A death of Big Law?

'From Big Law to Lean Law' by William D. Henderson in (2014) 38(Supp) International Review of Law and Economics 5 comments

In a provocative 2009 essay entitled The Death of Big Law, the late Larry Ribstein predicted the shrinkage, devolution, and ultimate demise of the traditional large law firm. At the time virtually no practicing lawyer took Larry seriously. The nation's large firms were only one year removed from record revenues and profits. Several decades of relentless growth had conditioned all of us to expect the inevitable rebound. Similarly, few law professors (including me) grasped the full reach of Larry's analysis. His essay was not just another academic analysis. Rather, he was describing a seismic paradigm shift that would profoundly disrupt the economics of legal education and cast into doubt nearly a century of academic conventions. Suffice to say, the events of the last three years have made us humbler and wiser. 

This essay revisits Larry's seminal essay. Its primary goal is to make Larry's original thesis much more tractable and concrete. It consists of three main pillars: (1) the organizational mindset and incentive structures that blinds large law partners to the gravity of their long-term business problems; (2) a specific rather than abstract description of the technologies and entrepreneurs that are gradually eating away at the work that has traditionally belonged to Big Law; and (3) the economics of the coming “Lean Law” era. With these data in hand, we can begin the difficult process of letting go of old ideas and architecting new institutions that better fit the needs of a 21st century economy.

 Henderson notes that Ribstein, in writing on the legal profession and lawyer regulation, considered

how the legal ethics rules, through bans on noncompete agreements and nonlawyer investment, were limiting the ability of lawyers to create new forms of organization that would facilitate optimal levels of risk sharing and innovation. Larry advanced these arguments long before the first signs of trouble. When the large corporate law firms were finally showing signs of stress, Larry reviewed the evidence. He concluded that most large law firms were evolving into highly inefficient, sprawling structures that worked to the benefit of individual lawyers and, as a result, were hollowing out the very mechanisms needed to strengthen and grow the organization. He also took stock of broader trends affecting the market for corporate legal services. The clients were wising up. Moreover, they had other options. Playing out the logical next steps, Larry confidently pronounced The Death of Big Law. 

As someone who closely follows the legal market and talks regularly with a wide range of lawyers, I can say with confidence that three years after the publication of The Death of Big Law, Larry's thesis is not widely accepted, let alone understood, by most large law firm lawyers. Yet, for reasons entirely rooted in self-interest and survival, it ought to be. By extension, legal education, which over the last several decades became heavily dependent on the fortunes of Big Law, also needs to grapple with the Larry's core message of value creation. 

The purpose of this essay is to move from the plane of high theory, where Larry Ribstein was a virtuoso, to the ground floor of practical application, where law firm leaders and educators have to assess myriad messy facts and make decisions about what to do next. Big Law is not dead—Larry was trafficking in metaphor—but it has plateaued. It is also losing market share. This creates an environment of uncertainty that is rarely acknowledged by law firm leaders and legal educators. Something new is going to gradually supplant, or at least rival, Big Law; and as a practical matter, none of us really know what it is going to look like. In times of massive structural shift, strategy is little more than an informed guess. Yet, such an approach is more likely to be successful than one that relies on false, outdated assumptions. 

Drawing upon Larry Ribstein's insights and some more recent market data, I will attempt to draw a more concrete picture of the state of Big Law, the evolving market for corporate legal services, and how the future might unfold. This Essay is organized in three sections. Section 1 is a summary of Larry's primary critique of Big Law. Section 2 adds color and concrete detail to Larry's prediction by examining recent trend data for both large law firms and non-law firm competitors that Larry's predicted would grow at Big Law's expense. Although Big Law remains big, it appears to be losing market power. Further, Larry may have underestimated the dynamism of nonlawyer entrepreneurs operating in the legal industry and overestimated the need for regulatory changes to spur innovation. The breadth and depth of change is very large and gaining momentum. Section 3 outlines the prevailing economic conditions of the post-Big Law period—what I refer to as Lean Law. 

1. Ribstein's critique of Big Law 

What do large law firms produce that is distinct and apart from the legal work performed by partners, who own the firm, and their lawyer employees? According the Larry Ribstein, the most persuasive explanation was reputational bonding. Lawyers are in a better position than clients to evaluate the skills, integrity, and work ethic of other lawyers. Therefore, highly capable lawyers have a strong incentive to organize themselves into firms, not only to provide more specialized services to clients—which clients surely need—but also to erect a screen to filter out less able or trustworthy lawyers. Over time, the firm earns a reputation for skillful lawyering and excellent client service. That reputation has positive value that enables a firm to charge premium fees. 

