Empirical Legal Studies

RAND's ICJ is Hiring

Colleagues at RAND's Institute for Civil Justice (ICJ) asked me to post the following job announcement for a Civil Justice Researcher.

"The RAND Institute for Civil Justice (ICJ) is looking for researchers at all levels of experience who can support, expand, and extend our research agenda on civil justice, business, and the law. We encourage applications from persons with strong training in empirical legal research, who possess an interest in building our portfolio of work in related areas, and who bring a collaborative, entrepreneurial spirit consistent with the culture of the ICJ."

Those interested should direct all inquiries to RAND and reference Job ID# 2221.

Today's WSJ on Law Schools "Gaming" US News Rankings

Over at PrawfsBlawg Adam Kolber started an interesting thread about the front-page story in today's WSJ (I was unable to find a link to the full story) on law school efforts to game US News rankings.  Such efforts, of course, are legion and increasingly well-understood among legal educators. I'll only note that the WSJ piece quotes the ELS Blog's very own Bill Henderson and features Tom Bell's (Chapman) empirical research on the rankings.

Northwestern's Research Symposium on Empirical Studies of Civil Liability

Max Schanzenbach (Northwestern), in conjunction with Northwestern University School of Law's Searle Center on Law, Regulation, and Economic Growth, has organized a Research Symposium on Empirical Studies of Civil Liability. This symposium, set for 9-10 Oct. 2008, at Northwestern Law School, will bring together leading empirical legal scholars to evaluate the effects of civil liability on economic activity. Presented papers will address a broad range of topics, including alternative dispute resolution, tort reform, settlement behavior, and securities litigation.

Conducting Empirical Legal Scholarship: The Advanced Course, October 24-26, 2008

 

On Friday, October 24, 2008 through Sunday, October 26, 2008 Lee Epstein and Andrew Martin will be teaching a workshop called "Conducting Empirical Legal Scholarship: The Advanced Course." This workshop will be held in Chicago, and is co-sponsored by Northwestern University and Washington University. The workshop is now open for registration at:

  http://www.law.northwestern.edu/faculty/conferences/empiricalworkshop.html

The workshop is designed for those who have some experience with empirical legal research, and an understanding of elementary statistics (at the level taught in the introductory workshop). Topics to be covered will include: multiple regression, regression models for limited dependent variables, presenting results from non-linear models, data visualization and graphics, and matching methods for causal inference.

Please visit the website for all logistical details. Feel free to contact Andrew Martin (admartin@wustl.edu) with substantive questions.

Economic Consequences of Religious Liberty

In Church and State: An Economic Analysis, Keith Hylton (BU), Yulia Rodionova (UCL), and Fei Deng (NERA), explore the consequences of public regulation of religion from an economic perspective.  Specifically, their paper examines "the effects of state regulation on corruption, economic growth, and inequality."  What they find is that: "laws and practices burdening religion enhance corruption.  Laws burdening religion reduce economic growth and are positively associated with inequality."

Law Professor Free Agency and "School-Specific" Capital

[Update: Paul Caron (Cincinnati), Michael Madison (Pittsburgh Law), Jeff Lipshaw (Suffolk), Jim Chen (Louisville) have picked up on the analysis in the below post.  There seems to be some misunderstanding on my point of "long-term contracts."  In retrospect, I should have said "long-term commitments" (i.e., extra-legal and perhaps not committed to writing) to avoid what I think is an unproductive analysis of run-of-the-mill employment and commercial contracts. 

I am talking about this:  Academic X says, "I will stay here X number of years and ignore outside offers if you provide me with the resources to execute the following institutional plan [e.g., labor-intensive but high-yield teaching, public service, useful scholarship that will be noticed and solve a real world problem, etc.]."  Law School Y says, "I love this idea.  If you are right, it will grow our institution.  Because you have committed to building it here, School Y will fund it."  Because both Academic X and Law School Y have aligned personal and institutional agendas, their cooperation and commitment grows the institutional pie; both are made better off. Moreover, it becomes magnetic for other scholars and funders who share the substantive vision. 

So we are talking about communitarian norms here.  This type of approach is easy in small groups, which is what law faculty are.  Firm-specific capital in law firms is harder to grow/maintain because (a) they have gotten larger, (b) covenants not to compete are prohibited, and (c) there are liquidity constraints imposed by the ban on non-lawyer ownership.  On the other hand, law firms work harder at it because they increasingly operate in a competitive national marketplace--firm-specific capital can be huge competitive advantage.  Law schools, in contrast, are not subject to the same market pressures--the most elite have huge endowments and donors who want to give more to be associated with the elite brands.  Thus, in the legal academy, the free agent ethos is damn near ubiquitous.

