Liberal Law Professors Shielded by Hostility Towards Lawyers

I read Brian Tamanaha’s “The Failure of Crits and Leftist Law Professors to Defend Progressive Causes,” which castigates politically liberal law professors for participating in institutions that encourage both the class schism in the legal profession and law students to borrow unpayable debts. How could they not know what was going on? Tamanaha writes:

Seduced by the allure of prestige of material comforts, Crits and progressive law professors have become a part of the system they set out to reform. Watching market-thinking become pervasive and the gap between rich and poor in America steadily increase, knowing that on broader economic issues we had lost, we succumbed to the temptation to grab what we could for ourselves and our families. (35)

Ouch. It occurred to me while reading this passage that of all the topics I think or write about, legal education is the one where I think we need more “market-thinking,” so I end up sounding like a perfidious neoliberal. I’m not. Instead I think that what passes for “market-thinking” has largely shielded liberal law professors: Lawyers are regularly perceived as playing outside market rules. They chronically overcharge their clients—a belief that’s readily reinforced by actual instances of file-churning, etc.—and they don’t do enough for the poor given their awesome privilege. For the more conspiratorially minded, they file frivolous lawsuits against one another to drive up business, or they use their dominance in legislatures to enact laws that create yet more work for themselves. Even corporate America is powerless to negotiate lower rates against the almighty leveraged, billable hour.

The public’s uncharitable perceptions aren’t helped by economists who misunderstand the effects of professional licensing. Anyone who reads Dean Baker’s Beat the Press will regularly find the author complaining that free trade advocates are willing to subject manufacturing workers to competition with cheap foreign labor, but they hypocritically use professional licensing regulations as trade protectionism. Never mind that professional services aren’t as fungible as precision-made goods; that lawyers’ contributions to legal matters are usually more valuable than assembly line workers’ to their products; or that most states, including California, New York, D.C., Texas, Illinois, and Florida, allow foreign-trained lawyers to take their bar exams (subject to various other requirements, admittedly) with no evidence of lower lawyer incomes there as a result. For some inexplicable reason, foreign lawyers will be able to topple biglaw in a way that tens of thousands of unranked law school grads cannot.

An even better example is Clifford Winston’s, Robert W. Crandall’s, and Vikram Maheshri’s 2011 book, First Thing We Do, Let’s Deregulate All the Lawyers. The authors calculated that lawyers earned 50 percent more than people who had the same amount of education. They also found that over time lawyers’ incomes increased even though their GPA and LSAT scores did not, and that the number of lawyer jobs created each year is significantly less than the number of people who apply to law schools. Therefore lawyers must be creating a huge deadweight loss to society.

No one pointed out to them that (a) demand for legal services is income elastic, which means rich people and corporations spend more money on brand-name firms as they become wealthier (and they have become wealthier); (b) the wages of lawyers are determined by their marginal product, not their education; and it might just be the case that lawyers are more productive than people who drop out of English PhD programs; (c) incomes for high-test-scoring people have increased generally over the last few decades as credentials from elite universities have led to higher-paying jobs; and (d) demand for legal education is not the same thing as demand for legal services.

One need only read First Thing We Do‘s introduction (PDF) to understand the methodological problems with the authors’ argument:

As regulatory economists, we find it natural to reason that occupational licensing, like other regulations that restrict entry, benefits existing suppliers by limiting competition. Thus its primary effect is to generate earnings premiums to practitioners in a particular profession such as law—earnings premiums that could be inefficient.

In short, it’s an argument from incredulity nestled in a begging-the-question fallacy: We can’t believe the legal profession would allow more people to purchase legal education than there are jobs available for them because that would mean lawyers are bad at creating licensing restrictions, and they would be callously dumping over-indebted, underemployed law graduates onto the labor market and tolerating a massive wealth transfer to law professors that doesn’t directly benefit lawyers. Therefore, the licensing requirements must be restricting supply and raising incomes.

However, the fact is, applicants’ willingness to risk rejection, which indicates they would pay full freight if accepted, increases with tuition. Behold the number of rejected full-time applicants at private law schools (ex. Puerto Rico’s and Brigham Young) and public law schools whose tuition is higher than the average private law school’s.

Adjusted Full-Time Private Law School Tuition by Full-Time Rejections

Those of you who wanted an upward-sloping demand curve, here is your upward-sloping demand curve.

Even in my private life, I’ve encountered two economists (whom I respect) who thought “licensing = labor cartel” applied to lawyers ipso facto. In fairness, it’s not self-evidently untrue, but it shows the heuristics that go into analyzing who’s cheating society and who isn’t.

Okay, I didn’t write this post to rehash First Thing We Do—not that I didn’t savor the empty calories and hope you did too—rather, I brought it up to show that “positions, not interests” explain conventional views about lawyers and law schools:

  • Lawyers = cheaters, thieves
  • Law students = greedy turds who refuse to serve the poor at lower pay and are whining because they’re bitter they didn’t get to be cheating thieves
  • Law professors = tragic figures because despite their liberal agendas, their students still refuse to serve the poor and aspire to be cheating thieves
  • Student debt for education = good because education = “upward mobility” = good

Once this framework for the law school debate sets in, it’s no wonder that Tamanaha’s peers call him an outrageous elitist conservative. It takes the ideological equivalent of a spontaneous reversal in the earth’s magnetic field to recognize that law schools have more in common with Bain Capital than they do with Legal Services NYC, which has been working without a contract since July 2012 and might go on strike soon. The dominant liberal story over the last thirty years is that rich conservatives and neoliberals (including cheating thieving lawyers) captured the government to crush labor and redirect incomes from the poor to themselves. Thus, liberal law professors are the types of people we’d least expect to support too-big-to-failist institutions. The fact that conservatives tend to hold anti-higher education and anti-student lending views further warps the discussion along ideological lines.

That law schools were caught fighting on the wrong side of the class war at the same time the banksters wrecked the economy is only a coincidence, but it doesn’t appear that way to the students, who are increasingly seeing a generational war between entrenched, entitled boomers and themselves. Law schools’ legacy will be a severely cynical generation—not something supposedly labor-loving liberal academics see themselves as promoting.

More on the (In)elasticity of Demand for Law School: Tuition Cuts Edition

Karen Sloan, “Arizona Cuts Law School Tuition, Marking a First,” National Law Journal

Following up on Wednesday’s post on neoclassical economics gone wrong, we have the University of Arizona loudly announcing a 10.7 percent tuition cut for in-state students. That’s $27,288 in 2012 down to $24,381 in 2013. The last time Arizona’s tuition was this low was … uh, 2010 when it was $23,540. In fact, Arizona’s mean nominal tuition increase since 1999 has been 16.2 percent, which is certainly due to state funding cuts and not academic bingeing. This is why I focus more on private law school tuition increases.

The painfully obvious question the first-publicized “big” tuition cut raises is, Will it persuade more people to apply (and attend)?

Answer: Not nearly to the extent that the dean interviewed by the NLJ hopes, but Brian Tamanaha makes a good point that it might help UA poach some applicants from ASU, which isn’t a great victory since applications are dropping there too. Instead, Arizona intends to “make up for the lost revenue by expanding existing master of laws and doctor of juridical science programs [HA!] and introducing a new LL.M. for non-lawyers [BIGGER HA!]. It also plans to reduce its pool of scholarship money.” With less scholarship money, the price cut is even more likely to be a non-event.

Why won’t this entice the swarms of 0Ls? you ask? Because people like Eric Posner wrongly believe that the elasticity of demand for legal education is static throughout time. (Did I mention I loathe neoclassical economics terminology? It’s so stilted.)

So yes, until 2010, you could increase law school tuition and people would still apply. Did I mention that you can increase tuition after 2010 and people will still apply? (Okay, it’s probably lower on average due to scholarships, blah blah blah.)

Applicants Per Law School and Mean Law School Tutiion (2011 $)

According to what I’ll call the “conventional thought,” applicants are insensitive to tuition hikes, yet the opposite is also simultaneously true: Make law school cheap and the deans will have to stand at opposite ends of a console, and then turn their keys simultaneously to open the weapons locker containing all the pitchforks they’ll distribute to the green professors to fend off the insatiable hoards of 0Ls demanding to pay someone a six-figure salary to tell them the difference between the parol evidence rule and the statute of frauds. If law school isn’t expensive, the “conventional thought” warns, it’ll be like WarGames meets Zulu.

