Defending Defending, with Integrity

How Can You Represent Those People? (Abbe Smith & Monroe H. Freedman eds., 2013).

Every criminal defense lawyer has been asked The Question: “How can you defend those people?” Even lawyers who do not represent persons accused of crimes have undoubtedly had to deal with the indignation directed at the lawyers representing the most recent high-profile, presumed-guilty defendants—O.J. Simpson, the detainees at Guantánamo Bay, alleged “American Taliban” terrorist John Walker Lindh, the Oklahoma City federal building or Boston Marathon bombing suspects, the man accused of being the guard known as “Ivan the Terrible” at the Treblinka concentration camp. The Question is about moral agency. How can you, an ordinary person, not only associate with but also actively assist terrible people in escaping punishment for terrible crimes?

Abbe Smith and Monroe Freedman have both written eloquently in answer to The Question.1 Now they have compiled a number of essays—some in the form in which they were previously published, some updated for this book, and some entirely new—written by advocates and academics who take seriously the problem of giving an account for one’s actions within a professional role. All of the essays, in one way or another, address the persistence of moral agency. Inside a criminal defense lawyer there is an ordinary person, with ordinary-person values, committed to non-violence and respect for the rights of others. What is it like to be that person? In this way the essays move beyond justification to consider the issue of motivation. In a classic essay reprinted in this recent book, Barbara Babcock surveys a number of responses, including:

  • The Constitutionalist’s Answer. Criminal defense lawyers protect the bedrock individual rights of our constitutional order. The role of the criminal defense lawyer gains not only justification but also nobility from this effort. This is the answer that Monroe Freedman has steadfastly given to The Question.
  • The Civil Libertarian’s Answer. If we do not protect the rights of people accused of awful crimes, we—as a society—will lack the commitment to protect the rights of all people. As Martin Niemöller puts it in his poem, “First they came for the communists, and I did not speak out—because I was not a communist . . . .”
  • The Legal Positivist’s Answer. Truth and justice are law-dependent concepts, so there really is no role-independent way of concluding that a client is guilty and, therefore, no role-independent foundation for condemning the actions of criminal defense attorneys. A less-sophistical version of this answer appeals to all that is uncertain and unknowable about an event, including the very-real possibility that an accused defendant is innocent of the crime charged. In one of the most arresting essays in this volume, Joseph Margulies describes the horrific odyssey of an Australian Muslim who happened to be picked up in Pakistan soon after the 9/11 attacks, was repeatedly subjected to torture, and was released three years later, never having been charged with any wrongdoing.2
  • The Humanitarian’s Answer. Criminal defendants are human beings, too—children of God, as Sister Helen Prejean would note—and deserve compassion and to have someone standing by them as they are processed through the dehumanizing machinery of the criminal justice system. In a more secular idiom, a jury needs to be able to see the inner, vulnerable, 11-year-old boy who lived through unspeakable abuses to become a capital defendant.3

Significantly, all of these arguments are intended to generate reasons that can be endorsed from the point of view of the lawyer—to constitute what Daniel Markovits calls a first-personal approach to ethics.4 Even lawyers in common-law systems with a cab-rank rule, in which declining representation on the grounds of the reprehensibility of the client is unethical, can appreciate the additional need for a first-personal justification. It is one thing to say a legal norm, like the cab-rank rule, requires representation; it is quite another to endorse, from the point of view of one’s own moral agency, the representation. Markovits’s approach to legal ethics requires two separate justifications: (1) An impartial, or third-personal, argument showing that a social role is justified and that an action taken by an occupant of that role is required by the role for the realization of the ends for which it is constituted.5 Much of the traditional debate in theoretical legal ethics is over whether these arguments can succeed. (2) A first-personal argument appealing to the concern all persons have for living a life characterized by integrity, where integrity means, essentially, having a life worthy of commitment, endorsement, and a kind of pride of authorship. Integrity is a way of representing the moral agency that persists while people act in social roles. In terms of The Question, it places stress on the person to whom it is addressed: “How can you represent those people?” You, in light of the kind of person you are, and the other things that you believe constitute a life well-lived.

One of the highlights of the book is the dénouement of the Freedman-Tigar debate, between Freedman and Michael Tigar—a celebrated civil rights attorney who represented, among other notorious clients, one of the accused Oklahoma City bombers, Terry Nichols. The occasion for the debate was Tigar’s representation of John Demjanjuk, accused of having committed atrocities as a guard at a Nazi concentration camp. Freedman pointed out that Tigar had once criticized a large law firm for representing General Motors in an environmental case, urging them to ask this version of The Question:

Which side are you on? The decision is whether or not you will commit your skills, your talents, your resources to the vindication of the interests of the vast majority of Americans or the vindication of the interests of . . . the minority of Americans who own the instruments of pollution and repression.6

Freedman asked the obvious follow-up question: If a law firm is morally accountable for its decision to commit its talents and resources to defending the owners of the instruments of pollution and repression, what then can one say about the decision to represent someone whose conduct was so infamous that he was known as “Ivan the Terrible”? Tigar responded with a moral argument:

We must remember the Holocaust, and we should pursue and punish its perpetrators. We dishonor that memory and besmirch the pursuit if we fail to accord those accused of Holocaust crimes the same measure of legality and due process that we would give to anyone accused of wrongdoing. Precisely because a charge of culpable participation in the Holocaust is so damning, the method of judgment whether such a charge is true should be above reproach.7

Is this an argument that one can endorse from the first-personal point-of-view? Can a lawyer represent John Demjanjuk with integrity? It is one thing to believe that a person accused of a serious crime is entitled to a fair trial. It is another to decide to commit one’s own skills and talents to defending that person. In effect, Tigar concedes Freedman’s point. A lawyer does owe an obligation of justification. But there are abundant opportunities for justification when one is living and practicing law in a society characterized by inequality, abuses of power, active and unconscious racism, and a sclerotic and unaccountable political system.

Lawyers may be tempted to roll their eyes when hearing yet another version of The Question. Hasn’t enough been said already to establish, for once and for all, that lawyers like John Adams and Clarence Darrow are authentic American heroes for a reason, because they embody our commitment to treating everyone as equal under the law? The importance of this book is, in part, the reminder to lawyers that every generation has to answer The Question again, and that the process of doing so is an opportunity to reflect not only on the values of the legal profession, but on more fundamental matters such as the meaning of human dignity, compassion, justice, and mercy. The reflection itself may be agonizing, as explained by two capital defense attorneys:

[O]ur consciences are heavy for so many reasons—the double-edged nature of our “successes” (most often, saving a client from the death chamber means he will vanish into prison for the rest of his natural life), the permanency of our failures, the constant gnawing guilt that we could have done more—but, for us, it is the pain we inflict every day that is our deepest wound: if we want our clients to live we will inevitably end up hurting them, their families, and ourselves in the process . . . . [A]s much as we want to help them with their other needs, we need their stories more. So we start asking questions. We dig. We probe. And we push onward, even when it’s obvious that what we are unearthing hurts: a client so addicted to drugs that he traded the car he’d been living in for two hits of crack; a client who was forced to watch his stepfather rape his younger sister and then dump her body in a tub of cold water in an attempt to stanch the bleeding; a client who, as a small child, slept on the floor of a crack house surrounded by rotting garbage and strangers trading sex for drugs; a client so defaced by a childhood illness that his father would not touch him; a client who “permitted” grown men to perform sex on him for slices of pizza.8

After encountering many of the essays in this volume, a reader comes away with a new version of The Question—how can one not represent these people? This book ultimately succeeds because it asks both the justification and the integrity question and does so by moving readers to experience the values of defending accused persons from the first-personal point-of-view. It is difficult to come away from the book feeling anything other than intense gratitude and admiration for the lawyers who are called to be criminal defenders.