Yet, the Ribstein critique also points out that the success of the large firm also gives rise to opportunistic behavior by individual lawyers. Once the firm's vaulted reputation is in place, partners may be able to make more money by focusing on their own client relationships and giving short shrift to activities that would preserve and grow the firm's reputational capital (e.g., training and mentoring junior lawyers). Firms can mitigate this behavior through careful screening and monitoring of partners. Yet, firm size, geographic dispersion, and lateral turnover make this job more difficult. In addition, the rise of limited liability through LLP and LLC business forms seemingly reduce the downside individual risk of poor monitoring, which means that lawyers become less vigilant monitoring each other. 

Big Law as a business model is dead, according to Ribstein's critique, because the firms’ reputational capital is being steadily eroded away by a confluence of pervasive business practices. These include five factors:

(1) Bad Incentives. Compensation structures that reward individual rainmaking and provide inadequate incentive to build the firm for the longer term. 

(2) Diluted Selection Criteria. Lenient partner and senior selection processes that end strict up or out in favor of keeping lawyers who add to short to medium term profits. 

(3) Inadequate Monitoring and Training. Excessive partner to associates leverage, which makes high quality training, mentoring, and monitoring infeasible. 

(4) Lack of Shared Downside Risk. The migration away from general partnerships, where vicarious liability for partner behavior is potentially unlimited, to limited liability entities, such as LLPs and LLCs, which typically caps liability to one's capital account. 

(5) Proliferation of Exit. Increased emphasis on lateral partner hiring to grow the firm, which “complicates a firms’ ability to maintain a strong culture of trust and cooperation.”

Notwithstanding the appearance of massive size, Ribstein argued the above pervasive practices have made Big Law remarkably brittle and unstable. As stated at the beginning of this section, reputational capital is what enables individual lawyers to obtain firm-level profits distinct and apart from the sale of their own time and services. Yet, “the firm's reputation lasts only as long as lawyers gain more from investing in it than they do from building their own clienteles.” When lawyers infer that their partners lack such a commitment, they become inclined to “grab” clients and invest in behavior that creates portable clientele, which creates better options for exit. When partner profits fall short of their expectations, they head for the doors. Because so few firms in the Big Law sector have avoided these pitfalls, reputational capital, Ribstein argued, is being rapidly dissipated. As a result, large law firms have increasingly become “just a collection of individuals sharing expenses and revenues that has little or no value as a distinct entity.” 

The core message of the Ribstein critique is that The Death of Big Law is caused by the decline of the traditional reputational capital model. As discussed above, this decline is substantially caused by the inability, or failure, of law firms to preserve an environment and ethos where individual lawyers invest in the long-term fortune of the firm. 

But according to Ribstein, the value of reputational capital is also declining because of external factors, such as the rise of in-house legal departments.  With improved ability to evaluate cost and value, legal departments can avoid the price premiums of Big Law by expanding their own in-house capacity.  In-house lawyers also have a proliferating array of options to address their legal needs, including hiring of non-US global law firms, legal process outsourcers with operations in India and other lowcost countries, non-lawyer companies and consultants, and mechanized legal advice or products delivered through sophisticated software as predicted by the lawyer, technology consultant, and futurist, Richard Susskind in this book, The End of Lawyers?. 

For many practicing lawyers, the Ribstein Death of Big Law thesis makes little sense. In the year 2010, when Larry made a presentation of this seminal paper to a large audience that included several managing partners, the general reaction was polite bafflement. Sure, there had been layoffs and deferrals, but Big Law was only two years removed from record revenues and profits. Even a year into the recession, the incomes enjoyed by partners were still extraordinarily high by historical standards. Two managing partners and a litigation chair of a major law firm, who were formal commentators on Larry's The Death of Big Law paper, conceded that the Big Law model was going to change, but all agreed that Ribstein's dire predictions were overstated. 

2. Contemporary market data 

Three years after the symposium that featured the Ribstein Death of Big Law critique, Big Law does not appear to be dead. In fact, Big Law is bigger. Yet, as discussed in this Section, there is evidence that the legal industry serving large organizational clients is undergoing significant restructuring. Section 2.1 presents an array of data that shows the continued dissipation of reputational capital: large law firms are losing market power; lateral activity is on the rise; and leverage (lawyers to number of equity partners) is up. Section 2.2 describes a series of non-lawyer legal vendors that are taking portions of the legal supply chain that was formerly the exclusive domain of large law firms. They are growing very rapidly. Indeed, they bear the hallmarks of a disruptive innovation.

