and they are all doing that because in this era where there is very little growth in demand, firms are trying to buy books of business by bringing other partners in. and what is the cost? well, the costs are ultimately institutional stability. the costs are the satisfaction of a career that is enjoyable, satisfaction rates for associates have been heading into the tank the last five years because you're squeezing, you know, the model is squeezing them. and every year for the last five years there has been a spectacular failure of a major law firm.
one of the a.m. loss 50 or 100 were partners are making an average of one and a half million dollars per year, $2 million per year. they disappeared. they disappeared for lots of different races, but the disappeared, i believe, fundamentally because there was flaws in the model and ultimately undermine the stability. where is the incentive to retain the loyalty to an institution that has no loyalty toward you? the attrition rate for young lawyers joining big firms, the 5-year attrition rate is 80%. so if 100 lawyers start, if you start with 100 lawyers, five years led a 20 you would still be around. and maybe five of those people, maybe five years after that will advance to equity partner in their firms. so, that is part two of the book. it is pretty depressing stuff, i guess, is this? but i think it is not unique.
you know, and i think that the elements of it -- i think any of us would look at medicine. you could look at higher education. you could look at -- my wife is an educator. she goes crazy about the teaching to the tests that happens or you're doing this mindless mind numbing testing to determine how many words a kid can read in some amount of time. and that is valued it as a metric, but is it in value to of nothing because the kid has no understanding of what is the their reading. what is the preoccupation, the fixation on short-term thinking and then finding a metric or a set of metrics that allows you to maximize that patrick, the larger metric or whether it is a ranking of profits are something else. i think it is a ubiquitous and universal phenomenon. so where is the ultimate hope is in part three because i actually do think that there are cures and solutions. i will not bore you with the mall now. but i will tell you that in
general i think that the solutions for the legal profession are going to come from two places. it is going to come from clients who look at something as absurd as the billable our model. let me illustrate the absurdity of the billable our model this way. somebody said to you, you know, you look like you need your house painted. here's what i'm going to do. i'm going to pager house. and going to charge you -- well, i'm not sure how much of going to charge you, but i am going to up -- the charge by the hour, and more hours of work, the more it is going to cost you and the moran going to make. how does that sound? deal? you know, and if you couple the, there is a further absurdity, which is the more you push people beyond human endurance in terms of billable hours, the lower the productivity actually becomes. there's a reason the u.s. department of transportation imposes rules and the number of
hours that interstate truckers can drive. if you are working as an over the row driver for 70 hours, that is @booktv and a daytime from, so in nine days, that is approximately eight hours per day, so if you work 70 hours over nine days, you are required by the u.s. departures petition to take a 34 consecutive hours off. well, i will tell you that most people in a big firm would love a leisurely schedule like that. it just does not happen. there's a reason for that, and it has to do with productivity. it has to do with safety. people say, well, yes, but truck drivers can hurt people. i suppose, but if you miss a critical deadline on the supreme court filing, you get a client of price. so, you know, everything is relative, i suppose. but i think -- so i think the change will come from external
forces. s nge from within because the embedded -- the embedded powers are too strong. the incentives and rewards for the people door at the top are to break for them to want to really entertain constructive change. and so what happens to them as they have to learn a lesson the hard way. so like last year, for example, one of the great law firms in the world collapsed in a famous, famous decline. a year before that it was a law firm in washington. then i can find you every year for the last five years. so at some point the employers and happens because of the pressures of the model itself. the of the senate is going to happen, and i come back to where i started, which is the students who really pressured me to write the book, students in my course, never did because frankly i could not find anything that i thought was a kind of balanced and comprehensive treatment of the profession. and it may surprise you to know
that actually, most of my former students still go on to law school. so it is now like am talking about anything. but i think they feel better armed to do it, and the one thing that is coming clear to me from that group and from the experience of now six years of teaching that group, that generation, is that they are taking a really hard look as some of the things that we come my, my generation of baby boomers have done, and they don't like what they see. and so i think increasingly, more and more of them will vote with their feet. does that mean we are approaching the and the big law firms? not a chance. now we approaching the end of days that will continue to maximize law school rankings? not a chance. but is there continuing -- we will there continue to be pressure on the system that causes people to think, maybe we have to do something. law school applications have dropped from 100,005 years ago to 50,000. unfortunately, there are still win more law school applications than there are going to be jobs
