The capacity of the marketplace to assign values that are completely out of touch with reality has been graphically demonstrated lately but we have known about for a long time.   The classic book on the subject,  Mackay’s Extraordinary Popular Delusions and the Madness of Crowds, was published in 1852.  Among the many examples Mackay cites in this exhaustive documentary of human folly are the South Sea Bubble,  a stock speculation mania that gripped Great Britain the 18th century.

In the meantime, innumerable joint stock companies started up every where.  They soon received the name of Bubbles, the most appropriate that imagination could devise.  The populace are often most happy in the nicknames that they employ.  None could be more apt than that of Bubbles.  Some of them lasted for a week or a fortnight and were not more heard of, while others could not even live out that short span of existence.  Every evening produced new schemes and morning new projects.   (Mackay, at 54.)

Part of the wisdom of the marketplace is that Bubbles, big or small, inevitably burst.  We are living through a painful reunion with that wisdom now in the collapse of the housing bubble, a collapse whose shock waves have spread through almost every aspect of our lives.

The lawyer business has been as impacted by those shock waves as much as any other part of the economy but is also undergoing a collapse that is peculiarly its own.  In an earlier post, I wrote of Prof. William Henderson of Indiana University Law School’s work showing the last forty years of exceptional growth in law firm revenues, a “golden age” a he puts it, is ending.   The reasons are many, but the essential fact is that our customers have decided that they no longer going to pay the legal bills that they have been paying for the last thirty years.   The law business long ago priced itself out of the reach of the middle class;  now large corporations have decided they don’t want to pay the hierarchical compensation structure of the large law firm.   Largely thanks to technology, they have other options.   The law business is experiencing the creative destruction thing that is capitalism’s way.

The future is going to look much different than the past.  And that future, again thanks to that same technology,  is going to arrive faster than we think.  We need to think about that future;  as Criswell reminds us, it will be where we will spending the rest of our lives.  It will include more in-house counsel, more automation of routine tasks (like document review) formerly done by lawyers, more outsourcing of legal work to lower labor cost environments (not necessarily overseas),  and at least limited public investment in law firms.   And fewer lawyers, maybe a lot fewer.

What will those lawyers do?  They will have to do something more than just provide “legal services”.   They will have to provide value that can’t be provided by technology or outsourcing.  Pretentious as it sounds, they are going to have to provide wisdom, a rare commodity whose value is conferred by an understanding of human experience.  The future of the law business lies in ABA Model Rule 2.1.

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice.  In rendering advice, a lawyer may refer not only the law but to other considerations, such as moral, economic, social and political factors, that may be relevant to the client’s situation.

Some of us will recognize this as the essence of what we do.  This is why a lawyer is something more than a legal technician.   The creative destruction of the bursting of the law bubble is an opportunity for the law business to again embrace the legal profession, actually an opportunity for a lawyer renaissance.

Planting the seeds for this renaissance will mean huge changes in the law school business.  First year law students today should be studying ethics, jurisprudence, law business, information systems and dealing with real clients with real problems, saving substantive law for the second year and peforming an apprenticeship in their third year.  Law schools have to become lawyering schools.

Licensing authorities will have to make to make room for new categories of legal professionals, legal technicians whose training would be less expensive and whose degree of independent interaction with clients would be greater than today’s paralegals.  California has recognized the emergence of non-lawyer legal paraprofessionals, paralegals and documents preparers, and defined criteria for those occupations.   The creation of new categories of legal professionals seems very likely.

Whether lawyers, as we robustly define them now, continue to exercise independent judgment is the issue that is bubbling up with the bubble’s collapse.  Legal traditionalists would argue for maintaining the tradition of lawyer control of the provision of legal services and I would throw my lot in with them.  Independent judgment is exactly the commodity that gives our profession its fundamental value and that commodity is in greater demand than ever as society becomes more crowded and complex. The future will belong to the entrepreneurial lawyer and there is no reason why entrepreneurship can’t deliver that commodity.