However, the “conventional thought” suffers from a flaw: The 0L hoards only came because there was just about no way for them to know the net present value of a law degree minus that of their college degrees. Then along came a bunch of scamblogger types who said that it was probably negative, and the 0Ls realized the solution was not to play.

Take it away John Bates Clark and Alfred Marshall: Not only is demand for legal education dropping, but also the price elasticity of its demand is shifting.

PED of Legal Education

For illustrative purposes only. I’m not an economist; I just play one on the Internet.

If you think that an upward-sloping demand curve hints that I think legal education was once a Veblen good (and possibly a Giffen good too), you have gained wisdom grasshopper. The question is to what extent that’s still true.

The other reason no one should take the “conventional thought” too seriously is that law school tuition has never been uniform throughout the country. For example, we’d expect dirt-cheap law schools like the University of D.C. or New Mexico to be overflowing with students. Instead, Georgetown, NYU, Harvard, American, Columbia, and George Washington have some of the largest student bodies in the country and aren’t known for their bargain-bin prices.

We’d also thus expect price competition among law schools, especially in California where you can become a lawyer via correspondence programs. If you object that ABA degrees are a separate class of goods from those of the unaccredited mills, you’ll have to tell me why that should matter. A lawyer is a lawyer, and the ability to pass a bar exam is largely set in stone before one has taken out one’s number two pencils at the LSAT center. If the fact that UCLA charges more than $45,000 per year for its law degrees has nothing to do with its (perceived) reputation for placing people in good lawyer gigs—and 0Ls perception of how many good lawyer gigs there are, the likelihood that they’ll get them, etc.—then you too are ready to start editorializing on economics.

Just be sure to wow your readers by using “at the margin” every third sentence.

How Grad PLUS Loans Saved Law Schools

[Information in this post is supplemented here.]

Georgetown University Law Center professor Philip Schrag’s review of Failing Law Schools is not at all the gyokusai attack on the critics of legal education that Lawrence Mitchell’s op-ed was. I even suspended my contrarian urges long enough to agree with parts of it. You can read Brian Tamanaha’s response, along with LawProf’s. Theirs cover most of the issues, but there are a few remaining that I feel the need to go into.

I’m going to break this process into more than one post. Today’s is a quick counterfactual history of legal education without IBR, Grad PLUS Loans, and nondischargeable private student loans. The world as it was in 2004.

Why do this? Because Schrag believes IBR renders law school cost issues irrelevant (and if you think subsidizing it is unsound, well, we subsidize a lot of things). The bigger problem for Schrag is how we license lawyers, which I think Tamanaha acknowledged on pp. 176-77 of his book.

So what would’ve happened if the student lending laws went unchanged since 2004?

(1)  No Grad PLUS Loans means most private law school students would’ve had to rely on private loans.

(2)  Tuition increases and eroding values of Stafford Loan limits would’ve also necessitated private loans.

(3)  Dischargeable private loans means noticeable waves of law school debtors would’ve defaulted and/or filed bankruptcy due to their student loans.

(4)  Lenders would be more suspicious of legal education, leading to even more forceful demands for transparency on employment outcomes and higher interest rates.

(5)  Certainly middle-range to low-end private law schools’ tuition hikes and expansions (including branch campuses) would have been curtailed.

In our universe, the real breakpoint period is in the 1990s, when private law school tuition began to permanently exceed Stafford Loan limits after their 1994 increase.

Median Law School Tuition and Annual Stafford Loan Limits

(Source: ABA, FinAid.org)

By 2004, there was a $10,000 gap (in 2011 dollars) between the annual Stafford limit and median private law school tuition. Seven years later, that gap grew to about $19,000 per year, despite a small boost to the annual loan limits in 2007.

Furthermore, in 1999, 28 private law schools’ tuitions were below the annual limit, by 2010, that number had dropped to two: the two private law schools in Puerto Rico. Even Brigham Young’s tuition can no longer be covered by Stafford Loans alone, but 42 public law schools’ tuitions still can.

No. Law Schools With Tuition Exceeding Annual Stafford Loan Limits + $10,000 (2011 $)

God only knows how these people paid for their living expenses (I lived on savings). Also, to answer your question: Yes, I’m psychotic enough that I ordered back-copies of the Official Guide going back to the 20th century. What’s really surprising is that I’ve managed to find such an interesting use for them so quickly.

What’s strikes me is how rapidly the law school unaffordability problem grew. In six years, nine law schools that required significant supplemental financing grew to 70 by 2005, and as a result, I’m not sure I believe the counterfactual history myself. Maybe law school tuition would’ve kept going up everywhere no matter what? Would private lenders have realized that their loans wouldn’t be repaid? Would they have cared? How many law school debtors would’ve filed bankruptcy if they could have? I regularly criticize arguments from incredulity, so maybe things could’ve really turned out better, just not for law schools.

This is why I’m not persuaded by Schrag’s argument. Conservatively, I think if we went back to the 2004 system, private lenders’ reluctance would cut away needless waste on law schools without any loss to students, taxpayers, the profession, or the economy.

NPR’s Law School Coverage Disappoints Again; the NLJ’s Opinion Page Entertains

Wendy Kaufman, “Job, Tuition Woes A Drain On Law Schools,” KUHF Houston Public Radio

“The American Bar Association has revealed a bit of a secret: A huge number of law school graduates cannot find jobs as lawyers…”

Since when was this a secret? If it were, why did fewer people apply to law school in 2010 than in 2004?

Way to not research NPR. What’s next, an exposé on this new scamblog titled Big Debt Small Law?

But that’s not the actual adventure for today:

Erwin Chemerinsky, “You get what you pay for in legal education,” in the National Law Journal

Chemerinsky responds to Brian Tamanaha’s book, Failing Law Schools:

“[Professor Tamanaha] singles out for criticism me and the University of California, Irvine School of Law (UCI) for creating an “elite” law school rather than one charging students less than $20,000 a year. Although everyone wants legal education to be less expensive, he proposes a model that is economically impossible without dramatically decreasing the quality of legal education.”

I’m only partway through Failing Law Schools (I’m still mopping up A Short History of Byzantium by John Julius Norwich), and I’m not even going to reach for it to respond to Dean Chemerinsky’s opinion piece.

(1)  The UC system has abandoned its law schools. For instance at Berkeley, Davis, Hastings, and LA, in 2011 dollars in-state tuition in 2004 was only ~$25,000. In 2011 they were all over $40,000 with Berkeley crossing the finish line as the first “public” law school to charge state residents more than $50,000 a year to learn The Law. I’m sure Irvine’s founders knew their law school wouldn’t receive state funding by the time it needed to start charging tuition, yet they opened it anyway. Fortunately its inaugural class just finished with a free ride; its successors won’t be so fortunate.

(2)  I don’t think anyone else has pointed this out, but UC Hastings made a big splash when it announced it was shrinking its incoming classes starting 2012. One new public law school opens, another cuts its enrollment. Why didn’t anyone tell Irvine it should’ve taken one for the team as the newest and least necessary law school? Read on, brother.

(3)  UC Irvine is in California, which is loaded with state-accredited, unaccredited, and correspondence law schools of all stripes. Plenty of the people who attend those schools become lawyers, and they pay much less than the $40,000 or so ABA fare. Most fail the bar exam, but then again they probably didn’t have the aptitude to pass it in the first place. The LSAT is a high predictor of bar passage, so legal education can be less expensive without dramatically decreasing its quality. It’s quite surprising that Chemerinsky has nothing to say about California’s non-ABA system.

“[Tamanaha's] solution is to advocate much lower-cost law schools. But is it possible? Tuition at the University of California law schools is approximately $45,000 for in-state students and $55,000 for out-of-state students. This is comparable to the tuition at other elite public and private law schools. For public law schools, it reflects the dramatic decrease in state subsidies over recent years.”

(4)  Why do we need public law schools, much less elite-mimicking ones? The whole point of public law schools is to provide legal education cheaply so the profession can be accessible to the rabble. If they’re going to charge more than many private law schools then they no longer serve that purpose and might as well close.

“Tamanaha is correct that law professors are paid significantly more than university faculty in disciplines like English, philosophy and history. Imagine that a law school tried to pay at that level, say roughly half of current faculty salaries at top law schools. Who would come and teach at a school where they got paid half what other law schools would pay them, and who would stay there when other opportunities arose?”

