In this week's Law Firm Disrupted, we take a look at the talent pool for Big Law and ask a pretty simple question: Why?

I'm Roy Strom, the author of this weekly briefing on the changing legal market, and you can ask me any simple question here or sign up to receive this newsletter here.

A couple weeks ago, I compared Big Law to a Hermes bag in an effort to show how it benefits from so-called prestige pricing. Today, I want to take a look at how new lawyers benefit from an ecosystem that holds Big Law in such high esteem. And what that says about the purchasers of corporate legal services in this country.

Let me direct you to the National Association of Law Placement's “Class of 2017 National Summary Report.” It is something like a map of outcomes for law school students. And it's an extensive map.

The report breaks down the employment status of 34,421 students who reported to NALP. That's a response rate of nearly 99 percent of the 34,922 graduates from last year. (Congrats grads!)

The report has around 70 rows of employment outcomes and salaries broken down in almost every conceivable way: By gender, race, employment status, employment by sector, employment region and type of employer to name some.

A lot of people think of law school as some sort of get-rich-in-three-years scheme. But the report should go a long way to disabuse college graduates of that notion. There is, it turns out, only one predictive measure of a six-figure salary: The size of the law firm that hires you.

Last year, there were five categories of employment to yield $100,000 or more in median salary. All are a result of law firms of three sizes: 100-250 lawyers; 251-500 lawyers; and 501 or more lawyers. That's three of the five categories. The other two are “associates in private practice” and lawyers in the Mid-Atlantic region, which is mostly a reflection of the number of associates in private practice who work in the world's largest legal market: New York City.

Turns out, this holds true going back all the way to the class of 2010. Since that year, 329,935 students have reported their job outcomes and salaries to NALP. Of them, 47,354 have gone on to six-figure median starting salaries. They are the 14 percent of law school graduates to work at law firms of more than 100 lawyers.

This all raises a series of questions. First off: Why?

Why are young lawyers paid more to work alongside 100 lawyers compared to 50?

The most obvious answer could be the simple need for bodies. The highest-paying clients need to hire Big Law to handle big matters. Complicated litigation and complex transactions require a lot of hands and minds. That's hard to argue with.

But is law firm size also necessarily reflective of quality? Sure, large firms often hire the “best and the brightest.” That's what top dollar gets you: Whatever it is you're selecting for.

But are law school grades predictive of success in the practice of law? I'm sure that doing well in law school means you work hard and are very smart. But I don't think the industry tracks data that would prove law review editors turn out to be better lawyers than those who aren't on law review.

I would argue the weeding out of lawyers from top law firms is a signal that law school grades are not completely correlated with a return on investment for law firms hiring those top students.

“I really don't think it's all that predictive,” Bill Painter, chief innovation officer at Baker, Donelson, Bearman, Caldwell & Berkowitz, said of law school grades and success in Big Law. “Certainly, being at the top of your class in law school is probably better than being at the bottom. Being in law review is probably better than not. But a top law school graduate and editor of law review could still be a miserable failure nonetheless, and we certainly have that occur.”

Here's another question to the purchasers of Big Law services: Do you think your legal work can only be handled, today or in the future, by 14 percent of the country's law graduates?

“The answer is, of course not. It's foolish to think only 14 percent are smart enough to handle the work,” said Bill Henderson, a professor at the Indiana University Maurer School of Law. “Fourteen percent of them will be given the opportunity because they will work in a corporate law firm. I think it's ridiculous.”

I don't think you can fault corporate purchasers of legal services or Big Law outfits for the status quo that has persisted for decades. The success of a lawyer is, in many ways, hard to quantify. And hiring the smartest people in the room is a strategy plenty of industries pursue. Certainly, those people can't be faulted for taking the biggest payday.

But there is likely room for someone to think up different ways to place value on lawyers outside the classic LSAT-GPA-Big Law Brand pathway to profits per partner.

The math on the labor arbitrage is straightforward enough. Law school graduates hired to work at firms of 26 to 50 lawyers make a median wage of $78,000. That's 43 percent of the median salary from a firm 10 times that size.

Roy's Reading Corner

On Emotional Intelligence: It's an example of one factor that law school and the practice of law might be selecting out, to its own disservice. That's the argument made (years ago) by Randall Kiser, a principal at a Silicon Valley-based consultancy called DecisionSet that describes itself this way: “DecisionSet believes that lawyers and law firms need to function as expert decision makers. Although lawyers know the law and are persuasive advocates, they generally are not educated or trained to be expert decision makers.”

Anyway! His argument regarding emotional intelligence was made in a Nevada Law Journal article titled, “The Emotionally Attentive Lawyer: Balancing the Rule of Law with the Realities of Human Behavior.”

From Kiser's study: “In a study of two thousand attorneys and law students, law professor Marjorie Shultz and psychology professor Sheldon Zedeck found that successful lawyers demonstrate strong competencies in “networking, building relationships, practical judgment, ability to see the world through the eyes of others, and … commitment to community service.” These traits are predominantly emotional, and their importance and development are neglected in the traditional law school curriculum. These traits, moreover, are “negatively associated” with high academic performance, meaning that law students with high grades do not frequently exhibit these traits. Thus, academic success, as measured by grades received in a conventional legal curriculum, is unlikely to ensure emotional development.”

On Right and Wrong: If Kiser is your kind of guy, you are a minority in the legal community (according to him!). But you also might appreciate this survey and ensuing New York Times story about the mistakes plaintiffs and defendants make in deciding to go to trial rather than accept a settlement offer.

Kiser's study, he said, shows that lawyers rely on the same kind of “gut instincts” or “heuristics” that most people fall back on when they are facing a loss.

“There is a tendency to be risk-averse when facing gains and a tendency to be risk-taking when facing losses,” Kiser said in a phone call this week. “One thing we discovered as a peculiar pattern was low settlement offers by plaintiffs in cases with high win rates and relatively high settlement offers in cases with low win rates for plaintiffs. They're offering less with the good cases and more with bad cases. Because we're more reckless when the odds are against us.”

“I don't know why I'm laughing,” I said to Kiser.

“It's the wonders of the human mind,” he said, laughing.

On ALM: Today is the last day this briefing will be edited by Brian Baxter, a senior editor at ALM who has helped shape the coverage of this weekly column. My thanks to him, and I wish him well in his next endeavor. Until then, you can reminisce about the great work he has done for a long time here by reading this story about the late Bill Shea of Shea Stadium fame or digesting this incredible volume of lateral partner moves he filed in November 2016. It contained more than 160 hyperlinks!

Editor's Note: Thank you, Roy. I wrote that compendium of lateral moves from Iceland, where the only light was the blue glow from those hyperlinks. May my record stand forever.

That's it for this week! Thanks again for reading, and please feel free to reach out to me at [email protected]. Sign up here to receive The Law Firm Disrupted as a weekly email.