Steel, Patience amid Adversity
posted by Lawrence Cunningham
Recent posts on this blog (Dave’s and Deven’s) about the state of the legal profession, and especially lawyer employment and legal scholarship (in comments to both), prompt the following reflections. No doubt, times are tough and may get tougher; but there is likewise little doubt that we, as a people, and law, as a profession, have faced them before and come to prosper. Steel and patience are vital here.
The stock market crashed in October 1987. Corporate finance and deal activity contracted. Law firms lost work. Associates were let go and firms cut back hiring. I graduated from law school in June 1988, and it was difficult to find jobs for many law graduates at the time. Luckily, my firm took me on board in September 1988, anyway, despite there being limited work. Shortly, however, deal flow resumed. By 1990, I had plenty of work. My firm and others resumed normal hiring, and later expanded it.
In September 2001, after terrorists attacked lower Manhattan, the stock market closed for several days. Corporate finance and deal activity contracted. Law firms lost work. Associates were let go and firms cut back hiring. Eventually, work resumed, with deal flow flourishing.
Then a professor, I went to the library to leaf through the law reviews published in the period just after the bombing of Pearl Harbor that brought the United States into World War II. I also read books about law firms during that period.
Amid World War II, people were terrified, deal flow contracted, associates at large firms were let go and hiring contracted. Scholarship appeared to have been cut back, but in corporate and securities law, did not seem to abate or shift course due to the attacks or resulting war. Eventually, the war ended, markets resumed, expanded, deals flowed, associates were hired, paid, made partner, and prosperity resumed.
Ditto with the episodic booms, busts, scandals and havoc that have ensued—the 1960s electronics boom and bust; the 1970s foreign bribery scandals; the Vietnam conflict and related upheaval; the 1980s savings & laon crisis; the 1980s/90s junk bond boom and bust; the late 1990s / early 2000s telecom boom and bust; and the current crisis, and its coming resolution.
Patience is a virtue for all those affected by adversity, whether economic, military or otherwise. Yesterday, Warren Buffett, known for his patience, and whose writings I’ve compiled into a book based on a law review conference, reminded us of this. Known also for cool analytics, Buffett emphasizes that our financial system is fundamentally durable. It will recover—and perhaps not as far into the future as many naysayers predict.
There is much talk of how associates at law firms can be let go to save the firm’s partners money (some, like Larry Ribstein, even analogizing the people to debt in a corporate capital structure) and others noting how firms may find it more profitable to let go those partners at the firm who do not share in the firm’s equity. These studies of the economics of law practice may be interesting.
What is likely true, however, is that the current cycle, like dozens before, will continue to result in wrenching contraction, followed, eventually, by a resumption of expansion. That is not to downplay the anxiety, fear, dislocation, upset, and other burdens of the process. I don’t mean to do that. It is to suggest, however, that we have seen this kind of problem before, we will see it again, and with patience, will prosper.
Meanwhile, those of us in the business of thinking about legal ideas, creating scholarly evaluations and proposals based on them, should continue to do that, just as we have in the past, and will do in the future, as Stanley Fish reminds us.
March 11, 2009 at 12:30 am
Posted in: Current Events
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Responses (6)
Miriam Cherry - March 11, 2009 at 1:52 am
Thanks, Larry, for writing a post that is sane and logical amid a great deal of chaos.
Miriam Cherry - March 11, 2009 at 1:54 am
Just to make it clear, the chaos to which I refer is in the financial market, not the other posts on this blug… ha ha …
A.J. Sutter - March 11, 2009 at 8:23 am
I’m sorry, the Larry Ribstein article you link to is a perfect example of the dehumanized discourse about associates that some of the other commenters in the past few days have been complaining about. E.g., “The more general point here that is sometimes ignored in the ‘leverage’ analogy is that, unlike conventional debt, which can be used to buy anything, human leverage bundles the asset with the liability. Moreover, the bundle is tightened by the fact that the debt aspect, by affecting incentives, also helps determine the value of the asset.” Talking about people, many of them with families and other dependents, in terms like these is repellent.
If law students are shocked that their profs can’t muster anything warmer or more empathetic to say about the current situation than “These studies of the economics of law practice may be interesting,” I can’t blame them.
Lawrence Cunningham - March 11, 2009 at 10:37 am
A.J.,
To be clear, my reference to Prof. Ribstein’s analogy to debt was intended as critical and my sentence you quote dismissive; I hope you detect some warmth and empathy in the rest of my post.
–LC
A.J. Sutter - March 11, 2009 at 10:54 am
Thanks and glad to hear it, since the impression made by the more straightforward reading was not at all characteristic of your posts.
Lia - March 12, 2009 at 10:47 pm
Professor Cunningham,
Thank you for bringing this insight to your students! Our discussion in Contracts the other morning was very uplifting.
I totally agree with you and Mr. Buffett– patience is a virtue. It’s also a prereq. to our societal pleasure. Good times are meaningless if they are not perceived. And, perception requires distinction. “The sweet just ain’t as sweet without the bitter baby.”
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