May 05, 2016
Lawyers traditionally bill a specified hourly rate for the time they spend working on a case. This ideally incentivizes lawyers to work hard and improve outcomes for their clients, and it provides clients transparency with respect to lawyer effort.
However, an hourly rate can reduce the predictability of costs for clients. Some clients worry that hourly rates might encourage inefficient over-work. As a result, some have shifted toward fixed-fee arrangements for their legal services, in which lawyers are paid a flat fee for completion of a task, regardless of how much time it takes to complete.
Preliminary results from empirical research that will be presented at this years’ American Law & Economics Association Conference suggest that a fixed-fee approach to compensating lawyers reduces lawyers’ efforts to assist clients and leads to worse outcomes for clients.
Two separate studies by two groups of researchers using similar research designs with different data sets both come to substantially the same conclusions. (Benjamin Schwall, High-Powered Attorney Incentives: A Look at the New Indigent Defense System in South Carolina and Amanda Y. Agan, Matthew Freedman & Emily Owens, Counsel Quality and Client Match Effects).
One potential obstacle in assessing the effects of different billing practices is reverse causation. Better lawyers may normally be able to bill by the hour because they are better and have more power to negotiate, not because billing by the hour makes them better.
The studies control for differences in lawyer quality by looking at the same lawyers (lawyer fixed effects) sometimes as court–appointed attorneys paid a flat fee and sometimes as attorneys billing by the hour. Schwall’s paper exploits changes in how South Carolina compensates its public defenders, while Agan, Freedman & Owen focus on random assignment of criminal defense counsel in Texas. The studies also attempt to control for differences in the type of case and defendant characteristics. The research designs for causal inference appear to be rigorous, and the results seem intuitive and plausible.
While the context of these studies is the criminal justice system, it would be surprising if the conclusions did not also hold true in civil litigation or in transactional practice. A lawyer on a fixed-fee is likely to be more willing to concede important points to bring a case or transaction to a speedy conclusion than one who can bill by the hour and be compensated for his or her extra efforts. Sophisticated clients may be better able to monitor their attorneys than indigent defendants and criminal courts, but clients probably cannot eliminate agency costs (If they could, an hourly rate would make at least as much sense as a fixed-fee).
Assuming the preliminary results of these studies hold, the incentive problems created by fixed fee arrangements may be an opportunity for shrewd business people or plaintiffs lawyers to target counterparties or defendants. If the businessperson pays his own lawyers by the hour to negotiate opposite lawyers on a fixed-fee, the reward could be contracts with lopsided terms in his favor. Plaintiffs’ lawyers may similarly expect civil defense lawyers on fixed-fee arrangements to advocate a swift settlement on terms relatively favorable to plaintiffs.
Lawyers are likely to know which clients use fixed fee arrangements because such clients often have an RFP process in which law firms bid for their work.
May 04, 2016
Interesting chart, though note two things about the data: first, it includes both district and circuit court placement, without distinguishing between them; and second, it includes only clerkships secured before graduation from law school. With the current turmoil in the clerkship market, securing federal clerkships after graduation is increasingly common. One thing that leaps out is that being a regional powerhouse is advantageous for clerkship placement.
April 30, 2016
New research from Dan Schwarcz and Dion Farganis at Minnesota argues that providing students with practice problems and exercises that are similar to final exams and giving individual feedback prior to the final examination can help improve grades for first year law students.
Schwarcz and Farganis tracked the performance of first year students who were randomly assigned to sections, and as a result took courses with professors who either provided exercises and individual feedback prior to the final examination, or who did not provide feedback.
When the students who studied under feedback professors and the students who studied under no-feedback professors took a separate required class together, the feedback students received higher grades after controlling for several factors that predict grades, such as LSAT scores, undergraduate GPA, gender, race, and country of birth. The increase in grades appears to be larger for students toward the bottom half of the distribution. The paper also attempts to control for variation in instructor ability using student evaluations of teacher clarity.
It’s an interesting paper, and part of a welcome trend toward assessing proposed pedagogical reform through quasi-experimental methods.
