Interview with Peter Lederer
Required changes in legal education
Peter Lederer joined Baker & McKenzie in Chicago in 1959. He became the firm’s 17th partner when he was sent to Zurich in 1960 to open the office there. He returned to New York after six years, and served in that office as partner, managing partner and of counsel until 2002. He now puzzles about law’s future as an amateur octogenarian futurist. He was interviewed by Bruno Mascello from the ES-HSG of the University of St. Gallen.
I would like to thank you for the opportunity to have you here and to learn more about your views on how the legal education should change due to the developments in the delivery of legal services.
Bruno Mascello: Over the last years you have been observing in particular with an eye on the US market the dependencies between legal education and the demand of the law firms and corporate legal departments. What have you noticed?
Peter Lederer: It is obvious that the labour market can no longer absorb all the graduates coming from the law schools. There are some 200 law schools in the US with a capacity of some 50-60’000 graduates per year. Unfortunately, and this is not only due to the recent economic crises, only little over half of them will find jobs where their training is really necessary. Further, in the 1990s the big law firms in the US reached a plateau of size. Since then their demand for lawyers has been in a slight decline. This is a permanent reduction, due to factors such as outsourcing, computerized document preparation, the entry of non-legal providers into the market and the greater efficiency achieved in clients’ legal departments.
What about the qualitative side of the legal education in law school?
The curriculum of the law schools has not changed much over the last 50 years. They still follow the same model, largely designed as if all graduates are to go to work for “big law”. But now you begin to hear complaints from the ultimate “buyers” of such resources – the corporate clients -- who are increasingly unhappy with paying high prices for the work of inexperienced young associates. Basically up to now the law school was accountable to provide the theory, and law firms undertook the training in practical skills. The clients of the law firms, however, are no longer willing to pay for the education of first and second year associates. This exercises pressure on the law firms to recruit fewer new graduates, and to hire associates with prior work experience. This helps maintain profitability levels. This is currently still possible, but what happens when the supply dries up? The turn to the law schools has already begun: train your students in practical skills in the 3rd year. And there has also been the – not very practical – suggestion of requiring a year of apprenticeship before bar admission.
What should a graduate learn in law school to provide value in the future?
In general they should get the full range of skills you need to work as a lawyer in tomorrow’s business enterprise. Besides the usual legal knowledge, which of course needs to continue to be taught, they need a better understanding of mathematics and statistics, in general more analytical skills and a basic understanding of costing. Further, solid skills in project management, IT and presentation would definitely be an asset. It is nice to say that law is a profession, but it is not an excuse to decline learning what a professional needs to know.
But now having even better skilled and qualified lawyers available, would this increase their chance to get a job?
No, it would not, since the demand is not increasing. But the ones who will go working in places, where lawyers with the classic skill set are required, will at least be highly trained and properly equipped with a full set of additional skills required to successfully provide such legal services.
This means the market of legal services does not need so many lawyers anymore?
We need to distinguish here. On the one hand we have too many lawyers educated in an old fashioned way and not matching the market needs. But on the other hand we have also a shortage in affordable legal aid. If you look into legal assistance in civil matters, for example, then the US is well down in the developed countries in terms of help provided. If somebody needs legal help before a problem leading to divorce or bankruptcy “erupts” there is no place to turn to for affordable help.
How can this demand be provided?
We need to understand that not everyone can become a “classical” lawyer anymore. However, there are people required to provide services on a different level of sophistication. New ventures providing legal services based on a much lower price level have already been created (e.g. Legal Zoom or Rocket Lawyer). But for some consumers even the $50 per hour service is too expensive and they are looking to even free online services. Online dispute resolution can be totally satisfactory for such purposes: look for example at the ebay dispute mechanism. A technical approach may not only be accepted by a broad mass of people but in some cases can provide a better solution.
What may happen to the law schools?
I expect a disruptive change. Some law schools will close and some others will change programs and offer different education levels as requested by the market. There are also new experiments running on how one can teach online “to the masses” while maintaining high quality. In single cases such courses were done for over 100’000 students. The success of such a new teaching method will also be dependent on the pricing structure of such an education; a legal education in the US currently costs some $ 150-200’000, which many cannot afford. Prices for legal education have exploded during the last decades; prices for attending online teaching programs range from nominal or free, to prices last seen in the 1980s.
It seems there is no silver bullet solution for this complex situation. What is your recommendation?
You are right, this is no easy task to complete. We will need a combination of different measures. Law schools need to teach practical skills and increase their clinical programs. Corporate clients need to accept and be willing to see at least some young lawyers showing up. And law firms need to accept that they also have to invest more heavily in the training of young lawyers without seeking to shift the cost to their clients.
Talking about rates, what may be expected in the future?
I began practice at a time where many lawyers charged their clients simply based on the estimated value of the work provided. Then in the 1950s the clients started to question this kind of billing method. They requested more transparency which led to introduce the hourly billing systems as we know it today. Now the pendulum is swinging back and the corporate clients question the hourly billing model, requesting alternative fee arrangements. Lawyers may feel annoyed by this, but it opens new options and chances to win new clients.
On a personal level, how do you recharge your batteries after work?
The largest single pleasure is still the work I was and am still doing. I have the pleasure to meet interesting people and work with young people. “Laws without Walls” allows me to continue with this experience and this opens the entire world to me. Looking back I think I was privileged that work was and still is very stimulating and rewarding to me. It is simply a pleasure.
Peter, I would like to thank you very much for the time and insights you kindly shared with us.