Larry Kramer: Larry Kramer, Richard E. Lang Professor and Dean, Stanford Law School.
Question: How has the legal profession changed in the past five years?
Larry Kramer: So the changes have taken place, actually I think over a slightly longer period than five years. I mean, it’s been coming for a long time and then accelerating somewhat in recent years. And there’s a lot, there’s a huge number of changes. I think a big part of it was globalization. And so the legal market expanded hugely. American firms, because of something about, I think, the tradition of American legal education, have largely dominated the internationalization of law, and so a huge number of jobs opened up. And the economic structure of the firm changed to accommodate that. So law firms, which used to be relatively small, in fact—the biggest law firms in the 1980’s were, you know, 200 lawyers, 250 lawyers—suddenly grew so now you’re talking about firms that have seven or eight thousand lawyers. And firms that might have two offices or three offices, suddenly have 20 or 30 offices all over the world. And in order to sustain that, you know, the small community that firms you used to be, that used to, you know, you made a lifetime commitment, you were a part of the firm... yes, you were supposed to generate profit and bring in business, but it was also a kind of family and people helped each other out and if times were slow you shifted your business and you got carried along. A lot of that began to disappear as the need to sustain the new economic model emerged.
At the same time, and partly because of this, there was increasing specialization in the practice, and the leverage changed, so you used to have, you know, maybe two partners per associate, or maybe one to one, and suddenly it flipped and now you’ve got seven or eight associates for each partner. And in order to produce the income that’s necessary with that model, the associates all have to bill lots and lots of hours, and, so that changed the nature of the work that they did.
At the same time—and literally at the same time—The American Lawyer comes out with a ranking of law firms, which had never existed before, and the ranking focuses on profits per partner. And so suddenly in order to sustain your ranking, you have to generate high profits per partner, which exacerbates that model even more, because again, now you want few partners, lots of associates generating lots of money that produces a high profit per partner figure.
And so all of that changes the culture inside the law firms, to a really large extent and the nature of the work they’re doing. In the meantime, the other major development that drives things in the profession is the clients become considerably more sophisticated in, you know, managing the law firms that they hire. So it used to be that in-house council, inside, you know, a company did very little work themselves, they had small offices. Their main task was soliciting the outside firms, to whom they would give business, from whom they would seek advice. Suddenly in-house offices have become larger, they’ve become more sophisticated, they can do all sorts of work themselves that didn’t used to be done in house, some of that’s driven by technology, which enables them to do this as well. That diminishes the amount of work that the firms can do and a lot of the profit generating work suddenly doesn’t need to be done by the law firms. And at the same time, the people running the in-house offices become themselves much more sophisticated at managing outside lawyers and so they begin to put pressure on the firms to reduce costs at the very same time that the firms are in this position where they need to generate larger amounts of, just, billable hours. And so all of that has come together to produce a really complicated set of pressures, pushing and pulling in all sorts of different directions.
Question: In this model of consolidated corporate firms, everyone can’t become a partner; what happens to those who don’t?
Larry Kramer: Well, from about the mid 1980s until, you know, just really recently, a couple years ago, actually the profession was expanding hugely, so they could. So, yes, so the model was, you would hire huge classes of incoming lawyers in the first or second year, maybe, you know, 125, 130 lawyers coming in on the assumption that by the second, third, fourth year, they would be moving out. And so you’d have fewer numbers who were going to, you know, work their way up the ladder to partnership. The lawyers who were moving out, though, they had places to go. I think between, say 1985 and 2005, the legal market expanded by about 77%. In that same period, law schools expanded in terms of the number of students that they were taking by only about 7%, at least at the established law schools. And so there was lots of demand and lots of room for growth.
And what happened last year when the economy collapsed was suddenly nobody was hiring. So there was nowhere... that’s why you had layoffs. The layoffs were heavily in the third and fourth year classes, not in the beginning lawyers, right? Because people who were supposed to move out suddenly had nowhere to go, but the firms' economic model didn’t have room for them to stay there, so they had to do some layoffs.
Question: What should law school accomplish?
Larry Kramer: So, you know, again, this is a really complicated story as well. I mean, again, if you go back, modern legal education, which is, you know, three years in school, emerges only in the mid-19th century, maybe late-19th century. It only becomes dominant in the early 20th century. Before then, most lawyers are trained in an apprenticeship system, where you, you know, you find a lawyer and you work for that lawyer for some number of years—like the English still use this to a large extent—you follow the lawyer around, you learn that way, you take the bar, you become a lawyer on your own.