Remittances

'Pacific Injustice and Instability: Bank Account Closures of Australian Money Transfer Operators' by Ross P. Buckley and Ken C. Ooi in (2014) 25 Journal of Banking and Finance Law and Practice 243-256 argues

The remittance industry provides international money transfer services for migrant workers and individuals looking to send relatively small amounts of money overseas. Money transfer operators (‘MTOs’) facilitate these international payments and offer services to a segment of the market that is often unserved by banks. An alarming trend is developing in Australia of banks closing the accounts of MTOs. A potential explanation for this trend is the increased cost of regulation and perceived risk to the banks from facilitating these transactions. However, these account closures create real problems for the remittance industry, Australia and the Asia Pacific region. 

This paper is in five parts. Part I highlights the importance of remittances to the Pacific Island Countries (‘PICs’) and Australia. Part II explores the trend of account closures in Australia. Part III considers the regulatory framework in Australia, and argues that the current approach to anti-money laundering (‘AML’) and counter-terrorist financing (‘CTF’) regulation has had the unintended consequence of encouraging banks to create financial exclusion. Part IV investigates the factors that have influenced bank behaviour. Finally, Part V explores the role that financial regulation should play in promoting financial inclusio

Assange

A manically sour review by Julian Assange in Newsweek of Luke Harding's The Snowden Files: The Inside Story of the World's Most Wanted Man (2014) may have been fun to write but confirms what many of his critics have written about the reviewer.

Assange characterises the book as "a hack job in the purest sense of the term", "Hollywood bait" and "a turkey" from an institution that should "be called out for institutional narcissism".

His spleen may reflect the comment that

Harding was also the co-author of 2011's WikiLeaks: Inside Julian Assange's War on Secrecy, another tour de force of dreary cash-in publishing, which went on to be the basis for Dreamworks' catastrophic box-office failure: 2013's The Fifth Estate. 

From there it's on to

 Since I've started praising the book, I might as well continue. As hack jobs by Luke Harding go, a lot of work has gone into this one. Mr. Harding has clearly gone to uncharacteristic lengths in rewriting most of his source material, although it remains in large part unattributed. 

Notoriously, as the Moscow bureau chief for The Guardian, Harding used to ply his trade ripping off work by other Moscow-based journalists before his plagiarism was pointed out by The eXile's Mark Ames and Yasha Levine, from whom he had misappropriated entire paragraphs without alteration. For this he was awarded "plagiarist of the year" by Private Eye in 2007. But—disciplined by experience—he covers his tracks much more effectively here. This book thereby avoids the charge of naked plagiarism. Yet the conclusion cannot be resisted that this work is painfully derivative. ...

 The subtitle of the book, "The Inside Story of the World's Most Wanted Man," is therefore disingenuous. If this is an inside story of Snowden, then anyone can write an inside story of anything. Something in me has to applaud the chutzpah. There simply isn't a book here. Tangents and trivia serve as desperate page-filler, padding out scarce source material to book length. We are subjected to routine detours through Snowden's historical namesakes, rehearsals of the plot of the James Bond movie Skyfall and lengthy forays into Harding's pedestrian view of Soviet history. Elsewhere, Harding runs out of external material to recycle and begins to rehash his own, best evidenced in the almost identical Homeric introductions Harding's boss, Alan Rusbridger, receives every time he arrives on the page. To be fair, not all of the book is secondhand information. The middle chapters, which document The Guardian's internal struggles over the publication of the Snowden information, contain mostly novel anecdotes. True, I'd already heard many of them (The Guardian leaks like a sieve), but it’s convenient to have them all written down in one place. For most of his narrative, however, Harding is riding on the coattails of other journalists. His is more of a “backside story” than an “inside story.” It reveals a glaring lack of expertise in just about every topic it touches on: the Internet and its subcultures, information and operational security, the digital rights and policy community, hacker culture, the cypherpunk movement, geopolitics, espionage and the security industry. ... 

We are left with a "Bullshitter's Guide" to the world of the world's most wanted man. It is a book by someone who wasn't there, doesn't know, doesn't belong and doesn't understand. Where the book is accurate, it is derivative. And where it is not derivative, it is not accurate. … The result is a story that is a non-story—a generic rendition of the Snowden cycle where lifeless bromide and imagined melodrama stand in for authentic human narrative.

In case you haven't got the message, Assange claims

As you'd expect from a serial plagiarist, the book is a stylistic wasteland. There are no regular impasses in here, only the more refined kind of "impasse we can't get past." Never simply "deny" when you can "categorically deny." Sympathetic characters are always either "wry" or "calm"; that is their entire emotional repertoire. The words "Orwellian," "Kafkaesque" and "McCarthyite" seem to apply to everything. Far too much is found to be "ironic," all too often "cruelly" so. Cliché after cliché sweeps by in a wash of ugly prose until you are overwhelmed with the cynical functionalism of the thing. It wouldn't be a Guardian book without some institutional axe-grinding. I made the mistake of glancing at the index before I read the book. There I spotted my name, with the following reference:

Assange, Julian; Manichean world view of..........224.

