It's all supply and demand

Why everything in the legal industry feels so competitive, and how you can find a niche where demand exceeds supply

If you feel like you did everything you were supposed do, but advancing in your career seems to keep getting harder, it might be because you're in a bad supply and demand situation in your specific market.

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Today I’ll explain why this happens to lawyers more often than most.

In the legal profession, you’re taught that there are formulas to success. I remember being told to go to a top school, get a clerkship, and work at a Biglaw firm because it would give me lots of lucrative career paths. To me, law was fairly simple—if you did certain things or followed certain steps, then rewards would inevitably follow. Or so they said.

The career formulas don’t always work

The problem is, everyone else gets the same exact advice. Which means everyone crowds into the same places—the same schools and jobs, leading to an oversupply of candidates. Which leads to all sorts of anomalies. Like having to beat out 99% of other test takers on a standardized test, just to get into one of the top schools—despite the fact that the test says nothing about whether you’d be a good lawyer.

You need that high score to get into a top school because you need that special line on your resume. Because when it comes to access to career opportunities in the legal world, credentials are everything. Especially if you’re trying to access the lucrative world of large law firms.

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Years later you’ll find that credentials can really only get you through the front door. Once you get in, the game continues. Your peers are just as smart and hard working as you, plus they have the same qualifications. For example, once you get into a top firm, you won’t make partner unless you beat out your peers—all of whom jumped through the same hoops to get to where you are.

The better you do, the harder the game gets.

Hyper competitive situations

The underlying problem is that there are just too many candidates competing for too few spots. In these “oversupply” situations, the winners end up getting selected based on reasons no one ever expected. Like who has the best access to demand. For example:

• Law school grads who land highly competitive jobs like federal clerkships need to rely on a warm referral from a professor who has “access” to demand, ie. a judge who’s looking to hire law clerks

• Senior associates at law firms who make partner have access to demand in the form of sponsors (who themselves have access to high value work) or client relationships (General Counsel who needs to get legal work done) that make them more valuable over time

Let me be clear: Just because you’re in a hyper competitive situation, doesn’t mean you’re necessarily out of luck. Some of you will thrive in these situations. For example, if you’re the type of person who professors or senior partners like, ie. one of The Chosen Ones; or if you have existing connections to potential clients—you can really thrive.

You can also get lucky, like I did. I landed a federal clerkship because it just so happened that one of my law professors had a relationship with the judge I ended up clerking for. I stumbled into a situation where I had access to demand.

Nowhere is this more apparent than the life of an equity partner at a law firm. At most firms, the partners with the most clout are able to bring in the most amount of business to the firm. That’s why recruiters are always looking to find those with a large “portable book of business.” Yes, these lateral partners earn a ton of money, but the value they bring to their firms is even greater. The firm pays them generously for their access to demand.

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Some lawyers have an unfair advantage in this game. For example, to the extent most CEOs and General Counsels have business to give to outside firms, and to the extent they’re all tall white men who enjoy golf—those who fit the same profile will be able to generate business with relative ease. This is why senior partners at law firms all look the same.

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If you find yourself struggling in your environment, where you don’t have an unfair advantage, you need to go somewhere else. You need to find a place where the dynamics are completely different. Where demand exceeds supply.

How do you find that?

It’s not going to be easy to find. Remember how I mentioned that there’s an oversupply of lawyers interested in the “resume building jobs” of the legal ecosystem? It’s because when people believe there’s a tried and true path to success, that path becomes overcrowded. To steer clear of that, you’ll either have to (1) find a niche most people don’t know about or (2) do something that goes against conventional wisdom.

As you make your decision on where to pivot to, you’ll want to look for evidence of excess demand. Some data points that have helped me in the past:

• Most people have never heard of the niche, but it’s been around for a long time. For me, this was legal tech back in 2016. Most lawyers had heard of Westlaw and Lexis, but were unaware of the many other tech companies that serviced the legal industry. I learned about it by accident, when I worked at a plaintiffs’ firm and used some of these technologies. Which is a good lesson if you’re trying to find a niche in your space. Keep your eyes and ears open at your day job, because you’ll never know what you’ll find.

• Lots of average performers seem to float to the top. People with weak resumes land great jobs, get promoted quickly, and stumble up the org chart. When I got into legal tech sales, I was surprised by the “rising stars” on my team. None of them went to good schools. They were not particularly hard working or reliable. And yet they kept landing big opportunities and kept getting promoted to higher level positions, earning more money than many lawyers I knew—all while working far fewer hours.

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• Average compensation seems to be rising over time. Use anecdotal evidence in addition to survey data. Look at average salary numbers but use them as a guide instead of the end-all be-all. Pay attention to trends and directional movement. Is compensation increasing? If so, that’s a good sign. It doesn’t have to be a huge increase—the fact that it’s moving up means that there’s excess demand. Which means you should be able to get promoted to bigger roles relatively easily.