(5)  Faculty at top law schools routinely make more than $200,000 per year. Plenty of people would show up for half that.

(6)  The ABA renegade Massachusetts School of Law hires lawyers and judges to teach its courses. Do they jump ship the first chance? Also, don’t, like, thousands of people show up to law school faculty hiring “meat markets” held in nice hotels? I’m sure plenty of people would be happy to teach law for $50,000 plus benefits, even six courses per year.

“About half of our budget is faculty salaries and benefits, but even slicing these in half wouldn’t save nearly enough for a tuition decrease like the one Tamanaha argues for. The only way to accomplish that would also be to cut the size of the faculty at least in half. Increasing the teaching load from an average of three to four courses won’t help much, since I and many on our faculty are already teaching four or more courses every year.”

(7)  And now, the moment of truth: a trip to UC Irvine’s Official Guide page … Student to faculty ratio: 6.9 to 1.

Ho~ly $@%#.

This cannot be right. I have to dumpster dive into some enrollment numbers… UC Irvine had 235 students in 2011 (89 1Ls, and its inaugural class started with 60, now 58; Give or take a few transfers, we’re looking at a 2L class of 88). Okay, given that it’s inaugural class was small than what it’ll be going forward, it’s full-time enrollment should be most similar to Maine’s, which had 270 full-time students in 2011. Maine has a student faculty ration of 14.3 to 1. Recall that an ABA law school can operate with as high a ratio as 30 to 1. Now I’m sure there are some scalability and flexibility issues here: Unless the law school wants students to have a rigid curriculum, it’s probably going to have to hire some more faculty and enroll more students to make up for it. Fair enough, but Maine has been doing this since 1962. Sure Maine has a cheaper cost of living than California, but something tells me its law school doesn’t strive for “elite” the way Irvine does and pays its faculty accordingly. Tuition there is $22,000 for residents, $33,000 for non-residents.

This is Irvine:

This is Maine:

Two schools that operate very differently.

I’m going to skip Chemerinsky’s arguments that full-time faculty teach better than part-timers and that reducing law school’s costs would eliminate clinical programs. I think the full-time faculty teaching ability issue is a non sequitur. It’s not that they need to be wholly eliminated, just pared back and paid less, and if part-time faculty don’t have time to answer students’ questions, fire them. As for clinical programs, we’ve had legal education without them and it’s not like lawyers of yesteryear were rampaging savages like Attila the Hun (There’s that Byzantium book again…).

The conclusion, though, is where you ought to be frolicking if the rest wasn’t to your liking:

“Tamanaha says that UCI Law School ‘squandered’ its opportunity, and that where we ‘went wrong was in setting out to create an elite law school.’ My goal, and that of my university, has been to create a top 20 law school from the outset … If we had followed Tamanaha’s advice, we would not have faculty remotely of this quality and then never could have attracted students of this caliber. We surely would have been a fourth-tier law school. It is ironic that he would be advocating that because so much of his book is about demonstrating the serious problems such schools face.”

(8)  The actual irony here is that the summer Irvine received its provisional accreditation, the “Inland Empire’s” University of La Verne lost it due to too many of its graduates failing the bar exam. Southern California apparently didn’t have room for another fourth-tier law school (not that it didn’t stop the ABA from re-provisionally accrediting La Verne last spring), but don’t let that or Dean Chemerinsky’s arguments fool you into thinking that UC Irvine’s decision to build a top-20 law school from scratch is somehow more responsible than opening another La Verne. There are only so many top-20-caliber applicants in each application cycle (to say nothing of the number of top-20 law schools), but Chemerinsky has given no reason for us to believe that Irvine adds more educational value than, say, Vanderbilt or Minnesota do for its cost. Indeed, Irvine’s 58 graduates would’ve received comparable legal educations from those schools had it not opened. Thus, by jumping into the rankings dogpile, Irvine does not meet any unmet demand and only reallocates existing resources to itself. It may not be a bottom-tier law school that Tamanaha criticizes, but by shifting its non-top-20 predecessors downward UC Irvine ipso facto creates one.

30 Years after They Graduated…

The law school transparency discussion is animated by the assumption that graduate employment data from nine months out reliably indicate the ROI of a law degree. Readers know I question the “reliability” in the assumption, yet such data are reliable because of the importance of first jobs after graduation and that meaningful employment in the legal profession for large numbers of graduates vanished long ago. It’s a pitiful set of circumstances when asking for increased transparency in the name of consumer protection amounts to twisting the law schools’ arms into admitting to the public that they’re over-enrolled, overpriced institutions, economic stagnation or no.

Nevertheless, for all you transparentists out there, this month’s ABA Journal has a blurb about the efforts of the Section of Legal Education’s changes to the All-Important Questionnaire. The Section got a good heap of hate piled onto it for appearing to self-servingly decide against distinguishing between various job types, especially professional and non-professional jobs.

[T]he section will add several more questions to a questionnaire about jobs held by 2011 graduates. As of late September, the questions still were being developed and new jobs categories still were being defined.

But a letter mailed to deans in August outlined the type of information the section is likely to seek. It includes how many graduates have jobs requiring bar passage or for which a law degree is preferred, how many are employed in another profession, how many hold non professional jobs, and how many are working full- or part-time. The results will be published online by about July 2012, an accelerated schedule that will get the information to the public nearly a year ahead of the usual time. [Emphasis LSTB]

So there. Since there wasn’t any hope of telling fall 2011 applicants before they enrolled how their distant predecessors fared, July 2012 seems a fair time to gently inform the next wave what they should already know by a visit to their friendly neighborhood scamblog. Since it doesn’t look like there will be any independent auditing, law schools may find ways to juke these numbers.

Whether this development (dis)satisfies transparency advocates is not today’s concern, for I’m busy resolving a contradiction: Candidly informing prospective students that large swaths of them will be worse off if they go to law school cannot be good for law schools’ bottom lines. Bad job numbers means declining applicants means smaller enrollments means less revenue means reduced spending means lower relative U.S. News rankings means reduced prestige means new dean, yet Section members appear unconcerned if their efforts ultimately encourage applicants not to buy their product; instead, they’re more concerned about image:

[Section chair and New England School of Law (NESL) dean John F. O'Brien] also expressed concern that the widespread media coverage of the issue has obscured perceptions of the overall job law schools are doing.

“The vast majority of law schools have been doing a tremendous job of training future lawyers, supporting pro bono work by students and alumni, and finding work for graduates in an extraordinarily difficult economic climate,” O’Brien said.

Readers should know that NESL’s current annual full-time tuition is $40,904, up from $22,475 in fall 2004, an astonishing growth. Moreover, New England has the worst ratio of law graduates to projected law jobs of any region in the U.S. Surely Dean O’Brien knows that if any law school shouldn’t expect to prosper in the coming transparency era, it’s NESL. Indeed, it’s the poster child for the tuition bubble, and with the dean of such an expensive, parochial law school chairing the Section of Legal Education it’s no wonder transparency advocates question if the Section is a captured agency whenever it declines to adopt a full transparency regime to their liking, even though it looks like it will by next year, not that it’s set in stone. Yet herein lays the contradiction, for as the block quote implies, rather than cynically manipulating the Questionnaire to shield his law school from Impending Doom as many expected, Dean O’Brien doesn’t appear to care. This indifference surprises me because I doubt law school deans are excited by the upcoming orgy in tuition, salary, and faculty cuts that will inevitably accompany applicants walking by law schools such as his, even if it means razing the building and telling the 3Ls to finish their degrees elsewhere in the name of The New Law School Order. Deans must be predicting a more modest outcome, meaning continued over-enrollment. (A much better example of Dean O’Brien’s pacific outlook appears on the National Law Journal’s site discussing legal education.)

(Note: this confusing, ubiquitous “sanguine law school” attitude is belied by the defensiveness found in Cooley’s “Report One: National Employment,” which portrays law schools’ critics as bullies intent on vengefully depriving the profession of its badly needed practitioners and by inference law schools’ accounts receivables.)