There is something about seeing my "Manichean world view" casually assigned its own index entry that epitomizes the Guardian's longstanding, cartoon-like vendetta against me. ...

 If anyone should answer to the charge of "Manicheanism," it is Harding, who, when he is not slogging through clumsy Hollywood film treatments smearing whistleblowers, can be found busily obsessing over Putin in the pages of The Guardian. … 

Thanks to Russia (and thanks to WikiLeaks), Snowden remains free. Only someone with a "Manichean world view" would be unable to acknowledge this. The most disappointing thing of all about The Snowden Files is that it is exploitative. It should not have existed at all. We all understand the pressures facing print journalism and the need to diversify revenue in order to cross-subsidize investigative journalism. But investigative journalism involves being able to develop relationships of trust with your sources. There is a conflict of interest here. Edward Snowden was left in the lurch in Hong Kong by The Guardian, and WikiLeaks had to step in to make sure he was safe. While WikiLeaks worked to find him a safe haven, The Guardian was already plotting to sell the film rights. How can one reconcile the duty to a source with the mad rush to be the first to market with a lucrative, self-glorifying, unauthorized biography? For all the risks he took, Snowden deserves better than this.

Conclusion, according to Mr Assange?

The Snowden Files is a walloping fraud, written by frauds to be praised by frauds. 

Torts

'An Overreaction to a Nonexistent Problem: Empirical Analysis of Tort Reform from the 1980s to 2000s' by Scott DeVito and Andrew Jurs in (2015) 3 Stanford Journal of Complex Litigation 62 comments -

Proponents of tort reform have suggested it is a necessary response to rising personal injury litigation and skyrocketing insurance premiums. Yet the research into the issue has mixed results, and the necessity of tort reform has remained unproven. 

We decided to research an underdeveloped area by empirically testing the real world effects of noneconomic damages caps. To do so, we assembled a database of nearly fourteen million actual cases filed between 1985 and 2009 and then measured how damages caps affect filing rates for torts. Not only could we analyze the change in filings after adoption of a cap but we could also measure the effect of elimination of a cap as well. When we did, we found something unique in the literature. 

We found first that when a state adopts a noneconomic damages cap, there is a statistically significant drop in filings of all torts and for medical malpractice torts. We also found that in both the 1990’s and 2000’s, the rate of filings dropped consistently as well – both in states with tort reform but also in states without it. Therefore, our finding of a statistically significant reduction in filings in response to damages caps demonstrates a “doubling-down” effect: there is one drop in filings due to the damages cap, but there is another drop based on larger background forces. 

Next, when assessing the change in filings after elimination of a damages cap, we found something initially counterintuitive but also new to the literature. While one might expect a sharp increase in filings when a cap disappears, our analysis could find no statistically significant change in the filing rate for all torts after elimination, while medical malpractice filings continued to decline overall. We believe that this finding demonstrates and quantifies, for the first time, the non-legal effect of tort reform measures discussed by commentators like Stephen Daniels and Joanne Martin. 

We believe the combination of the ‘doubling down’ on plaintiffs as well as the quantifiable non-legal changes in response to damages caps significantly modifies the cost-benefit analysis of tort reform. In Trammel v. United States, the Supreme Court stated: ‘we cannot escape the reality that the law on occasion adheres to doctrinal concepts long after the reasons which gave them birth have disappeared and after experience suggest the need for change’. Based on our empirical assessment, we conclude that tort reform has reached that point and call upon state legislators to reconsider these measures.

Architecture

'Workspace satisfaction: The privacy-communication trade-off in open-plan offices' by Jungsoo Kim and Richard de Dear in (2013) 36 Journal of Environmental Psychology 18–26 argues

 Open-plan office layout is commonly assumed to facilitate communication and interaction between co-workers, promoting workplace satisfaction and team-work effectiveness. On the other hand, open-plan layouts are widely acknowledged to be more disruptive due to uncontrollable noise and loss of privacy. Based on the occupant survey database from Center for the Built Environment (CBE), empirical analyses indicated that occupants assessed Indoor Environmental Quality (IEQ) issues in different ways depending on the spatial configuration (classified by the degree of enclosure) of their workspace. Enclosed private offices clearly outperformed open-plan layouts in most aspects of IEQ, particularly in acoustics, privacy and the proxemics issues. Benefits of enhanced ‘ease of interaction’ were smaller than the penalties of increased noise level and decreased privacy resulting from open-plan office configuration.

