The American Legal System Is Broken: Can It Be Fixed?

3 01 2011

By Timothy D. Naegele[1][2]

I have been an American lawyer for 44 years.  I am a member of the bar of the United States Supreme Court, the District of Columbia Bar, the State Bar of California, and the bars of other federal courts.  I have been a U.S. Senate lawyer and a lawyer at the Pentagon, and have represented more than 200 banks and other financial institutions.  I have purchased banks for our clients, and advised two States; and I testified as an expert on behalf of the FDIC in a failing bank case.  I have done essentially everything that I ever wanted to do in the law, except work at the White House; and I have attended meetings there.  In these and countless other ways, I have seen the American legal system “up close and personal.”[3]

I have two law degrees, from Berkeley and Georgetown, at opposite ends of this great country.[4] I can say without any hesitation, reservation or equivocation that the finest education I received was at Berkeley’s law school par excellence, Boalt Hall.  I was taught—to think analytically, and to write—by outstanding professors[5] who instilled in my fellow students and me a belief that the law is sacred, sacrosanct and pristine, “a shining city upon a hill.”  Since then whenever I have encountered what I perceived as legal injustices and incompetence, I have taken umbrage and railed against them, albeit generally in my own quiet ways.

John Lennon probably said it best: “Life is what happens to you while you’re busy making other plans.”  I never truly wanted to become a lawyer; that was not my life’s ambition.  I wanted to be a businessman instead, and buy and sell companies, but the Vietnam War intervened and changed my life forever.[6] I never dreamed of being a lawyer, like so many of my law school classmates at Berkeley did, which may explain why I view the profession—which so many Americans have come to despise—with a certain degree of detachment and healthy skepticism.  For example, I would not recommend the practice of law to anyone.  Among other things, the time demands and stress on young lawyers are a “family-killer,” which is why there is a high rate of divorces among members of the profession.

When my son wanted to attend law school, I encouraged him to get both a JD and an MBA, to “hedge his bets” and give him options.  When he was nearing graduation with both degrees in hand, I did my best to talk him out of practicing law.[7] Friends of mine, who have practiced law for many years and have been very successful at doing it, feel much the same way and have told their kids and others not to pursue a legal career.  Indeed, some of these friends and I have joked that we should give lectures to graduating college seniors and entering law school students, telling them what the practice of law is really all about.  If we told them the unvarnished truth, many might decide not to enter the profession.

Despite a healthy contempt for many lawyers, and judges—who are often egotistical, callous, mean-spirited, power-hungry, arrogant, self-righteous, condescending and incompetent—I have had wonderful friends over the years who are lawyers and even judges.  I have worked with them, and some have represented me, and I will always respect and be deeply indebted to them.  They are special people, who stand head-and-shoulders above others in the profession; and they are nice people as well—which may be what distinguishes them from the others.

Perhaps the most disturbing qualities about lawyers and judges are their arrogance and abuse of power, and their lack of empathy and innate legal and life skills to deal with vital human issues that come before them.  For example, lawyers who are prosecutors are often less interested in fairness and justice than they are in winning at all costs, and exercising their raw power and hurting others in the process—such as those who are innocent but are convicted anyway.[8]

Similarly, lawyers are trained in law schools to be advocates.  When they represent clients in divorce proceedings, the last things that estranged couples need are their respective lawyers “stirring the pot” to earn greater fees, and increasing the acrimony that already exists.  Also, male lawyers prey sexually on their distraught and vulnerable female clients, which should give rise to immediate disbarments but it does not.  The American legal system is broken today, inter alia, because it has often attracted the wrong type of people.[9]

Can our legal system be fixed, and will the American people come to trust and respect lawyers and judges again, and believe that justice not only exists but prevails in this great nation?  Maybe . . . if the profession is restructured, and if it attracts those people who believe that the law is sacred, sacrosanct and pristine—truly a shining city upon a hill—and they put such principles into practice.  The profession does not require saints, but it does need something different than “Law West of the Pecos by Judge Roy Bean.”  And it needs people who are different than it has been attracting: who are often driven, ruthless, unprincipled, money-hungry, and power-hungry.

© 2011, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/naegele_resume.html).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g.www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2] The issues addressed in this article are discussed further in a partially-completed book of mine entitled, “Never Become A Lawyer.”  Its chapters include but are not limited to the following subjects: law schools, law firms, divorces, bar associations, Congress, lobbying, mergers and acquisitions, litigation, law enforcement, state governments, the federal government, judges, federal courts, the U.S. Supreme Court, politics, abuse of power, justice, lawyer scams, and other careers.

The book’s last chapter starts with the words:

I began writing this book with the idea of thoroughly trashing the legal profession of which I have been a member for more than 40 years, as well as the American “system of justice”—and God knows there is plenty of support for that approach.  However, the United States has many fine lawyers, including former classmates of mine at Berkeley and friends who have tried to do their very best to help others, such as those lawyers who have helped me.  Thus, in the final analysis, I endeavored to present a somewhat objective view of the profession. . . .

I assume my assessment will remain the same, or close to it, when the book is finished and published.

[3] See, e.g., http://www.naegele.com/naegele_resume.html

[4] See http://naegeleblog.wordpress.com/2010/02/26/america-a-rich-tapestry-of-life/

[5] They included but were not limited to Edward C. Halbach Jr. (see, e.g.,  http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=44), who became dean of the law school and gave me an “A” in Conflicts of Law during my last year at Boalt, which I will remember always; Sanford H. (“Sandy”) Kadish (see, e.g., http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=61), who taught Criminal Law and became dean of the law school too; Barbara N. Armstrong, who was the first woman law professor at a major American law school (see, e.g., http://en.wikipedia.org/wiki/UC_Berkeley_School_of_Law); Richard W. Jennings (see, e.g., http://www.universityofcalifornia.edu/senate/inmemoriam/richardwjennings.htm), who taught Securities Law and came to Washington when I was a young attorney with the Senate Banking Committee, and we shared stories; and Michael (“Mike”) Heyman (see, e.g., http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=52), from whom I never took a class, but I will always remember his smiling face, and that he was a “force” for excellence at the law school and beyond (e.g., he ran the Smithsonian in Washington, D.C. for many years).  A giant in the law of Torts, William L. Prosser (see, e.g., http://en.wikipedia.org/wiki/William_Prosser), was at Boalt too; however, he left shortly before I arrived—although his spirit was still there.

[6] As a result of enrolling in Army ROTC as an undergraduate, I had a commission as an officer when I graduated from UCLA in January of 1963.  I wanted to attend a business school; however, I needed to work from January to September at two jobs, to earn enough money so I could afford any graduate school.  Even though UCLA’s business school had classes that I could begin right away, in January—whereas, law school classes only began in September—my choice became a law school.  The Vietnam War was raging; and the Army would defer me for law school, but would not let me work for the same amount of time before entering a business school, which is the graduate education that I really wanted to pursue.

Having become a lawyer, however, I have always tried to do my very best, and believe that I have done so.  Also, reading endless legal decisions at Boalt Hall and later at Georgetown, I learned the English language in ways that were unfathomable at the time, but have proved to be quintessentially-invaluable with respect to any skills that I have today as a writer.

The great American poet, Robert Frost, wrote a wonderful poem about life choices entitled, “The Road Not Taken,” which perhaps says it all:

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

See, e.g.http://en.wikipedia.org/wiki/The_Road_Not_Taken_(poem)

[7] I was adamant that neither of my kids would work on Capitol Hill, because of what I had witnessed there.

