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Two cheers for indetured servitude!

Yesterday, Mike asked the following question about legal education and the profession:

As I read these, they take as premise the proposition not merely that law schools should change how they teach because practice-based teaching is more effective, but that law schools need to fill a training gap created by the growing unwillingness of many law firms to train new lawyers themselves.

Why should that latter proposition be the case? It is reasonable to argue that clients should not be forced to bear the cost of training new lawyers. But why should the profession not expect law firm partners to shoulder that cost ­ rather than passing some or all of it back to law schools?

I think that part of the answer lies in the nature of the employment contract. Pushing the cost of training back on law schools is slighlty misleading. We are really talking about pushing the costs back onto students. One reason that law firms may be reticent about lavishing resources on the training of young lawyers is that they have few guarantees that they can recapture the upside of the training that they lavish. There are few ways of stopping young lawyers from taking the training and leaving for greener pastures, giving firms (and associates) an incentive to free-ride on the training provided.

Here, I think that it is useful to contrast the legal profession to the armed forces. The military spends an enormous amount of money training its recruits. On the other hand, the Army has much stronger remedies against employees who try to walk out on their employment contracts. Go AWOL and the MPs can track you down and throw you in the stockade. On the other hand, the system produces some superb training. For example, my understanding is that the airline industry is largely dependent on former military pilots to fly its jets. The reason is that to achieve the levels of proficiency that the airlines (and the FAA) demand a pilot must have an enormous number of flying hours, and as a practical matter it is nearly impossible for a student pilot to bear these costs individually. In other words, it is the remedial structure of the military contract that provides the intensive on-the-job training necessary to produce superbly trained pilots.

Perhaps we need something similar for lawyers. Apprenticeship indentures anyone?

3 thoughts on “Two cheers for indetured servitude!”

  1. I’m not quite persuaded, at least with respect to law firms. If we assume that law firms want to recoup the training costs associated with each and every lawyer they hire, then I agree: the free riding problem is such that firms have a vastly reduced incentive to invest. (That’s the “I’m a realist” part of my initial post. Been there, done that.)

    The problem is that the larger firms want it both ways: They want to recoup their investment on every lawyer hired, but they hire far more new lawyers than they need in order to supply the partnership ranks. If attrition is already built into the system, then there’s no reason not to add the cost of training into the existing cost of hiring — unless the firms’ partners are unwilling to sacrifice profits, which often they are not.

    Thinking more about the military analogy, and in light of the fact that only a small proportion of graduating lawyers nationwide enter the profession via the large firm door, prompts an additional thought: Are we looking to compare the legal profession to the armed forces, or is the right analogy a comparison between the large law firm and the Air Force (and/or between the large law firm and United Airlines)? Lots of pilots learn to fly on their own nickel and some of them — maybe even many of them — become commercial pilots. Some commercial pilots — maybe even many of them, these days — have little lateral flexibility because of seniority and pension concerns. But some simply love to fly, and their employers retain their services not because of the coercion implicit in seniority systems, but because the employers make it worth the pilots’ while.

    In other words, the legal profession is a big place, and lawyers move around at least partly because they believe that they’ll be treated better in the next office tower. (Treat new lawyers like commodities, and they’ll behave like commodities.) They’re often wrong, but I’ve long wondered whether law offices of every size would have greater success in retaining lawyers if they used carrots as effectively as they use sticks — or more effectively.

    For another comment or post: Does the profession need to deal with arbitrage?

  2. Mike: I am not talking solely about big law firms, though. Indeed, I think that the free-riding problem is probably bigger for small firms that can’t diversify away the risk of losing investment in associates. On the otherhand, if we had specific performance or something like it (perhaps the return of master and servant acts) for junior lawyers in small firms, then those firms could invest more energy in training with greater confidence that they can recoup some of the benefit at the tail end of the contract. As it now stands, the costs of training get pushed back on to the student. Hence, if anything, the case for indentured servitude is stronger for small firms and solo practictioners…

  3. Nate,

    Fair enough. Empirically speaking, and asking and expecting gross generalizations:

    Are smaller firms or larger firms more likely to be unable or unwilling to invest in training new lawyers?

    Are smaller firms or larger firms more likely to speak loudly in the calls from the bar for extending “skills” training in law schools?

    My own limited, anecdotal evidence suggests that “larger firms” is the answer to both questions.

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