Assuming they’re not completely clueless, this “modest outcome” entails either (a) prospectives acknowledging the likelihood of underemployment but applying anyway, or (b) the short-term data correcting the situation … but for only the nine-month period, after which market forces take over and erode the long-term value of graduates’ law degrees. Law schools will view this through a lens of “proximate causation,” i.e. they believe the students bear the post-nine months market risk. “Law is not for everyone,” they’ll say, but they’ll deny systemic over-enrollment or that their schools are superfluous. Both options belittle transparency efforts, for the former means that law schools will continue to be over-enrolled, overpriced, and possibly gaming the transparency regime, while the latter means that the “reliability” in the transparency assumption is wrong and the effort wasted.

If the short-term data aren’t reliable (i.e. (b) above), what long-term knowledge of the value of a law degree is out there? There’s the After the JD project (AJD) and a paper on the LSAC’s Web site titled, “From 1L to 401(k): A Pilot Study of the Later Stages of Lawyers’ Careers.” AJD is a longitudinal survey of 5,000 year 2000 graduates sampled in 2002, 2007, and 2010. I’ve found only two relevant papers based on the data. Sadly both focus on lawyers’ careers rather than JDs’ careers, and it’s only in the LSAC paper that we find that the After the JD project used only people who’d already passed the bar, and that by seven years after passing the bar (2007) 5.1 percent of After the JD participants were unemployed, and 7.9 percent had left the law entirely. If only they were able to start it ten years earlier.

“From 1L to 401(k)” is much better written and more interesting than any of the AJD articles. It gives us a sample of the fates of the mid-1970s classes. Of particular interest is Table 2 on page 5 (PDF 9):

So I had to bust out my grad school research methods textbook, and I can tell you that the Chi-square tells us the likelihood that there’s a correlation between the type of law school attended and graduates’ career tracks. The author should’ve given us the raw numbers instead of just the percentages, and my textbook orders me to chide her for not telling readers that there’re ten degrees of freedom in the table. The number in parenthesis after the Chi-square is the probability of no correlation between the two variables. That it’s 0.000 means that there is a significant correlation, and to give you a comparison, here’re the expected percentages if these two variables were independent of each other.

48.3%
8.4%
10.3%
4.4%
19.7%
8.79%

It’s odd (statistically) that late 1970s “urban” law school graduates did not find their way into government or in-house positions and instead “stepped out” of the profession, which in the researcher’s definition means they maintained their law licenses despite not working as lawyers. “Other fields” means they aren’t licensed anymore, and the purpose of the distinction is to give an idea of how many graduates still identified as lawyers by maintaining their licenses (or would have had they not been disbarred). I should also add that she was concerned about over-counting in-house counsel based on the methodology.

This isn’t much to extrapolate on, but if 35.3 percent of 1970s urban law school grads left the profession within thirty years, that doesn’t say much good about the value of the degrees their law schools sold them as compared to those who went to state (22.6%) or elite schools (27%). Although, tuition was cheaper relative to elite schools and law jobs were more common back then, so recouping the investment wouldn’t’ve required as much time in the profession. The ten-year standard repayment plan could’ve been sufficient, and we should be more concerned about legal education’s ROI than whether graduates have long careers. Suffice it to say, though, the NESL of 1975 was more affordable and charged a lot less than 86 percent of what Paper Chase-era Harvard did.

Table 3 shows us gender’s impact on law careers:

Trusting the “unverified” numbers, fully 36.3 percent of women who went to law school in the mid 70s weren’t working as lawyers in the mid-2000s. For men it was 25.6 percent. Take from that what you will.

But Table 4 goes for the gold.

I like how the author didn’t bother printing the Chi-square, probably because it’s blatantly obvious there’s a correlation between school attended and size of practice.

Thirty years is a long time, but while it’s possible some subsequent classes kept with the law longer, we know that to the prestigious go the jobs. Brian Tamanaha has graphically demonstrated this pattern is alive and well and likely worse since then.

I won’t copy Tables 5 and 6, but they testify to the signaling value an undergraduate degree from an “elite” institution has on career tracks even more than thirty years ago. With this in mind, you can see how downward mobility affects the decision-making of young Americans. With a dearth of living wage jobs for high school and college-educated people, demand for graduate-level education increases, and using transparency to tell the public that law jobs are now McJobs (or non-Jobs) doesn’t address the fact that there are so many such jobs in the first place. We should give credit to the moral character of the large numbers of applicants who prefer downward-mobile McJobs to a legal profession that offers them no better.

There’s more to the study’s methodology than the pithy points I’ve brought up, but we know that today there are far fewer law jobs than in the late 1970s, they don’t pay as well as back then, there will be fewer jobs going forward, there are more law schools than necessary, and the total cost of attending law school is catastrophically higher than in the past, so the tendency of significant percentages of legally educated Americans “stepping out” of the legal profession has worsened since the 1970s. I further believe that law careers are shorter, accelerating the “stepping out” rate.

So, is it worthwhile today to throw down more than $120,000 for an NESL law degree when it basically guarantees a career in low-paying small practice work for the majority of graduates who manage to enter the legal profession? Put differently, are the transparency enthusiastic NESLs under the Section’s wing clueless, CYOA-ing, or callous as to the long-term value of their degrees? Are law school deans like John F. O’Brien counting the days until they can fire their faculty and abandon their state-of-the-art law school buildings for the forsaken ones relegated to humanities departments?

My thoughts on the long-term value of a law degree lead me to two points:

(a) Much depends on whether applicants really care if the degrees they’re buying are disastrous career-wise. Rather than blaming the media for this by glamorizing law practice, pundits should look at macro-level forces like downward mobility caused by income inequality, but this requires viewing the law school problem as a part of a political problem, which the profession’s elite prefer not to do.

(b) Even if the transparency era arrives, law graduate employment data will still conceal a very high long-term attrition rate they may not even know about. They’ll figure it belongs to the nebulous category of information applicants are supposed to obtain from existing practitioners to “find out if law is really right for them.”

Update on News in the Law School World

There were a bunch of articles I couldn’t get around to this past week, and they’re worth consolidating into one post.

(1)  Law School Lawsuits

New York Law School fights class-action suit over job rates,” Thompson Reuters.

NYLS’s attorney states:

“The allegations are not only baseless, but also belied by the plaintiffs’ own complaint, which demonstrates this case has nothing to do with New York Law School and everything to do with a crusade against the entire law school industry.”

The graduates’ attorney says:

“The fact remains that when our clients paid the annual tuition of over $40,000 to attend New York Law School, they did so based on New York Law School’s misleading representation that they had an over 90 percent chance of getting a job, and that those jobs paid certain salaries,” [Jesse] Strauss said. “That representation is demonstrably false.”

We’ll see how this plays out.

(2)  University of Baltimore Law School

Karen Sloan, “Following dean’s resignation, Baltimore relents on law school money,” National Law Journal.

Debra Cassens Weiss, “U of Baltimore Law School to Retain More Money After Outgoing Dean’s Protest,” ABA Journal.

Sam Favate, “Law Schools Recover Lost Cash, As Grads Seek Tuition Refunds,” Wall Street Journal.

A few months ago, U Baltimore asked Phillip Closius to resign after he blew the whistle on the university for allegedly over-taxing the law school to pay for other university programs.

“Under the new funding agreement, an estimated 90% of the funds generated by the law school will return to it, [Baltimore Law Professor] Meyerson said. The arrangement ensures that law student tuition will not increase next year. Students were informed by e-mail that the administration would try to minimize future tuition increases.”

A year without tuition increases is good, but whether they will occur is indisputable.

(3)  Irate Senators

Coburn, Boxer Call for Department of Education to Examine Questions of Law School Transparency,” Office of Senator Barbara Boxer.

Senators Barbara Boxer’s and Tom Coburn’s joint press release opens with, “To help better inform Congress as it prepares to reform the Higher Education Act…” Reform the HEA? What’s on the table here? This is the first I’ve heard of planned HEA reform. Returning to the lawsuits:

The New York Times found the same school [NYLS] is ranked in the bottom third of all law schools in the country and has tuition and fees set at $47,800 a year but reported to prospective students median starting salaries rivaling graduates of the best schools in the nation “even though most of its graduates, in fact, find work at less than half that amount.”

Ouch. Even if NYLS wins its motion to dismiss, it’ll still have to convince legislators that it’s not doing anything wrong.

Other reports question whether or not law schools are properly disclosing their graduation rates to prospective students.

Graduation rates? I’ve never heard of law schools concealing their graduation rates.

The senators then ask the Department of Education to provide them with the following things:

1. The current enrollments, as well as the historical growth of enrollments, at American law schools – in the aggregate, and also by sector (i.e., private, public, for-profit).