Once you’ve found the right place, consider where to make your entry point. What should the job look like? Is it working with people, or something technical? If it’s a new area of law, where should you position yourself in terms of the type of work you do? If it’s a startup (like me) what type of role—sales, marketing, product—should you pivot to?

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Where to go next

At this point you might think of several different paths to go down. Remember, your choice is going to be very specific to your unique situation, life circumstances, and most importantly, your personality. You want to choose a place that’s aligned with your superpowers. For me, when I faced my own crossroads in 2016, it was at the intersection of law and technology, doing something that involved working with people. That’s why I made my first pivot to legal tech sales.

There was so much I didn’t know back then. I knew little about tech landscape, and had zero sales experience. I also had no idea what was happening in the market, let alone where the trends were headed. However, as I made my way through the space, I always paid attention to where the demand was. As a result, I found ways to specialize in skills that were rare and valuable. I learned as I went along.

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Making a pivot to something new and unexpected isn’t for the faint of heart. You need to think independently and be patient. Not everyone has that luxury though—if you have bills to pay, or other financial responsibilities, you might feel trapped in your current job. For those of you in that situation, it’s ok! Just keep your eyes and ears open to what’s happening around you.

Because the world will continue to change. And my hope for you is that when the time is right, and you’re ready to make that leap—you’ll know exactly where to go.

Best of luck my friends.

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Latest News

• E-discovery company Nextpoint just announced the launch of a “data driven” firm under Arizona’s regulatory regime that allows for non-lawyer ownership of law firms. This comes on the heels of Axiom doing the same thing earlier this year. Not sure what to make of all this yet (I’m still asking around, off the record!) but it’s definitely something to keep an eye on.

• Corporate law firms are increasingly replacing the large firms with smaller firms as outside counsel. This goes towards my broader point (that I’ve written about before) regarding buyers moving to low-cost providers. The big wildcard in my mind, is how AI will affect demand for legal services.

• This week I received my first mention in a legitimate publication, Legal Dive! The article is about the ChatGPT “scandal” that happened at the end of last week. Thanks everyone for amplifying my content on social to give me some much needed street cred.

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1. I assume you’re familiar with how supply and demand works but just in case you aren’t here’s a thorough explanation. Or you can check Reddit’s “explain like I’m 5 (years old)” here.

2. Part of the reason why Biglaw associate comp has increased has to do with the pipeline of candidates. Every year there’s a limited supply of law school grads that are “eligible” for jobs at these firms, e.g. Top 14 law school grads, or top performers at lower ranked schools. Demand is usually consistently high because having lots of “top grads” as your entry level lawyers creates a perception that your firm produces elite quality work. To attract these top grads, you have to have pay market salaries for entry level positions. As demand for Biglaw work increases, the firms have to raise salaries even more to remain attractive.

Now Biglaw firms could dig deeper into the candidate pool, perhaps hiring from a lower ranked school or someone with weaker grades. However, that then changes the perception of the firm, which means it won’t be able to attract clients with the toughest legal problems, which means the firm won’t be able to command premium hourly rates. The Biglaw business model and obsession with credentials are all related, and it all has to do with supply and demand.

3. Further reading: The most valuable players

4. Having said that, this is changing. The makeup of corporate legal departments is changing and I would bet that over the years, we'll see leadership at some of the largest firms change to reflect that. When I went to the NAPABA conference last year, I spoke to in-house counsel, off the record, who said they go to the conference in part to identify up and coming Asian American law firm lawyers so they can feed them work. I imagine there are similar things happening in other affinity groups.

5. You could say the same for me, too. A lot of my success in the early days of my legal tech career had to do with “a rising tide that lifts all boats.” Having a decent work ethic helped me avoid getting fired or laid off, which allowed my career capital to compound. Eventually, I grew along with the company. This could not be more different than my experience at an established firm where not only do you have to work hard, you have to also make the right relationships, be strategic about the types of work to take on, etc.

6. Many of the unique skills I bring to my current role at my unicorn job came from that brief moment early on during the pandemic when everyone went online. I learned how to use LinkedIn for marketing, how to moderate large Zoom meetups, how to encourage participants to engage with each other, etc. And one of my biggest success stories—figuring out how to drive brand awareness and B2B lead generation through Tik Tok—was the result of an experiment making silly video skits a few months into the pandemic. I share this because often us lawyers want to be prepared for everything, and we seek out classes or courses to get ourselves ready. But by the time those courses are launched, it’s usually too late. That’s why diving in, and paying attention to what’s happening in the market, and most importantly, learning by doing, yields the most powerful results.