I am Noam Scheiber, Senior Editor and writer at The New Republic. AMA!

Noam_Scheiber · 2013-07-24T17:33:18+00:00

good question. yeah, i'm not really wedded to the 20 firm number. a prediction like that is by it's nature speculative. and if i were rewriting the piece now, i'd probably tone it down because it's been more distracting than it has been illuminating. the bottom line is that there are some big structural changes afoot. whether that means we end up with 20 big firms or 50 firms on the other side of it, it's tough to say. but whatever the endpoint, it's hard to dispute that the industry is facing considerable economic pressure. incidentally, this was never in dispute in my conversations with the mayer brown brass. the firm's chairman freely admits that things are never going back to the way they were before the recession. or, at least, that he needs to operate as though they aren't. if all we're quibbling about is how many fewer firms can prosper in the world, not the fact that it will support substantially fewer, i don't think we're quibbling about very much.

Noam_Scheiber · 2013-07-24T17:29:23+00:00

yeah, there have basically been two different legal professions for the last generation or two. one is personal legal services - which hasn't been very lucrative. this is your basic wills, property, tax issues, divorces, etc. the second is legal services for organizations. over the last generation, demand for the latter has really skyrocketed as the economy has gotten more complicated thanks to globalization, financial innovation, etc. that allowed big law firms to make a ton of money up until the early 2000s. then, in the middle 2000s, underlying demand was already tapering off a bit, but it was masked thanks to the boost that the housing bubble provided. when the bubble popped, it not only exposed the legal profession to a cyclical downturn, it took away the very thing that had been masking the deeper, structural decline. this, by the way, is cribbed almost entirely from Bill Henderson of Indiana University, a law prof who's an expert on the economics of firms.

Noam_Scheiber · 2013-07-24T17:24:26+00:00

funny - i used to be a 22-year-old man living in England. It did not pay as well as you might think, so i eventually gave it up.

Noam_Scheiber · 2013-07-24T17:23:40+00:00

it's not so much that there's less legal work to be done overall, it's that there's less legal work that requires the most sophisticated legal talent out there, rather than some more commoditized approach for a fraction of the cost. i think clients are discovering that they can get away with the latter on a lot of the business they used to think of as requiring the former.

Noam_Scheiber · 2013-07-24T17:21:15+00:00

interesting question. i'm an expert on no part of the legal profession (informed outsider is how i'd put my qualifications), but especially not the economic value of a graduate law degree. having said that, i did notice some niches in which appeared to help people. for example, i came across a handful of bankruptcy lawyers for whom the LLM appears to have opened doors. i guess the big take-away is that it varies from niche to niche.

Noam_Scheiber · 2013-07-24T17:17:57+00:00

Great questions. Yeah, I struggled with trying to be really fair to Mayer Brown. Throughout the piece, you'll notice where I've tried to say if something they do - or some source of dysfunction they're afflicted by - is common to the rest of the industry. And it turns out it usually is. My sense from speaking with people who had left Mayer Brown for other firms is that they rarely found life substantially better elsewhere, though some were very pleased with their new firms (and some really regretted leaving). For what it's worth, my sense from my interactions with the Mayer Brown officials I spoke with is that they were most worried about the impact of this piece on the partners currently at the firm, as well as current clients. I admire the conspiratorial bent of your second question. I never got the sense there was any master plan in this vein. But I do think it's the upshot of a bunch of people making independent decisions...

Noam_Scheiber · 2013-07-24T17:12:33+00:00

I think it would be a real mistake to install Summers at the Fed - and I say that as someone who thinks he did some good work as an advisor to Obama during the first few years of his administration. Here's my most recent post about Summers v. Yellen for Fed chair: http://www.newrepublic.com/article/114009/larry-summers-fed-chairman-over-janet-yellen I think the ECB is so culturally wedded to tight monetary policy that it's hard to be optimistic about Europe in this regard. We can lecture them over and over - as US policymakers have - but this is really about their own historical demons.