for those people. so, i guess i would offer to things to think about, i suppose coming closing. one is, they're both einstein. one is iran is attributed to him because he had written on a blackboard. and what he wrote on his blackboard is the actual author was william bruce cameron, a sociologist. on the blackboard he had written, not everything that counts can be counted, not everything that can be counted counts. so that is sort of what i would look at where we have come over the past 20-25 years, and i hope we are moving in a direction where maybe we will start thinking more seriously about things that we -- the things that we cannot count as counting and then, perhaps, the other comment, and this is i sense, the problems that exist in the
world today cannot be solved by the level of thinking that created them. so with that, hopefully have provoked you to that always that line of instilling are generating a reaction or comment, but not crossing into the world where you want to throw in an object set me. so anybody have a question? comment? reaction to back off? yes? >> talked about -- >> sang on with the -- sorry. he talked about our effort, taking things that cannot be measured and that we should not measure. how about, by extension, there are things that we cannot measure that we still try to measure. we apply what i will call false metrics. i think that happens a lot in the legal profession. >> to you have something in mind? >> may be and how situation where the law department is part of a group of coequal departments and
to justify your budget or never you have to come up with a set of internal metrics. >> yours is making stuff up. >> making stuff up. >> here is the most absurd metric of all. a complete reversal of the concept. law firm management consultants have persuaded law firm leaders that the billable hours should be regarded as a measure of productivity. it is the opposite. the gross amount of time you spend to get something done without regard to the quality of your have done is the opposite a productivity. but -- i mean, i think that is probably right to but that is because we all -- you know, that is part of the superficial appeal of a number. we become lulled into a false sense of comfort that if i can put a number on it, that i don't have story about it. for example, if i need to figure out how to reward a partner and a law firm of my contract
demands a, kutcher numbers. here are your billings. here is your deal. in the story. it is dangerous. i should say, i am not an anarchist. actually have a master's degree in economics, so i understand the importance of day and the importance of data driven answers to questions, but maybe it is also occurs because it also seems pretty clear to me that some of the superficiality of some of the metrics of the type the you're describing are just misleading people in a really profound ways. yes. go ahead. >> i read your book. and i -- it provoked a very vigorous exchange of a friend of mine. and we had an area of agreement which is that law schools need
to be more honest about, you know, job prospects. where we disagree, though, is whether it is an appropriate role for the aba to play in constraining supply a little education to people that would otherwise wanted to give media feel that is inappropriate role? specifically my friends objection was and it basically makes the aba can to some sort of price-fixing cartel. he feels that the medical th our medical costs areama does higher, in part, because there's a shortage of doctors. he worries that maybe that is, yo kw, going to just keep legal costs artificially high. i just wanted to get your thoughts on sort of solution is that a lot of people have proposed which involves sort of constraining the supply of legal education to be below what otherwise wanted, assuming that there are perfectly honest about the disclosures about the real suspects are. >> that is not an easy question because the aba has been sued in the past for failing to accredits law schools.
in the underlying claim was that they were effectively -- it was an antitrust violation of restraint of trade and all lasorda's stuff. my problem with all that is to my don't really understand -- and a lot of the dishonesty in terms of deceptive numbers and the employment data and all the sort of stuff, all of that was happening simply because plus schools were filling out forms exactly the way the a be required to be filled out. so they did not require them to be any more specific. it did not require them to be any more honest. as for the question of legal services, until you figure out a way to connect the cost of a legal education to the behavior of deans who, at this point, really have no incentive to control the costs of visual education, you will always have the problem you have now, which is 85 percent of law school graduates, staggering number, 85 percent of law school graduates with over $100,000 of
educational that, and the median income for the lawyers to get jobs is about $60,000 per year. that is a lot of money, you know, for someone right out of lost love starting a career, but $100,000 in debt is a lot o money. i don't have the answer, although i do not think that the answer is essentially the hands of problem -- solution that the aba has done to this point, which is to -- i mean literally. we are -- the aba accrediting and opening state funded law schools all over the country. i mean, a major austerity it makes your head spin. how the world cannot be happening? i do think there was a way -- and that you have a solution that i offer, and you have read the book, so you know. where allows do is to declare bankruptcy to get out from under their achievements. i think most of them still wouldn't because the state will be pretty tough. i am not sure it would jump the numbers that much, but then when i would also do is allow bankruptcy court to make a