The authors note

There exists a large body of literature looking at how physical environment influence occupants' perception and behaviour in office buildings. As office layout has transitioned in recent decades from conventional private (or cellular) spatial configuration to modern open-plan, the impacts on occupants and organisations have been extensively studied from a variety of perspectives in disciplines as diverse as architecture, engineering, health and psychology.

In addition to tangible economic benefits of open-plan offices such as increased net usable area, higher occupant density and ease of re-configuration (Duffy, 1992 and Hedge, 1982), the open-plan office layout is believed by many to facilitate communication and interaction between co-workers by removing internal walls, which should improve individual work performance and organisational productivity (Brand and Smith, 2005 and Kupritz, 2003). However there is not much empirical evidence to support these widespread beliefs (Kaarlela-Tuomaala et al., 2009 and Smith-Jackson and Klein, 2009). On the contrary, a plethora of research papers identify negative impacts of open-plan office layout on occupants' perception of their office environment. For example, some longitudinal survey results have demonstrated a significant decline in workspace satisfaction (Sundstrom, Herbert, & Brown, 1982), increased distraction and loss of privacy (Kaarlela-Tuomaala et al., 2009), and perceived performance decrement (Brennan, Chugh, & Kline, 2002) after relocation of employees from enclosed workplace to open-plan or less-enclosed workplace. Moreover, the occupants in these studies didn't adapt or habituate to the change in spatial layout (Brand and Smith, 2005, Brennan et al., 2002 and Virjonen et al., 2007), and many researcher draw the causal link between declining environmental satisfaction and deteriorating job satisfaction and productivity (Sundstrom et al., 1994, Veitch et al., 2007 and Wineman, 1982). Still other research studies attribute escalating Sick Building Syndrome (SBS) symptoms such as distress, irritation, fatigue, headache and concentration difficulties (Klitzman and Stellman, 1989, Pejtersen et al., 2006 and Witterseh et al., 2004) to open-plan office layout.

An extensive research literature consistently identifies noise and lack of privacy as the key sources of dissatisfaction in open-plan office layouts (Danielsson and Bodin, 2009, de Croon et al., 2005 and Hedge, 1982). Firstly, studies based on either occupant surveys and laboratory experiment report that noise, in particular irrelevant but audible and intelligible speech from co-workers, disturbs and negatively affects individual performance on tasks requiring cognitive processing (Banbury and Berry, 2005, Haka et al., 2009, Smith-Jackson and Klein, 2009 and Virjonen et al., 2007). The loss of productivity due to noise distraction estimated by self-rated waste of working time was doubled in open-plan offices compared to private offices, and the tasks requiring complex verbal process were more likely to be disturbed than relatively simple or routine tasks (Haapakangas, Helenius, Keekinen, & Hongisto, 2008). Also, Evans and Johnson (2000) argue that exposure to uncontrollable noise can be associated with fall in task motivation. Secondly, with a reduced degree of personal enclosure, open-plan layout often fails to isolate the occupants from unwanted sound (i.e. sound privacy) and unwanted observation (i.e. visual privacy), resulting in the overall feeling of loss of privacy and personal control over their workspace (Brand and Smith, 2005, Brill et al., 1985, Danielsson and Bodin, 2009 and O'Neill and Carayon, 1993). Consequently, occupants experience excessive uncontrolled social contact and interruptions due to close proximity to others and perceived loss of privacy, known as overstimulation, which leads to occupants' overall negative reactions toward their office environment (Maher and von Hippel, 2005 and Oldham, 1988).

Although that the absence of interior walls in open-plan office layout purportedly improves communication within teams and, in turn, enhances employee satisfaction, the presumption of improved workplace satisfaction is yet to be verified. Indeed, the disadvantages of open-plan offices dominate previous research outcomes. To date there has been no attempt at quantifying pros and cons of the open-plan office layout. Hedge (1982) opined that the improved social climate within open-planed offices was insufficient to offset the occupants' negative reactions to this spatial workplace configuration, but attached no empirical evidence to support this argument. Thus the primary objective of this paper is to weigh up the positive impact of the purported advantages of open-plan office (i.e. interaction between colleagues) against the negative impact of the disadvantages (i.e. noise and privacy) in relation to occupants' overall satisfaction with their workspace. This study also explores how occupants' attitude toward indoor environment changes between different office layouts categorized depending on the degree of personal enclosure. For example, an occupant located in a spacious private office would have different expectations or priority for Indoor Environmental Quality (IEQ) compared to an occupant located in a dense, open-plan office.

