May 30, 2020
A recent article argues that legal clinics funded in the 1960s to help the poor obtain access to legal services helped reduce civil unrest and thereby increased property values in minority communities. The article argues that the timing and location of grants to fund the establishment of these clinics was close enough to random (or at least unrelated to riot propensities) to facilitate causal inference, and attempts to control for differences between areas that received grants and those that did not. In particular, the article instruments by whether or not the community had an established law school, which was a necessary precondition for receipt of a grant to fund a legal clinic.
The debate about law school clinics has tended to focus on the extent to which clinics provide pedagogical benefits and short term employment advantages to law students. But if the authors of the article above are right, clinics may also be a way for law schools and universities to contribute to stability in their local communities.
May 18, 2020
International efforts to slow the spread of coronavirus have come at heavy economic cost. According to figures recently released by the Department of Labor, Bureau of Labor Statistics, U.S. national unemployment rates have spiked from less than 5 percent to more than 14 percent as of April 2020, reaching the highest level since the Great Depression.
Unemployment has increased the most for those working in food preparation and personal care occupations, where working remotely is less feasible. For such workers, unemployment rates are now close to 40 percent. In contrast, those in professional and related occupations have fared relatively well, with unemployment averaging below 9 percent.
Legal occupations have proved remarkably resilient and currently have the lowest unemployment rate of any category tracked by the BLS. Unemployment for legal occupations reached only 3.7 percent in April of 2020. Unemployment rates for lawyers are likely even lower because legal occupations include lawyers as well as occupations that typically have significantly higher unemployment rates than lawyers, such as paralegals and other legal support workers. In the first quarter of 2020, these non-lawyer legal occupations had unemployment rates around 2.3 to 2.5 percent, compared to 1.1. percent for lawyers. To be clear, unemployment has increased in legal occupations—just not by as much as it has increased everywhere else.
Law may be resilient in part because electronic filing, electronic legal research resources, home computers, and telecommunications technology make it is easy for lawyers to work remotely, and in part because the COVID shutdowns are leading to additional work for lawyers in areas like restructuring, secured lending, and employment law. Legal services may also be helpful for navigating recent relief legislation that seeks to provide federal assistance to businesses and other institutions.
In the 2008 to 2009 recession, law was also relatively resilient, but healthcare was the most stable sector. The current downturn, however, is having a devastating effect on the finances of the healthcare sector.
April 06, 2020
Unemployment increased from 3.5 percent in February to 4.4 percent in March, according to the U.S. Bureau of Labor Statistics. Jobless claims have spiked by millions. While unemployment rates are currently moderate by historical standards, the rapid rate of increase raises concerns that the U.S. is entering into a recession, if it is not in one already. Thus far, credit spreads on corporate bonds suggest that investors are concerned, though not quite as concerned as they were during the height of the financial crisis in 2009. Law firms are reportedly delaying the start of summer programs and discussing reducing hiring. A few firms are furloughing or cutting pay for existing workers, at this point disproportionately support staff.
Workers who are highly educated (across age groups) are less likely to become unemployed and, if they do become unemployed, find work again sooner. But even those with graduate degrees are not immune from recessions. Within each level of education, those who are young and inexperienced are more vulnerable in a down economy because they are less strongly attached to jobs and integrated with employers and have not developed specialized skills that come with work experience. There's evidence that graduating into an economy with high unemployment can lead to a decline in earnings for the first 4 years or so after graduation for law graduates. College graduates and high school graduates are even more vulnerable. Law graduates typically catch up in terms of annual earnings later in their careers.
This raises the question--what can law students do now to maximize their chances of finding gainful employment? A warning before proceeding--the advice that follows may be anecdotal unless it includes a link to supporting research. Although the advice is primarily intended for those interested in work in the private sector, and who are more interested in practicing law than in other opportunities, the underlying data in Timing Law School and After the JD is broader. These studies include those who were not practicing law or who worked outside law firms. The AJD sample is restricted to the 90+ percent or so of graduates who eventually passed the bar exam, while Timing Law School and SIPP include those who did not pass the bar.