finding that educational debt was a principal factor in the causing of the bankruptcy and at that point allow the federal government, which stands behind all these loans, to go after the university of the law school, and i think if you figure out a way to close that loop and create some accountability between the law school behavior in the financial implications for the students come aid might be a beginning to a solution of the problem. but tell you know, is that contact in this congress to back not in my lifetime. maybe yours. maybe yours. >> if you had talked to cultural factors, may be due in the buck. lasorda's seeing that. a couple come to mind, and this seems like the system is so messed up that it reeks of market failure. why isn't the market correcting this? i mentioned that the solution may come from the clients. and they have been talking about a for a very long time. >> it never happens. >> is a part of the problem of the in-house counseling clients
all come from this world? and so the economic irrational thing for them to do would be to go along with it. we will be to challenges, and yet they don't want to make waves of their former partners. also the one to the question that there are a public company, firing now one of the biggest firms, even though they might think that there is more value to be had at a smaller firm with a different business model, so can you address that? and also, the conservatism of the people who go into the legal profession on the supply side, our lawyers really the kind of people who are going to go out and real alternatives? >> we are really risk averse people. we really are, and we hate debt. we hate that. the -- the issue -- i am not sure it is so much a problem of in-house people having come from law firms so that it is sort of a sweetheart deal kind of arrangement, but i do think that there is something to the notion that lawyers become comparable with a certain regime, and they have really become comfortable, i think, with hourly billing. you know what you're going to
get. you can look at -- you can call up and complain about something that may be was an hour or too high or an hour too low, and this is the most common thing to happen now, you can say, i am not going to pay your full rate. will the page -- give me a discount. i am not going to pay for your first year associates. that is the other big thing. so it is all tinkering at the margins, and other related to the core problem. and it is sort of ironic in a way because the whole billable or regime itself is relatively new. came about because back in the 1970's a client typically get a bill that said in one line for services rendered. $100,000. that was it. so one of the reasons the billable hours -- the billable hours invoice can about was clients that cannot tell me what you people doing to make this money. i would like to know. well, some clients say that looks like a pretty good deal. not going to worry about it. so now what has happened as a result is that it is completely
turned on its head. so as a matter of the firm's internal decision making dynamics, the billable hour has taken on a different kind of life of its own. not know what the solution is. i do know that increasingly big corporations are trying to find ways to go to a fixed fee arrangements, trying to go to the different kinds of competitive bidding. i don't really think any of that is going to lead to much in the way of change, and i really think that the most unfortunate part about that is, even if it did, law firms would still retain all of their internal billable hours off for. so the associates inside these places are still going to have to account for their time. all of those same interests are still going to be in place, and if anything could become more difficult, if you are in a fixed fee situation, for example with a client and you are an associate and you say, oh, dear, i might be spending too much time on this. i will wind blowing my partners
budget. a better ease some of this time. i am not quite the village. so i think there is something just insidious about the whole thing. i don't have a really good suggestion, although i do have a number of things that i think would help in different ways. for example, if i were client would want to know if a lawyer working for me was in his third or fourth or fifth consecutive year of billing 25 or 2600 hours per year. i might be fine with it, but i want to know. and the reason i want to know is because all the studies on productivity and everything else might lead you to say, you know, mr. parker, i think this person who is working this kind of clip, and i am not talking but emergencies. every lawyer has done with emergencies and there's nothing to do about that. the sunday working at that kind of click, you might have a conversation that would go something like this, i am not
sure that our number 2,852 in your four is as valuable or that i should pay as much as our number 1,426 in the same year. seems to me there is a falloff that i should be entitled to get as a credit, you know, productivity credit. that's collar productivity credit. but i don't know. you know, there are lots of things like that. the other thing i would do as a matter of internal incentives, but these other things that are not going to happen. aspirational in the sense that some of my students, some number of years from now, that is other want to form their own firm. maybe they can use of these things to do it, although a lot of firms do some of these things now. but another thing is to my would say, above a certain number of hours, whether that is, you're not going to get -- there is no more money in it for you. is it is -- if we're talking about associates. 2200 hours or ever the numbers you want to sit, if you want to
