Billy Beane Branch Rickey

So, it’s the end of September. Let’s talk baseball. And, since my beloved Red Sox have reverted to their old habits, we’re not going to focus on this season. Instead, we’re going to go back nine years and sixty-four years. And we’re going to talk about two general managers. Billy Beane (the Brad Pitt of baseball management) and Branch Rickey (the Edward Herrman of baseball management). Between the two of them, these baseball managers came up with at least three innovations that changed the way the game was played. What were they?

Moneyball. What do you do when you want to be an American League pennant contender, but you don’t have the same payroll as the big boys in New York and Boston? Hire a statistician instead. Have the statistician figure out which players are contributing the most to scoring or preventing runs, and which do so for the least amount of salary. Hire those guys. Sounds simple enough, but in 2002, the Oakland A’s rode that strategy to first place in the AL West, including an AL record 20 wins in 22 days. How? At the time, no one else was doing it.

Jackie Robinson. Major League Baseball had a gentleman’s agreement not to hire any blacks to play. (The only silver lining to this was a vibrant alternative set of teams, the Negro Leagues, that featured such great players–Hall of Famers, finally–as pitcher Satchel Paige, slugger Josh Gibson, and base-stealer James "Cool Papa" Bell.) Rickey was the man who decided to break the color barrier in the National League. A simple enough decision, probably, but hardly an easy one. He recruited former UCLA star and then-Kansas City Monarch Jackie Robinson, who spent one year with the minor-league Montreal Royals before braving racist fans and opponents in a blistering rookie year with the Brooklyn Dodgers.

Farm teams. Branch Rickey was the pioneer of the farm team, a method of developing home-grown talent for a ball club. Before that, scouts would try to recruit new talent from various semi-professional clubs; a risky proposition at best.

There’s a common theme to these innovations. Baseball is a talent-oriented industry. To build a winning team, you need winning players. Rickey and Beane each recognized untapped (and therefore less-expensive) sources of winning players. Beane found players who could contribute to a team even if they weren’t pretty enough to grab a scout’s attention. Rickey began by taking players who needed seasoning and adding it, while in the process adding another source of revenue to his ball club’s organization. Then he went straight for the talented, seasoned players that–because of virulent prejudice–no team would touch. There’s no question that breaking the color barrier was costly in the short term, but it was far less expensive in the long term than maintaining it.

So what Rickey and Beane did was to find undervalued players. Finding (and employing) those players cost a little more in the short term, but it more than paid off in competitive advantage. How do we know? Today baseball is integrated, and scouts are continually looking for new sources of players. Every team has a farm team. And most teams have statisticians.

So what does this all have to do with class action practice?

Well, let’s look at the lead counsel for each side of the 2010-11 Supreme Court term class action cases (I’m using this as a VERY loose proxy for "wicked smart class action lawyers") and where they each went to school.

  • David Boies (Erica P. John Fund v. Halliburton) – Yale Law School
  • Andrew Pincus (AT&T Mobility v. Concepcion) – Columbia University Law School
  • Deepak Gupta (AT&T Mobility v. Concepcion) – Georgetown University Law Center
  • Jonathan Hacker (Matrixx) – University of Michigan

Pittsburgh, BU, San Diego, Case Western, UT. Hardly slouch schools. And yet there is a consensus that students from these schools can’t get jobs in this market, because we have a glut of unemployed lawyers, and employed lawyers are often concerned with status and prestige.

It’s no secret that the legal market is in turmoil right now. Firms are desperately looking to stay relevant, particularly given the competition they are receiving from technology and lawyers in other countries.

So here’s what I’d do if I were in charge of a high-earning plaintiffs’ firm. I would take $5 million out of my next contingency fee, and build a "farm firm" for recent law school grads. Offer a low base salary that would cover rent and a moderate student-loan payment, and then let them eat what they kill. If they’re good enough, let them buy into the big leagues. Alternatively, I’d endow a clinic at a local law school. Students would have to interview for slots. Should we eventually no longer have a glut of just-graduated lawyers, I’d try to turn this into a law-school firm.

If I were rebuilding a a defense firm from the ground up, I’d do two things. First, I’d offer to take each of the complex litigation and civil procedure professors out to lunch. I’d want to pump them about their most promising students. Not just the ones that did best on the exams, but the ones that actually participated in class, and the ones that seemed most creative when asked offbeat questions. And I’d ask them specifically who seemed to underperform on their last exam. Those are the students I’d want to interview for jobs; and I’d want to start some of them right away as clerks. Yes, the search costs are slightly higher than just taking the appellate clerks and law-review editors, but I’m looking for students who exhibit skills other than just test-taking. Then I’d go to my best client, and make the following pitch: give us your lowest-tier class actions, the crazy, frivolous ones that are unlikely to turn into anything. Most companies have a few of these lying around. I’d offer to litigate these for a significant discount, provided I can use my new stable of clerks and first-years to do most of the work. The cases would still get partner attention, but they’d also get a significant discount to reflect the fact that they were essentially training cases.

While I doubt many current AmLaw firms would go for these ideas, my bigger worry is that they may not be crazy enough. Law firms (including class action firms) have the opportunity right now to grab and train great future lawyers on the cheap. And currently, most firms can’t or won’t do so. So it’s only good strategy for someone else to.

[Image of Branch Rickey public domain, image of Billy Beane taken by Brett Farmiloe]