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Law Firm Moneyball

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Billy Beane: He can't throw and he can't field, but what can he do? Guys, check the reports or I'm gonna point at Peter.

The Scouts: He gets on base.

Billy Beane: He gets on base!

John Poloni: So he walks a lot.

Billy Beane: He gets on base a lot. Do I care if it's a walk or a hit? Pete?

Peter Brand: You do not.

Billy Beane: I do not.

Corporate clients are tightening their belts. They don't want to pay $300/hr for junior associates who are just learning that promissory estoppel isn't a real thing, and they're not particularly happy about paying $500/hr for someone with a hint of experience but no true expertise. BigLaw billing and hiring are both set for a major overhaul over the next decade, and so there's one word that keeps coming up in discussions about how these renovations should take place:

Moneyball.

Moneyball is the story of how the Oakland As, a baseball club with only a fraction of the money of its competitors, managed to become one of the best teams in the country. Traditionally scouts for major league teams looked at a few things that mattered for a player, such as their number of hits, RBIs, and home runs, but also a lot of things that didn't matter at all, such as if his girlfriend was ugly (shows a lack of confidence) or if he had the kind of face that you expect to see on a superstar athlete.

The As ditched all the ridiculous voodoo methods for predicting player stardom and reduced the game to a simple formula. To go to the playoffs you need to win games. To win games you need to get runs. To get runs you need to get players on base. And, to get players on base you need to hire players who get on base.

It's a theory that's obvious in its simplicity, and pretty hard to find a flaw with (especially considering the method's success). Now, law firms want to replicate the brilliance.

Traditional law firm hiring has been to look at top ranked schools and top ranked students. T14 and Law Review.

Clients don't care about prestige. No general counsel is going to suddenly by okay paying $300/hr for a first year associate because that guy was on the editorial board of a journal. Law firms live and breath billable hours. If an associate isn't billing, he isn't covering his expenses, and he's bleeding firm money. If he is billing but not billing enough, he's not increasing the profits per partner, and the firm will struggle to recruit partners with a good book of business and will lose their top performers to poachers.

So can the shiny prestige badges and get right down to the basics. The firm needs two things out of an associate. First, the associate needs to be competent enough to not royally screw up a case and cost the firm a client. Second, the associate needs to be a billing machine.

For all the flaws with the LSAT, it does at least reveal a basic level of competency when it comes to reading comprehension and logical reasoning. Those are the two core skills necessary to not screw up a client matter. Soft skills like taking depositions or wooing clients, those are things you can only get a feel for after having an attorney working for a while. At the first year associate hiring stage though, all you really have to go on are the basic skillset needed to read and interpret statutes and case law, and for that the LSAT isn't too bad.

Undergraduate and law school GPAs are also useful. There's a lot of variables that goes in to your GPA (which professors you get, undergrad major, if the professor was hungry when he graded your exam), but a high GPA means doing well over and over in a variety of circumstances. It's another good indication of a fundamental intellectual competence, but more importantly it shows the ability to grind things out repeatedly. A 4.0 undergrad GPA shows that you're an overachieving nerd who is willing to continue working long after all the work has been finished. One A in law school could be dumb luck, but four As and two B+s in your 1L year indicates you're not only intelligent, but willing to lock yourself in the library and go no-life-mode with your outlines. That's the sort of work ethic needed to squeeze out a few extra billable hours past midnight. One more hour a night, five nights a week, fifty weeks a year, at $300/hr, that's another $75,000 for the firm. When it becomes an extra two hours a night, six nights a week, as a midlevel billing $500/hr, it's another $300,000 for the firm.

Law firms need billable hours to cover their expenses, and more billable hours to keep and recruit partners who carry large clients around in their pockets. And what gets hours bills?

High LSAT, high undergrad GPA, high law school GPA. There's a pretty simple shorthand for that. T14 and Law Review.

 

The reality is that sabermetrics (for people who get their ideas from something other than Brad Pitt and Jonah Hill's on screen chemistry) doesn't carry over to legal practice. Major league ball players grew up playing tee ball, they played baseball in elementary school, and middle school, and high school, and possibly in college for a few years. By the time they even look at the big leagues they'll have more than a decade on the field.

BigLaw first years have never been to a deposition, never read a contract more than two pages long. There is no fundamental change they can implement that will make corporate clients want to pay for undereducated newbies. The only people who can change the system are law schools, and so long as butts keep filling up seats at the top schools they have little reason to care about the financial worries of firms.

Want to really change the game, open up the DLA Piper School of Law.

[Read more from The Robot Pimp]


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