To summarise, the research questions addressed in this paper are:

(1) Does occupant satisfaction with various IEQ factors change depending on different office layouts?

(2) Does the priority of various IEQ factors (i.e. relative importance for shaping occupants' overall workspace satisfaction) differ between occupant groups in different office layouts?

(3) Do the benefits such as easiness of interaction between co-workers offset the disadvantages such as distraction by noise and loss of privacy in the open-plan office layout?

Frye

'On Evidence: Proving Frye as a Matter of Law, Science, and History' by Jill Lepore in (2014-2015) 124(4) Yale Law Journal 882 offers

a cautionary tale about what the law does to history. It uses a landmark ruling about whether scientific evidence is admissible in court to illustrate how the law renders historical evidence invisible. Frye v. United States established one of the most influential rules of evidence in the history of American law. On the matter of expert testimony, few cases are more cited than Frye.In a 669-word opinion, the D.C. Circuit Court of Appeals established the Frye test, which held sway for seven decades, remains the standard in many states, and continues to influence federal law. “Frye,” like “Miranda,” has the rare distinction of being a case name that has become a verb. To be “Frye’d” is to have your expert’s testimony deemed inadmissible. In Frye, the expert in question was a Harvard-trained lawyer and psychologist named William Moulton Marston. Marston’s name is not mentioned in the court’s opinion, nor does it generally appear in textbook discussions of Frye, in the case law that has followed in its wake, or in the considerable legal scholarship on the subject. Marston is missing from Frye because the law of evidence, case law, the case method, and the conventions of legal scholarship — together, and relentlessly — hide facts. It might be said that to be Marston’d is to have your name stripped from the record. Relying on extensive archival research and on the narrative conventions of biography, this Essay reconstructs Marston’s crucial role in Frye to establish facts that have been left out of the record and to argue that their absence is responsible for the many ways in which Frye has been both narrowly and broadly misunderstood.

Lepore states

The lecture had only just begun when there came a rap at the door. The professor, who wore owl’s-eye spectacles, walked across the room and opened the door. A young man entered. He wore leather gloves. In his right hand, he carried an envelope. Tucked under his left arm were three books: one red, one green, one blue. He said he had a message to deliver; he spoke with a Texas twang. He handed the professor the envelope. While the professor opened the envelope, pulled out a yellow paper, and read its contents, the messenger slid a second envelope into the professor’s pocket. Then, using only his right hand, he drew from another pocket a long, green-handled pocketknife. Deftly, he opened the knife and began scraping his gloved left thumb with the edge of the blade, sharpening it on the leather like a barber stropping a razor.

The class was a graduate course called Legal Psychology, held at American University, in Washington, D.C. It met twice a week, in the evening, in 1922. There were eighteen students, all of them lawyers. They had come to the lecture hall, a building at 1901 F Street, two blocks from the White House, after either a day at the office or a day in court; many of them worked for the federal government. In the course catalog, the professor—a twenty-eight-year-old graduate of Harvard Law School who had earned his Ph.D. in Harvard’s psychology department only the year before—listed a prerequisite: “Students must have a working knowledge of the principles of Common Law to qualify for this course, which is especially designed for practicing attorneys and lawyers having a genuine and active interest in raising the standards of justice in the actual administration of the law.” He was possessed of a certain ambivalent idealism.

The professor finished reading whatever was written on that sheet of yellow paper, said something to the Texan, and sent him on his way. Then, turning to his class, the professor informed his students that the man who had just left the room was not, in fact, a messenger at all; he was, instead, an actor, following a script written by the professor as part of an elaborate experiment. Imagine, the professor likely went on to say, that the man who was here a moment ago has since been arrested and charged with murder. Please write down everything you saw. Eighteen lawyers picked up their pencils.

In preparing the experiment, the professor had identified 147 facts that the students could have observed: the number and color of the books the messenger held, for instance, and the fact that he held them under one arm, his left. After the students had written down everything they’d seen, the professor examined them, one by one; then he cross-examined them. After class, he scored their answers, grading them for completeness, accuracy, and caution (you’d get a point for “caution” if, upon either direct or cross-examination, you said, “I don’t know”). Out of 147 observable facts, the students, on average, noticed only thirty-four. Everyone flunked. And no one, not a single student, noticed the knife.

The professor, William Moulton Marston, had designed this experiment in order to demonstrate to a room full of practicing attorneys that eyewitness testimony is unreliable. The demonstration was not without effect. Days later, two of Marston’s students became involved in a murder trial whose appeal, in Frye v. United States, established one of the most influential rules of evidence in the history of American law. On the matter of expert testimony, few cases are more cited than Frye. The 669-word opinion of the D.C. Circuit Court of Appeals established a new rule of evidence: the Frye test. This rule held sway for seven decades, remains the standard in several states, and continues to influence federal law. “Frye,” like “Miranda,” has the rare distinction of being a case name that has become a verb. To be “Frye’d” is to have your expert’s testimony deemed inadmissible.