See http://naegeleblog.wordpress.com/2010/09/24/washington-is-sick-and-the-american-people-know-it/

[8] A federal official with reason to know told me that between 15-20 percent of the indictees in federal courts are probably innocent.  Some are seniors who have been charged with cheating the Social Security program, and they are scared to death, so they agree to plea bargains rather than fight for their innocence.

[9] This is true of many judges, who serve for life and cannot be removed if they are federal judges.


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3 01 2011
Timothy D. Naegele

Tough Times In Texas . . . And Elsewhere

A private investigator in Texas made the following observations recently:

Our work is down almost two-thirds from what it has been in the past. It has been very slow in Texas, as people have not been pursuing others in litigation.

It is amazing the number of attorneys who have closed their offices and moved to their residences, or rented a small office in an executive suite. The only work has been in the judgment area, and that has been very slow and sporadic as people are careful about spending good money chasing bad.

This may mirror what is happening nationally and internationally in the legal profession, as the economic tsunami continues to roll worldwide, with devastating effects through the end of this decade.

See, e.g., http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/

13 01 2011
Delia Hartog

Will be the first to read the book.

14 01 2011
Timothy D. Naegele

Is Law School A Losing Game?

This is the title of an excellent New York Times article, which is worth reading—and states in pertinent part:

[Michael Wallerstein], who can’t afford to pay down interest and thus watches the outstanding [student] loan balance grow, is in roughly the same financial hell as people who bought more home than they could afford during the real estate boom. But creditors can’t foreclose on him because he didn’t spend the money on a house.

He spent it on a law degree. And from every angle, this now looks like a catastrophic investment.

Well, every angle except one: the view from law schools. To judge from data that law schools collect, and which is published in the closely parsed U.S. News and World Report annual rankings, the prospects of young doctors of jurisprudence are downright rosy.

In reality, and based on every other source of information, Mr. Wallerstein and a generation of J.D.’s face the grimmest job market in decades. Since 2008, some 15,000 attorney and legal-staff jobs at large firms have vanished, according to a Northwestern Law study. Associates have been laid off, partners nudged out the door and recruitment programs have been scaled back or eliminated.

And with corporations scrutinizing their legal expenses as never before, more entry-level legal work is now outsourced to contract temporary employees, both in the United States and in countries like India. It’s common to hear lawyers fret about the sort of tectonic shift that crushed the domestic steel industry decades ago.

. . .

How do law schools depict a feast amid so much famine?

“Enron-type accounting standards have become the norm,” says William Henderson of Indiana University, one of many exasperated law professors who are asking the American Bar Association to overhaul the way law schools assess themselves. “Every time I look at this data, I feel dirty.”

. . .

A law grad, for instance, counts as “employed after nine months” even if he or she has a job that doesn’t require a law degree. Waiting tables at Applebee’s? You’re employed. Stocking aisles at Home Depot? You’re working, too.

Number-fudging games are endemic, professors and deans say, because the fortunes of law schools rise and fall on rankings, with reputations and huge sums of money hanging in the balance. You may think of law schools as training grounds for new lawyers, but that is just part of it.

They are also cash cows.

Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes—remember “The Paper Chase”?—keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.

. . .

There were fewer complaints about fudging and subsidizing when legal jobs were plentiful. But student loans have always been the financial equivalent of chronic illnesses because there is no legal way to shake them. So the glut of diplomas, the dearth of jobs and those candy-coated employment statistics have now yielded a crop of furious young lawyers who say they mortgaged their future under false pretenses. You can sample their rage, and their admonitions, on what are known as law school scam blogs. . . .

. . .

But so far, the warnings have been unheeded. Job openings for lawyers have plunged, but law schools are not dialing back enrollment. About 43,000 J.D.’s were handed out in 2009, 11 percent more than a decade earlier, and the number of law schools keeps rising—nine new ones in the last 10 years, and five more seeking approval to open in the future.

Apparently, there is no shortage of 22-year-olds who think that law school is the perfect place to wait out a lousy economy and the gasoline that fuels this system—federally backed student loans—is still widely available. But the legal market has always been obsessed with academic credentials, and today, few students except those with strong grade-point averages at top national and regional schools can expect a come-hither from a deep-pocketed firm. Nearly everyone else is in for a struggle. Which is why many law school professors privately are appalled by what they describe as a huge and continuing transfer of wealth, from students short on cash to richly salaried academics. Or perhaps this is more like a game of three-card monte, with law schools flipping the aces and a long line of eager players, most wagering borrowed cash, in a contest that few of them can win.

And all those losers can remain cash-poor for a long time. “I think the student loans that kids leave law school with are more scandalous than payday loans,” says Andrew Morriss, a law professor at the University of Alabama. “And because it’s so easy to get a student loan, law school tuition has grossly outpaced the rate of inflation for the last 20 years. It’s now astonishingly high.”

Like everything else about the law, however, the full picture here is complicated. Independent surveys find that most law students would enroll even if they knew that only a tiny number of them would wind up with six-figure salaries. Nearly all of them, it seems, are convinced that they’re going to win the ring toss at this carnival and bring home the stuffed bear.

And many students enroll for reasons other than immediate financial returns. Mr. Wallerstein, for instance, was drawn by the prestige of the degree. He has no regrets, at least for now, even though he seems doomed to a type of indentured servitude at least through his 30s.

. . .

“You’re beginning your legal education at an institution that is engaging in the kind of disreputable practices that we would be incredibly disappointed to discover our graduates engaging in,” [Professor Henderson] says. “What we have here is powder keg, and if law schools don’t solve this problem, there will be a day when the Federal Trade Commission, or some plaintiff’s lawyer, shows up and says ‘This looks like illegal deception.’”

. . .

Critics of the rankings often cast the issue in moral terms, but the problem, as many professors have noted, is structural. A school that does not aggressively manage its ranking will founder, and because there are no cops on this beat, there is no downside to creative accounting. In such circumstances, the numbers are bound to look cheerier, even as the legal market flat-lines.

. . .

“Even if you tell them the bottom has fallen out of the legal market, they’re all convinced that none of the bad stuff will happen to them. It’s a serious, life-altering decision, going to law school, and you’re dealing with a lot of naïve students who have never had jobs, never paid real bills.”

. . .

“Most of us either went to the wrong law school, which is the bottom two-thirds, or we were too old when we graduated,” [John Thacher] said. “I was 32 when I graduated, and at 32 you’re washed up in this field, in terms of a shot at the real deal. They perceived me as somebody they can’t indoctrinate into slave labor and work to death for seven years and then release if they don’t like you.”

. . .

This gets to what might be the ultimate ugly truth about law school: plenty of those who borrow, study and glad-hand their way into the gated community of Big Law are miserable soon after they move in. The billable-hour business model pins them to their desks and devours their free time.

Hence the cliché: law school is a pie-eating contest where the first prize is more pie.

. . .

The mismatch of student expectations and likely postgraduate outcomes is starting to yield some embarrassing headlines. In October, a student at Boston College Law School made news by posting online an open letter to the dean, offering to leave the school if he could get his tuition money back.

“With fatherhood impending,” wrote the student, whose name was redacted, “I go to bed every night terrified of the thought of trying to provide for my child AND paying off my J.D., and resentful at the thought that I was convinced to go to law school by empty promises of a fulfilling and remunerative career.”

