CalBar Wants Solos to Go Down Fighting

…Is really the most charitable thing I can say about the State Bar of California’s Task Force on Admissions Regulation Reform (Task Force), which recently issued its recommendations for requiring “preadmission competency skills training” for lawyers. Proposed changes to the licensing requirements include:

• 15 units of competency skills training during law school
• 50 hours of legal services devoted to pro bono or modest means clients, either pre- or post-admission
• 10 extra hours of post-admission Minimum Continuing Legal Education, specifically focused on competency skills training

I’ve already opined on the futility of mandatory pro bon/low bono requirements, so the Task Force’s decision to copy New York’s new requirements is an inauspicious start. In fact, the Task Force managed to produce the most conservative response to mass lawyer unemployment of any state bar thus far:

We call for no radical change in legal education as it exists today. (2)

…

We do not embrace or endorse the idea that law schools are somehow “broken.”¹² [citing Failing Law Schools] We take that thesis into account only as a marker of the vigorous debate about change now underway within the academy itself, as it is in the profession. (4)

…

Long ago, when American lawyers entered the legal profession by reading law in the office of a practicing lawyer, as Abraham Lincoln did, the training regimen for new lawyers was integral to law practice. That venerable tradition has long since disappeared, never to return, and we do not propose to try. (18)

I doubt it’s in the Task Force’s mandate to advocate sweeping changes to lawyer licensing, but even the ABA’s Task Force on the Future of Legal Education appears more open-minded. The Task Force never discusses tuition increases, the state’s defunded and expensive public law schools, the government’s lending program that enables just about anyone to go to law school, or why California’s state-accredited, unaccredited, and correspondence law schools all charge significantly less than its ABA law schools do.

I’m not against skills training. Neither are law schools, which are spending more and more money on adjuncts to teach it. You can imagine where the money comes from. The Task Force believes that due to (1) “the economic climate,” and (2) “client demands for trained and sophisticated practitioners fresh out of law school” (page 1), that more people than ever are graduating from law school and starting small and solo practices without any training. Certainly (1) is true.

What’s laughable is the Task Force’s insistence that there’s some kind of legal sector market failure due to lack of skills training, as though more new lawyers would have jobs if they were trained better. The Task Force arrives at this conclusion by basing its foundational assumptions on the Illinois State Bar Association’s Special Committee on the Impact of Law School Debt on the Delivery of Legal Services’ (Special Committee’s) Final Report and Recommendations, which I covered here. The Task Force states:

[W]e are recommending something that is designed to improve the employability of law school graduates. The scarcity of jobs for new lawyers in recent years was not simply a statistical phenomenon, isolated from the issue of employability, and driven purely by macro-economic factors outside of the legal profession. For many years before the recent downturn in the economy, there was widespread concern that the cost of training new lawyers was being foisted onto clients, which played a significant role in driving up legal costs. If, in the future, new lawyers come into the profession more practice-ready than they are today, more jobs will be available and new lawyers will be better equipped to compete for those jobs. Critics of improving competency skills training as too costly overlook this key point. They also fail to consider the role that inadequate practice-readiness among new lawyers has had in contributing to the difficult job market that these lawyers face.⁴⁴ (14) [Emphases LSTB]

Ever walk into a Starbuck’s and demand a discount because you felt that the cost of training new baristas was being foisted on you and was even playing a significant role in driving up the cost of coffee? No? So where does the Task Force get its novel contribution to political economic thought: the lack-of-practice-readiness theory of lawyer unemployment? Footnote 44 takes us back to page 3 of the Illinois Bar’s Special Committee’s Final Report, which declares:

The problems with the current legal education model go beyond the difficult economic climate. In fact, the Special Committee received testimony that the tight job market facing recent law school graduates may have—at least in part—resulted from the inadequate training of law students for the jobs that are available. The majority of lawyers who testified indicated that new lawyers are not adequately prepared for practice, and that hiring partners have consequently become less willing to hire new lawyers, preferring instead those with a minimum of several years of experience. [Emphasis Original]

In other words, the Task Force subtly bases its argument on the testimony of unnamed hiring partners in a different state who have a clear financial interest in shifting the costs of training their employees off themselves and onto student debtors. These partners also apparently benefit from a buyer’s market where they can choose between experienced practitioners and fresh graduates.

Ri~ght. Sounds like the problem is lack of demand for new lawyers.

Setting aside its insistence that the requirements will be cheap and easy to meet, the Task Force nevertheless fails to recognize that there is no free lawyer training. Even if you make the law students pay for it (with no government subsidy to public law schools), then in normal circumstances they would evaluate whether law school and lawyer skills training would increase their net lifetime incomes before applying. The net income increase comes from clients’ demand for lawyers. Consequently, it’s the clients who ultimately pay for the training, just like in every other industry. The only difference is that in reality, lifetime income information is either unavailable or presented to applicants in a distorted fashion to induce them into applying. Aside from economic depression, this is why new lawyers are not employed.

And what does the Task Force say about student loan debt?