There was only actually historically a really tangential connection between legal education in school and the practice of law. So law schools taught essentially one skill, one core skill for being a lawyer, which we refer to generically as we taught people how to think like a lawyer. And that’s basically teaching them how to look at a set of facts and spot the legal problems, and then analytically break those problems down. And it’s an essential skill, I mean, it’s really, you can’t do much without it, but with just that, you can’t practice law.
So the truth was, the apprenticeship system affectively continued because students would graduate, they’d have this degree, they would then go to a law firm and their first three or four years in the firm were in effect, an apprenticeship. And that worked just fine, they would go to the firm, they’d wander around practice groups for three or four years, try out different things, learn, get a lot of training, and then settle into a practice really in their fourth year. So it was more like medical school than people kind of realize, even though it wasn’t a formal residency model, and that worked just fine in the old system. It works a lot less well when the changes, you know, begin to take place that we’ve been talking about.
So suddenly, if you need those first and second year associates to do a lot of, you know, billable hour generating work, you have less time to train them, you can’t really let them float around from practice to practice anymore, they come in, you need to slot them where you need them and get them, you know, billing hours right away doing document work or whatever, organizing large litigation, and so on. And so, you know, that puts pressure back on the school to maybe do something a little more or different by way of preparing them. On the other hand, within the law schools themselves, you know, the tradition that grew up over the 100 years was, this was the place to get a real intellectual understanding of law. So, you know, the culture within the legal education environment was not at all one of preparing people to practice for law and then the debate gets framed in this funny way where law schools are intellectual environments, right? We teach you to think deeply about law. And we’re not going to be trade schools. And of course, as long as that’s the framing of the debate, you know, that you learn the trade in the trade, that’s where you do that, it created a fair amount of tension as pressures grew to prepare students better to be able to hit the ground running when they reach the firm and do something more than they could do.
Because the fact of the matter is, they weren’t really prepared to do much more than the low level document work that they were now doing when they graduated from law school, because the schools had done so little to equip them. So I think, you know, what’s happening in legal education is, we need to do more to prepare them to practice, but the mistake in the debate is the framing of it as we’re either intellectual environments over trade schools, when the truth is, there’s a wide set of skills that are intellectual skills, you know, that are the kinds of things that universities actually can specialize in and do very well, that are essential to the practice of law, that we have not been doing. That we’ll prepare them better to be lawyers and that’s the set of skills that we need to fill in.
And the easiest way to think of them is, and if you think about all the changes that we talked about, what we need to do is we need to prepare them better to work with clients more quickly. To be able to offer more, more value to a client than, you know, than they can offer, when all they know how to do is spot a problem on a set of facts that has already been developed for them and analytically break it down.
And so that’s, I think, where legal education needs to go. What it needs to be is a place in which one does still get a deep, but also a broad understanding of the full range of analytical and judgment skills that make a great lawyer a great lawyer.
Question: How is Stanford revolutionizing legal education?
Larry Kramer: So, what we’ve done, I mean the writ large, is largely to reconceptualize the way to think about the three-year program. So the traditional understanding of the three-year program was, we’re going to teach you this one skill, and you’re going to do it by serving various fields of law. And in each of them, we’ll put you through the paces, you know, what’s the problem, what about this? What about that? The whole Socratic method thing, which is a great way to teach people how to spot problems and analytically break them down.
As I say, it had the very tangential connection to actual practice, it didn’t give them a whole lot of skills that they needed, but it is essential. So the first thing is, you have to take care of business first.
One of the, you know, well-known facts about law school is it never took three years to do what we were doing, it took maybe two years at most, maybe a year-and-a-half. And it’s not that students are good at it after, you know, even after three years, they’re not good at it. But what we’re contributing by what we do in class is become, has really fast diminishing returns. And so third year students have been notoriously bored out of their mind. I found a letter written by the first dean of Stanford Law School in 1891, six years after the law school has formally started and which he’s already complaining about the fact that the third year students are completely disengaged, it’s a crises, what are we going to do about this? And the answer was, nobody ever did much of anything.