. . .

Steven Greenberger of DePaul recommends a mandatory warning—a bit like the labels on cigarette packs—that every student taking the LSAT, the prelaw standardized test, must read.

“Something like ‘Law school tuition is expensive and here is what the actual cost will be, the job market is uncertain and you should carefully consider whether you want to pursue this degree,’ ” he says. “And it should be made absolutely clear to students, that if they sign up for X amount of debt, their monthly nut will be X in three years.”

See http://www.nytimes.com/2011/01/09/business/09law.html?src=me&ref=general

The warnings to graduating college seniors and entering law school students need to be much stronger than indicated. As negative as this New York Times article’s description of the prospects for young lawyers is, the article merely captures the tippy tip of an enormous iceberg, with respect to what the practice of law is really like, and what is wrong with the American legal profession. Perhaps the title of my partially-completed book—which is discussed in footnote 2 of the article above—says it best: “Never Become A Lawyer.”

Also, as written in my book:

The major difference between lawyers and those who pursue a career in business is that lawyers look for problems (or issues), while those in business look for possibilities (or opportunities). Law students are taught to spot problems from the moment they begin their studies and it stays with them throughout their legal careers. It is how law school exams are written, and how State bar exams are structured. Most lawyers have a myopic view of life, because problems are their bread and butter—and focus. Without problems in our society, most lawyers would be out of work. However, they are generally not the builders of anything; and the problems versus possibilities dichotomy accounts for the difference.

Those in business start companies and sell products and build buildings and are truly creative and contribute to society. If they own their own businesses, they build up equity that is valuable if the business prospers and is sold. On the other hand, if a lawyer is successful, he works himself out of a job. The client thanks him, and sometimes there may be follow-on work or a bonus fee, but the lawyer’s job is finished. There is nothing to show for his work except a satisfied client, hopefully. Those in business are constantly looking for opportunities because that is how they prosper and succeed and build up equity. At the end of the day, though, the lawyer has no equity and has worked himself out of a job and must start all over again trying to find another client with problems, and solving those problems, only to work himself out of a job again—and the cycle keeps repeating itself.

See also http://naegeleblog.wordpress.com/2011/07/29/are-colleges-dinosaurs/ (“Are Colleges Dinosaurs?”) (see footnote 4, as well as the other footnotes and comments beneath the article)

14 01 2011
Delia Hartog

Sad state of affairs. Fortunately we follow the Roman Dutch Law. America’s legal system is renown for its circus tactics. Pity

17 03 2011
Hugo Hur

Wow, I knew lawyers had a bad rep but is this really how the majority of lawyers are and are preceived? I graduated from Bucknell University in 2004 and have been working in sales for a medical device company for about 6 years now. Many people see it as a desirable profession but I have grown very tired of the mundane repetitiveness of the job and find it unchallenging and boring. As I have matured I have also developed to desire to want to help others and make a difference in society. Which is why I decided to apply to law school for the 2011 Fall semester hoping a law degree would help me achieve this. However, since I took my LSAT and have applied to law schools, I have heard mostly negative comments about the job market and the professionals currently working in field. I am starting to wonder, am I making the wrong choice?

17 03 2011
Timothy D. Naegele

Thank you, Hugo, for your comments.

If you are intent on going to law school, perhaps the best advice that I can give to you is what I told my son—which is set forth in the article above: hedge your bets by getting an MBA too. It takes an extra year, but it will be worth it.

Also, you must factor in the cost of that education, and assume that the job market may be terrible in 3-4 years, when you finish with one or both degrees. My comment above discusses the cost considerations, which are very real, and the economic problems ahead during the balance of this decade, which will be very real too.

See http://naegeleblog.wordpress.com/2011/01/03/the-american-legal-system-is-broken-can-it-be-fixed/#comment-1274 and http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (see also the footnotes and comments beneath the article)

In the final analysis, it is a judgment call that you must make, factoring in all that I have written above, as well as your goals in life. Only you can make the ultimate decisions.

Are there good lawyers and judges? Of course there are. Many are my friends. However, more and more lawyers are concluding that if they had to do it all over again, they would not enter the profession. My book—which is mentioned in footnote 2 of the article above—details all of these issues in much greater detail.

17 03 2011
Anon

I enjoyed reading this essay. I would like to feel like I am an exceptional case and that I would be one of the lucky few that becomes the exception, but advice, from professors, friends, and professionals have disabused me of that notion. I am still eager to go the Law School, but with opened eyes. I have met some of the most ambitious, driven, unscrupulous people and the majority of them just happen to be people studying for the LSAT planning on applying to Law School; Unfortunately most of these people are often the highest scoring LSAT takers. Your advice to pursue an MBA will be taken to heart as a hedging mechanism. But having made the personal calculations, I find that I come trumps up; not that I am not bothered by the long list of negatives associated with the professions, but with my ability to cope with them.

17 03 2011
Timothy D. Naegele

Thank you for your comments.

Yes, I can certainly understand your feelings, and I share many of them, especially the following:

I have met some of the most ambitious, driven, unscrupulous people and the majority of them just happen to be people studying for the LSAT planning on applying to Law School; Unfortunately most of these people are often the highest scoring LSAT takers.

Your comments mirror many of my own thoughts, including the following—which appear in the article above:

Despite a healthy contempt for many lawyers, and judges—who are often egotistical, callous, mean-spirited, power-hungry, arrogant, self-righteous, condescending and incompetent—I have had wonderful friends over the years who are lawyers and even judges.

Also, in my book—but not included in the article above—are the following observations:

When I got to Berkeley, I was supposed to be rooming with a fraternity brother of mine from UCSB . . . ; however, God love him, he took one look at the law school and opted instead for Vietnam, having gotten an Army commission through ROTC just as I did. He was stationed in the Mekong Delta at a place called Cantho, which I will always remember; and he wrote to me saying that he slept every night with guns next to his bed, and armed, friendly South Vietnamese soldiers stationed outside. Because he was an Intelligence officer, I never doubted it at all—plus I trusted him completely.

Apparently [he] was more prescient about law school and the law than I was, because he put his life on the line rather than embark on the path that I was taking. This should have told me something. Also, I realized that seemingly all of my law school classmates had wanted to become lawyers for many years, and some even wanted to be judges. The only image that such thinking conjured up was people wearing green eyeshades, who had tunnel vision. While I read many learned and well-written opinions in law school, I never figured out why anyone would want to be a judge.

17 03 2011
Hugo Hur

Mr. Naegele,

Thank you so much for your response. I have taken into consideration the cost of a legal education and fortunately for me, there are many Philadelphia schools who offer part-time programs at a great price which would allow me to keep my job. I have considered also getting an MBA at the same time and maybe that is an option that I should take more into account. Thank you for your references. I will definitely look into your book to see if it will provide any additonal insights that may be beneficial to me. Thanks again for your advice.

Regards,

Hugo Hur

17 03 2011
Timothy D. Naegele

Thank you again for your comments, Hugo.

First, I recommend an MBA too, which would add an extra year to your studies if you pursue a joint JD/MBA program, which many if not most universities offer today.