work the heart of a nest terrific and you can. if you love what you do and are immersed in it and cannot envision anything else to many other way you'd rather spend your time, you're free to do that to but as a matter of the culture of this place, you're not going to get another dollar out of me. at what cost a cut partner's money. >> from one perspective he said -- has said to very often, says the law firms are different now than they were, and with some big law firms, whether for agree are misjudging the market, some died. and therefore darwinian, the ones you don't make those kind of bad choices might end of surviving. so the profession might actually be different in one or two generations. likewise, for the supply, more people going to law school, where they learn the rules of presumably learning ethics and the foundation of our
cons of like the potato famine about the people who had that good training to go into lots of other professions. >> yes. i would take the second first because that has become a favorite dean . law school dean line to persuade people, hey, hey, hey don't worry about the employment numbers. just because you cannot get its other cars a law degree does not mean there are a lot of really get things that you can do with a law degree. that is true. but that is not quite the same as saying, spend $150,000 on his law degree and then just find something else that you really want to do. i mean, my thought that would be, what do you find something that you really want to do first and save yourself hundred 50 grand. under first point i agree with you completely and think there was something refer to "creative destruction. and i think we are in a process in the legal profession right now in a number of different ways, may be very early in the
process of a kind of creative destruction. you're seeing it in the implosion of some of these big firms. you're seeing it with -- i mean, law school deans, many law school deans and a steadily are running around as if there was on fire because it is. they're really concerned about applications. they're concerned about having enough -- on not talking about the top schools, places like northwestern or anything like that, but we have 200 -- 200 accredited law schools in this country. there are about 50 of them that are going to have a very difficult time, not filling that the seats, filling of the seats with people who are really qualified to do the work. so i do believe -- and it is a source of optimism for me at that kind of creative destruction is going to create tremendous opportunities, and that is what -- that is sort of the white -- that is the optimistic note that i try to leave many of my students with, which is that they're going to have decisions to make and options that i cannot even envision what they may be, but
in one of my favorite lines, figure out a way to control your own life, or someone else will happily do that for you. >> do you think the implosion of some of these large firms, though, teaches the right lesson to the right people? because from the outsider, you're like amok, it's gone. what a terrible thing. even though he was this massive creation of several other entities. but the vast majority of those folks are moving on and moving to other places. >> we learn nothing. >> to learn nothing. your exact right. all of -- you know, the people with their silos a business move to another place with their silo . and it is sort of -- what if it was a karl marx history repeats itself verses commonly. i don't know what it is when you
get to tie number three and four and five. but i think it is a real problem. here's the way the process works. if you -- i can guarantee you that this is true. if you are a senior partner in a big law firm at the time of one of these large firms failed, one of the things he did immediately was you would say to yourself, all right. just like it when it failed. you don't do that and we don't do that, we don't do that. we don't do that. lawyers are masterful at something called distinguishing adverse president. we all labor from confirmation by s. we are burdened with it. and then they move on. and, boy, was that ever stupid, what they did. and their eyes are on the wrong balls because the underlying -- the underlying -- the prevailing underlying trends are there for all of them or at least an awful lot of them, an awful lot of them. and you will see. abbey, sometime in the next 18
months i was not pretty to they are, but sometime in the next 18 months there will be another spectacular failure of the big firm. >> how would you compare your motives in going to law school with your students modest? >> i was just like that. you know, i -- i mean, i was really lucky. i grew up watching perry mason with my dad, and i thought that his lawyers did. back in those days it was perry mason and sam benedict. i don't remember all the other ones, but atticas' fence, you know. i thought that his lawyers did. they did great, noble things. and they do great and noble things. this is not by any means a profession bashing exercise for me. it is actually the opposite. it is an effort to try to remind people about the ability of the profession and what it was and what it can be and what should be. but i got lucky, and here's how. for me i did not have the
disconnect. added not have the dissidents between expectations and reality so i went to law school thinking that lawyers did was went to court and try cases. well, lo and behold as a second your associate at a big law firm , i was a first chair trial lawyer in front of the jury in federal court in chicago. this is what lawyers do. it was a remarkable opportunity. six months later i had another one. i was lucky. was really, really lucky. those are rare things then. now they're really -- now there million common. but my career followed, you know -- no job is perfect and they're is a reason the college work. but by and large i did not have the disconnect between expectations and reality, and i will also say, i came up through the big firm. my big firm when i joined it, i was about the 150th lawyer. now my firm has 1500 lawyers. so the big firm had a whole different meaning than from what