The interpretation of these results raises a number of questions which I hope the authors will address more thoroughly as they revise the paper and in future research.
For example, are the differences due to instructor effects rather than feedback effects? Students are randomly assigned to instructors who happen to voluntarily give pre-final exam feedback. These might be instructors who are more conscientious, dedicated, or skilled and who also happen to give pre-exam feedback. Requiring other instructors to give pre-exam feedback—or having the same instructors provide no pre-exam feedback—might not affect student performance.
Controlling for instructor ability based on teaching evaluations is not entirely convincing, even if students are ostensibly evaluating teacher clarity. There is not very strong evidence that teaching evaluations reflect how much students learn. An easier instructor who covers less substance might receive higher teaching evaluations across the board than a rigorous instructor who does more to prepare students for practice. Teaching evaluations might reflect friendliness or liveliness or attractiveness or factors that do not actually affect student learning outcomes but that have consumption value for students. Indeed, high feedback professors might receive lower teaching evaluations for the same quality of teaching because they might make students work harder and because they might provide negative feedback to some students, leading students to retaliate on teaching evaluations.
These issues could be addressed in future research by asking the same instructor to teach two sections of the same class in different ways and measuring both long term student outcomes and teaching evaluations.
Another question is: are students simply learning how to take law school exams? Or are they actually learning the material better in a way that will provide long-term benefits, either in bar passage rates or in job performance? At the moment, the data is not sufficient to know one way or the other.
A final question is how much providing individualized feedback will cost in faculty time, and whether the putative benefits justify the costs.
It’s a great start, and I look forward to more work from these authors, and from others, using quasi-experimental designs to investigate pedagogical variations.
April 22, 2016
Professor Paula Franzese of Seton Hall law school is something of a patron saint of law students. Widely known for her upbeat energy, kindness, and tendency to break into song for the sake of helping students remember a particularly challenging point of law, Paula has literally helped hundreds of thousands of lawyers pass the bar exam through her video taped Property lectures for BarBri.
Paula is such a gifted teacher that she won teacher of the year almost ever year until Seton Hall implemented a rule to give others a chance: no professor can win teacher of the year more than two years in a row. Since the rule was implemented, Paula wins every other year. She’s also incredibly generous, leading seminars and workshops to help her colleagues improve their teaching.
Paula recently wrote a book encouraging law students to have a productive, upbeat happy, and grateful outlook on life (A short & happy guide to being a law school student).
Paula’s well-intentioned book has rather bizarrely been attacked by scambloggers as “dehumanizing”, “vain”, “untrustworthy” and “insidious.” The scambloggers are not happy people, and reacted as if burned by Paula’s sunshine. They worry that Paula’s thesis implies that “their failure must be due to their unwillingness to think happy and thankful thoughts.”
Happiness and success tend to go together. Some people assume that success leads to happiness. But an increasing number of psychological studies suggest that happiness causes success. (here and here) Happiness often precedes and predicts success, and happiness appears to be strongly influenced by genetic factors.
Leaving aside the question of how much people can change their baseline level of happiness, being happier—or at least outwardly appearing to be happier—probably does contribute to success, and being unhappy probably is a professional and personal liability.
People like working with happy people. They don’t like working with people who are unhappy or unpleasant. This does not mean that people who are unhappy are to blame for their unhappiness, any more than people who are born with disabilities are to blame for being deaf or blind.
But it does raise serious questions about whether studies of law graduates’ levels of happiness are measuring causation or selection. We would not assume that differences between the height of law graduates and the rest of the population were caused by law school attendance, and we probably should not assume that law school affects happiness very much either.
April 20, 2016
April 11, 2016
April 07, 2016
President Obama is at the University of Chicago Law School today discussing the Supreme Court and the nomination of Judge Garland...
...which you can watch here. And if you'd like to know the truth about what's really going on with Supreme Court nomination battles, read this. (I'm not there, I'm at home working, since the faculty have been thrown out of their offices for the day!)