FARMER’S LEGAL RESIDENCY IDEA IS A GOOD START, BUT THE DETAILS NEED WORK

The rustling of academia seeking to restore order to a collapsing law school system has produced a flurry of proposals for reform at every level of the legal industry. In Sunday’s New York Times, the Dean of Rutgers Law School-Newark (not to be confused with alleged data-distorting Rutgers Law School-Camden), John Farmer Jr., joined the fray with an op-ed in which he proposed an idea that is both wisely progressive in concept and terribly ill-conceived in execution.

The Dean would like to create a legal residency program (good), that would rest the future of the legal industry on the good behavior and business management skills of large law firms (bad).

Farmer’s proposal has laudable ambition, but we’re skeptical of the details. While he astutely observes that “Law schools have trained students for a profession that has left a huge part of the public unable to afford representation — especially the middle class — and at a cost that perpetuates the problem,” he proposes a solution that more or less spit shines the current large-firm model, and those firms to now gouge new associates in addition to clients.

This doesn’t feel like the progressive reshaping of the legal industry that is sorely needed. Rather, the type of residency program Farmer suggests could be viewed as a reward to the large-firm business model for its failure. Instead of preparing the next generation of law students to manage a practice — a skill that is unquestionably unrefined in the modern legal industry — this plan would seem to be feeding law firms with cheap labor. The idea is that we treat new attorneys like medical residents, paying them significantly less while they provide services to a segment of society that is struggling to access them. It’s a great idea in broad strokes, but Farmer isn’t clear on why he believes law firms will use this cheap labor source to help clients in need.

Farmer is correct in suggesting that law firms would be able to hire more attorneys for less money, but his plan fails to recognize that law firms are already in a position to hire more attorneys for less money. The scenario Farmer’s reforms would aim to install has already manifested in the market. As the supply of new attorneys is way up and demand (among law firms) is down, firms could hire new associates at far lower starting salaries. So, why aren’t the firms hiring new attorneys for less money? Because either they can’t afford to or they don’t want to. It’s more likely than not that big firms are incapable of serving the middle class because they have too much overhead to make a $50/hour billing scheme work.

Consider that the reform Farmer suggests is, in some sense, already in play. New attorneys are already eligible to receive income-based repayment and, for public-service work,  loan deferments or loan forgiveness. So, pardon us if we don’t share Mr. Farmer’s faith in the law firms that a reduced-cost labor contingent on loan deferment will entice more firms to find and serve middle-class clients.

Farmer is right that the reform must come from law schools. Academia must prepare the next generation of lawyers to learn how to make a living on $50-150 an hour. This is not a magic trick, it’s cost management. Further, when Farmer speaks of a “legal residency,” program he should not be trusting this mechanism to the firms. Rather, non-profit universities ought to be at the forefront of the new legal development, bringing established attorneys together with new lawyers to serve the middle class at affordable rates. During a two- or three-year residency, a student should learn not only how to become an attorney valuable to established law firms, but also trained to run a solo or small practice and skilled in cost management tactics.

If you do the math, there is absolutely no reason why an attorney can’t live well billing $50-$150/hour. In fact, that is the take-home pay for most new associates, who are no doubt well-compensated. The problem in the legal industry is that lawyers do not do the math. It is time for Mr. Farmer and his colleagues to start teaching it.

ABOUT THE AUTHOR: Dave Brown is a founding partner of Boston MicroLaw, LLP, a practice of Business Formation Attorneys and General Outside Counsel for Small Businesses in Boston and Cambridge, MA. He is doing the math as we speak.

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