it does now. and that -- and you had a different sense of the culture, a different sense of collegiality perry's of their best friends i have of the world i form of my firm when i was a young associate in the firm. and so it -- the model was not as harsh. so, as i said, no one talked to me about billable hours, even in the 90's when i was chairing the assess the review committee of the firm, the subject of billable hours only came up into waste. it came up if someone was extraordinarily high in the committee meetings and at that point the discussion will be along the lines of, you know, this person, if there any good that will burn themselves out and someone to talk to them. as a conversation that i am confident does not happen today. the other end of the extreme would be someone who was very, very low and hours, and the conversation was, is there some sense of concern about the quality of the work that that person does that is somehow
preventing other people from wanting to use them on things? but other than that, it's just did not come up. it's just not come up every their is a pamphlet. 1958, and they issued a pamphlet to lawyers helping them -- suggesting that they could be better businessmen and one thing they could do to be better businessmen would be to keep track of their time. and it recommended that lawyers should strive to bell 1300 hours per year. that would not even be part time of partner track in a bid from today. but, you know, people who lebron that regime in the 70's, they were not that low, but you did not -- it just wasn't a driving force in the conversation. so i was lucky. anybody else to back. >> you mentioned that you had kids, and i was just curious, you know, what career path you would recommend to your own kids? >> i'll be delighted to talk
about my kids. not as a lawyer, for which i kind of irresponsibility a credit. my oldest son is finishing up his ph.d. in education at george washington university. he is married and has two kids. my second son after graduating from college formed a band pretty is a singer-songwriter in los angeles. and my daughter is an aspiring writer. most recently she was working as an it -- as an editorial assistant at the stanford university press. all following different dreams. in the else? >> i was just want ask you if you have any thoughts about the increasing involvement of the insurance industry in certain areas of litigation, i.e., when i first of a practicing of the all the rest of the insurance companies recovering were poor risks, so you have the
insurance. right now increasingly insurance covering all sorts of other risks and there for the insurance industry and its plans people and/or in-house lawyers are having an effect on the rates and such. wonder if you have any thoughts about that. >> well, not in particular although it does sort of -- it sounds a little bit like -- it sounds a little bit like an evolving into the world that some medical practitioners complain about which is that they have an accountability to nonmedical bean counters who in very important ways are telling them not practice. it is an unfortunate -- i think it is the force at a loss of autonomy when that happens, but i don't have any particular insights on an otherwise. yes. >> steve, you mentioned the baby boomer generation. >> we are terrible. [laughter] >> well, on that point to monday
think it -- you know, the baby boomers just happen to be there now and this is happening or do you think it is part -- you know, the baby boomers have the numbers and they are asserting their dominance? >> that is a really good question. what is it that causes baby boomers to misbehave is probably another way that i could put that question. i think -- i will tell you, this is just a personal theory of my own. if you ask any of my fellow law students in the late 70's whether any of them thought they would get rich by becoming a lawyer, none of them will have said yes. i know anybody who will have said yes. in 1985 even when the american lawyer for striking scan not commit the average equity partner in a big law firm made $300,000 per year. as a lot of money by any standard. and in today's dollars it is about 6205, something like that.
well, the average for that same group of the end lot 50 is now million six. and so i think what happened a little bit, and i don't want to indict the entire -- i don't want to indict all of me because it would not be fair, and it would not be right, but i do think that there's a sense in which there are people in many of these firms to have been able to obtain positions of power and influence and have come to believe their own press releases . and they really think that they're worth it. and i think that it is easy to forget. i mean, it is easy to forget that when you work 24, 25 years old and a law student and if you ever thought that you would make $100,000 per year and now someone is telling you will make 5 million, well, after a while you get used to lift a might think. and so once you get used to it and into it to my thinking can is what the fed. and once agreed becomes
respectable, and i think that is what has really happened. i think that is the fundamental problem with metrics like these, it has made greed respectable. not that people are that much different from what they would be anyway, but i think it just gives them cover, and allows them, you know, in the way that the dean said you should not let u.s. news metric died your judgments, it allows them to cease independent thought. i'll have to think drug problem. all have to exercise independent judgment. all have to do is figure out how i can maximizes metric because everybody in my firm must be to maximize this metric because when i get to the next board meeting everyone wants to hear that next year's earnings are going to be bigger than this year's earnings. and so i think you sort of get caught up in it. and i think everyone is venal or mean. do not think it beans are meal or been. some are. some senior partners in some law firms are, but did not think