Second, as stated in footnote 2 of the article above, my book is not finished or published yet. It is in draft form, and a “work in progress” at the moment. :-)

17 03 2011
Timothy D. Naegele

Debtors’ Prisons

The Wall Street Journal’s article entitled, “Welcome to Debtors’ Prison, 2011 Edition,” is worth reading. It states in pertinent part:

Some lawmakers, judges and regulators are trying to rein in the U.S. debt-collection industry’s use of arrest warrants to recoup money owed by borrowers who are behind on credit-card payments, auto loans and other bills.

More than a third of all U.S. states allow borrowers who can’t or won’t pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people, according to a tally by The Wall Street Journal of filings in those counties. Nationwide figures aren’t known because many courts don’t keep track of warrants by alleged offense. In interviews, 20 judges across the nation said the number of borrowers threatened with arrest in their courtrooms has surged since the financial crisis began.

See http://online.wsj.com/article/SB10001424052748704396504576204553811636610.html?mod=WSJ_hps_editorsPicks_1

As the American and other global economies decline during the balance of this decade, such draconian measures may be used more and more to collect debts and harass debtors.

See, e.g., http://en.wikipedia.org/wiki/Debtors'_prison

In the United States, it is unconstitutional to incarcerate someone solely for failing to pay a debt. For example, it violates (1) the Due Process Clause of the Fourteenth Amendment, (2) the Cruel and Unusual Punishment Clause of the Eighth Amendment (as applied to the States through the Due Process Clause of the Fourteenth Amendment), and (3) the Eighth Amendment contains the Excessive Fines and Excessive Bail Clauses.

See http://topics.law.cornell.edu/constitution/amendmentxiv (Section 1: “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws”) and http://topics.law.cornell.edu/constitution/billofrights#amendmentviii (Amendment VIII: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted”)

In Florida, for example, the St. Petersburg Times stated in an editorial entitled, “Debtors’ prison—again”:

In a little-noticed trend blamed on the state’s hard economic times, several courts in Florida have resurrected the de facto debtor’s prison—having thousands of Floridians jailed for failing to pay assessed court fees and fines. The shortsighted plan threatens to run afoul of the U.S. Constitution. It appears to generate little additional revenue relative to the misery it causes, and it should be stopped.

. . .

Author Charles Dickens familiarized his readers with England’s system of squalid debtors’ prisons. Dickens’ father was imprisoned in Marshalsea for debts and Dickens set Little Dorrit there. But that country saw the light in the mid 19th century and outlawed jail for debtors.

In the United States, it is unconstitutional to incarcerate someone solely for failing to pay a debt. Florida officials get around this by claiming the defendants are going to jail not for their debts but for violating a court order. That is what you would call a self-serving technicality. The truth is that Florida has enthusiastically resurrected debtors’ prison. How Dickensian is that?

See, e.g., http://www.tampabay.com/opinion/editorials/article991963.ece

5 05 2011
Timothy D. Naegele

The Law: A Less Gilded Future

This is the title of an article in the UK’s Economist, which is worth reading. Among other things, it states:

TWO years ago Howrey was one of the world’s 100 biggest law firms by revenue, with nearly 700 lawyers in eight countries. Profits exceeded $1m per partner. The American firm, which specialised in intellectual-property suits, had had several spectacular years in a row. But in 2009 profits were much less than expected and angry partners began to leave. Defections continued during the recession. After failed merger talks, Howrey shut its doors this March.

. . .

After a dozen years of growth, employment in America’s law industry, the world’s biggest, has declined for the past three years. . . . The 250 biggest firms . . . shed more than 9,500 lawyers in 2009 and 2010, nearly 8% of the total. Many also deferred hiring, leaving new graduates in a glutted market. . . . The pain was felt in Britain, easily the biggest legal market after America, and other countries too.

. . .

[N]ot all the trends that have hit the legal industry are cyclical. Some are here to stay even as the economy recovers. One is clients’ determination to keep their bills down. Feeling that they had overpaid vastly for the work of green trainees, they began refusing to have routine work billed to first- and second-year associates (ie, lawyers who are not yet partners). They see no reason to stand for it again.

See http://www.economist.com/node/18651114?story_id=18651114&fsrc=nlw|hig|05-05-2011|editors_highlights

First, any notion that the work of young “green trainees” does not have value, and should not be charged to clients, is utter nonsense and naïve. It reflects ignorance about how the practice of law really works, as well as the relative imput of partner-level lawyers and those who work under them. “Grunt” legal research is done by law clerks (i.e., law students) and associates, and it is invaluable in producing outstanding legal documents (e.g., lengthy court filings) and helping to shape legal strategies. The job of partner-level lawyers is to apply their experience to refine legal arguments and perfect briefs and offer clients the wisdom of years of legal experience. Put bluntly, the work of all is important, essential and in the clients’ best interests; and the absence of any portion is like having a car run on 2-3 wheels.

Next, the outsourcing of legal work to places like India is patently absurd. First, the lawyers in such countries are not admitted to practice law in the American jurisdictions, which protect their turfs religiously. Second, only by practicing law in the United States, and in particular States, does one truly understand what the law is all about there. The next time you have a problem with your computer and your phone call ends up being routed to a call center in India, the Philippines or somewhere else, and you are frustrated by the results, just multiply such problems a thousand fold with respect to the law. In all fairness to the people in India and elsewhere, they are being asked to opine about the American law when they have not be trained to do so, nor are they qualified or legally entitled to do so. In short, globalization of the law has definite limits.

See also http://www.economist.com/node/17733545 (“Offshoring your lawyer”)

With respect to the growth of technology, I have used laptops for approximately 20 years, and my first one essentially made a secretary obsolete. I can do work anywhere in the world today, with only a laptop and the ability to connect to the Web; and I have done extensive work for clients when I have been traveling abroad, including work for a major American corporate client almost 16 years ago—when computer technology and the ease of using it was much less sophisticated than it is today. Put bluntly, technology has changed the practice of law dramatically.

Large international firms may prosper if they are managed properly; however—like the government, at all levels, whether federal, State or local—the larger they get, the more unmanageable they become. Also, small niche law firms with specialized practices will do well, which is what my practice has been for many years.

The article states: “Ultimately, lawyering is becoming more of a business than a profession.” This has been true since I left the U.S. Senate and became a partner of a Washington law firm in 1973, before establishing my own law firm. It has always been a business, as far as I am concerned. Also, the article adds: “American law schools are slowly trying to instil some business acumen into future lawyers.” I have believed all of my professional life that a law student should get both an MBA and a JD, which is what I recommended to my son. Among other things, it allows a law student to hedge his or her bets, if jobs in the legal profession become scarce or nonexistent.

See also http://naegeleblog.wordpress.com/2011/01/03/the-american-legal-system-is-broken-can-it-be-fixed/#comment-1274 (“Is Law School A Losing Game?”) and http://www.usatoday.com/news/education/story/2011-10-24/ABA-law-schools-student-debt/50898362/1 (“[W]e have a legal education model that’s broken”)

18 05 2011
Timothy D. Naegele

The Presumption Of Innocence No Longer Exists In America

To its credit, the Wall Street Journal conducted an unscientific, yet important poll of its readers, which asked: “Should images of defendants in handcuffs and in court be broadcast and published, before they’ve been convicted of a crime?” The Journal added:

French law prohibits the showing of suspects in handcuffs or otherwise restrained. The law, passed in 2000, aims at strengthening the protection of the presumption of innocence. Media companies can be fined thousands of dollars for violating the law. What do you think? Is the U.S. tradition of airing such footage prejudicial? Is it more important to protect freedom of speech than the presumption of innocence?