2. Current tuition and fee rates, as well as the historical growth of tuition and fees, at American law schools – in the aggregate, and also by sector (i.e., private, public, for-profit).

3. The percentage of law school revenue generated that is retained to administer legal education, operate law school facilities, and the percentage and dollar amount used for other, non-legal educational purposes by the broader university system. If possible, please provide specific examples of what activities and expenses law school revenues are being used to support if such revenue does not support legal education directly.

4. The amount of federal and private educational loan debt legal students carried upon graduation, again in the aggregate and across sectors.

5. The current bar passage rates and graduation rates of students at American law schools, again in the aggregate and across sectors.

6. The job placement rates of American law school graduates; indicating whether such jobs are full- or part-time positions, whether they require a law degree, and whether they were maintained a year after employment.

Enrollments and tuition are publicly available, though it may require dumpster-diving into paper editions of the Official Guide to go back ten years (1. & 2.). Revenue will be in universities’ hands (3.). I’ll publish federal and private debt data very soon (4.). Graduation and bar passage rates are mostly available in the Official Guide. I use “mostly” because bar exam data are published in calendar years while graduation rates are in school years, and not all graduates immediately take the bar exam (5.). Job placement rates? Good luck prying that from the law schools or NALP. The primary difficulty with legal education reform via self-reported employment data by law school is that it’s trying to gather the highest-hanging fruit to reform the system when BLS data already tell us there’s a structural overproduction of juris doctors (6.).

(4)  Can law schools save themselves?

Kyle McEntee & Patrick J. Lynch (“LST”), “Do law schools defraud students?New York Post.

Brian Tamanaha, “The Depth and Breadth of Misleading Employment Numbers by Law Schools (And How to Solve It),” Balkinization.

These two pieces bring up some subtle points worth my editorializing. First, the LST editorial refers to prospective law students as “consumers,” a term I dislike not because it hints of mindless consumerism, but because it tries to take a neutral view of the Direct Loan Program. For instance:

This year, ABA-approved law schools will get at least $4 billion in taxpayer support, thanks to the government’s decision in 2010 to directly lend to students. But when graduates can’t find jobs that allow full loan repayment, they either default or sign up for hardship programs. The taxpayers are on the hook for the lost interest income and unpaid loan principal.

So isn’t the Direct Loan Program the bigger problem rather than law school employment data? It’s not the law schools’ fault that the bank is knowingly loaning money to students whom it knows will not work as attorneys according to its own employment projections. Maybe the government shouldn’t nationalize credit markets and then guarantee the loans to itself.

There are a few more points I disagreed with in the editorial, but I didn’t start this blog to criticize transparency advocates when they’re not the ones profiting from the current system. The important line, though, is towards the end:

Whether tuition drops because consumers finally receive the real employment statistics, or because the government stops lending essentially unlimited amounts of money to students, schools will need to either reimagine the kind of education they provide or close down.

Okay, I give LST credit for putting Direct Loan reform on the table, but there are two false dilemmas in this passage. One, the choice is not between transparency and student debt reform. Both are necessary. Two, LST is offering the legal academy a Biblical ultimatum: Reform or close, which assumes there’s a face-saving option for law schools. There is none. Law schools will close, regardless of what reforms they choose to implement and especially if they essentially admit to the public that they are nonperforming institutions wasting Direct Loan dollars, or worse, wasting Direct Loan dollars and redirecting them to other university programs.

Contrast LST’s internal reform belief with Brian Tamanaha’s suggested transparency proposal:

The law school funny number problem is out of control. And it won’t stop on its own. Anyone who thinks the fix will come from the current ABA efforts to provide greater transparency is deluded.

There is only one possible solution in the short run. The deans at the top 20 law schools must sit together in a room, agree on the standards, and personally guarantee the veracity of what they report. All the other law schools will follow (or be embarrassed by continuing to post ridiculously implausible salary numbers). This must be done soon, before the next cycle of numbers comes around.

Tamanaha’s solution is realistic, but it comes with two costs. One, he knows full well that the transparency trickle-down effect will wipe out the unranked law schools because no one will take U.S. News’s rankings seriously if the Ivy League law schools all suddenly dropped into the middle hundred. Second, look at who’s in charge here. The most reputable law schools potentially have more power than the ABA Section of Legal Education, which is nominally superior to them. It would be quite a rebuke of the Section indeed.

Tamanaha’s proposal, though, is the limit of what some law schools can do to save themselves. Mandating or shaming law schools into disclosing that their graduates have poor career prospects is all but asking them to commit suicide as well as potentially open themselves up to more lawsuits.

The Law School Problem Is Vertical, Not Horizontal as Most Law Professors Believe

I take [the LawScam critique] to be that legal education is hoodwinking prospective law students into law school and conspiring to produce an oversupply of lawyers that face diminished job prospects and crippling debt loads. –Usha Rodrigues (Associate Professor of Law, University of Georgia), “ScamLaw: The Master’s Forum,” The Conglomerate

So, if I’m right, then the argument is: third and fourth tier schools are misleading students, it’s criminal, shut them down. I take it that this is a clean solution to the LawScam: remedy the oversupply of new lawyers by cutting it in half.  I’m not advocating this solution, but just observing that it seems like that’s where you end up if you follow the LawScam argument to its logical conclusion. –Rodrigues, “ScamLaw: Paternalism or prudence?” [emphasis original]

Rodrigues’ statements are a significant step ahead of mainstream legal media coverage of scambloggery, exemplified by Karen Sloan’s editorial on Lucille Jewel’s scam blog article:

It’s difficult to gauge the effect the scam blogger movement has had on the larger debate over the transparency of law school employment data. The American Bar Association recently moved to require law schools to report more detailed job information in its annual questionnaire. However, that push involved a number of more traditional advocates, including law professors and Law School Transparency, a nonprofit group formed by two former Vanderbilt University Law School students.

To which I observe that few if any of the scam blogs I know of prioritize transparency over discouraging people from applying, closing superfluous law schools, and obtaining justice for student debtors. Indeed, I believe scam blogs have been successful in their first objective. Specifically, the wrecked economy did not contribute to as significant a rise in law school applicants as in the past, and according to the LSAC’s preliminary estimates, 2011 is witnessing a law school applicant nosedive. The LSAC’s preliminary number of applicants per law school has dropped to what it was in prosperous 1998, and when compared to Official Guide estimates and Census data, the number of law school applicants per capita is at an all time low going back to 1984, though it’s just one hundredth of a point lower than 1985. Such is the power of the Internet.

The relentless reality presented by scam bloggers persuaded LawProf to begin Inside the Law School Scam (ITLSS), which in turn prompted Rodrigues and her colleagues, the The Conglomerate’s “Masters,” to hold a forum titled, “ScamLaw.” In my opinion, the Masters’ views by and large speak for the legal academy’s understanding of the situation, including what solutions will work. The results discourage me. Here are my criticisms.

I. ScamLaw Misses the History of the Scam Blog Movement

Alarmingly, ScamLaw attempts to reset the clock, setting ITLSS to Year One. This is a wrong move because scam blogs are not a new phenomenon and have existed since at least 2007 with WSJ Law Blog’s Loyola 2L, Temporary Attorney: The Sweatshop Edition, and gifted satirist Scott Bullock’s Big Debt Small Law. Aside from a brief mention of the “burgeoning field of law scam blogs” by Brett McDonnell, ScamLaw brazenly ignores the scam blog movement’s history, which I think contributes to the Masters’ disappointing discussion.

II. ScamLaw Misses Other Academics’ Discussions on the Topic

Sanitizing history, though, is only one of ScamLaw’s problems. Its lack of rigor is more unfortunate, and by focusing on LawProf and ITLSS, it misses an excellent discussion of the legal education system’s pathologies, conducted not even by scam bloggers but between Washington University’s Brian Tamanaha and Loyola Los Angeles’s Theodore Seto. I summarized Tamanha’s and Seto’s discussion and recommend readers skip ScamLaw’s corpus and read that instead, both because it’s better and their discussion illustrates the problems as I see them, making it a good reintroduction to the LSTB for newer readers.

III. Horizontal and Vertical Perspectives

The problem with the ScamLaw Masters’ perspective is that they see the problem as horizontal, as between and among law schools. They do not see it as vertical in terms of the interests of the various parties: prospective students, current students, graduates, lawyers, law schools, the ABA, the profession, and the financers (banks and ED). I see it as vertical, so do scam bloggers and a handful of law professors whose absence ScamLaw sorely missed.