Due to the staggering cost of the education, those who cannot pay for law school on their own or by tapping family wealth are graduating heavily burdened by debt, only to face one of the worst employment markets for recent law graduates in decades. While we in the profession see and are taking steps to respond to the crisis in access to justice,­⁹ the economics of legal education point to another developing crisis, this one more insidious — the emerging crisis in access to legal education. (4) [Emphasis LSTB]

Footnote 9 see-cites the Special Committee’s report, implying that the Task Force concurs with Illinois that lawyers pass their student loan debt onto their clients, twisting education debt (a genuine insidious crisis) into a problem for poor people’s “access to justice.” Thus, the problem isn’t that there are more law schools and law students than jobs (that would mean the system is broken and the Task Force adamantly denies that). Rather, the fear is that student debtors are magically able to force people to pay them money as shown by high student loan default rates. Expensive law schools also deny poor people the opportunity of reducing their lifetime incomes, never work as lawyers, and never really use their legal educations in their careers.

I can see it now:

“Give me your tired, your poor,

Your huddled masses yearning to pay an IBR income surtax to the government for 20 years until ED cancels your Grad PLUS loans and makes you pay income tax on the shortfall.”

By adopting the Illinois Bar’s Special Committee’s dubious reasoning (and unfortunately not its somewhat reasonable conclusions), the Task Force is recommending CalBar set new lawyers up for failure—and making them pay for it.

Alternatives for Krugman’s Luddites

Paul Krugman, “Sympathy for the Luddites,” The New York Times.

Several months ago, Krugman opined on the “rise of the robots,” and I wrote that the lover of Asimov’s Foundation series would be better served by rereading The Naked Sun instead. In that book, Asimov crafted a sparsely populated world where everyone lived on vast, robot-serviced latifundia, and they’re so isolated that they had serious sexual hangups touching one another. (That’s off-topic, but I bring it up to note that I find Asimov to be kind of a pervert, especially as he got older.)

The point was that Henry George, writing well before Karel Čapek’s Rossum’s Universal Robots—the play that coined the term “robot” and which I happened to see earlier this year—already contemplated a world in which technology eliminated the return to labor. George misunderstands that “laborsaving inventions” are in fact capital, and he fails to recognize that some inventions are land-conserving, but he’s otherwise basically right that owning land becomes of paramount importance as capital substitutes for labor. George’s style may be antiquated, but it’s still fun to read:

[I]f laborsaving inventions went on until perfection was attained, and the necessity of labor in the production of wealth was entirely done away with, then everything that the earth could yield could be obtained without labor, and the margin of cultivation would be extended to zero. Wages would be nothing, and interest would be nothing, while rent would take everything. For the owners of the land, being enabled without labor to obtain all the wealth that could be procured from nature, there would be no use for either labor or capital, and no possible way in which either could compel any share of the wealth produced. And no matter how small population might be, if anybody but the landowners continued to exist, it would be at the whim or by the mercy of the landowners — they would be maintained either for the amusement of the landowners, or, as paupers, by their bounty. (Progress and Poverty, Book IV, Chapter 3)

Unfortunately, Asimov didn’t create an unemployed underclass in The Naked Sun, which would’ve made it a better, if darker book.

Today, Krugman is back on the topic of education versus laborsaving technology, and he concludes that what I’ll call “liberal interventionism” is the ineluctable answer:

Education, then, is no longer the answer to rising inequality, if it ever was (which I doubt).

So what is the answer? If the picture I’ve drawn is at all right, the only way we could have anything resembling a middle-class society — a society in which ordinary citizens have a reasonable assurance of maintaining a decent life as long as they work hard and play by the rules — would be by having a strong social safety net, one that guarantees not just health care but a minimum income, too. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.

I can already hear conservatives shouting about the evils of “redistribution.” But what, exactly, would they propose instead?

Okay, this is the first time I’ve seen Krugman endorse a guaranteed minimum income, which is more classical like George (think Thomas Paine’s Agrarian Justice) than liberal interventionist like Krugman, so I’ll give him that. However, I think he’s been a little thin on higher education, particularly during the ’12 election when he called out Romney’s stance on equality of opportunity in accessing higher education. If education was doubtfully ever the answer to rising polarization, then why should government ensure equal opportunity to obtain it?

I’m not a conservative either, but like all Georgists, I prefer taxing land before labor and capital, as best we can if land taxes can’t cover society’s needs, which they almost certainly would if we spent less on the military. The benefits of land taxes are that they avoid the supposed penalties of taxing capital: discouraging innovation, building bigger buildings, etc. George is more of a libertarian than I am, which is partly due to the fact that he wrote Progress and Poverty long before Social Security and modern national medical care existed mostly anywhere. Nevertheless, I think most safety regulations and maybe things like financial transactions taxes would do more good than harm.

But make no mistake, we’d be better off in Krugman’s liberal interventionist United States than the full-employment-is-optional one tens of millions of underemployed Americans are blighted to inhabit. However, the problem with liberal interventionism, which I see as leaning heavily on income taxes and capital gains taxes to provide a floor for the least among us, is its tax system is arbitrary. How many income tax brackets should we have? At what rates? What if the income distribution changes over time and we have to rework the system?

