The Orthodox Assumptions in Amar’s and Ayers’ ‘Unorthodox’ Solution to the Law School Bubble

If only I had a dollar for every law professor who came up with a solution for saving the legal academy…

Akhil Reed Amar and Ian Ayres, “Paying Students to Quit Law School,” in Slate

At least from the descriptive title, we know this will be fun. The opener, though, starts us off on the wrong foot.

A crisis is threatening legal education. In constant dollars, tuition at private law schools nearly tripled over the last quarter century.

A nitpick: Private law school tuition has not “nearly tripled” over the last quarter century.

(Source: ABA, BLS)

2.38 times is not “nearly tripling,” it’s “more than doubling.” I think this is a fair criticism as it’s based on standard numeric rounding conventions, but let’s to the proposal:

[L]aw schools are engaged in a specific program of instruction, with a specific goal—passing the bar—as its purpose. Measuring and even predicting this dimension of success is more straightforward.

Really? Here’s the problem with law schools as bar prep schools: they’re ghastly inefficient. For example, the University of La Verne lost its accreditation because its students couldn’t pass it. At the other end of the spectrum, nearly all of Yale’s graduates pass the bar exam on the first try. Why? It’s not because La Verne’s professors were completely incompetent while Yale is exceptionally strict about doctrinal learning; rather, it’s because Yale accepts students who have the aptitude—yes, I believe that intelligence is mostly inherited—to pass the exam (and don’t say it’s because California’s bar is harder, etc.). That means that all Yale is really selling is prestige, for most of its students could probably pass a bar exam with about a year’s worth of self-study and not pay the law school a dime.

Anyone who starts law school with less than a 50 percent chance of passing the bar within three years of graduation should be required to sign a special waiver that he has been informed about the riskiness of his education investment.

“Your Honor, my client’s law school’s stated purpose was to train him to pass a bar exam that it knew or should have known he lacked the mental aptitude to pass based on extensive research documenting the correlation between LSAT scores and bar passage rates. It did not inform him of this risk, which is material knowledge for anyone considering purchasing a law degree. I have market experts standing by to testify as to the employment outcomes of bar-failure JD-holders as opposed to bar-passing ones, including a calculation of the differential lifetime income. Thus, we can determine the amount of compensation my client’s law school owes him. For these reasons the Court should deny the defendant law school’s motion to dismiss.”

There’s the lawsuit for you folks, and the best part is that I don’t have a stake in this one as I had diploma privilege from the state of Wisconsin, so I can opine on it to my heart’s content.

Now, to the meat of Amar’s and Ayres’ proposal:

Law schools might … offer to rebate half of a student’s first-year tuition if the student opts to quit school at the end of the first year. (If the student has taken out government loans, this rebate would first go to repay this debt.)  A half-tuition rebate splits the loss of an aborted legal career between the school and the student. Each has skin in the game, so students will not go to law school lightly, and law schools will have better incentives not to admit students likely to fail.

The idea is to mark the end of the first year, after students have received their grades, as a salient decision-making point. At that time, students will have learned more about their legal abilities and inclinations. Law schools will also have learned more about each student’s abilities, and schools could now disclose how previous students with similar first-year grades fared after graduation.

Excellent idea! … if we assume that the structure of law school grading correlates to successful practice (as opposed to intangibles like law school prestige), and there are a bunch of other flaws that flow from this assumption:

(1)  It does not take three years to teach someone how to pass a bar exam. Irrespective of what I said in my previous post, law schools could probably teach bar readiness in one year to a year and a half tops.

(2)  Almost every law school grades 1L courses on a curve. This means nearly everyone is average, and it distorts academic incentives in all kinds of ways. It rewards beating the herd over understanding the material for its own sake, and on some level it’s a crapshoot because law schools admit students of largely the same aptitude as measured in LSAT scores.

(3)  If we really wanted to see this work, we take a cross-sectional group of law students from schools of varying reputations, have them take the same 1L test, and grade it on an absolute scale. You’ll probably find that nearly everyone passes. Thus, in theory, few would take the rebate.

(4)  Law schools engage in rampant grade inflation to make everyone a winner. What good are 1L grades as a measure of career success when everyone gets B’s and B+’s? (Also, I seem to recall a law professor telling me that Yale uses only “fail,” “low pass,” “pass,” and “high pass” as grades. It may be just for the first year courses, but it tells you about the relationship between grading systems and prestige.)

(5)  Academic performance isn’t necessarily the best measure of lawyering. Much of law practice is now specialized, making a lot of the bar exam wasteful, and some abilities such as empathy or business acumen make people better lawyers than taking Professor Ayres’ contracts final and nailing the difference between a unilateral contract and a bilateral contract with acceptance defined as the offeree initiating performance.

(6) No mention of IBR? Who’s really paying for these bribed drop-outs?

In making this proposal, we might be accused of having an institutional conflict of interest.

Oh God yes. This proposal is biased towards protecting prestige machines rather than law schools that putatively prepare people for practice. That’s not a full-throated defense of them, but I really think the prestigious law schools are due a lot more criticism than they get. They’ve been the unintended beneficiaries of a significant upward redistribution of the wealth—even in the last few decades—and their one-percentish faculties obliviously believe they’ve done something to deserve it. Maybe not Elizabeth Warren, but I don’t think anyone’s asked her directly yet.

Another possible reform would oblige law schools to lend money directly to students—so that defaults hurt the school’s bottom line rather than taxpayers’. While educational lenders are legally allowed to insist on repayment even after bankruptcy, schools are free to renounce this option.

The best part is how at the last minute Amar and Ayres punt to forcing the law schools take on the financial risk of their graduates’ careers. I just doubt that any creditor would voluntarily waive the undue hardship exception, though.

Oh, and what does this proposal do for recent graduates? Nothing.

(Postscript: I must add that Ian Ayres does some good stuff; I especially his campaign finance reform proposal with Bruce Ackerman.)

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