  1. Abbe Smith, Defending Defending: The Case for Unmitigated Zeal on Behalf of People Who Do Terrible Things, 28 Hofstra L. Rev. 925 (2000); Monroe H. Freedman, The Lawyer’s Moral Obligation of Justification, 74 Texas L. Rev. 111 (1995). []
  2. Joseph Margulies, Ruminations on Us and Them, in How Can You Represent Those People?, supra, pp. 101–07. []
  3. William R. Montross, Jr. and Meghan Shapiro, Wrecking Life: When the State Seeks to Kill, in How Can You Represent Those People?, supra, p. 113. []
  4. Daniel Markovits, A Modern Legal Ethics (2008). []
  5. This structure is from David Luban’s fourfold root of sufficient reasoning, in Lawyers and Justice. []
  6. Quoted in The Lawyer’s Moral Obligation of Justification, supra, p. 113. []
  7. Michael E. Tigar, “Setting the Record Straight on the Defense of John Demjanjuk,” Legal Times (Sept. 6, 1993), reprinted in Monroe Freedman & Abbe Smith, Understanding Lawyers’ Ethics (4th ed., 2010), Appendix A, p. 371. []
  8. Montross and Shapiro, supra, pp. 114–15. []

Patterns and Problems in Professional Discipline Cases

Leslie Levin, Misbehaving Lawyers: Cross-Country Comparisons15 Legal Ethics 357 (2012), available at SSRN.

Commentaries on lawyer discipline often refer to practice areas that are involved in grievances. Discussions of lawyer discipline devote far less attention to examining the circumstances of particular grievances or the characteristics of the lawyers facing disciplinary charges. That is one reason why I especially liked Professor Leslie Levin’s Misbehaving Lawyers: Cross-Country Comparisons. This article was published in a special issue of Legal Ethics—the preeminent international legal ethics journal.

In his preface to the issue, Richard Abel described the premise of the special issue as follows: “we can illuminate the nature of and explanations for lawyer misconduct and the relative advantages of different regulatory responses by comparing case studies of lawyers disciplined a variety of countries.”1 In the special issue, experts presented fascinating case studies of lawyers disciplined in the authors’ home countries. Following these case studies, Professor Levin’s essay identifies similarities and differences among the cases studies written by experts from Canada, the Netherlands, the United Kingdom, Australia, and New Zealand. Anyone interested in lawyer conduct should read Professor Levin’s essay because it provides a concise and thoughtful analysis of patterns and problems that emerge from the accounts presented in the articles in the special issue. Legal profession scholars, lawyers who defend and prosecute disciplinary cases and malpractice cases, jurists, educators, and individual practitioners can learn a great deal by reflecting on Professor Levin’s observations.

Although case studies have their limits, Professor Levin points out that an examination of case studies suggests common conditions that lead some lawyers to misbehave. One common characteristic relates to the context of representation. Generally speaking, the lawyers in the case studies represented individuals facing some personal plight, such as persons facing criminal charges or family difficulties. (P. 358.) Other similarities relate to the psychological profile of individuals facing serious discipline. Each of the lawyers in the case studies appeared to be highly motivated by money. Professor Levin explains that the “love of money” is positively related to manipulative behavioral disposition. (P. 367.) To maintain their own self-esteem, the lawyers engaged in rationalization—shifting the blame to others. (Pp. 368, 370.) Consistent with this mindset, the lawyers did not show remorse. (P. 371.)

The lawyers’ self-deception may have been checked or tempered had peers or colleagues discouraged the misconduct. Professor Levin explains that positive peer influence was less likely to occur for the lawyers in the case studies because they largely practiced on their own or with others that were “ethically challenged.” (P. 358.) Outside of their own offices, lawyers did not appear to associate with “communities of practice,” defined as groups of lawyers with whom practitioners interact and to whom they compare themselves and look for common expectations and standards.2 Rather than adhere to community norms, these lawyers tended to rely on their own personal ethics. This can be particularly problematic when lawyers, especially litigators, set their own boundaries and feel pressure to “play as close to the line” as possible.

The case studies should also be of interest to legal educators who believe that that law school plays a role in shaping students’ professional identity and development.3 As Professor Levin points out, lessons from early in a lawyer’s career continue to influence that individual’s ethical decision-making. (P. 362.) Therefore, those of us in the academy should reflect on what we can do to help new graduates start off—and continue—on the right foot.

The essay should also motivate legal educators to consider their role as gatekeepers. In our dealings, we may occasionally encounter students who appear to be “pushing the ethical envelope,” even if they do not violate applicable rules. Query whether failing to deal with “ethically challenged” law students contributes to them feeling emboldened, believing that they can avoid consequences for acts and omissions that are inconsistent with professional norms.4

Finally, Professor Levin’s discussion of recidivism raises serious questions about the failure of the disciplinary systems to protect the public. Although there are numerous steps that may be taken to avoid and deal with misconduct, the essay clearly communicates the value of improving transparency so that members of the public can obtain information and protect themselves.

It is for these reasons that I would like to thank Professor Levin for continuing to prod us to reexamine how we discharge our responsibilities to police the legal profession.

  1. Richard Abel, Comparative Studies of Lawyer Deviance and Discipline, 15 Legal Ethics 187 (2012). []
  2. P. 362 (quoting Lynn Mather, Craig A. McEwan, & Richard Maiman, Divorce Lawyers and Work: Varieties of Professionalism in Practice 6, 14 (2001). []
  3. See Neil W. Hamilton, Fostering Professional Formation: Lessons from the Carnegie Foundation’s Five Studies on Educating Professionals, 45 Creighton L. Rev. 763 (2012) (providing insights on professional formation). []
  4. “Ethically challenged students” refers to those who engaged in questionable conduct, but escaped formal discipline in school. []

Resistance is Futile?

Jakob Weberstaedt, English Alternative Business Structures and the European Single Market, Humboldt U. Berlin Working Paper (2013), available at SSRN.

In the last several years, alternative business structures (ABS) have been a top agenda item regarding the legal profession in the United States and Canada. Moves in Australia and England to liberalize legal markets—including the introduction of non-lawyer ownership of law firms—have inspired and influenced conversations about whether ABS should be introduced into the North American market for legal services. Most North American lawyers, however, don’t likely know much about how these overseas reforms have also fuelled the debate about ABS in Continental Europe. Fortunately, in his recent article, Jakob Weberstaedt provides an engaging account of this very issue.

Weberstaedt focuses on the reaction of the German Federal Bar to reforms introduced in England and Wales by the 2007 Legal Services Act, which allowed for law firms to be wholly-owned by non-lawyers (“English ABS”). The German reaction is, as he notes, of particular interest given both its forcefulness and the size of the German market for legal services (approximately 22% of the total revenues of the legal services sector in Europe). To provide some background for his analysis, Weberstaedt begins his article by outlining “[a] brief history of the Continental resistance to English ABS.” In this section, a number of interesting factual tidbits are offered, including the fact that, even before English ABS reforms were finalized, the German Federal Bar, via a 2006 letter from its president to a UK parliamentary committee considering the draft Legal Services Bill, made it clear that it “did not like the proposed reforms and that English ABS would not be allowed to operate in Germany.” A similarly negative position was subsequently taken by the Council of Bars and Law Societies of Europe (CCBE), which argued that provisions in a European Union directive1 addressing lawyer mobility would allow the Continental European bars to prevent English ABS from operating within their national jurisdictions. In turn, this analysis made its way into a response from the German Federal Bar to a 2011 American Bar Association issues paper on ABS. The background provided by Weberstaedt is both an informative summary of the events leading to the current debate about English ABS in Continental Europe and also a helpful reminder that the once-parochial issues of lawyer regulation now have an unprecedented global reach.

At the heart of Weberstaedt’s article is a detailed analysis of the legal ability of English ABS to enter other European markets. He first considers a number of “small European ABS cases”—ranging from, for example, a relatively simple hypothetical involving German lawyers investing in an English ABS to more complex hypotheticals involving cross-border online legal services and English ABS providing services in Continental European markets—before tackling the “big European ABS case” (i.e., what happens “if an ABS with non-lawyer investors seeks to establish a presence on the Continent”). In considering these scenarios, Weberstaedt is attentive not only to the applicable legislative context and case law but also to the relevant political background.

The conclusions that Weberstaedt reaches suggest that the future of English ABS on the European Continent may be lively despite protestations of the Continental European bars. The law, he observes, is in many ways favourable to the “pro-ABS” side of the debate. With respect to the “small European ABS cases,” he concludes, for example, that Continental European bars will not be able to successfully invoke the current regulatory regime to prevent English ABS from offering services outside the scope of reserved activities or from engaging in the temporary provision of legal services in Continental Europe. Although he acknowledges that the fate of an English ABS that wants to more permanently establish itself in another European jurisdiction is “uncertain,” he also suggests that “the English side could improve its odds in the ECJ by developing a comprehensive litigation strategy taking maximum advantage of its influence over the facts and timing of the ‘big ABS case’ in the ECJ.”