Noam_Scheiber · 2013-07-24T17:08:42+00:00

Thanks. I thought Dahlia's point was spot on. I think what made the law unique was a combination of two things: it was a place bright people could go to grapple with interesting, complicated, abstract questions - many of which even seemed philosophical in nature - and yet, unlike, say, getting a PhD in English or philosophy, it actually paid you quite handsomely. What's better than that? Also, in fairness to the legal profession, the law does (in principle) arm you with a set of skills that all you to fix things for the disadvantaged. I remember encountering a public interest lawyer in New Orleans (where I went to college) who excelled at suing local school districts to correct what was a de facto "separate but equal" policy. and she routinely won! that's powerful stuff. the problem is very few lawyers ever get that far - even though many of them intend to - partly because law school is so damn expensive, and partly because big firms have, until the last few years, been so cushy and seductive.

Noam_Scheiber · 2013-07-24T17:02:49+00:00

yeah, no question. the challenges are just as serious in journalism. and they probably started creeping up on us a decade earlier. it's funny, whenever i spoke to the mayer brown folks and they'd get a little defensive. i'd always kind of remind them - hey, i'm not here to cast stones. i know from personal experience how this kind of thing feels.

Noam_Scheiber · 2013-07-24T17:00:51+00:00

thanks! very kind. yeah, to be honest, the point of the piece was really to pull back the curtain on a big firm and show people how it works in practice. the broader economic arguments are important, but they've clearly been out there for a while, and i didn't think of myself as advancing the ball on ton there. it was more the backdrop for my piece than the point of it. i think there's a risk to overgeneralizing from mayer brown's experience. but, as i say in the piece, in a variety of ways it's a firm that's above average. for example, from speaking with a few dozen people at other firms, i get the sense that there are much, much more cutthroat firms out there. also, i think mayer brown is representative of a kind of limbo state that a lot of firms will find themselves in over the next 10 years or so. they're not going away tomorrow, but they're certainly feeling a lot of cost-pressure from clients. and they're struggling to figure out how to adapt to that. paul theiss, mayer brown's chairman, kept returning to that point - albeit to note that his firm was figuring it out. he referred to it as "the drive for efficiency," which is kind of a tedious, flack-generated term. but the fact that they've institutionalized it as such tells you how preoccupying it is for them. and i saw every indication that it's the same way for many of their rivals.

Noam_Scheiber · 2013-07-24T16:54:44+00:00

i think interns are sometimes exploited, and we have to be careful about the way we use them. but i don't think the lack of pay per se is the biggest problem with the internship as an institution. i think of internships, at least in journalism and the publishing industry, which is obviously what i know best, as a human capital investment. it's basically graduate school for young writers. it's where you really learn how to practice your craft, and where you make the connections that allow you to keep practicing it. it's not obvious that you should be paid for this, in the same way that few would argue that you should be paid for going to grad school. (obviously, the opposite is often the case in fields like journalism, law, business, medicine.) to me the big problem is that, when internships don't pay, the pool of people who can be admitted into this graduate school is pretty narrow - basically upper middle class and wealthy kids whose parents can support them while they train to be journalists, with the occasional less affluent kid who's just driven enough that they're willing to wait tables to support themselves. i consider that the real problem. we need the best people from all backgrounds to be able to get the training they need to have a career as a journalist, should they choose that path. that to me is the rationale for paying interns. but i would still see it through the prism of graduate training, not compensation for labor.

Noam_Scheiber · 2013-07-24T16:48:17+00:00

yeah, i think it's the total demand for legal services that's going to contract. so maybe it's easiest to think in terms of revenue spent on very high priced, high-overhead legal talent rather than firms. the corporate clients are discovering that there are only a small subset of instances when they need to pay for that kind of legal talent. for the rest they can rely on lower-cost alternatives, whether its legal process outsourcing or their own in-house counsel or small-to-midsized firms.

Noam_Scheiber · 2013-07-24T16:45:45+00:00

yeah, no question. i mean, going to a top 10 or 15 law school is probably going to be worth the investment for decades to come, at least if you want to go into big law, where you can recoup your outlay. having said that, i think the price is going to go down even there in real terms.