No need to be abstract about all this.  I lay out a highly plausible counteractive approach in this comment.]

Several bloggers have noted Clayton Gillette's recent article, Law School Faculty as Free Agents, 17 J. Contemp. Leg. Issues 213 (2008).  See, e.g., Paul Caron, Larry Ribstein, Al Brophy, and Paul Secunda.  Gillette's essay provides the type of straight thinking needed to move the Moneyball-Moneylaw debate into a mode of institutional analysis that can produce actual results.   I will briefly lay out Gillette's analysis and then extend it to a concept I call "school-specific" capital--an analog to firm-specific capital.

Law Professor Free Agency

In a nutshell, here is Gillette's argument.  The lateral market for law professors is primarily based upon scholarship, which is an observable, coveted good.  Teaching and service, to be sure, are relevant goods, but they are hard to measure.   Further, faculty make hiring decisions; when they land a high profile scholar, they share equally in the school's reputational gain (albeit these gains are largely limited to opinions of other professors).  Yet, if new colleagues shirk committee work or are disengaged and uninspiring teachers, the costs borne by individual faculty members are negligible or non-existent. Hence scholarship becomes the focus of lateral hiring.  Clayton observes,

In 30 years of teaching, service as vice dean, and membership on appointments committees, I don’t believe I have ever heard a discussion of a candidate’s qualifications that included serious consideration of institutional service, except insofar as it related to scholarship. ... 

[H]iring schools tend to invest little in discovering teaching quality. The hiring decision is typically made after one or two faculty members at the hiring school attend one or two of the visitor’s classes, and that is done through a process (e.g., informing the visitor when faculty members will attend, and allowing the visitor to choose that time) that diminishes the likelihood that those classes will be representative. ... The result is that, as opposed to the meticulous, highly tailored criticism to which a candidate’s scholarship will be subjected, a candidate’s teaching will be evaluated largely to determine whether it is “good enough.” (pp. 228-29)

Gillette's key insight is that the lateral market in legal academia, unlike baseball (a crucial point), does not force the decision-makers [faculty] to internalize the benefits and costs of free agent activity:  Some costs potentially get externalized onto the students, alumni and law school administrators.   When  scholarship opens so many doors, Gillette suggests, it is easy to see how a more robust lateral market can skew institutional incentives and detract from overall educational quality.

To my mind, Gillette sets forth a very coherent and plausible analysis. [I suspect a lot of people will quibble with it, however, believing that their own lateral experience (or aspiration) reflects a more optimal outcome at the institutional level.  Listeners interested in the merits of this debate should weigh the critic's potential bias.]   It is an open question whether lateral mobility is really on the rise. At Indiana Law, we are building a law faculty universe database that covers 80 years of AALS schools.  See "Is Lateral Movement on the Rise? A Precise Answer is on the Way," ELS Blog (Dec. 21, 2006).  We see a lot of lateral movement in the 30s, 40s, 50s, 60s, and 70s. Eventually we will answer to the nagging empirical question of whether lateral movement is truly on the rise.

But one thing I can say with confidence--information published on the Internet (Leiter Faculty News and Concurring Opinions) has increased the perception of heightened movement.  And perception is all that is necessary to change behavior and institutional norms--possibly in the wrong direction.

"School-Specific" Capital

Gillette actually understates his argument.  Specifically, the proliferation of a free agency ethos not only undercut educational quality, it inhibits the cooperative, highly committed, selfless environments need to create truly exceptional institutions.   One of the major implications of more professor mobility is the diminution of "school-specific" capital--i.e., desirable law school attributes, such as innovative curriculum, public service reputation, alumni good will, that remains largely intact when a professor leaves.   So more free agency suggests fewer law schools that transform good human capital into great human capital.  On this score, the "best" law schools can, in fact, be pretty mediocre.   (I believe there is a way out of this box, which I will address below.)

More after the jump. ...

