January 17, 2017
January 16, 2017
January 04, 2017
President-elect Trump intends to nominate Sullivan & Cromwell partner Jay Clayton to head the Securities and Exchange Commission according to reports by the Financial Times and other newspapers. Clayton has extensive expertise in M&A, capital markets, and financial regulation.
Clayton is a graduate of the University of Pennsylvannia Law School, where he taught a class on "M&A Through the Business Cycle" from 2009 to 2015.
A partner in a prominent San-Francisco-Bay-area venture capital firm recently told me, “The tech sector is eating the world. The menu is full of inefficient legacy industries.”
The thesis of USC Professor Gillian Hadfield’s new book, Rules for a Flat World, is that the legal profession should be near the top of the menu. Hadfield argues that law is overly complicated, expensive and inefficient. This is because lawyers have monopolized the practice of law, locking out more efficient, technologically empowered, venture-capital backed competitors. These competitors—software engineers backed by venture capital money, perhaps in cooperation with lawyers and paralegals—could hopefully improve quality, reduce costs, and generally run circles around overly conservative law firms and inefficiently subscale solo practitioners.
This book will engage venture capitalists and entrepreneurs, established legal technology companies, individuals interested in regulation of the legal profession, and more broadly, those who study privatization and deregulation.
She raises important questions about which regulations of the legal profession protect consumers or serve other legitimate public policy goals and which might be merely protectionist. She targets prohibitions on practice of law within a corporation and prohibitions on profit-sharing with non-lawyers. Without such regulations, it would be easier for non-lawyers to invest in and make high level decisions for legal services providers. Non-lawyers might place more trust in technology than lawyers and might be more open to new business models.
Hadfield’s analysis focuses on the aspects of law that are an economic service (she describes it as “economic infrastructure”). Hadfield is primarily focused on commercial and corporate law. Hadfield notes that while criminal law may be more salient in popular culture, since the time of Hammurabi, most law has been about money, property rights, risk allocation, and supporting business activity.
Hadfield argues that if companies such as Westlaw, Lexis and Legal Zoom could hire lawyers to provide customer support directly to end-users, these companies could improve the appeal of their offerings and more easily compete with small and solo-practitioners. Moreover, these companies would have economies of scale and efficiencies that solo practitioners cannot readily match. Because of these efficiencies and expansion of the legal market to under-served populations, lawyers working for incorporated legal services providers would not necessarily earn less than solo practitioners currently earn, although lawyer-employees would have substantially less autonomy than lawyer-owners.
January 03, 2017
December 26, 2016
Useful charts here. JD enrollment has stabilized, though well below its peak; non-JD enrollment has spiked as law schools try to sustain financial viability for schools that grew to their present size during the years of peak demand for legal education.
December 21, 2016
December 15, 2016
Professor Seto (Loyola/Los Angeles) asked me to share the following analysis of the ABA's new proposed bar passs standard:
There is a serious mathematical problem with the ABA’s 75% proposal.
Assume for illustration’s sake that bar results are normally distributed – that is, that they will cluster around the mean in a normal distribution. (There is no reason to believe that deviations from a normal distribution affect the analysis given below.)
In a state in which only one school provides the bulk of bar-takers, the bulk of that the state’s normal distribution will be reflected in the school’s bar passage rate. Assuming that the state bar passage mean is reasonably high, the school will always meet the ABA’s requirement, regardless of the quality of the education it provides.
In a state with multiple law schools, however, the normal distribution of bar results will instead be distributed unevenly across those schools. Some schools’ results will incorporate the lower end of that normal distribution. If there are enough schools in the state and students are sorted by bar-taker aptitude across those schools, the bottom schools will always fail the ABA’s requirement, again regardless of the quality of the education they provide.
Note that the difference between the two results – always meeting and always failing – is not because students are being admitted who shouldn’t be. If, in the state with multiple law schools, all such schools were to merge into one single mega-school, without any change in admissions policies or educational quality, that mega-school would absorb the bulk of the normal distribution in bar passage and would always meet the ABA’s requirement.
What this means is that the ABA’s proposal should chiefly impact lower-ranked schools in large states – not because the quality of the educations they provide or because they are admitting students who should not be lawyers, but because of the mathematics of normal distributions. To the extent those lower-ranked schools disproportionately service students from underserved communities, the ABA’s proposal will disproportionately impact diversity in the legal profession. And again, this is not because schools are admitting students who shouldn’t be admitted. It follows from the failure of the ABA to take the mathematics of normal distributions into account in structuring its proposed standard.
Conversely, the ABA’s proposal should have no significant impact on schools in states with few schools – again regardless of the quality of the educations they provide or the students they admit. And again, this follows from its failure to take into account the mathematics of normal distributions.
I question whether a rule that it likely to have a dramatically different impact in different parts of the United States for reasons having nothing to do with the rule’s ostensible purpose should be adopted. It is likely that the ABA is seriously considering the proposal in its current form in part because lawyers are, for the most part, innumerate. Unfortunately, this reinforces the argument that the ABA should not have regulatory jurisdiction over law school accreditation – precisely the argument the proposal is intended to rebut.
Comments are open for those who have ideas about how to address this difficulty. Post your comment only once, it may take awhile to appear.
December 10, 2016
From their various data sources, two tidbits: LSAT takers in September were up 1% compared to last year, while applicants were down about 5% in December compared to last year. The trend has been towards more applications later in the season, so I expect in the end this year will not be much different than last year in overall volume. We still do not have the December figure for test-takers.