Frye was an alleged murderer named James Alphonso Frye. People who cite the case usually know no more about him than his last name. They know even less about the expert called by his defense. That expert was Marston. Marston’s name is not mentioned in the opinions of either the trial or the appellate court. Nor, generally, does his name appear in textbook discussions of Frye, in the case law that has followed in its wake, or in the considerable legal scholarship on the subject of expert testimony. Marston is missing from Frye because the law of evidence, case law, the case method, and the conventions of legal scholarship—together, and relentlessly—hide facts. This Essay Marston-izes Frye, finding facts long hidden to cast light not only on this particular case but also on the standards of evidence used by lawyers, scientists, and historians. It uses a landmark ruling about whether scientific evidence is admissible in court to illustrate how the law renders historical evidence invisible.

The law of evidence began in earnest in the early modern era; the history of evidence remains largely unwritten. Before the eighteenth century, the written rules of evidence were few. In 1794, Edmund Burke said that they were “comprised in so small a compass that a parrot he had known might get them by rote in one half-hour and repeat them in five minutes.” But even as Burke was writing, treatises at once examining and codifying exclusionary rules had already begun to proliferate. This sort of work reached a new height at the beginning of the twentieth century with the publication of John Henry Wigmore’s magisterial, four-volume A Treatise on the System of Evidence in Trials at Common Law. Wigmore’s study of the law of evidence remains a towering influence in the “New Evidence Scholarship,” which emerged in the 1980s, following the adoption of the Federal Rules of Evidence in 1975. The law of evidence is vast; the history of evidence is scant. This is to some degree surprising, because in the last decades of the twentieth century, literary scholars, intellectual historians, and historians of the law and of science became fascinated by epistemological questions about the means by which ideas about evidence police the boundaries between disciplines—a fascination that produced invaluable interdisciplinary work on subjects like the history of truth, the rise of empiricism, and the fall of objectivity. But this line of inquiry has a natural limit: scholars who are engaged in a debate about whether facts exist tend not to be especially interested in digging them up. For all the fascination with questions of evidence, very few scholars have investigated the nitty-gritty, stigmata-to-DNA history of the means by which, at different points in time, and across realms of knowledge, some things count as proof and others don’t.

This Essay chronicles a turning point in the history of evidence. During the last decades of the nineteenth century and the first decades of the twentieth, I argue, standards of evidence in law, science, and history underwent transformations that were at once related and, to a considerable degree, at odds: the case method became standard; modern, government-funded scientific research began; and history, as an academic discipline, attempted to ally itself with the emerging social sciences by establishing a historical method. Curiously enough, the queer career of an obscure Harvard-trained lawyer and scientist who wore owl’s-eye spectacles lies, if not at the heart of this shift, deep in its gut, well stuck.

When that messenger with a Texas twang came to Marston’s lecture hall, he did everything he was told. He spoke his lines. He shifted his books. He reached into his pocket. He sharpened a blade. Marston’s law students, watching, observed almost none of this: they missed three out of every four facts. Case law is like that, too, except that it doesn’t only fail to notice details; it conceals them. This Essay, then, is a cautionary tale about what the law does to history: it hides the knives.

Cheating

The controversial NSW Independent Commission Against Commission has released a 36 page paper on Learning the hard way: managing corruption risks associated with international students at universities in NSW.

ICAC states that the paper seeks

to examine the broader factors at play that are contributing to the challenges currently being faced by universities in NSW. 

These factors include:

• the competitive nature of the international student industry 
• the capabilities of the universities to engage in such a business 
• market strategies adopted by universities 
• management of intermediaries 
• internal intertwining of business development and compliance functions. 

ICAC also seeks "to share the changes that various universities have adopted that go some way to ameliorating the situation",  including strategies for

• reducing credential fraud 
• raising English-language literacy scores 
• managing the tension between the compliance and business development functions within universities. 

The paper states

Chapter 1 sets out the highly competitive nature of the international tertiary education industry and how that environment has driven universities in NSW to accept students with lower academic capabilities in order to meet revenue needs. Some students consequently struggle to pass because of the gap that has developed between student capabilities and university academic demands. This has become conducive to corruption, and can lead to cheating, inducements to academics, academic exploitation of struggling students, and internal pressures to turn a blind eye to academic misconduct or to allow students to pass who would otherwise fail. 

