Judge Richard Posner has suggested that the legal system in the United States has developed along the lines of a cartel. That cartel formed, in large part, first because of changes in the training of lawyers and then because of resulting changes in the licensing of lawyers. Throughout the 19th century, educational standards rose and a movement to make the practice of law a restricted occupation started to develop. Posner and others date the beginnings of this movement to 1870, when Christopher Columbus Langdell—the then-dean of Harvard Law School—revolutionized legal education. Langdell believed that law was a science and that opinions written by appellate judges were the raw materials of this branch of science. So, in Langdell’s view, just as geologists study rocks and zoologists study animals, lawyers should study published case opinions through a lengthy curriculum. And for the new system to jell completely, it required the abolition of the centuries-old practice of prospective lawyers entering the profession through a process of apprenticeship combined with self-study (“reading law”).

That system has created a number of economic incentives for universities, because consumers (prospective lawyers) have to buy the product, and the product is relatively cheap to deliver (traditionally, large lecture classes capped by a single examination at the end of the semester). Simply put, law schools can be relatively profitable (compared to typical humanities departments, with low student-to-faculty ratios and relatively lower tuition), and they can be started with a relatively low capital investment (compared to medical or engineering schools, which need labs). But the Langdellian system doesn’t produce “practice­-ready” graduates of the sort that come out of trade schools or even out of university-level programs in education, pharmacy or medicine. Nor can it, because—reverting to MacIntyre’s dictum from my last column—the ability to judge “internal goods” is a function of experience, which is not what law schools principally have on offer (although that has changed in recent years at schools offering extensive writing and experiential programs).

Of course, until fairly recently, most law firms didn’t complain all that much about the lack of practical training in their new hires, and for my part, I think the traditional law school curriculum works pretty well in preparing new entrants into the only part of the profession that I know much of anything about—large law firms. But the recent change of heart is one worth exploring because we’ll find that it’s emblematic of the other cultural change that I want to emphasize: the migration of law practice from a professional culture to a commercial culture. There’s a straight line from the liminal moment between law practice as a profession and law practice as commerce and the ethical lapses that plague the everyday practice of law.

That straight line is intersected by a change in how new lawyers actually learn how to practice. There never was, of course, a “golden age” of law practice in which lawyers toiled harmoniously in the Garden of Justice. But it’s fair to say that law practice has become less professionally focused and more commercially focused over the past few decades—yet another impediment has been placed in the lawyer’s road to virtue. All this bottom-line commercialism has exacerbated the legal education/law practice divide, because practicing lawyers have diminished the important role that they once played in both legal scholarship and new lawyer training. (Query whether Chief Justice Stone of the U.S. Supreme Court could today have a career that would include stints as a named partner at a predecessor of my firm, Duane Morris, a partner at Sullivan & Cromwell, a professor and dean at Columbia Law School, and an attorney general of the United States.)

If a lawyer from 1950 were parachuted into the present, I suspect that the most startling change that he (and it would inevitably be a “he”) would notice in the legal landscape would be the overall number of lawyers and the size (both in terms of number of lawyers and geographic scope) of law firms. Lots of factors caused that explosion in the number of lawyers, but my point is that the explosion is a real phenomenon. With the rise of large, highly leveraged (i.e., few equity partners relative to all lawyers) law firms came the transition from profession to business—and with that transition came the transition to metrics that created disincentives for individual lawyers to spend time training new lawyers.

Most firms keep two types of statistics that figure into how nearly all promotion and compensation decisions are made: “originations,” which tracks who brought the work into the firm, and paid billable hours. Consequently, as William Henderson observes, none of this statistical focus is lost on law firm partners. To make matters worse, these seemingly “objective” metrics mask an underlying set of contingencies, ranging from how the business was generated (for example, is it “new” or from a hundred-year client?) to why the client didn’t pay for the hours billed (was the work shoddy, or was the client a deadbeat?).

So why do firms use such metrics when they so clearly serve to enhance only the external goods of the practice (i.e., money and its collateral prestige)? The short answer is lawyer mobility. At one point, most firms were organized under the Cravath model, in which firms hired the “best and brightest” from law school, eventually made some of those hires into partners for life, and exported the rest to positions with clients, the government or firms in regional markets. There were virtually no lateral moves at the partnership level, a situation facilitated by stable client relationships. But as client loyalty waned, a market developed for lawyers with portable business.

In effect, then, the internal goods of the practice (being an excellent lawyer who serves clients well) are held hostage to the external (money and prestige). What the devolution from the internal to the external means is that Aristotelian “friendship” (i.e., the virtue that holds institutions together) requires great effort to maintain in large law firms. Over my career, I’ve been fortunate to belong to firms that found ways to foster and balance the internal and external goals of law practice. But we can all think of many venerable firms that didn’t and, as a consequence, did not survive. In any event, the economic conundrum leads us back into the legal education issue with which I started. In the past, new lawyers learned to apply their legal education through a combination of watching and doing. But several of the forces that I’ve mentioned have conspired to undo on-the-job learning. For example, as Henderson and others have reported many times, some clients now refuse to pay for time billed by first- and second-year lawyers, which exacerbates the associate development problem, because meaningful “briefcase carrying” is lost revenue.

The takeaway from all this is that economics matter and that firm managers must pay close attention to economic metrics or put their firms in peril. But that takeaway leads to another: If law firms want to remain ethical as well as solvent, they must foster habits that allow their professionals to check their clients’ interests (which is to say, in part, their commercial interests) when necessary. I have no panacea at hand, but I can offer a way of thinking about our professional obligations and what we do that may help. That subject is up next time.

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