Weberstaedt’s analysis of the various scenarios that may play out regarding the entrance of English ABS into other European markets is both comprehensive and accessible. As such, it will likely be of interest to those both familiar and unfamiliar with the European debates. His article also helpfully offers broader lessons for non-European jurisdictions grappling with the issue of ABS and how far to liberalize legal markets.

One of Weberstaedt’s major critiques is that the CCBE and the Continental European bars “could have done a better job of recognizing what is going on in England . . . [and that] [t]he failure to see beyond the self-painted cartoonish picture of ‘banks, insurance companies and supermarket chains’ moving into legal services was at the origin of a deplorably incomplete legal analysis.” Although Weberstaedt credits the American Bar Association2 and the Law Society of British Columbia3 for a more sophisticated and consultative approach to the ABS question in their jurisdictions, North Americans are still wise to heed his warning about not allowing the “Tesco law” model to disproportionately dominate the conversation about ABS and fuel knee-jerk negative reactions.

Weberstaedt also helpfully reminds us that arguments for and against the introduction of ABS take place in what is largely “a data-free zone”. As time passes and more empirical data is available from England to complement the several existing Australian studies,4 speculation on predicted outcomes of introducing ABS will be replaced by reference to actual outcomes. If Weberstaedt is correct that this future data is unlikely to strengthen anti-ABS arguments, we may see an acceleration of reform measures globally. Although bar organizations in many jurisdictions continue to rebuff calls to introduce forms of ABS, one wonders if developments over the next few years will quickly render such resistance futile.

  1. As explained on the European Union website: “a ‘directive’ is a legislative act that sets out a goal that all EU countries must achieve. However, it is up to the individual countries to decide how.” []
  2. As Weberstaedt observes, although the ABA has, to date, rejected the introduction of ABS (i.e. the types of business structures now permitted in England and Australia) into the United States, the approach taken by the ABA is laudable for being broadly consultative. []
  3. The Law Society of British Columbia, Alternative Business Structures in the Legal Profession: Preliminary Discussion and Recommendations (2011). []
  4. See, e.g., Susan Fortney & Tahlia Gordon, Adopting Law Firm Management Systems to Survive and Thrive: A Study of the Australian Approach to Management-Based Regulation, 26 St. Thomas L. Rev (forthcoming 2014), available at SSRN; Christine Parker, Tahlia Gordon, & Steve Mark, Regulating Law Firms Ethics Management: An Empirical Assessment of an Innovation in Regulation of the Legal Profession in New South Wales, 37 J.L. & Soc’y 466 (2010), available at SSRN. []

Reimagining a New Ending to “Reimagining Legal Services”

Spoiler alert: This Jotwell review reveals the plot of Mitchell Kowalski’s book, Avoiding Extinction: Reimagining Legal Services for the 21st Century.

In recent years, those of us who are interested in legal services market innovation and disruption are often presented with two different types of source materials to satisfy our curiosity. First, there is blue-skies thinking—ideas that might ultimately become mainstream but not in the immediate future. Secondly, there is research, which examines innovative market behaviours, delivered by actual providers to real clients. However, what is generally missing from such works are discussions about how either of these changes will impact existing lawyers who find themselves caught up in this period of transition. And this is the main attraction of Mitch Kowalski’s approach: By writing a novel, Avoiding Extinction: Reimagining Legal Services for the 21st Century, Kowalski is able to offer a human-focused examination of these mega-market changes—from the perspectives of individual clients and private practice lawyers.

When we first meet Maria Fernandez, general counsel for Kowtor Industries, she is clearly intended to act as an emblem of client frustrations with current Big Law service providers. Indeed, within the book’s first few pages, Kowalski reveals that Fernandez has recently received a budget-busting invoice from one of the traditional law firms she previously worked with. Naturally, therefore, Fernandez becomes intrigued by a YouTube video that focuses on the activities of an innovative legal practice called Bowen, Fong & Chandri (BFC). In the video, BFC chief executive and chairman Sylvester Bowen sets out what he believes is wrong with the existing model of legal services and how BFC is different. What she hears clearly arouses her interest: By chapter three, Fernandez is taking her company’s CEO, Harry Kow, along to a BFC tender presentation.

Mark Reynolds first appears in chapter four. His main role in the novel is to act as a disoriented and burnt out, “big law” refugee, cautiously trying to come to terms with the realities of the new legal market as BFC’s newest recruit. Indeed, Stephen Boulder, the very first BFC employee he encounters on day one, points out that Reynolds’ three-piece suit is “overdressed” for BFC’s laid-back approach. But this is just the start of the cultural challenges Reynolds faces, as he progresses through BFC’s induction programme. BFC’s use of cloud-based IT systems initially causes him to worry about possible ethical and confidentiality-related issues. He is also concerned about the firm’s use of an Indian-based legal process outsourcing operation. Naturally, he is reassured by his fellow BFC coworkers that all possible ethical and regulatory challenges have already been overcome.

As you may now have guessed, many aspects of BFC’s culture and working practices are revealed through discussions between characters in Kowalski’s novel. They cover, among other things, the perfidious billable hour, virtual working, the unbundling of legal services, and the importance of results for clients. On many occasions, this approach works: In my mind, I imagine many of these conversations being delivered in the rapid style that was pioneered on the West Wing television series. But, on other occasions, this method feels somewhat laboured. For example, when explaining BFC’s approach to knowledge management (KM), the discussion between KM head Barry Spunker and Reynolds comprises lengthy tracts of explanation by the former, punctuated by a succession of two-word responses by the latter. Thankfully, Kowalski uses humour and self-awareness to alleviate (some) incidences where over-long monologues may cause the reader’s attention to wander. For example, as Rachel Nguyen, BFC’s senior vice-president of professional development, enthuses about the firm’s tension-avoiding air circulation system, Reynolds is revealed as thinking: “She sounded a little like a bad office brochure . . . particularly when . . . gushing over the special coating of the offices’ large windows.”

Segments of clunky dialogue aside, perhaps the biggest challenge for any reader of Kowalski’s novel is in its plotting. Having introduced Maria Fernandez as an in-house counsel considering retaining BFC, and Mark Reynolds as a new BFC recruit, I came to regard it as inevitable that Fernandez and Reynolds would ultimately work together.1 But remarkably, this storyline never materialises. The last we hear from Reynolds, in the book’s penultimate chapter, is that he has been selected to write BFC’s pitch document for the Kowtor tender.2 Yet, having dominated the first three chapters of the book, Fernandez’s character simply vanishes, without the reader ever learning about the outcome of her meeting with BFC. Instead, the book concludes in a wholly unexpected manner: BFCs’ CEO and chairman, Sylvester Bowen, announces his resignation at a directors’ dinner.

In truth, I found it difficult to care about Bowen’s resignation. After being featured in the YouTube video watched by Maria Fernandez in chapter one, his character does not reappear to any significant extent until chapter six, when he takes Reynolds out to lunch. Indeed, Kowalski’s novel ends so abruptly that I was genuinely surprised to be confronted with “Appendix A: Kowtor Industries Outside Counsel Expense and Disbursement Policy” just four pages after Bowen’s big announcement. I even checked the book’s page numbers, to reassure myself that a section of the book wasn’t missing from the novel I was reading. Nothing was. The ending was just plain odd.

However, if my criticism of Kowalski’s dialogue and story-telling has left you feeling that you could comfortably give this novel a miss, I urge you to reconsider. Like Bruce Macewen’s new book Growth is Dead: Now What?, Kowalski’s book will, in just a few hours of light reading, provide you with a clear overview of the possible future direction of the legal services market, in a way that a series of research papers on discrete research topics would not. And, while Kowalski’s novel is lightly referenced, I noticed it name-checked at least two well-known legal profession academics, discussed various principles of process reengineering, innovative ideas regarding approaches to learning, and (briefly) mentioned a well-known case history regarding technology-driven market disruption. I’m sure other well-known concepts were also referred in the book’s narrative, but simply passed me by.

As already mentioned, I believe that the book’s major failure is its abrupt ending, which fails to unify two key story arcs. But, hopefully, now that I’ve managed your expectations on this point, that shouldn’t be a problem. There’s no need to emotionally engage with either Mark Reynolds or Maria Fernandez, because you now know it’s unclear if they will ever end up working together—unless Kowalski plans to write a sequel. Let’s hope he does.

  1. I even absent-mindedly wondered if Reynolds and Fernandez would have an affair. []
  2. Partially in order to offer a “point-of-view” perspective, the novel does not consistently follow a linear timeline. []

It’s the System, Stupid?