Chapter 2 examines the challenges for universities in NSW in developing effective market strategies. The internal operational arrangements of those universities – as loosely coupled organisations – have translated into a somewhat ad hoc approach to market choice. Individual academics have tied universities in NSW to markets based on personal contacts and interests. Even after international student offices were established, market strategies continued to focus on revenue with cost and risk peripheral considerations. The result was often that the universities were operating in a large number of often corrupt markets, seeking revenue without consideration of the cost of managing students with low capabilities. The risks associated with document fraud and false English-language proficiency test results are often seen as something that can be resolved during admission screening. 

The Commission found that some universities had benefitted from including explicit cost and risk considerations in market decisions by: 

• restricting the ability of academics to enter into agreements on behalf of the university 

• understanding the full-cost profile of international students, particularly the ongoing and significant cost of managing the gap between student capability and academic demands 

• assessing risk in markets and using this assessment to develop organisational responses tailored to the specific market risks 

• leveraging university strengths, where possible, to develop niche international operations capable of attracting higher-capability students.

Chapter 3 addresses the challenges of operating in numerous markets through large numbers of intermediaries. Rather than concentrating on dominance in a small number of markets, universities in NSW frequently spread themselves across many markets. The distribution costs and development of capabilities in so many different markets mean intermediaries are the only feasible option. In some cases, local intermediaries have significant market power, with the option to divert students to other universities if there are onerous demands placed on them by any one university. 

Universities in NSW are, therefore, limited in their ability to enforce contracts, demand audit access or demand tighter checking of students. At the other extreme, some universities have hundreds of small education agents spread across many markets, making the logistics of oversight difficult. 

The risk of students with false credentials being put forward by the agents is high, with all universities in NSW experiencing misconduct by some of their agents. Some universities in NSW have taken steps to improve the situation by: „ 

• altering incentive structures applied to agents to better encourage the provision of quality students „ 

• reducing the number of overseas agents „ 

• increasing due diligence on and monitoring of agents, particularly focusing on the use of fine-grained data analysis of student issues „ 

• forming closer relationships with trusted agents „ 

• developing partnerships with overseas institutions as an alternative to agents. 

Chapter 4 deals with the internal tension between a university’s academic standards compliance function and its business development function. 

Good business practices dictate that, where business development activities are likely to cause direct violation of the rules and goals of an organisation, the compliance function is separated from the business development function. Further, where the business development function is heavily incentivised, the compliance function is commensurately strengthened. 

This has generally not been the case in universities in NSW. Compliance and business development have been intertwined with targets and incentives tied to the development role without matching improvements in the compliance role. The effect is to encourage the admission of less academically capable students, to turn a blind eye to their academic misconduct, and to find ways to pass these students. 

While few universities in NSW have addressed the broader issue of separation of compliance and business development, some actions that have been taken include: 

• integrating the international student office’s information technology (IT) systems with the university’s systems to ensure that the international student office can be held accountable for the quality of students entering the university 

• matching the strength of the university’s academic standards compliance system with business development risks (for example, appointing an independent representative from another university to sit on academic standard committees or auditing of course standards by well-regarded Australian and overseas academics) 

• separating the compliance function from the business development function, as feasible (for example, moving admission out of international student offices that are responsible for marketing and recruitment, and limiting the impact of international student numbers on faculty budgets).

ICAC notes that

Universities in NSW find themselves facing what is referred to as a “wicked problem”. 

There is no way around the fact that some of the international students the universities can attract will struggle to meet university standards; or that the universities are reliant on their revenue but limited in how far they can lower standards. There is no simple solution that will effectively eliminate the gap between the capabilities of the students and the academic demands of the universities, and no easy way to eliminate the corruption pressures created by the gap. 

According to information provided to the Commission, universities in NSW are fully aware that the international student industry is fraught. For almost 30 years, they have experienced problems such as fake qualifications, questionable agent behaviour, visa-driven enrolments, nepotism in offshore campuses, loss of intellectual property to partners, unwitting involvement in offshore bribery, cheating and plagiarism, academics exploiting students and students offering inducements to staff. These problems have been costly and, when made public, embarrassing. 

While the central tension between student capability and academic demands cannot be completely resolved, there are actions that can be taken to reduce the gap and the pressures created by it. For example, since universities in Australia began recruiting full-fee paying international students, some have been:

• learning from the risks created and have dealt with them by reducing the number of agents to more manageable levels

• shifting to partnerships where there are mutual interests 

• increasing due diligence of intermediaries 

• changingagent incentives to align motivations with university interests 

• changing internal business incentive arrangements to separate compliance and revenue generation 

•  centralising the recruitment activities of the universities to improve the way this function is overseen.