May 3, 2024

After Law School, Associates Learn to Be Lawyers

“How do you get a merger done?” asks Scott B. Connolly, an attorney.

There is silence from three well-dressed people in their early 20s, sitting at a conference table in a downtown building here last month.

“What steps would you need to take to accomplish a merger?” Mr. Connolly prods.

After a pause, a participant gives it a shot: “You buy all the stock of one company. Is that what you need?”

“That’s a stock acquisition,” Mr. Connolly says. “The question is, when you close a merger, how does that deal get done?”

The answer — draft a certificate of merger and file it with the secretary of state — is part of a crash course in legal training. But the three people taking notes are not students. They are associates at a law firm called Drinker Biddle Reath, hired to handle corporate transactions. And they have each spent three years and as much as $150,000 for a legal degree.

What they did not get, for all that time and money, was much practical training. Law schools have long emphasized the theoretical over the useful, with classes that are often overstuffed with antiquated distinctions, like the variety of property law in post-feudal England. Professors are rewarded for chin-stroking scholarship, like law review articles with titles like “A Future Foretold: Neo-Aristotelian Praise of Postmodern Legal Theory.”

So, for decades, clients have essentially underwritten the training of new lawyers, paying as much as $300 an hour for the time of associates learning on the job. But the downturn in the economy, and long-running efforts to rethink legal fees, have prompted more and more of those clients to send a simple message to law firms: Teach new hires on your own dime.

“The fundamental issue is that law schools are producing people who are not capable of being counselors,” says Jeffrey W. Carr, the general counsel of FMC Technologies, a Houston company that makes oil drilling equipment. “They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”

Last year, a survey by American Lawyer found that 47 percent of law firms had a client say, in effect, “We don’t want to see the names of first- or second-year associates on our bills.” Other clients are demanding that law firms charge flat fees.

This has helped to hasten a historic decline in hiring. The legal services market has shrunk for three consecutive years, according to the Bureau of Labor Statistics. Altogether, the top 250 firms — which hired 27 percent of graduates from the top 50 law schools last year — have lost nearly 10,000 jobs since 2008, according to an April survey by The National Law Journal.

Law schools know all about the tough conditions that await graduates, and many have added or expanded programs that provide practical training through legal clinics. But almost all the cachet in legal academia goes to professors who produce law review articles, which gobbles up huge amounts of time and tuition money. The essential how-tos of daily practice are a subject that many in the faculty know nothing about — by design. One 2010 study of hiring at top-tier law schools since 2000 found that the median amount of practical experience was one year, and that nearly half of faculty members had never practiced law for a single day. If medical schools took the same approach, they’d be filled with professors who had never set foot in a hospital.

But sticking to the old syllabus has had little downside. The clients of law firms may be scaling back, but the clients of law schools — namely, students — are spending freely. Or rather, borrowing heavily. It is hard to imagine a 21-year-old without a steady income securing a private or federally guaranteed loan to buy a $150,000 house, but sums like that are still readily available for just about anyone who wants a doctor of jurisprudence degree. And while word of grievous job prospects is finally reaching undergraduates — there was an a 11.5 percent drop in applications this year — there were no empty seats in any of the 200 law schools in the country.

“I gather change is afoot at some law schools,” Mr. Connolly says, “but it’s going to be very slow.”

So at Drinker Biddle, first-year associates spend four months getting a primer on corporate law. During this time, they work at a reduced salary and they are neither expected nor allowed to bill a client. It’s good marketing for the firm and a novel experience for the trainees.

“What they taught us at this law firm is how to be a lawyer,” says Dennis P. O’Reilly, who went through the program last year, and attended the George Washington University School of Law. “What they taught us at law school is how to graduate from law school.”

Allergic to the Practical

Article source: http://feeds.nytimes.com/click.phdo?i=897b15b0c5e8e4b75f9e30389131da72

Analyst’s Longtime Skepticism on Euro Gains Traction

“The current policy of lending plus austerity will lead to social unrest,” Mr. Connolly told investors and policy makers at a conference held this spring in Los Angeles by the Milken Institute, arguing the case that Greece, Italy, Portugal and Spain could not simply cut their way to recovery.

“And one should not forget that of the four countries we are talking about, all have had civil wars, fascist dictatorships and revolutions. That is history,” he concluded, his voice rising above the chortles and gasps coming from the audience and the Europeans on his panel. “And that is the future if this malignant lunacy of monetary union is pursued and crushes these countries into the ground.”

Mr. Connolly has been warning for years that Europe was heading for disaster. As a European Union economist in the early 1990s, he helped design the common currency’s framework, but then he was dismissed after he expressed turncoat views. In 1998, just months before the euro’s introduction, he predicted that at least one of Europe’s weakest countries would face a rising budget deficit, a shrinking economy and a “downward spiral from which there is no escape unaided. When that happens, the country concerned will be faced with a risk of sovereign default.”

Now, as the European debt crisis that began in Greece threatens to engulf even France along with Italy and Spain, Mr. Connolly’s longstanding proposition that the foisting of a common currency upon so many disparate nations would end in ruin is getting a much wider hearing. Hedge funds looking to bet on a euro zone breakup scour his research reports for insights.

Longer-term investors who listened to his decade-long recommendations to steer clear of the bonds of Greece, Italy, Portugal and Spain are congratulating themselves for not falling into the trap that bankrupted MF Global, the investment firm run until recently by Jon S. Corzine, the former Goldman Sachs executive and New Jersey governor.

And central bankers outside the euro zone are among his most faithful readers.

In 2008, Mark Carney, the governor of the Canadian central bank, cited the British-born Mr. Connolly, along with the far more prominent Nouriel Roubini of New York University and the Harvard economist Kenneth S. Rogoff, as having been among the few who foresaw the global financial crisis. Mervyn A. King, the governor of the Bank of England, has become more vocal about the euro zone’s problems and is also a longtime follower.

Nicolas Carn, an independent research analyst and money manager who worked previously as chief investment strategist for the London-based hedge fund Odey Asset Management, is one of Mr. Connolly’s biggest fans. “Bernard has influenced me a great deal,” Mr. Carn said. “He has shaped my views on Europe and contributed significantly to my investment performance.”

To be sure, Mr. Connolly was not the only analyst who raised early warning flags about the euro project. Economists like Martin Feldstein of Harvard and Paul Krugman, a Princeton economist who writes an Op-Ed page column for The New York Times, have been longtime critics, as were many experts in Britain, which has long been skeptical of the euro. But few have gone on to devote more or less their entire professional career to exposing Europe’s monetary fault lines.

Unlike many critics of the euro, Mr. Connolly, 61, plies his trade mostly in private, eschewing cable television programs, opinion pages and policy journals.

He represents a new breed of independent analyst that has come increasingly to the fore since the financial crisis broke in 2008.

As investment banks have cut down on staff and remain constrained by their banking and government relationships, independent analysts like Mr. Connolly, who are mostly pessimistic in outlook, have become highly popular for hedge fund investors who wager large sums of money betting against the currencies, bonds and banks of countries headed for trouble.

Article source: http://www.nytimes.com/2011/11/18/business/global/the-rise-of-a-euro-doomsayer.html?partner=rss&emc=rss