Mitu Gulati and Robert E. Scott’s new book, The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design examines the pari passu clause, a clause designed to ensure a debtor’s creditors rank against each other equally. It asks why a standard clause in cross-border financial contracts remained in sovereign debt contracts after a well-known but minor judgment in a Belgian court suggested that the clause should be amended or removed. The book reveals that the majority of practitioners designing and drafting these contracts did not have a coherent and consistent explanation of the origin, purpose, or meaning of the term in sovereign debt contracts. How can it be that sophisticated legal practitioners can put forward contracts, worth millions or even billions of dollars, where they do not understand a term common to, and prominent in, the contract? And once a court decision, albeit an ‘unreliable’ ex parte Belgian decision, threatens to undermine received wisdom on the overall effect of those sovereign debt contracts, posing not insignificant risk that the clauses will be litigated, how is it that these terms remain largely unaltered? Moreover, why is the clause not removed if, as many seem to think, it performs no discernible and certainly no predictable function in the sovereign debt arrangements?

These are some of the fascinating questions explored in Gulati and Scott’s excellent book, The Three and a Half Minute Transaction. Part empirical project, part theoretical exposition of securities law, and part detective novel reaching back to Bolivia in 1870, it is a highly readable and nuanced account of how elite lawyers approach the drafting of sovereign debt contracts. The account is theoretically and empirically rich. Its conclusion is that modern legal practice poses significant challenges to the evolution of professional practice. It also raises questions about whether and how systemisation works. Systemisation is the idea that legal practice can be disaggregated into component parts and automated through processes (checklists, software and the like). As a favourite theme of innovators keen on developing legal practice beyond the inefficient artisan model— the book serves as a reminder as to how systemisation needs to cope with the complexity and stickiness of clients and markets.

As such, the book raises important challenges to the old guard (largely now the professional bodies) that holds to the notion of bespoke professional service delivering excellence. The book suggests that in sovereign debt contracts that it does not. It also challenges the new guard, those advocating disruptive innovation, such as Richard Susskind and Daniel Katz, to suggest how systems will overcome complexity and stickiness as a social phenomena embedded within client networks.

The story this book tells begins with the pari passu clause. We are told that the clause has been a feature of sovereign debt contracts for many years. As part of the contract’s boilerplate, such clauses are assumed to have survived and developed by reason of their utility and efficiency. An evolutionary theory of contracts casts out bad clauses while simultaneously ensuring that good clauses survive. The authors’ carefully critique the idea that there is a process of intelligent design at work. There are charismatic elder statesmen who do research, theorise, and innovate in contractual design in some of the firms under consideration, but the authors point out that these Wise Men—they are all men—are dying out and are apparently not being replaced. Additionally, these Wise Men have not used their influence to resolve the pari passu problem.

Instead, the story that we hear is of how large firms rely on precedents and computerised systems, which generate “horseshoe” contracts—standard forms that come close to a client’s needs and can be marked up with minimal effort to meet those needs. Lawyers are required to draft these contracts quickly, and—so the lawyers say—have no incentive under hourly billing and increased client pressures to conduct the research needed to replace the flawed clauses. More worryingly still, such lawyers miss out on the once traditional practice of having a partner explain mark ups and amendments of agreements. They do not learn the effect of the agreements they are working on. As one mid-level associate told the researchers:

Most of what we mark up and send round, we don’t understand at all.

The story is of agreements that are both mechanical and resistant to change. There are a variety of “herd instinct” biases that inhibit lawyers from suggesting changes. Changes require time and money to be invested. Conservative clients are said to resist them. Change brings with it risk; if a contract is changed there is a risk of unsettling the wisdom accumulated over years of practice.

A strength of the book is that it is simultaneously possible to both understand and be alarmed by the way in which such explanations are offered by practitioners without any coherent justification for their approach winning out. Particularly alarming is that the elder statesmen within elite firms specializing in securities law offer explanations as to the function of pari passu clauses that are contradictory (i.e., different lawyers do not agree with each other) and are—in Gulati and Scott’s view—often indefensible. Their views and continuing practice in the area appear to be ignorant of the major court decisions and policy stances bearing on the continuing use of pari passu clauses. The authors never explicitly state as such, but there is an alarming sense that—as regards this particular clause—the practitioners are simply making up explanations for their actions, or more often inactions, as they go. Far from the expert and forensic professional judgment being applied to the design of such high value contracts, habit and the rituals of practice replace deliberate thought.

Thus, the study quotes one practitioner saying:

why a standard clause in cross-border financial contracts, now . . . one that a junior associate can go to and plug the relevant parameters into—you know, type of issuance, type of issuer, which side we are representing, etc.—and the computer generates a standard contract. The firm spent [a large amount] on putting together this system. Associates can now produce a contract for one of these deals in three and a half minutes. This is the future of contracting in these markets.

The benefit of systems is that they produce predictability and uniformity. Gulati and Scott’s book thoughtfully develops an account of the benefits of predictability. Complex systems benefit from predictability. Clients prefer it. Changes in standard documents may breed suspicion and create negotiating costs. Thus, there is benefit in inertia within any particular system. So, when in Elliot v Peru an Belgian judge interpreted a pari passu clause in an unusual way, one might not be that surprised that law firms did not quickly change their sovereign debt agreements. Yet, clauses that once seemed obscure and harmless suddenly posed a litigation risk. Why did firms decide to do nothing about their pari passu clauses?

The book carefully dissects the reasons for not changing sovereign debt agreements in light of Elliot v. Peru and finds them wanting. Although, the rationale that most often appears to surface has a plausible ring to it: the transactional lawyers were worried about prejudicing future litigation. If you change a clause in response to a potential litigation threat, then it may be seen as an admission of doubt about the original clause. The problem with this argument is twofold. First, the opposite is as likely: if a court—even an obscure Belgian court—has interpreted a clause in a particular way and you have not taken prudent steps to clarify the meaning of the clause in the light of such a decision, then you might be taken to have accepted the Belgian court’s interpretation. Second, and here the book is worryingly convincing, the firms need to be able to show that the clause used has a plausible meaning, which they cannot do because the firms do not understand the meaning of the clause.

For the new guard the challenge that this poses is that a systemised, efficient contract process needs to have someone in full and proper control of the system. This book suggests that the operation of client markets and organisational theory both suggest that systems can become overly fixed—sclerotic and harmful to client interests. For me, one of the telling critiques made by the book is the way in which lawyers within the study had both diagnosed the underlying problem (firms drive lawyers only to do work for which they can bill) and sought to distance themselves from it. One partner, for example, bemoans the costs of associates: If they were paid less, his argument goes, the firms might be able to train them more. This begs the question, why do they need to compete for associates in a market that rewards newly qualified lawyers with high salaries if those same lawyers are drafting contracts that they (and their supervisors) do not understand? Moreover, how are their elders and betters going to train them, anyway, if they don’t understand these contracts either?

Of course, this may be going a little far. We are only talking about one clause in one type of contract. Other types of contracts and practice may be different. For the book to be able to go both deep and wide in its data collection, it had to concentrate on one type of contract. There is also the possibility that lawyers ignored the Belgian court decision because it was wrong, as most practitioners agreed it was, and irrelevant. The authors point out that the problem with this interpretation is that two subsequent cases suggest that other judges may be inclined to agree with the Belgian judge, or at least go some way towards agreeing. Both the Greek debt crisis and an Argentinian case suggested there is unpredictable life in the pari passu clause that practitioners would have been wise to address when Elliot suggested a problem. It looks possible that when securities lawyers offered the explanation that the Belgian decision was wildly wide of the mark, they let complacency and the habits of practice get the better of them.




The Persistent Gender Wage Gap in Legal Practice: What We Know and What to Do

Joyce S. Sterling & Nancy Reichman, Navigating the Gap: Reflections on 20 Years Researching Gender Disparities in the Legal Profession, 8 Fla. Int’l. U. L. Rev. (forthcoming, 2013), available at SSRN.

