Signs of change
Signs of change
Three unrelated developments reveal that the legal industry is becoming increasingly practical
Welcome to all of my new subscribers who found me through my Instagram post earlier this week! Today I’m going to share a few thoughts I had about changes taking place in the legal industry. Basically there are 3 developments in recent weeks that I thought represented a broader trend that’s been playing out for a while:
The legal industry is becoming increasingly practical.
I know each of these 3 news items seem pretty unremarkable on their own, and at face value. But bear with me. I’ll walk through each of them and give you my conclusion at the end.
1. Layoffs at the world’s most profitable law firms reveal who’s actually important to the business.
Biglaw layoffs have arrived. And when things get slow, those who did what they were told--but unfortunately spent their time doing low value shitwork--get screwed. Meanwhile, those with perceived expertise (still billing lots of hours) or rainmaking ability (has a portable book of business) survive and thrive as the firm cuts costs and likely increases profits this year.
This is true even beyond the law. When the company does well, it can afford to keep on lots of employees on staff. When things slow down, decisions have to be made about who stays and who goes. Executives don’t always get it right but it does often boil down to who is viewed as “expendable.”
2. U.S. News changing how they rank law schools is a sign of the declining importance of prestige
Earlier this week the magazine announced a change in the rankings formula, away from perceived reputation (from academics, judges, & lawyers) and towards practical factors (employment & bar pass rates). Don't get me wrong, rankings are still important.
But the change reveals a shift in sentiment that many lawyers have been talking about for the past decade. Law school is too expensive and impractical, and needs to focus more on preparing students for the realities of the market.One thing to keep in mind though, is that this change seems to be driven by high ranking schools themselves. Yale Law kicked things off in November when they first withdrew from the rankings, followed by multiple top schools doing the same. I’m hopeful that these changes will help rein in tuition costs and help law schools teach more useful skills. Only time will tell.
3. AI is going to accelerate technology’s impact on the legal industry.
If you haven’t played around with ChatGPT I highly encourage you to—it’s incredibly impressive. Pessimists believe it’s not quite good enough yet. And I agree. But a first year lawyer isn’t good enough either, and there’s always room to improve. As the AI improves, it will dramatically increase the upside of upgrading your technology stack. If that doesn’t convince the law firms, then their corporate clients (who are early adopters of legal tech) may start forcing them to.
A lot of the chatter you’ll likely see in the coming weeks and months will revolve around whether the AI can replace lawyers. Don’t get distracted by these sensational headlines. The real question is where AI fits into legal work. Wherever that is, will be commoditized shitwork you’ll want to stay away from.
Okay but what does this all mean?
These 3 developments show that the legal industry is becoming increasingly practical, and more like the rest of the business world. We're not exempt from economic realities. Not everyone will agree whether these changes are good, but they're important for any lawyer who wants to “skate to where the puck will be.”
These changes will take time though. Some of them have been playing out for years, and have only made incremental progress. But that’s how you stay ahead of the curve. Because the pattern tends to be that changes come slowly over a long period of time, while perceptions gradually shift, and then more radical changes show up suddenly.
As a legal professional, I would focus on developing skills that are rare and valuable, and involve some amount of complexity. That’s why I’m a firm believer in developing sales skills—because that type of work is both valuable and very difficult to automate. Sales is for everyone, even if you’re working in-house. Because knowing how to convince internal stakeholders to get resources, change processes, etc. is incredibly valuable.
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The Latest:
Major Lindsey Africa acquired staffing startup Hire an Esquire, which surprised me because I thought they were only focused on recruiting. Staffing is a hot area in law, just because clients are becoming savvier buyers and looking beyond the typical set of law firms to do legal work.
Two major law firms in the southeast merged to form a 550-lawyer firm, which is the latest in a trend of heavy M&A activity in legal. My Twitter followers had some interesting comments on why all this consolidation is happening, like how conservatively managed firms are using this as an opportunity to pick up assets on the cheap.
Nixon Peabody’s managing partner made an appearance in The Wall Street Journal to talk about the work habits of associates at his firm and not everyone appreciated it. His comments about associates not being willing to do last minute legal research or doc review is just a reflection that the younger generation recognizes how stupid shitwork is.
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Coming Soon
I’m working on an article for Above The Law featuring a Biglaw associate turned legal influencer who recently landed an incredible book deal. Stay tuned!
I realize that this topic is a bit more complex than I’ve laid out. I’m not saying the details never matter or that they’re unimportant. And maybe it’s slightly different in transactional practice. My point is that there’s low value, commoditized work, and then there’s high value premium work, and it would be a mistake to view them as the same.
I received some feedback that rankings, in general, are completely bogus. I wouldn’t go that far. Although rankings are imperfect, they still matter. They are rules of thumb that help you cut through noise quickly.
Having said that the pessimism and skepticism will remain. Which is fine. There will always be early adopters and late adopters.
Imagine he had been looking for associates willing to do last minute substantive work. I’d be willing to bet he wouldn’t have any trouble finding help.
The universities initiated this change as a form of power consolidation as US News is an institution that incentivized behavior in conflict with the institution, and this just closed a power leak. For the Ivy League and Stanfords, they do not need US News as an entity to “rank” them anymore, the environment is a state where the admission to an elite institution is the only thing that matters, and in an environment where you’ve destroyed your competitors, you can leave the rankings as your work is done. I’m not saying this is done deliberately, however in the current state of the world, going to law school or grad school at an Ivy/MIT/Stanford matters actually more than ever, in an environment like that, what is the point of having a ranking system? They know that people will continue to go to their schools, and the schools that will get close to annihilated will be all the law schools that don’t have that brand name and prestige, not the Harvard’s and Stanfords.
Alex, just joined your email list and this is the first article I've read from you. I'm a solo practitioner that always worked in house before now. Fantastic article and I'm looking forward to reading more!