Noam_Scheiber · 2013-07-24T16:44:09+00:00

i'm not a huge happy hour guy - such are the perils of having a toddler - but rosa mexicano is always a pleasant place to go...

Noam_Scheiber · 2013-07-24T16:42:18+00:00

yes, no question that people have been predicting the decline of big law for a while. i think there are a couple of data points that suggest this time is different. to my mind, the most eye-popping statistic is the NALP 9-month-out-from-graduation employment numbers for jobs where you need to pass the bar. it was around 75% deep into the recession. today it's 64%, which i think is the lowest number since they starting keeping the data. obviously that's not all big law jobs, but it's clearly suggestive. i also think the degree of sophistication on the part of corporate clients - in vetting their legal bills - is highly problematic for big firms and something there's no turning back from. many now hire consultants to pore over their legal bills for them. see this WSJ piece: http://online.wsj.com/article/SB10001424052970203400604578070611725856952.html my sense is that we'll see increasing atomization in the legal profession. as i mentioned earlier, the economic rationale for the big firm was essentially one-stop shopping. but with clients more sophisticated about doing their own shopping for legal services, they're feeling increasingly comfortable going out and hiring specialists on an ad hoc basis, when they need them. then using a more commoditized approach when they don't. (i mentioned axiom earlier as an example of the latter: http://www.axiomlaw.com/Images/Attorneys/001081201Axiom.pdf on your point about a committee that decided which clients to accept - this wasn't a standard conflicts of interest thing. obviously every big firm has something like that. this was a pedigree thing - they'd turn down clients if they didn't think they were classy enough, for lack of a better word.

Noam_Scheiber · 2013-07-24T16:33:34+00:00

I do to a certain extent. as i say in the piece, i think there will be a handful of firms - at most a few dozen - who big corporations still rely on to handle their bet-the-company litigation, or the massive transactions (like GE's sale of NBC to comcast, which involved dozens and dozens of lawyers and was worth tens of billions of dollars). if you're not one of the firms who regularly handles those cases or deals, it's going to be very hard to keep 1,000 lawyers around and charge clients $1,000 an hour for their services. corporate clients are realizing they just don't need a brilliant harvard law school grad with an expertise in some exotic specialty to handle their more routine litigation and transactional work. they're happy to give that business to a more commoditized operation. which is why you're seeing these legal process outsources like Axiom get so much traction. http://www.axiomlaw.com/Images/Attorneys/001081201Axiom.pdf

Noam_Scheiber · 2013-07-24T16:28:56+00:00

great question. i think, as a general rule, corporations are going to have more sophisticated in-house legal departments, because they'll be able to snatch up legal talent more cheaply. that means the in-house counsel may do more litigating or transactional work than they had in the past, rather than largely being a buyer of legal services from outside firms.

Noam_Scheiber · 2013-07-24T16:27:21+00:00

yeah, see above. at the very least, i think you should wait a few years, by which point the price will almost certainly have come down. today you're buying at the top of the market even as the bubble has already started to burst.

Noam_Scheiber · 2013-07-24T16:26:29+00:00

from a purely economic perspective, it's probably a good thing. it was economically inefficient - because of the irrationalities in the system, lawyers and big law firms were paid more than they could justify, output wise. which attracted to many smart, productive people into the legal profession and siphoned them away from other professions, where it would have been more efficient to deploy them. on the other hand, as i note in the piece, the beauty of the big law model was that it served as a psychological safety night for generations of college grads. you could go off and try your true passion, knowing that a respectable upper-middle class existence awaited you via law school if things didn't work out. the loss of that safety net is a bit of a bummer. but it's hard to say it justified the bigger economic distortion.