that all those are. i tend to think the best people, but think it is easy to get caught in the systems, particularly if you getsufficiey and look,ind of give it a hard look. but that is just a personal terry a mile. [inaudible question] >> one last question. anybody have one last question? >> do the courts in the broader legal system play a role in terms of the out of control litigation? am sure there are other areas of the loss of one can point to. that system necessitates a certain degree of scale or make legal work less predictable in ways that drive the billable hours, for example. >> well, two things about that. courts have done -- courts have really been eight years and the batter is too the embedding of the billable hours system. most recently there was a supreme court opinion that essentially said -- this was
about two years ago. if you want to make sure your fee petition gets approved you better use of billable hours to do it. don't give me this creative alternative billing rates as tough. the u.s. supreme court. five to four. you configure and who voted which way. the second part, though, isres s even more insidious, and that is -- and this is a particular specialized pocket of law. you know, the bankruptcy area where, for ever really certainly in the last 20 years, courts have really given big firms in particular a free pass on the hourly rates they charge in bankruptcy petitions. you know, animal casey have declined. have to submit your bill to a client and in the client and say, well, okay. give me a break here. give me a break there. there is a negotiation, at least eight direct accountability, but in a bankruptcy case once somebody files bankruptcy the court takes control of
everything, including payment to the lawyers. well, courts are not particularly well-equipped to second-guess the petitions. there is a report last year of a big firm in new york in connection with al-amin bankruptcy and over $400 million in legal fees. well, you can say, well, that is a big number. you're staring with a big number, that is not the scary number. the scary numbers that 40 of the lawyers in the firm charged over $1,000 in our on their fee petitions. a free pass. a free pass. u.s. trustee directly has oversight. i am not have the resources to deal with it. judges directly at oversight. it'll have the timer resources to second-guess. so there is a problem there. and it the u.s. trustee's office and sometimes congress is nibbling around.
required disclosures. for last year there was a request, u.s. trustee's office wanted law firms to disclose whether the race that they charged in bankruptcy cases were higher for the same lawyer and the rates they charged in on big rig to cases. well, the bankruptcy bar united in opposition and said, that will be terrible. breaching confidentiality. that is the last layer of it. so their pockets, big pockets. that is one in particular that ask us in the book. that is it to my guess. thank you all for coming. [applause] >> for more information visit the of his website. [inaudible conversations]
>> so truth for so many years. >> i put him and because i read over. it is not that i had any personal. i didn't. and the st., i did not do it out of, i know him. it is a case i read. i read the macao's the book. and i read that book and drive of the life of me to figure out. the rest of the place went for a post.
gambling in the door through a lottery. and the casino owners, they did not want that. the other thing, the second judge followed quickly. [inaudible conversations] nobody knew about it. this goes. the judge own 44% of the company. 300 million invested. no one knew about it. [inaudible conversations] >> i did not know. like a have some friends and decide to write about it. that is found a fascinating. i looked at the landscape of the
issue, what on earth happened. and to of course, abram loft pros the question of money. when i got out of federal prison as we lovingly refer in our family to the bush housing program at that time, did something that is why would not do which was to listen to ellen ratner telling me that i needed to write to radio. i just need to be quiet and the need to sit around a little bit. she said, no, you have some experiences and knowledge or working history of politics and government. well, the first show that we did was tom harkin. of course, knew who he was. i have a lot of respect for him. that link today in washington, to laughter to the right. and it does not matter how, declassified.
he is fair. he knows journalism. he is an accomplished person. add interest to see some of his books. so i was a little nervous as we did the show. and it really went well. i continued to do the whole radio gig. it my own show for a little bit. out of west virginia. and i was -- it was an interesting thing to do, but after while i did not like doing the daily show. i continue to the talk radio, which i do to this day, and i ventured over to india a little bit. what do you do when you want to recharge your batteries? you go to india. at chapter in this book which i was really delighted to right. when i go there i stayed about five or seven minutes walk from the deli lamas residents. a mixture of the indians and the tibetans over there, fascinating place. provide me your virginity to write this book.
i was able to go over there for couple of months and then come back. in between watching my granddaughter, the recovery program, assistance that i do for some people. i was able to us write this book . here tonight and i never thought i would do a book. my cousin, god rest his soul to mile west of the republicans, he coined the phrase the gilbert. and ronald reagan, is successful movie. what he was known best for. i give my cousin credit. but my cousin always told me, you need to write a book. when i was a little kid to my need to write a book. never thought i would write this one right it is like. so i put a lot of thought into it. did not want to do it.