April 03, 2020
Independent Law schools and small to mid-sized law firms can apply for low interest, partly forgiveable SBA loans (Michael Simkovic)
As part of the CARE Act passed in March, the Small Business Administration (SBA) is working with private banks to make several hundred billion dollars available to businesses with fewer than 500 employees. Non-profits are eligible. Law schools that are separate legal entities from their universities (or are independent and unaffiliated) may qualify, as may small law firms. The loans carry a 1% interest rate and are partly forgivable, based mainly on a firm's payroll expenses and in part on its mortgage or rent.
The funds are being distributed on a first-come, first-served basis and are expected to be quickly used up.
Details are available here.
Bank of America is processing applications today. Chase will begin processing applications next week.
March 31, 2020
New "Emergency Relief Fund" for law students, funded by Access Lex, administered by law schools (Michael Simkovic)
The Access Lex Institute is providing $5 million in total to fund an emergency relief fund for students at each of 200 law schools. Each law school will receive $25,000. Law schools will be responsible for administering the funds to assist students in need.
The press release describes the purpose of the funds as follows:
"Beyond the concerns around adapting to online learning, completion of hands-on legal clinics, and the potential for delays in the bar exam, this crisis has exacerbated financial pressures on law students . . . It is imperative that we act on our mission to positively impact the lives of law students in a tangible way when they need the support most"
Access Lex will provide more details about the program later this week.
The funds should be particularly helpful to law schools with small class sizes and limited resources. JD class sizes at law schools range from more than 500 students per year to less than 50.
February 13, 2020
Novartis demands a 15% discount from its outside law firms unless they put more women and minority lawyers to work on Novartis legal matters (Michael Simkovic)
Bloomberg reports that Novartis AG, a Swiss Pharmaceutical firm with a Market Capitalization in excess of 220 billion USD and U.S. headquarters in Boston, is demanding that its U.S.-based outside law firms ensure that at least 30 percent of associate billable hours on Novartis matters are completed by associates who are female or members of racial minority groups or LGBTQ+ groups, and that at least 20 percent of partner billable hours are completed by partners who are members of such minority groups. Any firm that does not meet these diversity targets will face demands from Novartis for an across the board 15 percent write down on its legal bill. The announcement of the policy is available here.
Under the new policy, above the 70 percent cap on straight-white-male associate hours, such non-minority associates would have to bill at least 4000 hours per year to be as financially valuable to Novartis's law firms as women or minorities billing 2000 hours per year on Novartis matters.
Novartis's policy represents a creative approach by Corporate Counsel to both cut costs and promote diversity. Recent research suggests that much of the difference in employment outcomes between male and female law firm associates is attributable to men billing more hours, bringing in more revenue, and having greater aspirations to make partner. The research could not rule out the possibility that law firms provided female associates fewer opportunities to bill hours.
Affirmative action is generally legal under Swiss law. The U.S. has historically been more permissive of affirmative action by private employers than by public employers or universities, but the legality of the policy above could potentially be challenged under more recent case law which imposes more limits on affirmative action and was decided under Title VII of the Civil Rights Act, which also applies to private employers.
However, standing and evidentiary issues could make a legal challenge to the new policy unlikely. Law firms are unlikely to sue a major client. A suit would therefore have to be brought by an associate who was dismissed or denied a promotion or bonus at one of Novartis’s outside law firms. The plaintiff would have to prove that he did not get enough work at the law firm specifically because of Novartis’s policy and that this led to adverse outcomes at his law firm. The law firm and Novartis would both have incentives to point to other potential reason for the plaintiff's dismissal or lower pay.
Were policies similar to Novartis's diversity policy to become widespread among corporate clients, straight-white-men intent on career advancement at law firms could potentially claim LGBTQ+ status--which includes those who report that they are bisexual, asexual or questioning their sexuality. Evidentiary issues and basic privacy concerns would make it difficult for private employers to challenge such claims. (However, courts have historically considered the factual truth of LGBTQ+ claims in asylum cases by requiring evidence of stereotypically effeminate behavior. Social scientists say such behavior has little relation to LGBTQ+ status. Courts have also asked asylum seekers to tell their "coming out" stories).
Widespread adoption of aggressive diversity targets could also raise questions about how much of one's ancestry would have to originate with individuals who were racial or ethnic minorities to claim minority status, and what kind of proof of such status would be required (i.e., self-report, an expert genealogy report, genetic testing, community involvement, or physical features stereotypically associated with racial minorities). Controversies related to similar issues have been raised to criticize Harvard law professor, Massachusetts Senator, and Democratic Presidential primary candidate Elizabeth Warren for claiming Native American ancestry based on family oral tradition and a small amount of Native American DNA.