Nearly twenty years ago, the Colorado Bar Association and the Colorado Women’s Bar Association published a study that identified, among other things, a significant wage gap between male and female lawyers practicing in the local Denver community: the “average woman working full-time earned only 59 cents to the dollar earned by the average man working full-time.” (P. 4.) This finding led to a commitment by the Colorado Bar to sponsor additional research on the “the mechanisms that produced the gap.” (P. 4.) To the good fortune of the Bar and the community of scholars interested in issues related to gender and the legal profession, two University of Denver professors agreed to undertake this additional research with the “expect[ation that they would]… be able to expose the sources of bias, make recommendations, and move forward to remove the barriers to women’s success in law.” (P. 4.) Thus began the collaboration by Joyce Sterling and Nancy Reichman that has produced more than 25 published articles, working papers, and presentations on the gender gap. Taking an empirical approach to the problem, they have drawn on numerous sources, settings, and theoretical frameworks, all the while with quantitative and qualitative data at the core of their work, to produce both foundational research and cutting-edge insight.

In Navigating the Gap: Reflections on 20 Years Researching Gender Disparities in the Legal Profession, one of their newest papers, Sterling and Reichman reflect on the continuing presence of the gender gap, and lament that their research has not led to the eradication of the wage gap much less other barriers to gender equality in legal practice. The article does more than lament, however. It is a call-to-arms, of sorts, that offers important ideas for advancing equality and simultaneously provides a comprehensive overview of what they have learned from their research and that of others about gender disparities in the legal profession. The dual focus of looking back and forward makes this article particularly significant. It offers an entrée to those unfamiliar with research about gender inequality in the legal profession and a map for those interested in joining research with activism.

First, the facts borne out by their research:

  • The wage gap has neither been eliminated over time, nor does it disappear over the course of women’s careers as they gain experience and stature in practice. A threshold measure of a gap of 59 cents to the dollar, based on a study of lawyers practicing in Denver in 1994, “had improved by one percent [by 1999, but] . . . the gap increased for women with more years of experience.” (P. 11.) More than ten years later, in a new and unrelated study that drew from a national sample of law graduates who passed the bar in 2000, the gap clearly remained. Even women who had been practicing for only three years suffered lower earnings of 5% less than their male colleagues, while by seven years after graduation women earned 13% less than men. That is, the gap is evident very early in lawyers’ careers and increases with years of practice.
  • The wage gap is not explained by issues related to work-family balance. Instead, “gender matters more than parenthood when predicting compensation and hours worked.” (P. 17.) By focusing explicitly on the “endowments” of lawyers, including credentials, hours worked, and other factors, Sterling and Reichman have clarified the role of gender. They find that it continues to matter: for example, “fathers had more opportunities to work with high-profile clients than both mothers and women without children…” (P. 17.) Their current work focuses on bonus compensation, and while their study of the subject is not yet complete, it, too, indicates that “women were significantly more likely to receive either no bonus or a bonus less than $10,000, while men are significantly more likely to receive bonuses over $10,000.” (P. 17.)
  • The explanation for the wage gap relates to the gendered nature of law firms. Sterling and Reichman explain that “[a] gendered organization is not necessarily populated predominately by men. Rather, it is an organization defined, conceptualized, and structured in ways that puts a premium on masculine characteristics, including a willingness to work ‘on demand,’ free from domestic responsibilities.” (P. 4.) This is not to suggest an intentional conspiracy among male lawyers; rather, the firms are “infused with stereotypes about the appropriate roles for men and women that . . . slow or prevent upward mobility of women . . . within them.” (P. 5.) The organizational characteristics structure—and limit—review and advancement, too. These organizational factors do not indicate malicious intent; rather, as Sterling and Reichman explain, “Even in gendered organizations, management may aim to increase the number of women in the workplace but throw up their hands, rather than contemplate change, when the women they recruit decide to move to other work, organizations, or drop out of the labor market because work structures and culture are inhospitable to them.” (P. 5.) Consequently, they view this character of firms as central in addressing the wage gap as well as other factors related to gender disparity in practice.

Second, the diagnosis:

  • One approach to neutralizing the influence of the gendered nature of law firms is suggested by research on non-law professional services firms. Sterling and Reichman draw on work investigating gender inequality in engineering, among other services sectors, to suggest that “formalized procedures for hiring, evaluation and promotion” will help law firms address the wage gap, if not also other challenges to women lawyers. (P. 6.) Their research provides a substantial basis for concluding that law firms now do not rely on “formalized procedures.” (P. 6.) While there may be some uncertainty regarding whether differences between law practice and non-law professional services will prevent law firms from completely transforming themselves to the extent accomplished by engineering firms, there clearly is much that law firms can do to advance the objective of formalizing their career-related procedures.

Finally, proposals for going forward:

  • Solving the problem of gender disparity requires a combination of two elements: information and responsibility.
  • Information is key to addressing the wage gap and gender inequality more generally. As Sterling and Reichman put it, “You can’t change what you don’t observe.” (P. 20.) Promotion and hiring decisions in law are shrouded in mystery. In contrast, work on firms in other services industries suggests that transparency in this process is central to eliminating the wage gap and gender disparity generally. To address this, Sterling and Reichman refer to a proposal by Rachel Grand that would impose on law firms an obligation to disclose their standards for promotion; for each partnership decision, a firm would either disclose that it has abided by its stated standards or explain its variation from them. Grand’s proposal stems from the regulation of publicly held corporations regarding the nominating process for members of the board of directors. Sterling and Reichman do not delve into the details of how such a proposal might work for law firms or whether there are examples of law firms that already have adopted more explicit and formal processes for partnership decisions. It would be interesting to know whether such firms, if they could be identified, have had more success with regard to both the proportion of women in their partnerships and eliminating the wage gap. Perhaps future research will investigate this issue and related variations among law firms.1
  • Explicitly prohibiting law firms and lawyers from discriminating on the basis of gender and race/ethnicity is a second element of Sterling and Reichman’s prescription for the future. They recommend an amendment to the Model Rules of Professional Conduct to specifically prohibit discrimination “both in the practice of law and in determining conditions of employment.” (P. 21.) Minnesota and New York already have adopted such a provision, and in New York the rule applies specifically to law firms as well as to lawyers. (Pp. 20-21.) While Sterling and Reichman do not specifically address the absence of regulation of law firms, as opposed to lawyers, in most U.S. jurisdictions, this vacuum presents a practical challenge to their proposal. Nonetheless, addressing discrimination by amending Rule 8.4, as they suggest, even if applied only to individual lawyers, would provide a basis for disciplinary action. This may be of more symbolic than practical significance, but perhaps the signal is important in itself.

In their closing remarks, Sterling and Reichman briefly identify the need for research in new directions, to “fill the gap in our knowledge of the inner workings of law firm practice.” (P. 21.) My hope is that they will continue to investigate lawyers’ careers while also pursuing new research on law firms as organizations. It is only by pursuing both lines of inquiry that the interaction and significance of individual and firm choices, policies and practices will be clear.

  1. In addition, research on non-law professional service firms may offer important comparative insight for purposes of understanding law firms and related practice organizations. One example is Paul Coombes’ study of women physicians, which suggests that women prefer certain practice areas and settings that offer certainty regarding scheduling and greater patient interaction. While current research on lawyers’ careers such as the After-the-JD research study does not support similar findings in law, this may reflect differences in fields related to the proportionate representation of women and the investment required for participation. []

How Are Professional Service Firms Governed?

The leadership role in law firms and other professional service firms (PSFs) tends to be either a residual characteristic or is defined by the “great man” ideal (think of Paul Cravath and his vaunted system). Modern versions exist still: the recently departed Joe Flom of Skadden and Marty Lipton of Wachtell were exemplars of visionary law firm leaders who created great law firms. However, since around 1985, PSFs and law firms have become more anonymous in their leadership as the bureaucratized firm supersedes the charismatic individual.

Usually when scholars study PSFs—and for purposes of this review I focus on law firms—the entire firm is the unit of study rather than its management or governance. If we think of Nelson’s Partners with Power, Starbuck’s Keeping a Butterfly and an Elephant in a House of Cards, or Wald’s Smart Growth: The Large Law Firm in the Twenty-First Century, leaders, senior partners, and others flit by, but they essentially subsist in an environment that is expressed as collegial and lacking in explicit hierarchy.

Despite the apparent nature of partnerships as collegially minded organizations sharing resources and profits motivated by the good of the common weal, the great recession of 2008 displayed a different aspect of firm leadership in PSFs. The reactions to the crisis showed management to be hard-headed and dirigiste when it came to laying off “redundant associates and partners.” In 2009, for example, Linklaters created its “New World” strategy to lose 120 lawyers and 150 support staff “to match the headcount of the firm to actual demand.” And by 2012, Linklaters was committed to its third round of restructuring in a decade. All of this is quite different from the “organic” days of Cravath.