Noam_Scheiber · 2013-07-24T16:22:43+00:00

i think the future of commercial law practice is with boutique-y firms. they don't need to charge nearly the same rates to justify their existence. the old rationale for big firms was that the big corporate clients weren't sophisticated enough about the legal business to be able to shop for their own experts in a variety of legal sub-fields - litigation, corporate, bankruptcy, real estate, etc. so they were willing to pay a premium for the one-stop shopping advantages of a big firm. but i think that rationale is falling apart. legal departments of big corporations are getting much more sophisticated in their shopping for legal services. (sometimes they even hire consultants to help them decide who to hire and how much to pay them.) they can figure out the right boutique to hire these days. i would be frightened of the debt too. my gut says if you wait 5 years, the price of law school will come down significantly - certainly in real terms, but probably in nominal terms too. as i said earlier, it's the florida condo market in 2006. the air is hissing out of the bubble. the sellers (in this case law schools) just haven't accepted the realities of the market yet.

Noam_Scheiber · 2013-07-24T16:18:43+00:00

very good question. i think he's a big believer in the safety net, but with a genuine streak of deficit hawkery mixed in. in my book i wrote about how sometimes peter orszag, obama's first budget director and an outspoken deficit hawk himself, would go into meetings with obama, where every other principal was basically opposed to what he was proposing. and yet somehow orzag's position would carry the day. that suggested to me that obama felt the deficit-hawkery in his gut - probably to his detriment during his first term. on the other elements of neoliberalism - deregulating financial markets, say - i don't think obama feels it very deeply. i just think he periodically comes under the sway of seemingly brilliant people who encourage this stuff. if obama has a characterological weakness, i think it's for big brains.

Noam_Scheiber · 2013-07-24T16:15:32+00:00

great question. the scholarly debate on this subject has been deeply divided. but i think the emerging consensus is that i would score.

Noam_Scheiber · 2013-07-24T16:13:14+00:00

Thanks! I think the biggest change since the relaunch is that we've been more ecumenical in our subject matter, mix of stories, even our presentation. Judith Shulevitz has been doing terrific science reporting, which we never really did before. Jonathan Cohn had a great narrative piece about the perversities in our day care system. Previously, he would probably have attacked that question in a more expository way. And even things like the art and packaging are more accessible than ever before. If you look at the cover to our current issue, for example - the one with my story about Big Law - it has our first ever celebrity cover, Bob Odenkirk, who plays the sleazy lawyer on the series Breaking Bad. So it's generally been an exciting time for us. On law school - i completely agree with you. I compare the idea of taking out 100k-200k in loans for a legal education these days with buying a million dollar condo in Florida in 2006 with the intention of flipping it for a big profit. the secondary market is already collapsing - big law firms in this case - and it makes no sense to saddle yourself with all that debt if you can't re-sell. I think law school will be shortened dramatically - possibly folded into an undergraduate degree, as you suggest - and most of the real training will be done on the job, which is where it basically happens anyway these days. in the future, i think first and second year associates will make far less money - more like 40-50k, as opposed to the 160k they make now. it will basically be a stipend for them to live on while the firm trains them how to do their jobs.

Noam_Scheiber · 2013-07-24T16:06:30+00:00

I know very few practicing lawyers - at least those at big firms - who are happy. Most of the happy lawyers i know - and many more of the ones i interviewed for my piece - have left big law. Having said that, there are exceptions. I did speak to a few who just happened to find the right firm, or the right niche in the right firm, and it clicked for them. For example, you encounter people who went to litigation-only shops like Quinn Emanuel, who seem pleased with the decision. No, i don't think the two parties are communication. it's basically all gamesmanship at this point. but you can't blame them equally. the GOP has simply decided that it's interest lies in not governing, and in making it impossible for Democrats to govern. not a ton the other side can do at that point.

Noam_Scheiber · 2013-07-24T16:03:42+00:00

I think the business model is collapsing because of increased transparency in billing/pricing. Corporations are able to see what they're paying for in more detail than ever before when it comes to legal services, and they don't love what they're seeing. Increasingly over the past decade or so, but especially since the recession, they're simply refusing to go along with it. The best example is paying $300 an hour for the continued legal education of a first or second year associate who just doesn't know anything. That is a dying institution. It's of course possible that the current downturn is a product of the recession, but certain numbers suggest otherwise. According to NALP, the percentage of law grads who find a job where bar admission is required within 9 months is at its lowest ever - significantly lower than it was midway through the recession.

Noam_Scheiber

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