"Deal or No Deal": NYT Story on Forthcoming JELS Article re: Case Settlement Decisions

Last Friday's NYT (8.8.08) included a lead story in the Business section (at C1) on a forthcoming JELS article. The subject of the NYT piece--a forthcoming article in 5:3 JELS (Sept. 2008)--reports results from a study of the financial consequences of case settlement decisions. To better assess the financial cost of going to trial, the study analyzes cases in which a settlement offer was considered, but rejected in favor of proceeding to either arbitration or trial. The findings reveal the influence of contingency fee arrangements and the availability of insurance coverage on plaintiff and defendant settlement decisions, respectively.

Funding for Civil Litigation Research

The ABA Section of Litigation invites applications to The Litigation Research Fund which makes individual awards of between $5,000 and $20,000 to support original and practical scholarly work that significantly advances the understanding of civil litigation in the United States.  The Fund was established in 2007 to support research and writing projects relevant to litigation policy and practice, with preference given to works with an empirical foundation. The first round of funding in early 2008 resulted in seven grants totaling approximately $70,000.  Priority will be given to applications received by August 31, 2008.  For additional information, see http://www.abanet.org/litigation/researchfund.

2009 APLS Annual Meeting

Jeremy Blumenthal (Syracuse) reminds me that the CFP for submissions to the 2009 American Psychology/Law Society (APLS) annual meeting in March was just posted. More info about the APLS is found here.

Indiana Law: Lateral and Entry Level Positions

[Interested in building a truly great law school?  Want a high quality life for you and your family? Consider this opportunity, which ran on SSRN Professional Announcements last week. wdh]

In 2007, Indiana University School of Law-Bloomington received a $25 million gift from the Lilly Foundation for the purpose of attracting and retaining leading scholars and teachers. The gift will enable the Law School to hire up to five senior level professors without limitation to specific curricular subject. In addition, the Law School is seeking outstanding applicants for several entry level openings. Although the entry level and lateral hiring committees are particularly interested in hiring scholars that will leverage and extend the School's current strengths, all qualified candidates will receive careful consideration.               

About the Law School.  The attractions of Indiana Law include:

• Highly collegial faculty with a longstanding focus on globalization, international law, interdisciplinary research, and law & society scholarship.
• Attractive law school facilities, including a top-ranked law library.
• Integration with a major research university on one of the nation's most beautiful campuses. 
• Excellent, ambitious JD, LLM, and SJD students with strong entering credentials.
• Strong commitment to curricular innovation to keep pace with a rapidly changing legal profession.
• Three course teaching load, small average class size, and an excellent student-faculty ratio that will further improve through new faculty hiring.
• Excellent support for conference travel related to scholarship and professional service and development.
• A lovely, vibrant Big Ten college town.
• An active and supportive alumni base.
• Competitive salary and benefits.

Application Procedure.  The entry level and lateral appointments committees invite      confidential inquiries from scholars at other institutions.  Women and underrepresented minorities are encouraged to apply. Interested candidates should submit a c.v. and a letter summarizing their future career goals in the areas of scholarship, teaching, and service. Please direct these materials, either electronically or through regular mail to the chair of the entry level or lateral appointments committees:          

Entry Level Contact:
    Jeannine Bell, JD, PhD                    
    Professor of Law & Whistler Faculty Fellow                    
    211 S. Indiana Ave., Bloomington, IN 47405     
    jeabell@indiana.edu     
    Ph. 812-856-5013          

Lateral Level Contact:
    Kenneth Dau-Schmidt, JD, PhD                    
    Willard & Margaret Carr Professor of Law                    
     211 S. Indiana Ave., Bloomington, IN 47405     
     kdauschm@indiana.edu     
     Ph. 812-855-0697          

Indiana University is an Equal Opportunity/Affirmative Action employer. 

Solicitation Letters to Prospective Transfer Students

A reporter for the ABA Journal has contacted me for a story on uptick in transfer students.  She has dug up a lot of information on this topic.  Although she has heard a lot of rumors that some law schools directly solicit rising 1Ls from other law schools, at this point they are all rumors from lots of law school administrators.

If any reader has any concrete evidence of direct solicitation of transfer students, the reporter, Leslie Gordon, would love to hear from you.  (It would be great if you would cc me, as I would love to see the evidence as well.)  Thanks. 

Class of 2007: A More Extreme Bi-Modal Distribution

NALP just published its 2007 edition of Jobs & JD's.  One topic of interest to students, lawyers, law firms, and legal educators is the change in salary distribution from 2006 to 2007.  The now famous 2006 bi-modal distribution was vivid evidence that the U.S. legal profession is undergoing significant structural change.  As shown in the graph below (from this NALP webpage entitled "Another Picture Worth a 1,000 Words"), the underlying stressors are even more pronounced for the class of 2007. 