See http://online.wsj.com/community/groups/question-day-229/topics/should-images-defendants-handcuffs-court?dj_vote=15371#identifier

It is more important by far to protect the presumption of innocence than to protect freedom of speech. The French are correct.

However, the issue goes much deeper than the showing of suspects in handcuffs or otherwise restrained. As a practical matter, the American system of “justice” no longer exists—because the presumption of innocence no longer exists.

We are a nation where rogue prosecutors reign, whose goal in life is to prosecute even the innocent. Federal, State and local prosecutors ruthlessly and gleefully pursue countless numbers of innocent Americans for a multitude of crimes that were never committed; and the judiciary has allowed this to happen because many judges are former prosecutors.

It has been estimated that between 15-20 percent of the indictees in federal courts are innocent. Some are seniors who have been charged with cheating the Social Security program; and they are scared to death, so instead of fighting an unjust system, they agree to unconscionable plea bargains—which is a chilling and disturbing fact.

Those prosecutors who pursue the innocent should be incarcerated themselves, and the prison system itself should mete out their punishments. Only then will justice be served.

18 05 2011
Richard Moran

Mr. Naegele,

First I want to say I enjoy your blog posts, especially the latest on the topic of Presumption Innocent. This is a symptom of a greater societal issue and it actually an issue I raised in my thesis for my undergraduate program here in Canada, because we are facing the same kind of issue. One of the other issues is what I discovered through my research the “CSI Effect” which is interesting.
My paper is more focused on wrongful convictions here in Canada and how our government is working to better the system. This is one of the reasons why I want to go to law school either in the US or Canada to work on these cases.
Thanks,
Richard

18 05 2011
Timothy D. Naegele

Thank you, Richard, for your comments and compliment.

Good luck in law school. :-)

18 05 2011
ATB

1) There are many companies that consider an MBA a liability rather than an asset these days.

2) In many countries, lawyers, like other professionals, are paid an hourly fee for their services, regardless of whether the patient lives or dies, regardless of whether the client wins or loses a law suit. The American system of (so I’ve been led to believe) paying a lawyer a percentage of the takings in a civil suit is bound to lead to frivolous suits being pursued to the nth degree.

3) If I were naive, I would have been shocked to hear that the American police randomly grab innocent people and attempt to frame them for crime. But I know lawyer-speak, which does not distinguish between the possibility or the likelihood of something happening. To a lawyer, if something is possible, though unlikely, we must assume it happens all the time, however absurd.

Do the police arrest people in connection with a crime they did not commit? Yes. Do the police pick these innocents out of a telephone directory? Possible, but unlikely. Do the police pick on these “innocents” because they have been committing this kind of crime since they were juveniles? Yes. Should lawyers police the police to prevent abuse? Yes, of course. Should they do so to the point where the police [are] so powerless that most crimes just end up [in] the vast warehouse of “unsolved” crime. I don’t think that is a service to society.

18 05 2011
Timothy D. Naegele

Thank you for your comments.

First, you might be correct that many companies consider an MBA a liability rather than an asset these days. However, that does not affect my judgment one iota. I believe the combination of an MBA and a JD (or law degree) provide anyone with a set of skills that are invaluable in life. Such degrees require four years in the United States, as a result of joint MBA-JD programs at most universities; and if jobs are scarce in the law, the person can easily switch to business.

Second, American lawyers are paid by the hour, or on a contingent-fee basis, or a combination of the two. Even when paid on a total contingent basis, the practical check against “frivolous suits being pursued to the nth degree” is that they are not profitable to undertake. In most cases, the lawyers involved will not receive any compensation at all.

Third, innocent people are arrested, indicted, convicted and imprisoned in too many cases. If it happens with only one person, it is an unconscionable travesty.

Fourth, you ask:

Should [lawyers police the police] to the point where the police [are] so powerless that most crimes just end up [in] the vast warehouse of “unsolved” crime. I don’t think that is a service to society.

I agree with you.

3 06 2011
mr0btuse

Hope you don’t mind a ‘legal consumer’ chiming in here.

As someone who has been forced to hire several lawyers for one civil complaint over the years, I can attest to the fact the US legal system is broken. It’s become so, because ‘the law’ has become completely uncoupled from ‘the morale imperative.’ Morality—which should underlay all law—has been thoroughly eliminated. The law is now simply a commodity to be analyzed for its potential risk/benefit. And, as lawyers continue to charge higher and higher fees, and the courts continue to take forever to judge the obvious, and consumers’ incomes continue to plummet due to the screwing they’re getting, there’s little incentive left for an average ‘Joe/Jane’ to even file a claim. The law has become a playground for the rich. The poor need not even apply.

And talk about incompetence. Out of the six or seven lawyers I’ve hired, two of them were not only incompetent, but they were liars also—making me believe they were working on my case while the case actually sat idle for months. The first lawyer’s negligence cost me 60 grand. Yet, the court wouldn’t do anything to punish the lawyer after I filed a malpractice claim for obvious negligence. The industry protects its own.

That’s why lawyers have such a bad reputation. The legal system may as well be the mafia as I think it’s viewed as being as equally corrupt by most laymen. All it takes is one experience through the court system to find that that opinion has merit. The question is this: Is the court system a reflection of our society, or has our society become a reflection of the court system?

4 06 2011
Timothy D. Naegele

Thank you for your comments.

First, “legal consumers” are always welcome. This and other articles were written for them, inter alia, to tell them what the law and other subjections are really like.

Second, you have said:

[A]s lawyers continue to charge higher and higher fees, and the courts continue to take forever to judge the obvious, and consumers’ incomes continue to plummet due to the screwing they’re getting, there’s little incentive left for an average ‘Joe/Jane’ to even file a claim.

For the most part, I agree with you. Litigation cannot be done “on the cheap,” because it is generally very complicated and time-consuming. Also, there is no question that consumers’ incomes have plummeted already, and they will continue to do so during the balance of this decade. Things will not get any easier, unfortunately.

See, e.g., http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-1621

Third, you are correct: “The industry protects its own.” This is true, however, when lawyers sue other lawyers. There are biases among judges that should not exist, and are not founded in the law.

Fourth, you added:

That’s why lawyers have such a bad reputation. The legal system may as well be the mafia as I think it’s viewed as being as equally corrupt by most laymen. All it takes is one experience through the court system to find that that opinion has merit.

Yes, I agree.

Lastly, you wrote:

The question is this: Is the court system a reflection of our society, or has our society become a reflection of the court system?

I do not believe our “court system” is a reflection of our society. On the contrary, judges have too often become the law unto themselves, and it is as though “Law West of the Pecos by Judge Roy Bean” prevailed. This should not happen.

I was taught when I received my first law degree from Berkeley that the law is sacred and sacrosanct—truly “a shining city upon a hill,” as I have written. Like you, it repulses and, yes, saddens me when I find otherwise.

By the same token, I do not believe that “our society [has] become a reflection of the court system.” I believe in the inherent wisdom and, yes, goodness of the American people—and of people everywhere. Perhaps the only saving grace about our legal system is that it may still be the best in the world, albeit very imperfect and “twisted.”

See, e.g., http://naegeleblog.wordpress.com/2010/02/26/america-a-rich-tapestry-of-life/

As I concluded in my article above:

The profession does not require saints, but it does need something different than “Law West of the Pecos by Judge Roy Bean.” And it needs people who are different than it has been attracting: who are often driven, ruthless, unprincipled, money-hungry, and power-hungry.