For example, Christine Hurt, whom I should add helped birth the LSTB with her 2010 essay, “Bubbles, Student Loans and Sub-Prime Debt,” presents the Masters with the following two questions:

1. So, what are law schools supposed to do? … [A]t some point we need to talk about the solution, besides “more transparency,” which seems to be on the road to happening.

2. Relatedly, what are law professors supposed to do? … [H]ow do we “withdraw from the conspiracy” (besides just blogging about it).

I find these questions’ assumptions bold. Do universities have the power to change their behaviors? Do law schools? Do these questions even address the situations of alienated graduates and lawyers? What about all the law school debt? Once you assume legal education can be fixed by law schools, then transparent post-graduate employment data promptly follows as the obvious solution. To her credit, Hurt wrote this before the ABA Section of Legal Education decided against asking law schools whether their graduates are employed full- or part-time and whether their positions preferred a J.D. or bar passage. However, I have voiced my doubts about transparency, and I’m sure I’m not alone.

Next, ScamLaw spends an inordinate amount of time discussing entry barriers, such as when Alan Meese wrote, “A system built on subsidized debt and expected perpetual growth in legal employment may not be sustainable. I welcome this debate, particularly its focus on the barriers to entry bolstered by the ABA’s accreditation requirements.” I see this as a psych-out. If the problem is subsidized debt and expected perpetual growth, aren’t the subsidies the problem? Sure, licensing practices are calibrated for an archaic mid-20th century legal profession that idolizes generalized solo practitioners, but the debt problem initiated the discussion.

So, we return to Rodrigues’s aborted suggestion: unilaterally close the bottom half of the law schools. The problem? Whose bottom half? U.S. News’s?? Why should the profession ratify a magazine’s rankings? There are two more problems:

(1)  There are no sacred cows:

For instance, public law schools use the following line of reasoning to justify their existence:

(i)  We need lawyers

(ii)  Lawyers are expensive

(iii)  Government can subsidize expensive things so we can have them

(iv)  Government can subsidize public law schools along these lines

(v)  Public law schools can make inexpensive lawyers

(vi)  We have lawyers

Except (i) is false. We have enough legally educated people to serve the country’s needs. (ii) is debatable. Plenty of paralegals could probably stand before a court and argue a motion just by watching their bosses do it. Moreover, given how much of legal education is memorizing theory and applying it in a blue book, much of that can be self-taught or learned via distance learning. (v) makes no sense when state governments are slashing subsidies to public law schools. What’s the point of UVA or U of Michigan if their students are paying private school tuition rates? The California schools, ASU, and U of Minnesota are coming up behind them. Rather than cut the subsidies, governments might as well do everyone the favor of just closing unneeded programs. Does anyone really think the subsidies will return when the economy starts growing again?

Also, why should we believe that highly regarded law schools provide more value than lesser ones? Just because they charge more? More likely, graduates from top-flight programs could probably pass a bar exam by self-study and learn the trade via apprenticeship. Arguably, the best law schools sell prestige more than substance.

(2)  There is no free lunch.

Behold the Law School Tuition Bubble’s mantra:

The onus is solely on the law schools to demonstrate that they are adding value for the privileges society gives them. If they fail, then we take away their national accreditation, non-profit tax status, grants and subsidies, and access to any student loans that are not dischargeable in a Chapter 7 bankruptcy proceeding.

I’m perpetually nonplussed that the presumption is on reformers to generate solutions. Rather, university officials should be explaining to legislators why they should have access to student debt or why the state government should support public legal education programs, much less secondary campuses. I doubt it will be long before they will.

I don’t think law schools can change themselves so long as they have easy access to government student loans, irrespective of income-based repayment. Even deans of public law schools must toe their institutions’ lines lest they be asked to resign like Baltimore’s Phillip Closius. Neither public nor private law schools seem capable of organizing a boycott of U.S. News, which would help. Perhaps private independent law schools—the ones facing lawsuits from their students—could forgo student loans and offer their students human capital contracts, for example giving them free educations in exchange for ten percent of their income for ten years. If they did that, they’d fail. The jobs are simply not there to keep the financing model viable.

IV. Vertical Solutions

The scam blog movement emerged because law schools took the lead position for the profession by promising careers they couldn’t warrant existed yet charged too much to obtain. The causes of “law career decay” were not wholly in law schools’ power nor in the profession’s (e.g. increased income inequality over the last thirty to forty years). However, scam bloggers are acutely aware that they do not directly benefit from increased transparency, leaving the Masters’ discussions frivolous to them.

While I don’t think internal solutions are possible, here are a few things the profession should do as the problem worsens.

1). Bankruptcy protections must be restored to student debtors, and the Direct Loan Program must be terminated. The ABA’s annual summer resolutions avoid this, further alienating recent graduates. If law professors like Christine Hurt want to help, they can use their government connections to effect this change, and the public will support those who incorporate student debt into reform discussions.

2). The profession must admit that it stood by as the law schools overenrolled students and that many recent graduates will never meaningfully see the inside of the profession. Brian Tamanaha and LawProf have both written on this; they are on the right track.

3). The profession needs to update its licensing system to accommodate the reality that much of law practice is specialized along practice lines. Ultimately, this means the question of legal education will have to be rehashed from the ground up, making suggestions of reducing law school to two years arbitrary.

The truth is that law degrees have been unable to provide long-term career stability for many, many years. Now, the legal academy has twisted into one of the most ossified institutions in American society, a force of inequity and deflation in the economy, transforming prosperity into debt. Contrary to Rodrigues’s cautiousness illustrated above, no solution involves 150,000 law students spending 3-5 billion dollars per year to attend 199 law schools that employ 22,000 people by the end of the decade. That means law faculty who today passively share the views of The Conglomerate’s Masters will tomorrow lose their jobs. Some scam bloggers might delight in this. I will not.

The ray of hope? Separate from the prospective law students who forgo legal education and student debt activists, law students have the power to act. They can walk out and demand tuition reductions and accreditation reform. They have little to lose.

And they will be heard.

A Reading List for the “Conversation about Employment in the Law and Legal Occupations”

Expressing relief at not being named in Cooley’s lawsuit against four John Doe bloggers, BIDER’s Angel includes the e-mail by Cooley’s president, Don LeDuc, to his students assuaging their possible concerns that their law degrees may not be very marketable. He writes:

The entire conversation about employment in the law and legal occupations is almost entirely wrong [eyebrow rises]:

1. According to the Bureau of Labor Statistics (BLS), the unemployment rate among lawyers in 2010 was 1.5%, for those in all legal occupations it was 2.7%, and for all occupations it was 9.6%, which drops to 8.9% when those who have never been in the labor market or are returning from military service are excluded.

2. The 2.7% unemployment rate for legal occupations, including lawyers, was better than the rate for all other occupations in the BLS category of management, professional, and related occupations except for health care practitioners and technician occupations (2.5%). This data shows that becoming a lawyer is a better choice for those considering a career, not a worse choice.

(I omitted the third and fourth points about NALP and Cooley’s unemployment rates because they aren’t germane to this post.)

I spent more time than I wanted to verifying President LeDuc’s facts, not because I thought he was making them up but because I wanted to know where in the BLS they came from. I mostly succeeded; most of what LeDuc is discussing can be found here, but the only place I found the 1.5% lawyer unemployment number is at the Wall Street Journal. The non-seasonally adjusted legal sector unemployment rate jumped to 4.2% by June of 2011, so much of what President LeDuc says loses whatever force it had.

The lawyer unemployment rate, of course, is not the appropriate measure of a law degree’s value for at least two reasons: (1) Only the BLS’s Occupational Outlook Handbook includes self-employed attorneys in its data, so anything else about unemployed attorneys is probably excluding ousted partners and failed practices. (2) Measuring unemployed attorneys assumes the legal profession is a closed system, that is, everyone who finished law school before 2008 had gainful employment in the legal profession if they wanted it. Not so. There are far more JD-holders in the economy than are needed to staff the legal profession, and we are producing more than are necessary going forward.

By the way, this is what employment in the U.S. legal sector has looked like:

Notice how there was almost no job growth until dotcom bubble and how its current employment has both fallen to 2003ish levels and stagnated since late 2009.