The sample is based on 23,337 law school graduates from the class of 2007 who reported salary information.  Note, however, that 197 ABA-Accredited law schools graduated 43,518 students in 2007.  Although we know the types of jobs taken by 40,416 grads, only 57.7% of this group provided salary information.  If I had to wager on the direction of underreporting, I would predict it was under-inclusive of graduates with lower salaries and those who did not pass the bar.  Why?  Aside from the human psychology that it is easier to share flattering rather than embarrassing information, the roughly 7,500 jobs under the second mode are fairly close to figures I have seen from ALM and NALP data, which are provided by large law firms rather than individual students.  See, e.g., charts in this NLJ article.

This bias, however, is not necessarily good news.  In the above graph, 32.5% of the law graduates took jobs with starting salaries in the $100K+ range; but the true percentage for the class of 2007 is probably lower.   Some facts and then one normative observation.  The facts first:

• 91.9% of 2007 graduates were employed 9 months after graduation, which compares favorably to 2006 (90.7%), 2005 (89.6%), 2004 (88.9%), and 2003 (89.0%).  I would like to believe these numbers are trustworthy. 
  
• 76.9% were in jobs that required bar passage.  [It would be useful to disaggregate the jobs in the remaining 23.1% of law school graduates.  Who are these students?  How many entered law school with no intention of practicing law? ]
• The median salary in the above distribution is $65,750; the mean is $86,396.  But these measures of central tendency are not reliable guides of future earning power.
• 38% of all starting full-time salaries were less than $55,000 per year, including 18% of all jobs in private practice, 27.5% in business, and 70.0% in government (excluding judicial clerkships).
• 79.6% of law firm jobs in NYC, 80.3% in Washington DC, and 74.9% in Boston were in firms with 100+ lawyers.  Even in Indianapolis, 50.4% were in 100+ lawyer firms.  Wow! those are big numbers.

See also NALP Press Release, July 24, 2008.  On the normative front, I have a simple thesis:  the bi-modal distribution is bad for students, bad for law firms, bad for clients, and bad for law schools.  [When I showed the 2007 distribution to one law school dean, she shielded her eyes!]:

• Students.  It is bad for students because at $160,000 per year, many corporate clients will ask that you not be assigned to their matters.  And if your initial work experience is document review, a $160K job can quickly become a dead-end because your skill set is not growing with your billing rate (avg. 1st yr billing rate in a $160+ firm is $225 to $255/hr).   So the atmosphere among associates at $160K+ firms is probably becoming more competitive.  It would be better in the long run to start at $95K, learn your craft, and become a great lawyer who commands top dollar.  And young lawyers should think long run.

• Clients.  This is bad for clients because the short term solution of requesting only midlevels and partners will eventually constrict the supply of incoming legal talent.  When clients and law firms try to externalize the cost of mentoring and training--here I mean observation, contact, and feedback from partners and clients--associates are more likely to leave.

• Law Firms.  Actually the bi-modal distribution is only bad for firms trying to keep pace with the Am Law 200 salary pay scale.  In contrast, boutiques and organizations like Axiom will find general counsel more interested in their value proposition.  For Am Law 200 firms, the difficulty is getting partners to commit themselves to the future of the firm by spending more time and money investing in associates.  This will reduce attrition and protect the brand.   But the $160K+ cost structure provides partners with strong incentives to bill hours rather than investing in the long term future of the firm.

• Law Schools.  The economics of the bi-modal distribution take the pressure off elite law schools--indeed, they can raise tuition! Thus, for many law professors, the best outcome is lateraling into a Top 15 law school.  But more/better law review articles--a precondition of a lateral offer--is not going to solve the difficult institutional problems of lower ranked schools.  Now more than ever, all law faculty members need to understand the structural shifts taking place in our profession.  When faculty at Harvard and Yale ignore these changes, it does not mean that these changes are not important.  It just means that Harvard, Yale, et al. are not affected.

I don't have any solutions to these issues, though I did write up some useful insights in my prior post, "Part II: How law firms misapply the 'Cravath System.'"  Our situation reflects difficult collective action and coordination/signaling problems.  For example, how a firm gracefully bows out of the salary wars is an immensely difficult problem.  I do think, however, that permitting nonlawyer investment would provide law firms with the financial wherewithal (and psychological courage) to experiment with more innovation.  And that would be good.  Larry Ribstein's scholarship is now more timely than ever.  See, e.g., here and here.