I believe this goes to the very heart of what you have encountered. However, you are not alone. There are those of us in the legal profession who have encountered it too, and we are just as frustrated and chastened as you are. We want and expect better than we find.

4 06 2011
mr0btuse

Thanks, Tim. Sometimes it helps just be heard by those in the profession. I’m concerned that if those practicing law don’t step up and fix the legal system, then the public has every right to subvert it. A fair and accessible legal system is the foundation of any free society. Without it, we live under tyranny.

Thanks for your comments. The only one I may not agree with is the fact that the US has the best legal system in the world. You may want to check out the ‘Rule of Law Index’ for a contrary opinion. Seems the US is ranked toward the bottom of the world’s richest countries, in several categories.

See http://worldjusticeproject.org/sites/default/files/USA%5b1%5d.pdf (“United States”); see also http://www.worldjusticeproject.org/node/559 (“Country Profiles”) and http://www.worldjusticeproject.org/rule-of-law-index and http://www.abajournal.com/news/article/us_lags_well_behind_other_wealthy_nations_on_rule_of_law_report_says/

4 06 2011
Timothy D. Naegele

Thank you again for your thoughtful comments.

First, I agree completely with your first paragraph. Unfortunately, too few lawyers are willing to speak out and criticize the profession, and “tell it like it is.” The judiciary is almost completely blind to the problems, because its members are at the root of many of these issues. Also, the American Bar Association is essentially worthless; and State bar associations are not much better. I am a member of the District of Columbia Bar, which I have always been proud of though.

Second, thank you for the link to the rating system. I was not aware of it.

5 06 2011
Timothy D. Naegele

Homeowners Turn The Tables By Foreclosing On The Bank Of America

This is the title of an article in the UK’s Daily Mail about a south Florida couple who got sweet revenge when they foreclosed on the Bank of America, instead of the other way around. As the article stated:

The unusual turn of events started in Collier County months ago, when the mega-bank notified Maurenn Nyergers and her husband that their comfortable, relatively new home had gone into foreclosure.

Trouble is, the Nyergers say they never owed the bank a cent, swearing instead that they had paid cash for their dwelling.

A Collier County judge agreed with the couple, and ordered Bank of America to pay their legal expenses.

But then, the Nyergers say they waited more than five months for a check.

The family’s lawyer, Todd Allen, told CBS: ‘They’ve ignored our calls, ignored our letters, legally this is the next step to get my clients compensated’.

So Mr Allen moved to seize the bank branch’s assets.

He instructed sheriff’s deputies and movers to remove desks, computers, copiers, filing cabinets and ‘any cash in the teller’s drawers’.

Bank employees were locked out for about an hour.

Mr Allen said the branch manager appeared ‘visibly shaken’ and bewildered.

He then handed the lawyer a check for the legal fees owed.

See http://www.dailymail.co.uk/news/article-1394412/Nyergers-family-homeowners-turn-tables-foreclosing-ON-Bank-America.html

Sweet revenge, indeed. Hopefully this happens again and again, across the U.S. and in other countries; and banks and other lenders are taught a lesson.

5 07 2011
Timothy D. Naegele

Justice Is Being Served In The Cases Against Casey Anthony And Dominique Strauss-Kahn

The prosecutors failed to prove their case against alleged child killer Casey Anthony—the so-called “Tot Mom”—except for four counts of lying to investigators. Something very similar is happening in the prosecution of Dominique Strauss-Kahn, whose sex case appears to be collapsing as well.

See, e.g., http://online.wsj.com/article/SB10001424052702304760604576427992712720456.html?mod=WSJ_hp_MIDDLETopStories (“Casey Anthony Acquitted of Murder”) and http://online.wsj.com/article/SB10001424052702304760604576425973330277408.html?mod=WSJ_hps_sections_world (“Strauss-Kahn Sex Case Appears Headed to Dismissal”); see also http://online.wsj.com/article/SB10001424052702303544604576429783247016492.html?mod=WSJ_hps_sections_opinion (“Even if it is ‘likely’ or ‘probable’ that she committed the murder, she must be acquitted [because the] standard is proof beyond a reasonable doubt”) and http://www.dailymail.co.uk/news/article-2011560/Casey-Anthony-trial-Not-guilty-verdict.html and http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8619409/Casey-Anthony-cleared-of-murdering-two-year-old-daughter.html and http://online.wsj.com/article/SB10001424052702304490004576422462548199624.html?mod=WSJ_hps_sections_opinion

The thread running through these cases and so many others is that abuse of our criminal justice system by prosecutors is “unreal” today. According to one civil trial attorney with years of experience, it is akin to “KGB material”—as rogue prosecutors go after innocent people and try to convict and imprison them.

None of these comments are intended to defend Anthony or Strauss-Kahn, or to say that they are nice people who are totally innocent or blameless. The tragic death of little Caylee turned my stomach just as much as it turned anyone’s. Also, the idea that Strauss-Kahn sexually assaults women is sick, pure and simple.

However, the world of criminal prosecutors is equally sick and grotesque. Just ask lawyers who take umbrage at the system. Also, ask distraught women whose divorce lawyers have preyed on them sexually—where the lawyers involved should be disbarred automatically, but the American Bar Association and State bar associations “turn a blind eye” and do little or nothing to curb such abuses.

As I have written:

[L]awyers who are prosecutors are often less interested in fairness and justice than they are in winning at all costs, and exercising their raw power and hurting others in the process—such as those who are innocent but are convicted anyway.

Also, “judges . . . are often egotistical, callous, mean-spirited, power-hungry, arrogant, self-righteous, condescending and incompetent.”

And I added:

A federal official with reason to know told me that between 15-20 percent of the indictees in federal courts are probably innocent. Some are seniors who have been charged with cheating the Social Security program, and they are scared to death, so they agree to plea bargains rather than fight for their innocence.

It can be argued that the only check on rogue prosecutors and judges—many of whom are former prosecutors—is our jury system that keeps our country “sane.”

Also, a stigma follows those who are found not guilty. Perhaps former U.S. Secretary of Labor Ray Donovan said it best, after being indicted by a New York grand jury for larceny and fraud. Donovan was acquitted, after which he was famously quoted as asking, “Which office do I go to get my reputation back?”

See, e.g., http://en.wikipedia.org/wiki/Ray_Donovan

Anyone who honestly thinks that prosecutors are advocates of truth and justice is living in a “Mary Poppins,” fantasy world, and knows nothing about how our legal system really operates. The truth about this system is not found by watching TV shows or films. Indeed, it is seldom if ever discussed or written about, yet it is often said—by lawyers—that the only thing separating prosecutors from guilty criminals is the “badge.”

Lastly, how many innocent people have been wrongly executed for crimes they did not commit? Even more startling may be the number of innocent people who have been wrongly convicted and imprisoned. Perhaps the best remedy for such abuses is to have the “guilty” prosecutors incarcerated; and let justice be meted out with respect to them, by those in prisons.