Issues of racial identity and passing were memorialized in a novel by Pulitzer Prize winning author Philip Roth, about a light skinned black man who passes for Jewish in the 1950s, only to see his career derailed in the 1990s by false accusations of racism brought by students who he calls out for repeatedly skipping his class.
Aggressive diversity targets would also raise questions about whether Portuguese or white Spanish or Brazilian or Sephardic Jewish ancestry would entitle an individual to claim hispanic or latino status.
The Novartis Group General Counsel is Shannon T. Klinger, a graduate of UNC Chapel Hill and former attorney at Mayer Brown. The U.S. General Counsel of Novartis AG is Elizabeth G. McGee, a graduate of Fordham Law School and a former attorney at Mayer Brown.
January 29, 2020
Does membership in the Federalist Society or American Constitutional Society undermine the appearance of judicial impartiality? (Michael Simkovic)
A draft judicial ethics advisory opinion would discourage judges and their clerks and staff attorneys from being members of either the conservative/libertarian Federalist Society or the liberal/progressive American Constitutional Society because of concerns that membership in such overtly ideological / political organizations could create an appearance of partisanship that could undermine perceptions of judicial impartiality. The rules would permit speaking at or attending Fed. Soc. or ACS events. The ABA Journal and Bloomberg covered the story.
The draft was intended for comment by members of the judiciary only, but was leaked to the conservative National Review, which opposes the draft advisory opinion. The Federalist Society has four times as much money as ACS and is generally perceived to be more active and effective than the ACS. Thus a rule banning membership in both organizations would likely hurt conservatives more than liberals.
The National Review accuses the American Bar Association, which does not have an explicitly ideological or political mission, of being a "liberal" organization and argues that if membership in Fed. Soc. is banned, then membership in the ABA should also be banned. The ABA has previously responded to accusations of political partisanship by arguing that cherry picked examples of ostensible support for liberal positions overlook ABA activities that could be construed as conservative, such as ABA positions on corporate taxation.
Conservatives have previously claimed liberal bias by corporate owned media, elite universities, climate scientists, engineers, medical doctors, teachers, Youtube, Facebook and Google, the Pope, the Federal Reserve, country music, coffee shops, the military and the CIA.
January 28, 2020
Law professors are more religious than scientists, but it probably doesn’t matter much (Michael Simkovic)
At Taxprof blog, Paul Caron (Dean, Pepperdine) covers a study by James Lindgren (Northwestern) about the religious beliefs and practices of law professors. Lindgren compares law professors to the overall U.S. population and finds that law professors are more likely to express doubts about the existence of God.
This study is part of a line of research from Lindgren and others which compares law professors to the general population or the median member of congress on dimensions like religious or political views. In my view, these comparison groups are uninformative and inappropriate for some of the uses to which they have been put. For example, some argue for hiring preferences for faculty members with certain supposedly under-represented ideological views.
Law professors should not be judged by their ideological beliefs, but by their academic rigor. Law professors should not be compared to the general U.S. population or members of congress, but rather to scientists. Like scientists, law professors are much more highly educated than the general population, have higher incomes,1 and have opted into a career where they are expected to advance knowledge, often by relying on data collection and analysis based on scientific principles of causal inference. Even non-empiricists are taught and teach that legal adjudication depends on application of legal rules and standards to facts and evidence, not on faith. (Brian Leiter notes that law professors are also more religious than philosophers).
Many law professors are also likely more familiar with other cultures where religion plays a smaller role than in the U.S., such as Western Europe and much of East Asia, because of conference and personal travel and because of interactions within the U.S. with international students and scholars. For a high-income country, the U.S. is unusually devout, more closely resembling Cyprus or Poland than the UK or Japan.
Pew research finds that 41 percent of scientists do not believe in God or a Higher Power, and an additional 18 percent do not believe in God. Thus 59 percent of scientists report that they do not believe in God. By contrast according to Lindgren’s study, only 24 percent of law professors report that they do not believe in God. Law professors are therefore approximately 2.5 times as religious as scientists. This is in spite of the fact that law professors are disproportionately trained in the North East of the United States, a region that is on average both more economically developed than much of the rest of the country1--in the sense of having higher per-capita income and higher life expectancy--and also less religiously devout.