And so, so the first step was to say we need to take care of business, but we can do that in a lot less than three years and that means we have a lot of time left in which, you know, we can actually begin to do the other things that need to be done to prepare a lawyer really well. So I’m actually opposed to the idea of decreasing law school, say from three to two years, that’s not a bad solution if we want to continue producing badly-trained lawyers, we might as well produce badly-trained lawyers in two years rather than three years and save them time and money. But instead, it makes sense to use the time to do other things that will make them, in fact, better lawyers, that we probably should’ve been doing all along.
So we start by saying the first year is the year in which we’re going to concentrate exclusively on that traditional skill of how to think like a lawyer. And so we’ve kept a very traditional first year, in fact, we’ve actually toughened it to some extent, because we really want to lay a very solid foundation. But instead of thinking of the first year as a year that prepares them to be lawyers, because it doesn’t, we think of it as the year that prepares them to be second and third year law students.
And so now we’ve got a two-year period in which we can really begin to train them to be lawyers. And what do we want to do with that period. And, you know, you can break it down into, I mean, a piece of it is, of course, they’re not completely done with the traditional legal education, so a piece of the second and third year will obviously continue to be focused on developing their core legal analytical skills, but there’s a whole slew of other things that we need to do in order to really change the education in a way that prepares them.
So they fall into a bunch of categories. One of them, which actually seldom gets attention, is we need to actually help them think about what kind of lawyer they want to be, because that matters. It didn’t matter in traditional system because, in fact, they had this four-year apprenticeship to wander around and they could figure that out then. And so, you know, when students came to law school, they were told basically, you know, take the three years, it’s like liberal arts in law, doesn’t make what you take. Just take lots of classes, you’re really, you’re developing this thinking like a lawyer skill and it doesn’t matter what classes you take for that.
The second piece was to think about what are the other kinds of skills that they need in order to be a lawyer. And this is really the most complicated piece because, you know, one of the things that makes law so interesting and so attractive to so many people, it’s what drew me into the profession, is law touches on everything. Right? I mean, it’s, there is no domain, no activity within society that is not in some way regulated by law, in which law structures the environment, and which there’s not a role for lawyers to play.
And the problem is then, there’s not a generic skill set that you need, it really depends on what kind of lawyer you are. So if you think of traditional legal education as teaching people how to spot problems, how to identify what the problems are, what we never did anything about was teaching them how to solve the problems. You talk to any lawyer, any lawyer today who’s been in practice and they will say, “You know, lawyers are problem solvers, that’s what we do, we solve problems.” And that’s absolutely true, it is what, you know, what a good lawyer does. It’s just that legal education never did anything to teach anybody anything about how to solve a problem. So how do you do that?
There are some people who sort of conceptualize this as there’s a generic set of problem solving skills, too, that we can teach people and I think that’s just wrong. The kinds of problems a lawyer needs to solve depend on the kind of lawyer we’re talking about. So what an environmental lawyer needs to solve the problems of his or her clients is just different from what, you know, a business lawyer needs, an intellectual property lawyer needs, a social services lawyer needs, government attorney, whatever it is. So you need to be able to give them the kinds of problem solving skills that they need for the kind of practice that they’re interested in moving into.
We’ve added on top of that, a series of classes that are designed as problem solving courses. So, you know, if you think of the traditional classes, we’re just going to present you the material across the area, so you know what all of the issues and problems are. Those are important, that’s how you lay a foundation, but how do you use that? And so you create a set of classes in which you put the students into teams and you give them actual problems to work on together and solve and it helps them bring what they’ve learned in the other classes to bear in a way that, you know, helps them comprehend how it actually plays out. And teaches them how to work with others and how to communicate the law to the person from the other discipline and how to learn from the person who has the other discipline, what they need to, you know, to understand and then to work together to figure out a solution to the problem, and so on.
So as I said, there’s a whole shift in the courses which changes the conceptual and analytical tool kit that students leave with. So they have not just the one tool, how to think like a lawyer, but they’ve got other ones as well.