Laura Empson, Professor in the Management of Professional Service Firms at Cass Business School, London, has spent the last three years studying this ignored aspect of PSFs and shows that leadership is a nebulous and fragile phenomenon in PSFs lacking the image of the “single heroic leader.” (P. 5.) Indeed, she says, without irony,

The problem with portraying yourself as a leader in a professional service firm is that your most valuable colleagues are likely to resent being cast as your followers. (P. 5.)

The converse of leaders is followers and where formal hierarchies are perceived not to exist the latter is a label that no one wishes to entertain. How then are management, governance, and leadership possible? Empson starts with partnership, which necessarily limits the exercise of formal power: primus inter pares in a law firm is not the same as being a CEO in a bank. Partners who become leaders find themselves in the perverse position of potentially losing power rather than gaining it. What gave them power—rain-making and work distribution—are set by the wayside as they assume positions of responsibility without much formal power. One question, which is not answered in Empson’s study, is do the most powerful rainmakers vie for executive power in firms or do they prefer to exert their influence more in the shadows? Furthermore, we don’t learn how particular lawyers decide to run for election. Her study focuses then on those who already occupy these managerial positions and the extent to which they can exert power.

Power here is plural, processual, and persuasive and is located within the “Leadership Constellation,” (Pp. 6-7) which consists of nodes that interact with each other. The key components are the senior executive dyad (senior and managing partners), heads of major practice areas (e.g., banking, litigation), heads of business services (e.g., HR, finance, IT), and key influencers (e.g., rainmakers and eminences grises). They are not a team but articulate the “informal power structure of the professional services firm.” (P. 8.)

Empson bases her research on an empirical study of three PSFs in law, consulting, and accounting. We are able to make occasional educated guesses on which is which. They are large and global with a mixture of eat what you kill to lockstep remuneration. Empson interviewed partners and had access to partnership agreements, board minutes, and records of leadership elections. A word of caution: Empson denatures her case studies in such a way that we aren’t sure if she is referring to a law firm or an accounting firm or anything else. This is necessary to keep them anonymous. But it means that we lack some of the rich, thick description that would really make the case studies fully comprehensible.

The report takes particular events in these PSFs and follows them chapter by chapter. In the first case, PSF A underwent an organizational crisis. The structure of PSF A gave no formal constitutional powers to the senior and managing partners nor to the Executive Board. Although partners were elected to these positions, they had to govern by their credibility and natural authority, or as Empson characterizes it: ambiguous authority. Beyond the senior dyad, management gets fuzzy. PSF A, however, celebrated this ambiguity since it enforced flexibility and went against dogmatism. It was a partnership that had grown together organically with relatively little lateral hiring.

The crisis came out of the global banking crunch. The senior and managing partners could see that work would decline and the partnership would have to shrink and be restructured. The question was: how to do it when there was no formal power outside a partnership vote? The leadership constellation was called on to analyse then recommend candidates for expulsion. It was a reiterative process that took months by which time a list had been drafted. Fifteen per cent of the partners were offered redundancy or de-equitization and all accepted the terms. The remainder of the partnership agreed.

Despite the resistance to formal hierarchy, there clearly was an inner circle of leaders, who through their social and cultural capital, were able to command influence and engineer results. The ambiguous authority cloaked a harmonious conflict. The senior dyad was able to steer the leadership constellation into believing in a plural system of leadership that had capacity beyond its individual components. One of the central reasons the strategy worked, according to Empson, is what she terms the “paradox of social embeddedness.” (P. 17.) The long-term organic nature of the firm had created high levels of trust between the partners through “intuitive working relationships” (P. 17), which reduced conflict and augmented active decision making.

Empson’s example of PSF C illustrates how leadership can fail when globalization runs amok in the firm without considering how different cultures might be integrated. The UK partners in particular were resentful because they thought they weren’t reaping any benefits from the expansion. This firm had a clearer leadership structure than PSF A with a chairman and CEO and an executive committee (Excom).

The chairman focused full-time on the global mergers, leaving the UK day-to-day management to the CEO. Excom seemed to be made up of warring factions with no sense of firm unity. The CEO reduced the size of Excom but those dismissed went to the chairman and were reinstated. No faction was pulling from strength.

Matters came to a head when the chairman resigned and an election was announced. Members of Excom put themselves forward as candidates but because of the dissension a group of firm elders organized meetings in which the candidates had to answer questions on their skills and responsibilities as chairman and the direction they would take the firm in. These meetings aired many complaints and began to salve the difficulties. The new chairman eventually came from outside the warring factions. He held one-to-one discussions with partners and he managed to rebuild trust. Although Empsom doesn’t say it, it appears the “outsider” was elected because he had no connection to the warring factions of the old Excom.

PSF C was a victim of its own inability to work in teams rather than the pressures of the outside world. Despite the breakdown PSF C finally recovered.

In other chapters, Empson explores the remainder of the leadership constellation and shows that all of its elements have important roles to play in the successful process of PSF leadership. One element that comes through in her study is the role of social embeddedness where trust has been built up over many years of working together. But as PSF C demonstrates, that trust can be easily lost. Ambiguous authority also enables leaders to “duck and dive” in their firm machinations, achieving results that may be more credible to the partners than if simply imposed from above, assuming they could be.

There is a similarity with some of Dezalay and Garth’s findings about notable international arbitrators in Dealing in Virtue. Effective leaders have to be highly respected, inspiring loyalty and commitment, able to build consensus, comfortable with ambiguity, yet not appear to want the position. Global professional service firms are now large organizations and therefore becoming increasing unwieldy to govern. PwC has over 160,000 professionals worldwide; DLA Piper has more than 4,000 lawyers, with the result that for some PSFs governance has to face up to the questions of formalized authority, constitutional power with consequent diminutions of ambiguity, collegiality and partnership. For Empson there are three overarching themes that emerge from her research. Firstly, power in ambiguity where structures are fuzzy can be effective as shown in PSF A. By contrast the leaders in PSF C, which had formal structures, found themselves effectively powerless. Secondly, social embeddedness is invaluable because of the trust it engenders; PSF C lacked this dimension but PSF A had it in full. Thirdly, political skills are absolutely necessary to hold the organization together even when politics is abjured as in PSF A. Yet we can ask if Empson’s study is one of an industry in transition to a new, less democratic age or a cri de coeur for a golden age past?


From Status to Mobility: On Gender and Global Lawyering

Steven A. Boutcher and Carole Silver, Gender and Global Lawyering: Where Are the Women?, Ind. J. Global Legal Stud. (forthcoming 2013), available at BePress.

Globalization has been a hot topic for the legal profession for many years, but analysis of global law firms has mostly ignored something increasingly conspicuous in research on domestic law firms: gender. When I was doing fieldwork in American law firms’ China offices 5-6 years ago, I could not help but notice a fascinating phenomenon: most of these offices were staffed by an overwhelmingly large proportion of female lawyers, usually at the level of associates and legal assistants. This was in sharp contrast to the situation in Chinese domestic law offices, where women accounted for less than 20% of the lawyer workforce (see Ethan Michelson’s paper on gender inequality in the Chinese legal profession). I have been thinking about this puzzle for years and pondered some possible explanations, until I read the path-breaking article that Steven Boutcher and Carole Silver recently wrote on gender and global lawyering.

In this article, Boutcher and Silver ask a basic question: Does globalization affect women differently than men in terms of status attainment in the law firm? The answer, not surprisingly, is yes, but the interesting part is how, and how much it varies from one place to another. Based on an original dataset of a sample of 55 U.S.-based law firms with overseas offices collected by Silver, Phelan, and Rabinowitz in 2006-2007, the authors examine the distribution of 6,211 lawyers in a total of 243 offices in seven different jurisdictions, namely, Belgium, China (mainland), England, France, Germany, Hong Kong, and Japan. The article classifies lawyers according to three variables: gender (male and female), education and licensing (local lawyers, U.S. expats, and other expats), and status in the law firm (partners, associates, and counsel). Then it uses a number of crosstabs to compare the status of men and women across jurisdictions, focusing on the issue of partnership.