As far as law schools are concerned, LeDuc’s “conversation about employment in the law and legal occupations” is only now starting to take graduate output seriously, a development I welcome. A good example of the conversation is between Professor Theodore Seto of Loyola, Los Angeles and Professor Brian Tamanaha of Washington University. TaxProf Blog served as the forum. I think the two viewpoints are important because they introduce readers to many themes I’ve written about before, making it a good reintroduction to the LSTB. Tamanaha sees the drop in applicants (what I called “Scam Blogger Victory (V-SB Day)” a while ago—an interregnum until some kind of formal reform is enacted), and Seto stands by the “bottleneck” and “versatile juris doctor” arguments to show there is no long-term employment problem. Here’s a summary:

  • Tamanaha, “The Coming Crunch for Law Schools,” showing that law schools are continuing to over-enroll relative to available lawyer jobs due to overexpansion of faculty. The declining number of applicants will force them to adjust or fail.
  • Seto, “Is The Sky Really Falling in Legal Education?” focusing on Tamanaha’s over-enrollment point by giving us the bottleneck argument (graduates per capita is the same as 20 years ago) and the versatile JD argument as well as a novel one that faculty spending isn’t growing relative to other law school expenses so faculty expansion is irrelevant.
  • Tamanaha, “The Crunch Is Coming for Law Schools,” pointing out that tuition has increased over inflation and over the perceived ROI of a law degree, which is leading to the applicant decline.
  • Seto, “The Law School Pricing Problem,” restating that graduates per capita is unchanged and that faculty expansion is not causing law schools’ problems, while conceding that he doesn’t know whether tuition has increased past the point of equilibrium.
  • Tamanaha (comment), reiterating that he’s writing about the number of applicants dropping and that graduates per capita isn’t relevant to projected job openings.

For extra credit you can read Stephen Bainbridge’s, “Consolidation in the Law School Industry,” pessimistically arguing that law schools and their alumni will not go quietly into the night, resisting closure and consolidation for many years to come.

The two professors’ discussion advanced my thinking in some ways.

(1)  Bottleneck-believing law school faculty appear to have contradictory views of legal ed. reformers and scambloggers. On the one hand these are disgruntled graduates, among others, who are fomenting a “bank run” on the law schools, depriving the legal profession and the public of the high caliber attorneys they need. On the other hand, they see the drop in applications as a response to the business cycle, making reformers a “natural” economic outcome.

(2)  When discussions of ROI lean on noneconomic benefits for persuasiveness, the utility of government loan programs becomes dubious. For example, Seto writes, “Many parents would prefer to be able to say ‘my child is a lawyer’ rather than ‘my child is a plumber’ even if plumbers, on average, make significantly more than lawyers.” Government loan programs don’t exist to make people’s parents happy; they exist to provide the economy with human capital. Once we start selling degrees as status symbols, the loans cease to be necessary.

(3)  Tamanaha asserts that structural forces require law schools to over-enroll to maintain their faculty while Seto says faculty aren’t taking as much out of the budget as before. This isn’t a conundrum. Law schools spend the increased tuition on something, and lower faculty/student ratios combined with salary increases above inflation should verify Tamanaha’s claim.

(4)  How do we reconcile Tamanaha’s prediction that law schools are structurally constrained against Seto’s students per capita argument? Here’s a new graph for you:

While the ABA law schools aren’t enrolling more people per capita than they did in the past, fall 2010 was the second highest year for students per law school. The record year, starting fall 2004, was merely 0.2% higher. 1991 comes in third. To give you a better perspective, the decade average students per law school was highest in the 2000s. This translates to a record decade of revenue for the existing law schools, especially since tuition is higher than ever before.

DECADE ENROLLMENT PER LAW SCHOOL
1970s 684.2
1980s 708.4
1990s 712.2
2000s 726.1

Thus, an applicant decline will hit the law schools relatively harder today than if it occurred in the past.

Circling back to the Thomas M. Cooley Law School, which began today’s discussion: Cooley built three branch campuses in Michigan (the ABA still counts it as one law school), the Lansing baseball stadium is named after it (the school, not the jurist!), and it has been a significant driver of the 2000s enrollment increase. From the Official Guide:

YEAR ENROLLMENT NUMERIC GROWTH GROWTH RELATIVE TO 2004
2004 2,868 N/A N/A
2005 3,252 384 13.4%
2006 3,606 354 25.7%
2007 3,664 58 27.8%
2008 3,678 14 28.2%
2009 3,727 49 30.0%
2010 3,931 204 37.1%

In 2010, Cooley’s enrollment accounted for roughly 2.7% of all ABA JD candidates (147,525), or roughly one law student in 38 (I should add that the majority of Cooley’s students are part-time, which distorts its 1L class sizes from its matriculation rate). That’s up from 2% in 2004. Seeing the unusual growth in 2010, Cooley’s 204 students account for 8.9% of the 2010 ABA enrollment increase (2,286), leading me to speculate that either this growth is wholly attributable to its Ann Arbor campus (opened in 2009 at Ave Maria’s old building), or it is “saving up” enrollments in preparation for law school applicant winter.

As Tamanaha points out in his first post, Cooley accepted more of its applicants than any other law school, 83.3% in 2010, up from 79.1% in 2009, and 61.3% in 2008. Contrary to what President LeDuc says, the entire conversation about employment in the law and legal occupations is almost entirely right, college students—law schools’ target demographic—distrust the sellers’ representations about their employment prospects and they’re voting with their feet. The crunch is coming, and for Cooley, it may have already begun.

No Bubble, Just ROCK!!! Vol. 5

I’m dashing off to Wisconsin later this week, so I’ll miss the first-of-its-kind panel discussion b’ween deans Ackerman (Wayne State) and Closius (Baltimore), professors Henderson (Indiana-Bloomington) and Tamanaha (Wash U), and Third Tier Reality’s Nando. Moderation provided by All Education Matter’s Cryn Johannsen. If you’re interested in legal education all five of the participants have contributed to the issue.

I’ve also found a ringer to cover for me with some guest posts while I’m out.

So, here’s some of Wisconsin’s contributions to American culture:

Boris the Sprinkler (they’re from Green Bay, not Green Day!)

Pale Young Gentlemen, a Madison band led by folks a grad school classmate grew up with (and who allegedly opened for the Clientele, which neither of us believed)

Finally, the Milwaukee-based Charles Walker Band, with a guitarist I grew up with (on the left)

The Law School Tuition Bubble: Tuition Increases Law School-by-Law School from 2005 to 2011, Part 1

As a member of a learned profession, a lawyer should cultivate knowledge of the law beyond its use for clients, employ that knowledge in reform of the law and work to strengthen legal education. – Wisconsin Rules of Professional Conduct “Preamble: A Lawyer’s Responsibilities,” ¶6, (WI SCR Chapter 20)

Introduction

Last May, I started the Law School Tuition Bubble for two personal reasons. One was to maintain my writing skills while I was unemployed (and ironically I found work around the time I started writing). The other reason was to contribute to the legal profession. At the very least, I could fulfill the Wisconsin Bar’s directive: reform the law and improve legal education. This blog fulfills that requirement.

My goal was to keep the candle alive on the supply side of the issue. Other reformers focus more on the demand side, gathering better graduate employment statistics and then transmitting them to prospective law students. Coverage on legal education’s ills has crested into the public’s knowledge over the last several months, but the tuition increases that animate the problem and their connection to the nondischargeability of student debt in bankruptcy, whether protected by income-based repayment, frequently appear as an afterthought.

I often run across quotes like these:

Tuition costs at law schools accredited by the American Bar Association have doubled in the last nine years. Total inflation during that same period was less than 25 percent. –Dean Michael Coyne, Massachusetts School of Law (non-ABA)

It’s always given as a statistic, even by the ABA. More sophisticated writers will distinguish between the causes of tuition increases in public versus private law schools. But it’s always a statistic. Somewhere someone has the spreadsheet with all the law schools’ tuition increases on it. I looked myself and it’s impossible to find it on the Internet.

So I built it myself.

