New Gilded Age: Are lawyers too rich to solve big problems?
Welcome to the Big Law Business Section on the evolution of the legal market written by me, Roy Strom. Today we’re talking to a law professor who thinks lawyers don’t live up to the ideals of the profession. Register to get this column delivered to your inbox on Thursday mornings. Programming Note: Big Law Business will be on vacation next week. Happy July 14!
When I spoke with Bill Henderson, a law professor at Indiana University on Tuesday, he had just finished watching the testimony of Cassidy Hutchinson, a former Trump staffer at the White House, before the committee of the House on January 6.
Henderson, who built and sold a legal tech company and now studies the business of law, examined the role of lawyers in society. He was prompted by growing signs of economic instability and political uncertainty, like those that were on full display when rioters stormed the Capitol last year and in the hearings now taking place on the Hill. .
His conclusion: Too many lawyers work to get rich and ignore other important aspects of the profession.
“We’re getting to a point where we have to step back and say ‘are we really doing our job as lawyers? “, Henderson said. “We have a duty first to our clients, then to the justice system and society at large. Are we fulfilling those duties?”
Henderson is not some kind of radical. He is well known for his writings on the legal industry and has devoted much of his energy since the 2009 financial crisis to developing new types of employment opportunities for law students. He thinks of problems in terms of the systems that create them. Henderson wrote about how the “diffusion theory” means that innovation in the legal industry will happen over generations rather than years.
It boils down many social and political issues, such as the rise of populism, opioid addiction in rural communities, and Washington’s impasse to one root cause: wealth inequality.
According to a report published this year by the World Inequality Lab, the richest 1% of individuals in the United States owned about 35% of the wealth in 2020, approaching levels seen in the Gilded Age.
Henderson says the legal profession’s work for wealthy clients exacerbates the gap.
“Historians tell you and the data shows you that these extreme wealth inequalities happen and some sort of totalitarian left or right movement often ensues,” Henderson said. “Lawyers are those who aid and encourage the accumulation of wealth.”
So he set out to study the Golden Age, an era which he believes most closely resembles today.
His first essay on this era is a captivating read for anyone interested in the history of today’s major law firms. Henderspon details how Paul Cravath built an estate – twice – on a 600-acre parcel on Long Island. Cravath partner William Guthrie has built his own resort nearby.
Perhaps Guthrie’s greatest legal achievement was developing arguments that ultimately led to the Supreme Court of the United States striking down the federal income tax in 1894. The case was funded by the wealthy clients of company that would benefit from paying less tax, according to Henderson.
The wealthiest lawyer of the Gilded Age was William Nelson Cromwell, known today as a renowned partner of Sullivan & Cromwell. He died in 1948 with an estate worth more than $200 million in today’s dollars, Henderson writes.
“We’re going back to Guthrie, Cravath wealth level here,” Henderson said of today’s lawyers, some of whom make $20 million a year. “You are getting to the point where some lawyers can now afford real estate as they had it. If you’re that lawyer, great. But on the other hand, historically, it is a red flag.
This is a message that is sure to be difficult for large law firms, which devote thousands of hours a year to pro bono work providing legal representation to low-income clients or defending causes that lack financial support. But Henderson points out that the problem of legal representation for low-income litigants is far from solved: More than 75 percent of civil cases in state court involve an unrepresented participant, according to the Self-Represented Litigation Network, a advocacy group.
Henderson, who teaches these issues to first-year law students, doesn’t have a simple answer to what lawyers can do to strengthen American institutions, but he wants lawyers to remember that representing clients is not their sole professional responsibility.
Lawyers must “cultivate knowledge of the law beyond its use for clients” and “use that knowledge in law reform,” according to the American Bar Associations Rules of Professional Conduct. Henderson said that’s what he does while studying the Golden Age – and he knows it’s easier for him to do as a law professor.
Law firms today, driven by billable hour targets and relentless client demands, are not a good environment for this type of practice, he said. Part of the solution, he argues in his essay, is tougher antitrust enforcement, something that individual lawyers or firms could help advance either in private practice or through government departments.
“Companies have created an environment where the only thing people can agree on is business ambition,” he said. “If you think they’re too ambitious commercially, you’re unlikely to be able to push them back. The law firm is simply not the right place, structurally, to act in concert in the face of these serious problems.
If there is a golden age analogue to the type of lawyer that Henderson thinks should emerge in today’s environment, it is George Wickersham, known as a renowned partner of Cadwalader, Wickersham & Taft.
Wickersham represented big business but changed his job after worrying the lawyers had gone too far to allow the accumulation of wealth. He solved the problem as attorney general in the William Taft administration, filing twice as many antitrust suits as Theodore Roosevelt’s administration, which broke the trust, according to the retired New York lawyer and author. York, John Oller.
This earned Wickersham the nickname “the scourge of Wall Street”.
“Wickersham was probably never as rich as Guthrie or Cravath, but he had enough money and did a lot of good. He at least walked away from the buffet,” Henderson said. “I’m looking for people like Wickersham.”
worth your time
On great law and gun control: Supreme Court practitioners Paul Clement and Erin Murphy left Kirkland & Ellis last week after the firm said it would stop handling cases involving the interpretation of the Second Amendment. I spoke with David Schultz about the news from a Bloomberg Law podcast.
On the great law and abortion: A handful of major law firms pledge to protect employee access to abortion services after the Supreme Court overturned Roe v. Wade, reports Meghan Tribe. Other law firms provide legal advice to patients and healthcare providers.
On Paul Hastings: Paul Hastings has a new leader who was not expected to take the reins of the business after joining him just over two years ago, report Chris Opfer and Meghan Tribe. Frank Lopez will take over as CEO in October from Seth Zachary, who led the company for nearly a third of its 70-year history.
It’s all for this week ! Thanks for reading and please send me your thoughts, criticisms and advice.