Several findings are particularly striking. First, U.S. expats who work in overseas offices are significantly more likely to be partners (46.2%) than both local lawyers working in the same offices (30.8%) and U.S. lawyers working in domestic offices (32.8%). This advantage of U.S. expats, however, is gendered: while 54.7% of the U.S. expat men are partners, the partnership rate for U.S. expat women is only 22.4%, though it is still higher than the rate for women lawyers in domestic offices of American law firms (17.6%). Second, although male domination in partnership is universal across the seven jurisdictions, there are notable variations. In Belgium, for example, U.S. expats are predominantly partners, even for women (60.0%). In contrast, in Germany, the partnership rate for U.S. expat women is only 10.0%, while the rate for their male counterparts is 63.0%—the gender gap is even wider than the gap between local male and female lawyers in the same German offices.

Two related findings are that in the majority of the jurisdictions, local women are the most disadvantageous group in global law firms; and that the partnership rates for local men are lower than the rates for U.S. expat women in three jurisdictions, namely, Belgium, Hong Kong, and China (mainland).  These observations suggest an important, but understudied, source of inequality in global law firms, that is, the inequality between expats and local lawyers. Boutcher and Silver’s analysis clearly shows the disadvantages of local lawyers in global law firms across gender and jurisdictions. Such disadvantages are the most salient in Hong Kong and mainland China, where only less than 20% of local male lawyers and less than 10% of local female lawyers are partners. This finding is consistent with what I found in an earlier article on the Chinese corporate law market, where Chinese associates often face a broken career trajectory because of the very low chances of partnership promotion in Anglo-American law firms. My speculation from qualitative evidence is that the low rate of local partners partially explains why local female associates often dominate these overseas offices, because local male associates are more likely to choose elite domestic law firms where they are paid less well but have a much higher chances of becoming partners. Many local women in global law firms, in contrast, would move to become in-house counsel or exit the profession after working as associates for a few years.

Increasingly, lawyers’ career mobility has become a key for understanding the production of status hierarchies in law firms, both domestically and globally. One weakness in Boutcher and Silver’s illuminating study is that it only examines the percentages of partners in different categories of lawyers, but we still know little about how these lawyers develop their careers in global law firms or how they move between domestic and overseas offices. In this sense, the “partnership rate” in this article is not really about the chances of promotion, but about the composition of lawyers with varying career paths in different offices of global law firms. This problem is mainly due to data constraint—the dataset that Silver and her co-authors collected only contains the basic biographical information of these global lawyers from firm websites and other public sources such as Martindale-Hubbell. It is impossible to draw systematic career patterns from the data without knowing where the lawyers come from and where they go after leaving these overseas offices. Nevertheless, Boutcher and Silver’s study still provides a pioneering analysis for a promising new area for empirical research on the legal profession. My hope is that future studies on this topic can adopt a more processual perspective and focus on the mobility of lawyers across countries and firms rather than the static descriptions of status and inequality. As I argue in a recent paper (“The Legal Profession as a Social Process”), the theoretical move from status to mobility is a core component of a paradigm shift in studying lawyers and globalization.


Re-Conceiving The Lawyer’s Role And The Foundations of Legal Professional Ethics

W. Bradley Wendel, Lawyers and Fidelity to Law (Princeton University Press, 2010).

In the 1970s and 80s, a significant debate emerged around the role played by lawyers. Based on the American Bar Association model code, associated documents and case-law, several moral philosophers, and a few lawyers, characterised legal representation as comprising two overarching principles.1 The principle of neutrality, they said, demanded that lawyers represent clients or causes they may disagree with morally. The principle of partisanship demanded that they fulfil their client’s wishes to the limits of the law. Provided they fulfil these tasks faithfully, they were morally absolved on the grounds that the role they perform is itself good. This constituted a third principle: non-accountability.

Numerous critics of this ‘standard conception’ of the lawyer’s role found it morally indefensible. Despite some spirited justifications2 and more nuanced rejoinders,3 the balance of debate moved on to the consequences of such a conclusion and the steps that should follow. At one end of the spectrum lay measures such as encouraging lawyers to select clients on moral grounds. The middle ground was occupied by proposals that lawyers have discretion to ignore ethical norms producing immoral outcomes. More radical solutions involved abandoning the adversarial system or the de-professionalization of lawyers. Wendel is one of many scholars who, often in book form, have recently revisited the issue of the standard conception of the lawyer’s role.4

The difficulty in justifying lawyers’ peculiar role morality was problematic for reasons other than the apocalyptic implications. First, lawyers are potentially significant figures in a society where the rule of law is constantly cited as a fundamental goal and organising principle. This is a time of worldwide changes to legal services markets. Lack of clarity could lead to changes in the roles of lawyers with dangerous consequences for the enforcement of rights. Second, in a society of plural values we recognise intuitively the fundamental importance of a neutral disposition towards those needing representation, coupled, on occasion, with intense zeal. Any corrective to the ethics of lawyers that resulted in these features being diminished or lost could negatively impact the protection of rights. Third, the question mark over the subject of legal ethics is particularly unfortunate at a time when, worldwide, legal professions are deciding that the subject is worthy of degree level study. The message that lawyers are slaves to clients’ wishes is not one that anyone concerned with the integrity of professional values wants to convey.

Assuming a continuation of the conventional role of lawyers, a new rationale is called for.

These efforts are generally commendable, striving to make the standard conception more palatable while accepting its underlying rationale as the autonomy of clients. Wendel also accepts the premise that the standard conception describes accurately the lawyer’s role, but seeks a new political-philosophical basis. His argument draws inspiration from the proposition that it is not fidelity to clients that is the underlying justification of the lawyer’s role, but fidelity to law itself. It is noticeable that, by fidelity to law, Wendel envisages fidelity to the kind of formal legality which is the dominant version of the rule of law in Western democracies. This conception of the rule of law does not explicitly equate with substantive justice, but with law that is general, prospective, clear and certain.5Therefore, the argument does not envisage lawyers exercising discretion to reach outcomes acceptable to ordinary morality. What is attempted is a justification of lawyers’ role morality rooted in the social and political significance of the role in the legal system of a liberal state.

The question that Wendel’s book strives to answer is ‘why the legal system deserves the allegiance of citizens, so that lawyers will be seen to play a justified role in society’. (P. 7). In answering this question, Wendell assumes a ‘reasonably well-functioning legal system’ which lawyers serve well by upholding its values. Within such a system, lawyers’ ethical duty is performed by providing that which clients are entitled to in law, rather than by delivering every advantage that the law allows. Wendel thereby provides a rational basis for limiting what lawyers may legitimately do for clients and, redraws the duty of loyalty. This suggests an ethically sound foundation for representation, particularly contrasted with the partisan obligation to deliver whatever client’s desire, within the limits of law.

Wendel’s position regarding neutrality is less consistent with the general argument. When it comes to client selection he conceives a moral permission to represent unpopular clients rather than a moral obligation. He would predicate selection decisions on legal rather than moral values, although the examples given suggest that, in most cases, arguments could be found for whatever outcome is preferred. To my mind, the logic of a system based on fidelity to law, and hence formal legality, in a society of plural values, is that all citizens should have representation in principle. This suggests that neutrality in client selection should be a governing principle.

Wendel’s conception of a lawyer’s role tackles some troubling aspects of the standard conception of the lawyers’ role while, in practical terms, avoiding the risks of other alternatives. A considerable strength is that it links the legal role more explicitly to the underlying purposes of the legal system in the pursuit of justice. The idea of fidelity to law resonates with renewed focus on the rule of law and the issue of determinacy of law. This, though, is the kind of justice reached through formal legality, rather than its substantive cousin. In the eyes of many, this will be a weakness of this re-imagining, but that, as they say, is a problem for another day.6 For the present, Wendel has shifted the theoretical foundation of legal ethics to represent ‘… a higher duty incumbent upon occupants of a professional role’. (P. 50).