Then the last piece, once you’ve done all that, is now you want to give them some sense of how to deploy it, in a real context. And that’s really the central function of all the different forms of experiential learning that have folded into the law school. So we’re not set up and can’t quite do what medical schools do in terms of rotations, but we can do something like that with a strong clinical program, where you can give students an opportunity to have real client representation under close supervision but where they’re the lawyers, they have to make the choices. And so it gives them a chance to take all the things that they’ve learned in their classes and learned through their research and now have to make the choices. And, you know, it’s one thing to have a given set of facts presented to you and say, “Can you spot the problem,” blah, blah, blah, it’s another thing when actually the facts aren’t given, you construct them, you have to figure out how to do that. Once you create the case as you go along, you have to make the choices because there’s always choices to be made and you discover, you know, it’s not as easy as just this analytical process. I mean, I’ve got a client who has needs, how do I take care of those? I’ve got resource limitations, I’ve got ethical obligations. I’ve got too many choices, I don’t even know how to think them through. So practical judgment skills in the problem solving context are an essential part, that is something you can learn, you know, in practice and you learn by doing. But we can, in a controlled environment, set you up so that you’ll be able to do that much more effectively when you’re on your own. Right? We can help you identify and name the kinds of problems so that you see them. And we can walk through the process with you in the controlled environment so that, you know, you can begin to see the kinds of mistakes that you’re going to avoid when you are on your own, and so on.
So, you know, you put it all together and what you’re talking about is a very traditional first year that prepares you for a second and third year that just has a completely different mix of classes, of research opportunities, of experiential learning opportunities, that has you as part of the university so that you’re taking advantage of all that, and that as a result, you know, put you in a position where you really can hit the ground running when you get into practice and be prepared to work with clients, if not immediately, very quickly.
Question: Will there be a consolidation of law schools in the next decade or so?
Larry Kramer: Not a consolidation. I mean, again, the legal market grew a lot faster than law schools, so even though the legal market is shrinking some now, I don’t think you’ll see a huge affect. I think one thing to be aware of, is the legal market is quite segmented, so, you know, the fact of the matter is the elite law schools are not only attracting different students, but they’re preparing them for really different careers, than, you know, the lower tier law schools.
And what’ll be interesting is if the legal market—see, we have no idea, the legal market may just continue to grow or it may, you know, there may be a slight downturn and then it will grow again. But if it were to continue to shrink, I think the bottom tier law schools will not actually be that affected, because as I say, they’re educating students for what amounts to a different market. Within the mid top tier schools, if the market shrinks, then presumably there will be pressure at the lower end of the top tier and it’s hard to predict what would happen there. There may be shrinkage, there might be some schools that phase law schools out, but I think it’s much too soon to say that that’s going to happen and as I say, I think more likely will be just—law schools will need to adapt to a changing profession and as they do, the problem should get solved that way.
Question: Is the billable hour on its way out?
Larry Kramer: I think it’s too soon to say whether the billable hour is dead or not. It’s hard to imagine it just disappearing. There is increasing pressure for fixed fee billing. I think right now everything is in such flux that it’s hard to see quite how it will sort out. Some of the things that are happening are contradictory, so for instance, you can imagine a large client, a client that generates a lot of business wanting to say to law firms, “We’re not going to pay by the hour. We want fixed fee.” But some of them then say, “And we’re going to do it sort of matter by matter and we’ll have a beauty contest for each matter.” That can’t sustain because competition among the firms then to come in at, you know, at a low billable rate, at a low overall rate rather, only works if there’s sustained business to be had. You have to make a guess on how this is going to work and you can’t do it if in every single instance you don’t know if you’ll get the business, you don’t know exactly what it’s going to cost you. So if you have a sustained business relationship with the client, then you can say, “You know, we can do this because we can just go to X-dollars per year and we have a pretty good guess about, some years it may be a little more, some years a little less, we’ll be okay.” So that’s one possible direction in which things move and then the billable hour could diminish or even disappear and it won’t have a huge affect on the profession.
You know, another would just be continued pressure to control billable hours much more tightly than has happened. That could also work. And there may end up being some sort of mix and there may end up being still alternatives to those two arrangements. One of the things that needs to get looked at that we’ll see a lot of is, you know, global competition is just emerging. So as I said, when the legal market globalized, the US initially dominated that—the US and England—initially dominated that. But, you know, there’s a lot of development happening in a lot of countries and legal services now can be delivered much more cheaply from places that traditionally weren’t a part of this game at all. And that will also put pressure on firms.
And so as that happens, you may get a split, you know, where a company will say, “Well, we will give this portion of the business out there that is low cost, and then we’ll keep the billable hour, because, but we’re only going to be paying for the high judgment skills. Right? So we’ll pay for your top partners and however many hours it takes them, we’re fine with that, because we know we’re getting value for those hours. And so we’ll do it that way.” You know, so there’s a lot of still sorting out to be done.