When I was an interim associate at Sidley & Austin the summer after the 2000 salary wars, a partner told us that "we are all going to hell" based of the jump in salaries from $95K to $125K.  I now worry that he may have been right.

Part II: How most law firms misapply the "Cravath system"

In my last post, I discussed the linkage between the bimodal distribution and the emphasis on credentials under the "Cravath system".  I also stated that most law firms misunderstood the internal logic of the original Cravath model and promised to elaborate in a subsequent post.   This is the promised entry. 

One note of context:  this post is not a history lesson.  The Cravath system reflects a profoundly powerful method of developing human assets.  Cravath started with very good associates/inputs  and turned them into truly exceptional lawyers who were in high demand by clients and other firms.   Moreover, the Cravath system required lawyers to work together collaboratively to further the clients' interests.  This resulted in efficient and highly effective legal services that engendered the abiding loyalty of clients and more demand for the firm's services. See Results or Résumés at 4 & n. 13 (discussing concept of firm-specific capital). In other words, under the true Cravath system, everyone comes out ahead. Two caveats:  (1) the first-mover--here, Cravath 108 years ago--garners the most benefit; (2) if a firm neglects a key element--e.g., investing in associates--the model generates no competitive advantage.

[Sources: The Cravath system described below come primarily from Robert Swaine's 1948 history of the firm and other contemporaneous sources from the 50s, 60s, and 70s, which I will cite as appropriate.]

Recruiting Elite Law School Graduates

One of the hallmarks of the Cravath system is the recruitment of elite law school graduates.  As of 1948, Cravath, Swaine & Moore and its predecessor firm had employed a total of 454 law school graduates as associates.   Of this total, 67.7% attended Harvard (128), Columbia (124), or Yale (54).  According to Swaine, "in recent years there has been an increasing number from the law schools of the Universities of Virginia and Michigan."  These two schools rounded out the top five :  (UVA 30, Michigan 26).

Cravath's emphasis on credentials, however, had a clear economic logic that was designed to compensate for the deficiencies of early 20th century legal education.  During this period, most law schools required little or no college education.   In contrast, Harvard, Columbia, and Yale grads typically had a college degree before entering law school.  Swaine writes,

Cravath believed that disciplined minds are more likely to be found among college graduates than among men lacking in formal education ... .

Cravath believed in seriousness of purpose--a man with a competent mind, adapting to practicing law according to Cravath standards, should have made a good scholastic record at college.  But he recognized, without full approval, the tradition of the early decades of this century--that "gentleman" went to college primarily to have a good time and make friends.  Hence, while a good college record was always a factor in favor of an applicant, lack of such a record was not necessarily an excluding factor. ... [I]n the stern realities of the depression of the '30s, however, college records of applicants came to have added importance.

Yet, "[f]or a poor law school record Cravath had no tolerance."  Candidates who "had not attained at least the equivalent of a Harvard Law School "B" either had a mind not adapted to the law or lacked purpose and ambition ... ."  Thus, the "first choice" was a "Phi Beta Kappa man from a good college who had become a law review editor at Harvard, Columbia or Yale."

Note, however, that Cravath's emphasis on credentials had a clear business purpose designed to compensate for the limitations of legal education.  During the first half of the 20th century, going to an Ivy League law school did not guaranteed legal aptitude. Prior to advent of the LSAT in 1948, college grades were the only predictors of success in law school.  In 1955, The "LSAT Handbook" included cross-tab tables of  LSAT scores versus law school performance for several individual law schools.  At Harvard Law, roughly 1/3 of the class scored below the 50th percentile.  On the west coast, UC Berkeley had a similar wide range of LSAT scores.  See The Law School Admission Test and Suggestions for Its Use (ETS 1955).  The clear relationship between LSAT and grades subsequently  encouraged law schools to revamp their admissions criterion.   But that process took decades.  See Lunneburg & Radford, The LSAT: A Survey of Actual Practice, 18 J. Legal Educ. 313 (1965).

In a talk at Harvard Law School, Cravath stated that a successful "lawyer of affairs" (aka corporate lawyer)  assumed "the fundamental qualities of good health, ordinary honesty, a sound education and normal intelligence."  On top of these attributes, a candidate must have "character, industry and intellectual thoroughness, qualities that do not make for charm but go far to make up that indefinable something that we call efficiency.  Brilliant intellectual powers are not essential."

More after the jump...