January 24, 2020
Consumer Reports: Leaked White House plan to slow progress on fuel economy standards will hurt consumers' health and finances (Michael Simkovic)
From Consumer Reports:
"A Trump administration plan to lower automotive mileage targets for future model years that could be approved in a matter of weeks would result in hundreds of dollars in [annual] added costs for consumers, according to a new U.S. Senate analysis. . . .
The proposed regulation, called the Safe Affordable Fuel-Efficient Vehicles Rule, will determine not only how much consumers pay for cars and fuel in the future but also how much carbon dioxide will be emitted by personal vehicles. Transportation (air travel as well as autos and trucks) is now the largest source of greenhouse gas emissions in the U.S., outstripping factories and all other sources.
The intent of creating future fuel-efficiency targets is to reduce greenhouse gases, but consumers also stand to gain if vehicles are more efficient because they will spend less money to fill up their gas tanks.
The Trump administration has argued that the previous targets for model years 2021-26, put in place under President Barack Obama, are too difficult for the auto industry to meet and would ultimately lead to higher vehicle prices, which in turn would reduce car sales and keep consumers in older, less safe cars.
Shannon Baker-Branstetter, manager of cars and energy policy at Consumer Reports, says the evidence suggests that automakers have more than enough affordable technology to meet the Obama targets. Since 2017, when the current fuel-economy improvement program began, vehicles have become safer and more reliable, as well as more efficient, she says.
According to the CR analysis, Consumers, under the Trump administration plan, would spend an average of about $3,200 more per vehicle on fuel over the lifetime of their vehicles. Cumulatively, all American consumers would lose about $300 billion, according to the CR analysis. . . .
The administration plan to lower fuel-economy targets has been challenged by California and other states that want to fight climate change and reduce air pollution.
The auto industry has been split on the Trump administration’s approach. Companies such as General Motors and Toyota have backed the federal government in a lawsuit that would change the rules so that California and other states cannot have their own clean-air rules. Ford, Honda, and two other automakers haven’t joined that suit and instead negotiated a deal with California to produce more efficient vehicles."
Jeff Plungis, Fuel Economy Rollback Plan Would Cost Consumers, Analysis Says, Consumer Reports, Jan. 23, 2020
January 16, 2020
David versus Goliath: Law professor sues New York Times Company over misleading and allegedly defamatory headline (Michael Simkovic)
Professor Lawrence Lessig recently sued The New York Times Company for defamation for incorrectly suggesting in a headline and lede that Lessig advocated soliciting donations from a convicted sex offender.
The New York Times wrote: "A Harvard Professor Doubles Down: If You Take Epstein’s Money, Do It in Secret . . . It is hard to defend soliciting donations from the convicted sex offender Jeffrey Epstein. But Lawrence Lessig, a Harvard Law professor, has been trying."
What Lessig actually said was more nuanced and subtle and had more to do with not being too quick to scapegoat fundraisers when donors turned out to have done disreputable things.
Read Lessig's complaint here. From the complaint:
"Defendants published their headline and lede despite their both being the exact opposite of what Lessig had written and despite being told expressly by Lessig pre-publication that they were contrary to what he had written. When Lessig brought the matter to Defendants attention post-publication, they refused to remove or edit their headline or lede to reflect the truth. . . . Defendant's publication destroyed [Lessig's efforts to spearhead a national dialogue dedicated to developing best standards for accepting and retaining donations from individuals and corporations who engage in wrongdoing] and has harmed Lessig's reputation more generally.
Defendant's actions here are part of a growing journalistic culture of click-baiting. . . . Defendants are fully aware that many, if not most, readers never read past the clickbait...The use of this tactic represents a uniquely troubling media practice as it relates to the harm to and destruction of the reputation of the target of the clickbait."
Although the full New York Times article provides more detail about Lessig's position, the headline and lede were anything but subtle or nuanced, essentially taking a few of Lessig's comments out of context and mischaracterizing them for shock value and humor at the expense of Lessig's reputation. As Lessig's complaint notes, the headline and lede are all many people read.