Question: What do you think about the current process of hiring law students two years in advance?
Larry Kramer: The current hiring process is a disaster. I mean, it works for nobody in fact. From the firm’s perspective, the big issue is they’re hiring people so far ahead they don’t know—not only, they don’t know what their needs are going to be, they also really don’t know what they’re buying. I mean, the students are committing to jobs at the end of their first summer that they will take in the second summer that then, you know, hopefully lead to offers for jobs that they will take after they graduate. So from the student’s perspective, they’re making a choice about a career, when at the vast majority of law schools, they’ve only had required first year courses, they have no idea what’s going to be interesting to them in law really, because they haven’t had any opportunity to explore.
The problem is, competition among the, it’s one of these situations where competition among the firms for, you know, what they regard as who are the best students, at least as far as we can tell now, and that’s what we want to grab, you know, forces the process earlier and earlier. So while all of the developments that we’ve been talking about would suggest a later process and a more informed process, at the same time, competitive pressures have been pushing it back sooner and sooner and it just keeps getting worse.
I think, you know, a process that would make sense would take place at the very least near the end of the second year, at the, you know, that would be the earliest. In some sense, it would be better if it took place in the third year. And when students had really had a chance to develop some interest and skills and could narrow their firm choices to firms that were doing something they were interested in doing, firms would have a strong sense of exactly what their needs were in that area, but right now, it’s hard to see how we move in that direction because as I say, competition just makes it impossible and nobody wants to be the first mover.
Question: Why are lawyers the most depressed professionals?
Larry Kramer: So I think a large part of that comes from exactly the things that we’ve been talking about. Which is, people have been, you know, making job choices, early career choices, that are not really well suited for them. And then getting into jobs with the idea that they’ll just do it for a couple of years, make a lot of money, pay off their debt and then find something that they like. But what happens too often is, it’s actually really hard to go from making $200,000 a year to making $100,000 a year. So they don’t make the move out once they’ve been in it for a couple years and suddenly they’re locked in a career that isn’t really satisfying to them.
A big part of that is our fault, the law school’s fault, because, as I say, we’ve always done much too little to really help them think about their choices while they’re in school and we’ve made it easy for them to just follow this path. So, you know, so we need to reduce that, I think we need to help people actually while they’re in law school, you know, find their way to a career within the law that will be fulfilling. It’s not the practice of law, as I say, the practice of law is great. It’s fascinating, you get to work with amazing people, you get to do important things, you get to help people in a big way. So it’s just a question of helping people find that part of a legal profession that does that for them and we haven’t done enough of that and I think too many people have done too little.
Now, there’s two other aspects to this, though. One is, for what it’s worth, I think the reports are somewhat exaggerated. We’ve been doing our own research on this and actually there’s a study that’s just come out called, After The JD and After The JD 2, and the levels of satisfaction among legal professionals are much higher than a lot of the other studies or anecdotal reports would have you think. They’re still not as high as they ought to be, but it’s, I think, not quite as bad as conventional wisdom now holds. And then the second thing is, you know, there’s also a large amount of evidence that suggests that if you can find a way to make public service a part of your career, you’ll have a much better career. And so this is something else that I think the law schools have to take on.
We’ve taken this on as one of the central tenants that we try and give students in their three years there, which is some exposure while they’re in school to some form of public service, whether it’s, you know, a pro bono practice full-time work, government work, whatever it is, you know, we say to them, “You come to law school, you’re going to get a license to practice law. It’s a really powerful thing in this society, you can do a lot of, a lot of things with it. Now you’re going to make a choice what kind of career you want to have and we don’t have, you know, it’s not our judgment about that, you should make your own choice, there are a lot of different careers in law, you have to find something that seems to suit you, but whatever practice you choose, whatever kind of law you choose to go into, there’s room in it to do public service. And that will be both good for the community, but will also, you’ll be much more fulfilled in your career if you do it. And so we try and model for them the different ways to do it, we try and do a lot to help students find their way into that, even the ones who are not going to, you know, become full-time public interest lawyers, it doesn’t matter. All right?
There’s still ways to do this and we’ll try and help you and that will increase career satisfaction as well.
Recorded May 5, 2010
Interviewed by Jessica Liebman