See also http://www.usatoday.com/news/washington/story/2012-02-06/ted-stevens-prosecutors-justice-department/52922922/1 (“Taxpayers pay to defend prosecutors in Ted Stevens case“)

12 07 2011
Eunice

Thank you for this post Mr. Naegele. I’ll be entering my third year of law school this fall and I had been wondering if anyone else was feeling precisely the same way I do about the legal profession. I had been wondering whether my feelings about the legal profession/lawyers/judges arose out of my naivete and still being very new to the legal profession. I’m pleasantly surprised to find that you, someone who has a great deal of experience in the law in many respects, feel the same way I do.

I feel that, in addition to the “wrong” types of people choosing fields in the law, the whole of society is broken when it comes to educating people of their legal rights and responsibilities. When I started law school, I went in thinking that I would learn all sorts of specialized knowledge that required a graduate degree. To my dismay, I did not. What I have been learning is that much of the knowledge and the analytical skills taught to us law students could have been taught to anyone and everyone in public middle schools and high schools. I began to think, and still do think, that law schools, lawyers, and the ABA hold a monopoly on legal knowledge to the exclusion of the general public. I still can’t grasp why analytical thinking and legal knowledge can’t be taught starting in middle school, or at least high school. It bothers me that the law, the rules that govern everyone’s lives on a daily basis, in every minutiae of detail, is so out of reach of most of the general public… especially the poor. What do you think about all of this?

I’m glad I found your blog. I hope you’ll be able to make some changes to the legal profession in ways that are desperately needed. Thank you.

12 07 2011
Timothy D. Naegele

Thank you, Eunice, for your thoughtful comments—and your compliments.

I agree with all of your observations. The ABA is essentially worthless; the same is true of many bar associations, with the exception of the District of Columbia Bar—they are effectively trade associations, and private clubs for lawyers; law schools are businesses; law students are “defrauded” . . . and the list goes on and on.

In a relatively short period of time, you have grasped what the law is today in America. To change it is like turning an aircraft carrier around on a dime, in the middle of the vast oceans. One would have to change the mentality of lawyers, judges and the like; and it might be akin to “fixing” an alcoholic. Can it be done? Sure. Is it likely? Not in this lifetime, barring a miracle—or a whole chain of them.

12 07 2011
atb

America always astonishes me with its creativity and resourcefulness and the toughness of its people “cowboys don’t cry”. The legal system can be changed. Smaller and weaker countries have started with legislation that requires all legal documents to be in “plain English”. Yes, this requires lawyers (in government employ) to legislate themselves out of existence. But jobs are changing and evolving all the time and people survive. (What happened to all the people with jobs in publishing and printing that were made obsolete by computers? They are now working with computers or washing dishes.) Americans have the ingenuity to survive all the changes brought about by modern technology and modern ways of thinking. So I don’t accept the premise that they will lag behind the rest of the world in modernizing its legal system.

12 07 2011
Timothy D. Naegele

Well said. Let’s hope you are correct. :-)

14 08 2011
Timothy D. Naegele

Serving On A Board Of Directors Can Be A Thankless And Brutal Experience

USA Today has reported about the political infighting and rifts within the board of directors at the acclaimed Betty Ford Center for the treatment of drug and alcohol addiction in Rancho Mirage, California.

The former First Lady’s daughter was ousted from her leadership position with the board, and resigned entirely; financial support has stopped from some of the Center’s long-time contributors; the former First Lady’s wishes for the Center’s future are being disputed; and chaos seems to be engulfing the organization as its competitors broaden their reach geographically, and as the national economy falters. None of this bodes well for the Center’s future.

See http://www.usatoday.com/news/nation/2011-08-14-betty-ford-treatment-center-funding_n.htm and http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (see also the footnotes and comments beneath the article)

Having served on several boards of directors, I vowed that I would never serve on another one. The “cat-fighting” and internal politics often make the most Machiavellian politics of Washington, D.C. seem like child’s play.

Egos and factions and power grabs seem to be the norm. Indeed, often the boards members are more interested in their power and positions, and the perks of being board members, than they are in advancing the worthy goals of the organization.

Many of us have found that it is a thankless job. More importantly, for those who serve on the boards of financial institutions and other large organizations, legal liability can attach to their decisions; and this alone can be brutal unless there are Directors and Officers Liability Insurance (“D&O”) policies in place that provide adequate coverage against costly litigation.

If asked today by a client about serving on a board, my gut reaction would be “no, don’t do it,” which is sad.

31 01 2012
Timothy D. Naegele

Law Firms Keep Squeezing Associates, And Much Worse Is To Come

The Wall Street Journal has an article on this subject, which is worth reading.

See http://online.wsj.com/article/SB10001424052970203363504577186913589594038.html?mod=WSJ_hp_mostpop_read#articleTabs%3Darticle

What it neglects to mention are the following:

First, the American and global economies will get much worse during the balance of this decade. No one should be buoyed by the temporary presence of “green shoots,” or signs that things are improving, because similar “upticks” happened during the Great Depression of the last century, which did not end until the onset of World War II at the earliest. We have a long way to go this time as well, which is fraught with economic dangers and uncertainties that have been evident for a long time now.

See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-1960 (see also the article itself, as well as the footnotes and all of the comments beneath it)

Second, “lean silhouettes” make sense during good times and bad. Hence, it would be foolhardy for law firms to ramp up and become bloated again.

Third, U.S. law schools have “defrauded” their students into believing that the practice of law is something other than what it is. Yes, it is a profession idealistically, but it is a business first and foremost, and a very tough and unforgiving one. Young law graduates and associates have learned this the hard way, probably more than anyone; and they will continue to do so.

Fourth, they have been worked to the bone for years now; the hours have been grueling; and many if not most have sacrificed families and everything else, only to be jettisoned “heartlessly” when tough times occur. When I left the U.S. Senate, I joined a Washington law firm as a partner. I will never forget a young associate who worked for some of my partners, and not me. He worked at nights and on weekends; and from my perspective, he always gave his best. Yet, when the time to become a partner arrived, he was let go unceremoniously. It was not my decision to make, but I always felt it was a cruel thing to do.

Fifth, the structure of American law firms has been wrong for decades. Some years later I dealt with a European law firm that was structured as a true pyramid. There were about 50 partners and would-be partners at the top, and some 250 lawyers beneath who were nothing more than employees, and could never aspire to more than that. They knew their “place” and were thankful for their jobs. Those 50 at the top were divided into 25 partners who enjoyed the firm’s profits and seemed to retire or move on before they were 50 years old; and 25 more who were designated to fill their shoes. Such a system was a far cry from the structure of American law firms, and it seemed to make more sense. It was run like a business, not like some grandiose experiment in paternal socialism.

Sixth, the way that American law firms have been structured for many years is that a lawyer without lucrative clients—be it a partner or associate—is at the mercy of those partners who run the business and are its “rainmakers.” These partners can leave and take their clients and business with them, sometimes destroying or certainly damaging the law firms that they leave; and this has become more and more the norm in recent years. One law school classmate of mine did this, taking a whole law firm department with him; and I was flabbergasted when he did it, because he had seemed so loyal to the firm.

Seventh, more and more of those lawyers who are “stuck” in the practice of law are transitioning to “safe” government jobs, or they are striking out on their own to found the next generation of law firms, or they are abandoning the law completely.

Eighth, for those who think that “the outlook is brighter [and] the anxiety level is diminished,” they might wish to think again, because they “ain’t seen nothing yet.” Much worse is to come.