i outlined that. and then added 60 minutes with my former chief of staff. and we agreed to do 60 minutes together, and alitalia will we did. we will have jack abram loft. we talked. and it was better to have the two of us. it shows to might think, more of an honesty factor. if i say this. so in my opinion having them side by side was a better way to do that. a one month trip and saw 60 minutes over there. when i saw i will make it clear, jack did not do this to me. i did this to myself. so i don't sit here saying he made me have a dinner. i made those decisions. but i watched him on that 60 minutes and then i started to -- you know, i could feel some empathy as having been in prison, he was in prison. and the for anyone that has done
time, but beyond that i just wondered where he was going with his version of history. and then when i heard him say that he spent a million dollars to welcome my gut the short end of the stick of money to my guess. but i sat there in all seriousness about, you know, i want to tell my end of it, but i wanted to make it more. another headlines. i wanted to make it more than that. he is part of the story, and i told the story. i get asked constantly by former constituents, still live in ohio, and in the district. parts of the old district and ask all the time, what happened to you. what are happen to you? in this book tells a very complicated story. it is not as easy as having some dinners and here i go. it is a complicated story where i have my part and then there is some other parts to it. so the perfect storm is sort of the way that i put together exactly the outside influences that came in to help with the
idiocy that i created in the crimes that i committed. also in the book very important to me, and i want to mention this to my mek because it deals with the opportunity that we missed as a country to potentially have a deal with it would have recognized israel, where they would have disbanded hezbollah. i said that deal to the white house. they chose to ignore it. maybe things would be a little bit different. they were recently made legitimate i think it is important for us on an international basis. the other part in there is about morgantown federal prison. and i was a lawmaker. abbott went into the prison site, which is very challenging and fascinating. i sat with a high-profile person who i first met in the back of the anteroom. and the finance committee, the banking committee.
the chairman said removed the handcuffs from the man. we can't do that. you will hear. and they did. you can add testified on the whole whitewater deal. and that is how i met with and the first time. the second time, i was headed to prison. i was up reporter, which is like reporting for your own firing squad. and allen said, you have to meet him. and i said, i just wanted to present. i set here in washington d.c. i don't know how many hours. he walked me through how you survive. and that was the best amount of time in less than. he also gave me insight as a former chief justice of the arkansas supreme court, former attorney general. we went to prison, and he was very empathetic to the plight of a lot of people in prison, and i walked out of prison not angry. and did not walk out of prison thinking of was a former congressman. i walked out of their feeling a
bond with a lot of people, and i need to tell that in this book, and i have because things are going on inside this balls. on expect anyone to have sympathy for me, but i have the ability to have a network. have the ability to stand here tonight, the ability to be on television, to have writers here with radio and the print media, and i can, you know, right about intel my story. all other people don't have a voice inside those walls. we are warehousing human beings. we are not rehabing in. we are rick warehousing them. this government and the current administration to mike has statistics. the big drug dealer spirited put them away. god there are a lot of attics and present. because autistic. there are not getting treatment. they need to have it. being in recovery. i have a message in this book
and i say at the beginning. you don't have to be in politics and abuse substances to make your life go down. can happen to anyone. i don't care if you are a waiter, i don't care what you do in your life's profession. whenever you are, you can in just substances into your body. you can lose your focus, you cannot pay to see to what you're doing pretty can go down a path that will cause a lot of personal problems. the cost of recovery, and formation which i think is important in this book. and i come -- i put a couple of funny stories about the congress. and i give credit to some members of congress which both sides of the island is book to read a few funny stories and things that will shock people in this book about staffers, congressional spouses which is pretty nice. i think we know that. i came to a conclusion in the book. i almost did not write that.
but what we did in our staff, you know, -- and that was the biggest scandal of its time. but while we did has been codified into a legal situation today. i, if i am a lobbyist, can take any member of congress or staffer, have a fund-raiser. once we have a fund-raiser i can take you hunting, i consecutive vegas, some republicans want to a bondage club. at least they're getting a little bit of personality. last year they had a fund-raiser. that put that in the book. other side of the aisle can do this. citizens united, i thought john mccain on time -- campaign finance reform twice. ..
the nrcc. that doesn't mean they have bad members. they are victims of the system. i promise you many members of congress would like this to change too. many members of congress do not find it delightful to raise this money. there are a lot of good members but that comes from the conclusion that the barrel is still corrupt. jack abramoff and die and staff people with felonies.