My hunch is that liberal interventionists see these as technical questions, but they’re really political. For example, in the mid-1980s Congress merged a bunch of tax brackets, which placed many upper-middle-income Americans in the same tax bracket as the burgeoning plutocratic class. Merging the brackets enlarged the constituency of Americans who didn’t want to shoulder any income tax increases. Sure, you can point to empirical studies about how high you can raise the highest bracket before people start fleeing the country like French actors to Russia (around 70 percent, I think), but that’s not exactly an election slogan. Liberal interventionists are already fighting an uphill battle convincing the public of the need for tax increases because many Americans are hostile to government. Georgism is much more readily defensible politically because it’s a qualitative argument rather than a quantitative one.

CBO Issues Report on Student Loan Interest Rates

…And that’s really not what’s important.

Congressional Budget Office, “Options to Change Interest Rates and Other Terms on Student Loans“

Credit subsidies estimated using the fair-value methodology represent a broader measure of cost that includes the cost of market risk. The fair value of a student loan approximates its value in a competitive private market, and a fair-value subsidy occurs whenever the government accepts less stringent terms than private-sector lenders would require to make comparable loans.

Taking account of the cost of market risk significantly reduces or eliminates the savings estimated for student loans under the FCRA approach, making student loans costly to the federal government in most years during the coming decade. CBO projects that direct student loans issued between 2013 and 2023 would cost $95 billion on a fair-value basis, in contrast with the projected savings of $184 billion under FCRA accounting. Under either accounting method, the program will be much less financially advantageous to the federal government in 2018 and beyond than in 2013 (see Figure 1). (Page 6)

I feel bad for the CBO. It’s like the Federal Credit Reform Act has tied its hands behind its back, and it desperately wants to break free and scream, “These loan programs are a really bad idea!”

So, care to guess how much of that $95 billion in cumulative losses will be Grad PLUS loans, much less Grad PLUS loans to law students?

On The Am Law Daily: ‘IBR May Not Bar Some Student Debtors From Shedding Debt’

“IBR May Not Bar Some Student Debtors From Shedding Debt“

Been busy recently, mainly inputting Official Guide data into spreadsheets. Interesting stuff. Will write more on it.

Possible Errors in NCBEX Data

For my recent piece on The Am Law Daily, I compared the number of bar admits in each state (taken from the National Conference of Bar Examiners (NCBEX)) to the number of estimated annual job openings (taken from CareerOneStop, aka state governments). My attention has been drawn to the fact that the NCBEX might have used the number of bar exam takers for the number of bar admits by examination, meaning a larger number of people were admitted to some states than took their bar exams that year.

Case in point: Nevada.

 

The same thing occurs in Montana and Utah for 2011 but not for 2012. Montana might be a fluke because so few people take the bar there.

In 2012, Nevada’s number of bar admits by examination is about the same as the number of exam takers, meaning the mistake might have been carried over to the next year.

I’ve contacted the NCBEX but will not receive a reply until next week.

Before You Start Saying Your State Is Better Than Mississippi…

Okay, the cat’s out of the bag regarding Mississippi’s low annual lawyer job openings rate between 2010 and 2020. I didn’t think it was implausible, just figured that the state was doing really badly because of the depression. But looking at the numbers, there might be a problem.

Jobs in 2010	Jobs in 2020	Annual Growth
3,770	4,109	30

If you look carefully, the net number of jobs created in Mississippi is greater than ten times the annual job openings rate. 4,109 – 3,770 = 339, but 10 x 30 = 300. This means that Mississippi is creating negative four jobs per year in terms of replacing attorneys. This wouldn’t be a problem if Mississippi were projecting a decline in the number of lawyers by 2020, but it’s projecting 9.0 percent growth.

Although, CareerOneStop rounds its job projections to a multiple of ten, so it might be that 30 jobs per year is correct, but that would still mean that all of Mississippi’s jobs will be created through growth and none by replacement, which warrants skepticism. Possibly, the correct number of job openings per year is 130, which would be consistent with the 2008 to 2018 period’s estimate (150). I tried contacting CareerOneStop to see if a mistake had been made, but I’m not sure if my messages went through. Until I get a response, the numbers are suspect but not quite enough for a footnote, much less a correction.

Heavy Traffic

…Is probably Ralph Bakshi’s best movie. I watched it on YouTube a few weeks back along with Fritz the Cat, which was disappointing because it was like a Woody Allen movie without Allen’s neurotic characters’ comedic qualities. Loved the animation though.

Anyway, if you’ve been directed here about the law graduate overproduction page, please read the article I wrote for The Am Law Daily a few weeks ago. It’s more thorough, includes the number of annual bar admits, is professionally edited, and it helps pay my bills more than the blog does.

Other than that, I’ve got nothing else right now. Until I do, I won’t make you sit through Heavy Traffic, but for readers who know the site, here’s some more New Wave.

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