Ninth, one lawyer responded to the Journal‘s article as follows:

I would . . . like to share my perspective, as a 34 year practitioner, and a very undistinguished graduate of an undistinguished law school. There is always a place in the law for people who care about their work and their clients—although less obviously at big firms or with the government. I am now a semi-retired solo in a town of less than 2,000 people. But I have made a fine living and have all the work that I can do because, first and foremost, my clients know that I will make THEIR problem MY problem. Therein lies the true poetry of the law: to use one’s training and accumulated experience for a moral good, and with even modest law office management skills the money will indeed follow. Put another way, get the word out that you care and can be trusted and the world will beat a path to your door. Lawyers can learn to survive with new attitudes and skill sets the same way the rest of America’s uprooted professionals have, and if it doesn’t pay what one thinks it should then keep at it. I don’t mind my long hours so much because they are MY long hours, not someone else’s.

This is the essence of what the law should be, not always what it is.

Lastly, one area of the law that I see “exploding” now and in the future is Internet fraud. I have witnessed it for years now; however, I see it more and more, each and every day, and law enforcement is essentially helpless in preventing it. Innocent Americans are being defrauded, and this is true of others worldwide, although we have only seen the very tip of an enormous iceberg of illegality, which will get much worse as economic conditions worsen.

See, e.g., http://naegeleblog.wordpress.com/2010/01/31/lawyers-and-internet-scams/ (“Lawyers And Internet Scams”) (see also the footnotes and comments beneath the article)

2 02 2012
Timothy D. Naegele

Law School May Amount To The Worst Investment Of Her Life!

This is a conclusion reached in an article about the financial challenges facing law school graduates today—entitled, “The Law School Bubble: How Long Will It Last if Law Grads Can’t Pay Bills?”—which is worth reading. It states in pertinent part as follows:

For the 29-year-old, who’s supported herself since college, the financial repercussions of law school may amount to the worst investment of her life, despite a degree from a second-tier school and a resumé that boasts a position on law review and coveted summer associate positions.

. . .

In 2010, 85 percent of law graduates from ABA-accredited schools boasted an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report. At 29 schools, that amount exceeded $120,000. In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after commencement. Less than 51 percent found employment in private law firms.

The influx of so many law school graduates—44,258 in 2010 alone, according to the ABA—into a declining job market creates serious repercussions that will reverberate for decades to come.

. . .

Heavy loans now threaten to consume the future earnings and livelihood of the nation’s young lawyers. Yet, even as the legal market contracts, more than 87,900 potential candidates vied for 60,000 seats at 200 ABA-approved law schools in 2011, according to the Law School Admission Council.

More than 78,900 have applied for 2012 spots, according to preliminary LSAC counts in November.

Youthful overoptimism, bleak job prospects for college grads and the entry of several more universities and for-profit businesses into the legal education business are some of the root causes for the supply-and-demand imbalance in entry-level lawyers.

Very few critics, however, have examined the part played by the federal government through its student loan policies in creating a law school bubble that may be on the verge of bursting—one strikingly similar to the mortgage crisis that cratered the economy in 2008.

Direct federal loans have become the lifeblood of graduate education, and they shelter law schools financially from the structural changes affecting the profession. The bills are now coming due for many young lawyers, and their inability to pay will likely bring the scrutiny of lawmakers already moaning about government spending.

. . .

Law schools—many for the first time ever—will become vulnerable to significant cuts in the amount of money available to students as Congress tries to hold the line on additional deficit spending.

. . .

Since the GI Bill, America has operated on the principle that higher education always delivers a return on investment. As such, Congress created a host of programs during the Great Society era of the 1960s to expand access to colleges and universities.

Law students, along with medical and dental students, are treated generously as future professionals and able to borrow, with virtually no cap, significantly more money than undergrads. America’s law students borrowed at least $3.7 billion in 2010 to pay for their legal educations. Although the majority of the funds came from the Education Department, the patchwork of mechanisms that serve higher education as a whole make it difficult to regulate how much is being lent and to whom.

. . .

When U.S. credit markets seized in 2008, there was worry that there would be insufficient federal or private loan funds to meet the financing needs of all students enrolled in U.S. colleges and universities. So the Education Department, under the authority of a new federal law passed in the spring of 2008, began buying up the federally guaranteed loans, making them direct loans from the U.S. government.

In 2010 Congress passed the Student Aid and Fiscal Responsibility Act, part of President Barack Obama’s final health care overhaul, which ended federally guaranteed student loans and replaced them with direct loans made through the Education Department. In effect, by converting the loan guarantees into an income-producing asset, the federal budget was reduced by $61 billion over 10 years.

. . .

The Education Department does not make lending decisions based on credit scores, at least for Stafford loans, the primary funding mechanism for both undergraduate and professional schools. Nor does it conduct a rigorous analysis on how graduation from particular institutions affects an individual’s income or earning power. The protections for the U.S. Treasury are largely on the back end: Changes to the federal bankruptcy code over the last 15 years have made it extremely difficult to discharge student debt.

. . .

The federal government’s gamble that higher education will continue to result in higher personal incomes eerily echoes Wall Street’s risky assumption that historical patterns in real estate values would carry forward forever and enable many sliced-and-diced mortgage-backed securities to attain AAA ratings.

. . .

Assuming a total debt of $150,000 (the amount currently carried by several thousand law graduates), the total monthly payment is $1,743.46 a month for 10 years, according to the Education Department’s repayment calculator. For law graduates who opt for the 25-year graduated payment plan, which starts at about $930 a month and increases over time, that amortizes to $357,229, more than double the original amount.

. . .

Given the likelihood of some form of curb in federal student lending, there are gut-wrenching times ahead for law schools—even those that continue to enjoy a surplus of applicants. Until we get to that point, however, the lawyer production machine will continue to churn out more lawyers.

. . .

“The face of the law profession has changed. Even the ones who don’t have jobs think it will bounce back and be the same, but it won’t. This is a totally different game.”

See http://www.calbarjournal.com/February2012/TopHeadlines/TH1.aspx

Even worse, and what the article fails to mention, is that such students—or rather graduates, and young lawyers—might end up spending time in “Debtors’ Prisons,” which is something that they never bargained for.

See http://naegeleblog.wordpress.com/2011/01/03/the-american-legal-system-is-broken-can-it-be-fixed/#comment-1517

Also, American and global economic conditions are likely to get far worse during the balance of this decade.

See http://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-1960 (see also the article itself, as well as the footnotes and all of the comments beneath it)

. . .

It is worth repeating what I wrote in the article above:

When my son wanted to attend law school, I encouraged him to get both a JD and an MBA, to “hedge his bets” and give him options. When he was nearing graduation with both degrees in hand, I did my best to talk him out of practicing law. Friends of mine, who have practiced law for many years and have been very successful at doing it, feel much the same way and have told their kids and others not to pursue a legal career. Indeed, some of these friends and I have joked that we should give lectures to graduating college seniors and entering law school students, telling them what the practice of law is really all about. If we told them the unvarnished truth, many might decide not to enter the profession.

If one wants a secure life financially, the legal profession is not the place to find it, certainly these days. It is a myth and a pipe dream—and outright fraud for law schools to tell young students otherwise. On the list of the youngest American billionaires, the law is not mentioned even as a remote “also ran.”

See, e.g., http://www.thedailybeast.com/galleries/2012/02/02/the-youngest-and-richest-people-in-america-from-mark-zuckerberg-to-sean-parker-photos.html (“The 10 Youngest Richest, From Sergey Brin to Mark Zuckerberg”)

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