Literature Review

As always, every discussion of the tuition bubble requires distinguishing a bubble from what I call a bottleneck. Law school staff (and sadly even progressive economists whom I agree with over just about everything else) look at the problem in terms of the economy. Every industry is doing badly, they will say. It’s just “cyclical” unemployment. Assumedly, as the economy improves, lost generation attorneys will be reabsorbed. In the meantime, unemployment remains high, the country is saddled with detritus of an $8 trillion housing bubble, and the federal government refuses to intervene on debtors’ behalves. Worse, structural problems plague the legal sector, too many attorneys chasing too few jobs, even if the economy reached a new normal.

You need not take my word for why I believe the bottleneck argument is false. Students, you are now enrolled in the Law School Tuition Bubble’s eponymous graduate-level seminar. Here is your syllabus culled from the Internet. I think that’s fairly comprehensive. If readers would like to add anything, let me know, and Professor LSTB will assign it.

  • “Competition for job openings should be keen because of the large number of students graduating from law school each year,” and, “Job Outlook: About as fast as the average employment growth is projected [for lawyers], but job competition is expected to be keen.” Bureau of Labor Statistics, “Lawyers,” and, “Judges,” Occupational Outlook Handbook, 2010-2011 Edition.
  • The ratio of attorneys per capita has risen from 1:695 in 1951 to 1:264 in 2000. Jason Dolin, “Opportunity Lost,” California Western Law Review, Vol. 44, 219-255 (2007).
  • The legal field has not grown along with the rest of the economy. Amir Efrati, “Hard Case: Job Market Wanes for U.S. Lawyers,” The Wall Street Journal, September 24, 2007. [I believe this article is slightly crisper than David Segal’s recent and noteworthy New York Times piece.]
  • Over the last twenty years, the distribution of graduate starting salaries gas shifted from a common mode of $30,000 per year to a bimodal distribution with a minority of graduates (about 25%) earning more than $160,000 and 34% of graduates earning between $40,000 and $65,000. NALP only reported 19,513 salaries in this stark 2009 graph. No one knows what the remaining 25,000 law graduates are earning, if anything.
  • ABA records indicate that around 1.4 million juris doctors have been conferred in the period between 1968 and 2008. By contrast, the BLS reports 759,200 people employed as lawyers and 51,200 people employed as judges (total 810,400). No one knows how many people entered the field via non-ABA accredited law schools, especially in California, nor does anyone know if the remainder of those with ABA law degrees are gainfully employed or even if their law degrees helped them get their current jobs. No one knows how the employment situation is since 2008.
  • The ABA also collected data from state bar authorities reporting 1,180,386 attorneys licensed and active within their jurisdictions as of 2009. No one has explained the gap between the ABA’s numbers and the BLS’s.
  • The ABA’s MacCrate Report, published in July 1992, finds that law schools mostly do not adequately prepare law students for practice. Things have not changed since then.
  • Using comparable back-of-the-envelope calculations, Fluster Cucked independently arrived at similar conclusions.
  • Shilling Me Softly diligently reports the growth in Legal Process Outsourcing.
  • Practioners: Jerry Kowalski informs readers that law jobs are down to 1991 levels. The Legal Dollar provides similar analysis.
  • Growing numbers of law professors, likely too many to track, publically agree on these issues to varying degrees: Professor Bainbridge, Richard Sander, Steve Harper, Maimon Schwarzschild, Bill Henderson, Herwig Schlunk, Christine Hurt (whose article helped inspire this blog), and my favorite on the subject Brian Tamanaha +1.
  • Dean Richard Matasar of New York Law School has long predicted the end of easy federal money to law schools. Richard Matasar, “The Rise and Fall of American Legal Education,” New York Law School Law Review, Vol. 49, No. 2, 465-504 (2004-2005); “Does the Current Economic Model of Legal Education Work for Law Schools, Law Firms (or Anyone Else)?New York State Bar Association Journal, October 2010, 20-26.
  • On the good news side, the Law School Admissions Council (LSAC) reports fewer LSAT takers in 2010 than in the previous year. Assuming legal education is highly countercyclical, this may indicate that the reform movement is successfully discouraging people from going to law school when it has a low return on investment.

Your three-page critical reviews are due next week.

So what?

What’s the benefit of knowing law schools’ tuition increases severally if we know them jointly? Shouldn’t hypotheses accompany research? Yes. The data I have collected tell us nothing we don’t already know. Although, all we can find easily is the post-aggregated statistics. Partly, this is an exercise in ensuring this blog lives up to its name. Those of you who want a tuition bubble, here is your tuition bubble.

More importantly, I think the statistics disconnect people from the reality of the crisis. Older practitioners can compare what law schools are charging today to what they paid. Younger graduates can see how much tuition has increased since they’ve left (even my recent successors’ fates sadden me). Students can envy what their recent predecessors paid, and hopefully prospective law students can grasp the bigger picture, especially since they don’t really know what they’ll be paying until they’re asked to pay it.

Data Collection Methodology:

I’ll explain how I gathered the tuition data autobiographically to explain the scope of the project.

I started collecting the data from U.S. News’s website, which gave the 2009-2010 school year’s tuition (with a few exceptions). Then came the hard part: finding the pre-2010 tuition data. At first, I went to law schools’ websites and went through the Wayback Machine, but this proved frustrating and took too much time. Then I made a breakthrough. The LSAC maintains data reported by law schools to the ABA going back to the 2004-2005 school year. I downloaded all 970 pdf files, 80.2 megabytes in all, and will provide them to those who don’t want to go through the LSAC themselves. Finally, to gather data for the 2010-2011 school year, I visited every law school’s website, seeking its tuition data.

Most of what I learned from the data-collection experience occurred while sifting through the websites. I can’t imagine too many other people having done this, save Nando from Third Tier Reality. It usually took only two clicks to find a law school’s current tuition, unless it was available via a pulldown menu. However, applicants trying to assess next year’s tuition are out of luck (except University of Hawaii, which estimates its 2011-2012 tuition). Law schools’ sites are well-designed. Eerily like a for-profit university, finding out how to apply for or obtain financial aid is far easier than finding the law school’s actual cost. That prospective law students can’t finance their own way through law school is usually taken as a given, not as a problem. How current students are given notice of tuition increases, I know not.

Notes on the Data:

The critical rule in empirical research is accuracy and precision. Accuracy refers to the degree to which the observations accord with the actual measurements, and precision refers to the reproducibility of the observations. These data are precise to the extent that one can look over the three sources and compare them, and I’m pretty damn good at data entry so I doubt there’re any mistakes. As to accuracy, because the data come from three distinct sources, they may vary. I’ll go into them.

  • The LSAC data come directly from the ABA, and for the first five years, they should be consistent unless stated otherwise. For instance, sometimes, I conclude that a law school’s semester tuition is reported instead of its annual tuition.
  • U.S. News data are reported by the law schools to the magazine. I doubt they differ from what the ABA reported in the LSAC data. When the LSAC publishes its law school reports for 2011, I’ll reenter those into the 2009-2010 school year.
  • Law School websites are far different from the other two data sets. Often readers may find that tuition dropped in the 2010-2011 school year over the 2009-2010 school year. This is not evidence the bubble is deflating! Rather, I took the bald tuition statistic the law school published and excluded fees whenever possible. Law schools are very inconsistent in how they measure fees. Some include them in tuition, others separate them, and still others itemize them. Law schools are very much like airlines, which pay a tax based on fares, so they add numerous, sometimes vague, fees (e.g. a “9/11 Security Fee”) to retain income. By separating tuition from fees, law schools appear cheaper than they actually are. As a result, when the 2012 edition of U.S. News is published this year, I will update these data as well.

I’ve organized the data by state in alphabetical order, noting whether the school is public or private. Along with the tuition, I also calculated the percent increase over the consumer price index according to the Bureau of Labor Statistics. This is not the place to discuss whether you think headline inflation is more relevant, or if you think CPI doesn’t mean anything anymore because the government switched to hedonic measurements in the last several years. More inflation is actually a good thing for those with massive non-dischargeable debts.

For private schools, a little treat for you. Using the regression coefficient for each law school’s tuition increases, I projected what the law schools’ tuitions will be five and ten years from now. Unsurprisingly, it’ll get absurdly expensive in the future. Note: I’m assuming tuition is increasing linearly rather than exponentially. If it’s growing exponentially, which may in fact be the case, then the problem is nightmarishly worse. I may recalculate the predictions using exponential regression after the next LSAC/U.S. News publishing cycle gives me an opportunity to update the data, which should be before the summer. So remember, what you see is a conservative estimate.

In Part 2, I share the data.

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