  1. See, e.g., Murray L. Schwartz, The Professionalism and Accountability of Lawyers, 66 Calif. L. Rev. 669 (1978); 66, William H. Simon, The Ideology of Advocacy: Procedural Justice and Professional Ethics, 29 Wis. L. Rev. (1978); David Luban, Lawyers and Justice: An Ethical Study (Princeton University Press, 1988). []
  2. Monroe H. Freedman, Professional Responsibility of the Criminal Defence Lawyer: The Three Hardest Questions, 64 Mich. L. Rev. 1469 (1966); Charles Friedt, The Lawyer as Friend: The Moral Foundations of the Lawyer-Client Relation, 85 Yale L. J. 1060 (1976); Stephen L. Pepper, The Lawyer’s Amoral Ethical Role: A Defense, A Problem, and Some Possibilities, 11 Law & Soc. Inquiry 613 (1986). []
  3. Murray L. Schwartz, The Professionalism and Accountability of Lawyers, 66 Calif. L. Rev. 669 (1978); David Luban, Lawyers and Justice: An Ethical Study (Princeton University Press, 1988). []
  4. See, e.g., Tim Dare, The Counsel of Rogues? A Defence of the Standard Conception of the Lawyer’s Role (Ashgate Publishing Ltd., 2009); Daniel Markovits, A Modern Legal Ethics: Adversary Advocacy in a Democratic Age (Princeton University Press, 2009). []
  5. See, e.g., Brian Z. Tamanaha, On the Rule of Law: History, Politics, Theory (Cambridge University Press, 2004). []
  6. See, e.g., some very important responses to Wendel from key figures in the original debate on the “standard conception” in 90 Tex. L. Rev. 69 (2012). []

“Creative Destruction” and the Legal Services & Legal Education Markets

Ray Worthy Campbell, Rethinking Regulation And Innovation in The U.S. Legal Services Market, 9 N.Y.U. J.L. & Bus. 1 (Fall 2012).

If you are like me, you have started to notice—more and more frequently—expressions such as “creative destruction,” “creative disruption,” “disruptive innovation,” and “positive disruption.” Two recent examples include the TEDxCHANGE 2013 event held in April in Seattle which had the theme of Positive Disruption and a January 2013 Harvard Business Review blog entry entitled Creative Destruction Visits the Legal Profession. These terms have also appeared in conferences (see Panel 1) and talks at places such as Georgetown and Harvard law schools and in blog posts by higher education leaders, legal academics such as Bruce Kobayashi, and legal consultants such as Jordan Furlong (see here and here [legal education] and here, here, and here [legal services]). Disruptive innovation has been a prominent theme in the award-winning LawWithoutWalls program, which was founded by Michele DeStefano and Michael Bossone from University of Miami School of Law and in the ReInvent Law Laboratory, which is a creation of Michigan State Professors Dan Katz and Renee Knake.

During the past five years, as I have noticed more and more people using expressions such as “creative destruction,” I wondered what class or book I had missed since the speakers all seemed to know much more about this topic than I did. For this reason, I was particularly pleased to read Professor Ray Campbell’s new article entitled Rethinking Regulation and Innovation in The U.S. Legal Services Market because it provided the historical and theoretical background behind these expressions and because it gave me a new way to think about changes taking place in the legal services and legal education markets.

Some of these changes have been dramatic. Student debt is up and law school applications are down. Some prominent law firms have shrunk or disappeared. There are new providers in the space where lawyers previously were (think Legal Zoom and legal process outsourcing companies such as Pangea, which is now owned by Thomson Reuters, the owner of Westlaw.) In the U.K. and Australia, it is now possible for law firms to have external equity investment and to be publicly traded on stock exchanges. Hedge funds and grocery-plus chains, among others, have now invested in or provide legal services. Other countries are considering whether to adopt a similar approach. Everywhere one turns, there seem to be dramatic changes in, and challenges to, the existing system. What is going on here?

Professor Campbell’s article puts these legal services changes in a broader context and provides a framework for thinking about what is happening and how one might respond. The article begins by providing useful information about a theory that first emerged in the business-school setting. As Professor Campbell explains, the theory of “disruptive innovation” was pioneered in the 1990s by Harvard business professor Clayton C. Christensen. Professor Christensen had observed that many well-established successful companies had disappeared. He wanted to learn why and how new firms and technologies drove out of business formerly entrenched incumbents. Christensen discerned a counterintuitive pattern: incumbent companies failed not because they were poorly managed, but precisely because they were well-managed. Incumbent companies that failed had focused on their best customers and wanted to offer better products to those customers. They also pursued those opportunities most likely to have a significant impact on the company’s profitability.

As Campbell’s article explains, Christensen identified three elements that were part of what he came to call “disruptive innovation.” First, Christensen distinguished between sustaining technologies, which help make incumbent businesses stronger, and disruptive technologies, which effectively change the rules of the game and reward innovators. Most technological innovations are sustaining technologies, but some are not and change markets. Consumer needs, rather than technology, determine whether an innovation is sustaining or disruptive. (If the incumbent companies can use the innovation to better serve their current customers, then the innovation will be sustaining. If the innovation allows a disruptive innovator to reach new customers that the incumbent business hadn’t targeted or if the innovation provides to the incumbent company’s existing customers something the incumbent company wasn’t itself willing to offer to them, then the innovation is disruptive.) Second, Christensen offered insights into the aspects of established firms that prevent them from pursuing disruptive technologies themselves. He concluded that an incumbent company’s resources, processes and values (RPV) prevent it from switching to new kinds of products, especially where those products are lower cost and less fully-featured. In other words, incumbent firms do not pursue disruptive innovations because they are inconsistent with the firm’s RPV. The third element Christensen pointed to was something he called the value chain evolution theory; it explained why innovators tend to migrate upmarket into more valuable niches, ultimately leading to direct competition with, and defeat of, the incumbents.

After setting forth Christensen’s “disruptive innovation” theory, Campbell explains how Christensen’s later work applied his theories not only to technology, but to business models and processes, which can also disrupt markets. Christensen concluded that his disruptive innovation theory was applicable to three different kinds of “value configurations,” noting that businesses find it very difficult to move from one value configuration to another (unless they set up separate units to pursue new opportunities.) The three value configurations were:

  1. value chain businesses, which transform inputs into products (or services), similar to what a factory does;
  2. solution shop businesses, which solve customer problems with expertise, such as what a lawyer does; and
  3. value network businesses, which provide value by linking customers, such as what EBay or an insurance company does.

After setting forth these theories in a detailed but accessible manner, Campbell identifies some lessons that scholars studying legal markets might learn from Christensen’s work. Campbell concludes this section with the observation that: “In a world where incumbents cannot implement disruptive change, regulation that excludes entrants from different value configurations excludes not just the potential entrants but the possibility of disruptive change itself.”

The next section of Campbell’s article examines the existing lawyer regulatory structure to determine the degree to which it limits disruptive change. Campbell concludes that for lawyers who are engaged in the “practice of law,” the current U.S. regulatory system locks them in to a solution-shop value configuration, thus limiting their ability to engage in disruptive innovation. He cites as an example the difficulties that ethics rules create for lawyers who want to offer limited scope services (which is sometimes referred to as “unbundling”). Campbell also finds that regulatory barriers such as UPL rules and the availability of private enforcement through class action suits have limited disruptive innovation by nonlawyers. These regulatory barriers have had a strong impact in the individual client hemisphere and a minimal impact in the corporate client hemisphere because that hemisphere has had defacto deregulation. Campbell cites three exceptions to the UPL rules that operate in the corporate client hemisphere and that contribute to defacto deregulation: the cleansing of what would be UPL by the supervision of the in-house counsel lawyer, the ability to ship work out of U.S. jurisdictions, and the ability of “consultants” to offer law related services that do not claim to be the practice of law.

Campbell finds that short of the barrister function of appearing live in U.S. court proceedings, there appears to be little non-lawyers do not do for U.S. corporations. The final section of Campbell’s article is particularly interesting. It examines current innovations in legal services and offers detailed observations about the innovations one might expect in the future in each of the three value configurations.

Although I agree with Campbell that most lawyers currently operate using a “solution-shop” business configuration, I was not completely persuaded by his article that the regulatory system itself requires lawyers who are engaged in the “practice of law” to use this “solution shop” model and prohibits them from using a value chain or network business model.  This is an important issue because commentators, including Richard Susskind, Campbell himself, and others, have convinced me that, regardless of who provides it, we are likely to see more commoditization (and value chain configurations) in legal services in the future.  I also believe we will see a marked if not exponential growth in network configurations.  These value configurations have the potential to help solve access to justice problems.

Despite the fact that I was not entirely convinced that the current regulatory system prohibits disruptive innovation, I wholeheartedly agree with Campbell that it is important to consider the impact and wisdom of our current lawyer regulatory system on disruptive innovation, including whether the current system limits the “practice of law” to a solution shop model and the degree to which the current system prevents nonlawyers from using other value configurations to deliver legal services. These are important questions to which Campbell provides thoughtful provocative answers.

In sum, Campbell’s article gave me the background and vocabulary to better understand references to “creative destruction” and to participate in the important ongoing dialogue about lawyer regulation and our legal system. I recommend Professor Campbell’s “disruptive innovation” article to all legal academics regardless of specialty or country—because we all have a stake in this debate.