Forget Indiana Tech’s Low Enrollment…

…And look at La Verne’s. (These data are for its full-time program, by the way.)

La Verne Application Data

I’m surprised that the school stayed open after getting only 209 applications last year.La Verne Enrollment Data

The ABA never should have restored La Verne’s provisional accreditation in 2012. Rescinding it in 2011 caused a nosedive in applications and a surge in out-transfers. It never recovered, and there’re no reasons to believe 2013 will be better.

If La Verne stays open, there will be a lot of empty seats in classrooms, but if it closes, the good news for the students is that they can claim an administrative discharge for their law school loans from the Department of Education—unless they transfer to another law school.

The LSTB’s Unauthorized Guide to State Bar Reports on the Legal Profession’s Problems

…Because really, who would authorize a guide on state bar reports?

As of last week, we now have at least four state bar association task forces/special committees/working groups/whatever offering their opinions on what’s wrong with legal education, law school debt, lawyer licensing, and the legal profession. Here is a list of the reports and links to my posts on them:

The two biggest themes, as far as I’m concerned, are what the task forces/committees/working groups/etc. thought about (1) student loan debt, specifically whether it’s passed onto clients and whether it should be dischargeable in bankruptcy, and (2) revising legal education and law licensing requirements to include more skills training over theory-heavy classes and whether that will result in better employment opportunities for new lawyers.

The NYSBA Task Force’s report didn’t say that student loan debt is passed onto clients, and it even chided lawyers who claim they want practice-ready law graduates but hire from elite law schools anyway. Most of the Task Force’s recommendations were tentative, but they did include changing licensing requirements to include assessing professional skills, adding a sequential licensing system, and adopting the Uniform Bar Exam. Instead, they got mandatory pro bono requirements. The quality in reasoning in subsequent state bars’ reports goes downhill from here.

Massachusetts’ Task Force determined—okay that’s being generous, it really assumed the conclusion—that poor training causes new lawyer underemployment because medical and dental schools require a lot of skills training and their graduates aren’t underemployed. Its report neglected to mention that those professions thrive with practitioner shortages or that aging boomers will need regular medical checkups. The Task Force said very little on student loan debt, and it advised transforming the third year of law school into a residency-type experience ala medical and dental school.

The Illinois Special Committee claimed that salaries for new lawyers are too low to support their student debts, public interest employers have difficulty paying new lawyers enough to cover their debts and suffer high turnover, and underpaid lawyers don’t serve the poor or “middle class” in favor of higher-paying lawyer positions or leaving law practice altogether. The Special Committee also believed that lack of practice-readiness also contributed to underemployment. Its recommendations on reforming federal student lending, however, were fairly reasonable.

Finally, California’s Task Force subtly concurred with the Illinois Special Committee’s reasoning on student loan debt, but it leaned more heavily on the practice-readiness problem by claiming that firms unfairly pass their new lawyers’ training costs onto clients. Better training would make new lawyers more productive (raising their incomes to repay their student loans) and simultaneously reduce costs to clients (I’ll discuss this nonsense later). The Task Force recommended requiring more skills courses and pro bono work of law students and new lawyers. This report is easily the most poorly thought-out of the four.

Law School Debt

Contrary to what I may have implied last week, none of the state bars’ reports explicitly say that law school debt is directly passed onto clients. However, the Illinois Special Committee report effectively makes that argument with its gathered testimony as listed in its executive summary (1-2):

  • Small Law Firms Face Challenges Hiring and Retaining Competent Attorneys

“Many small law firms are unable to pay the salaries new attorneys need to manage their debt. As a result, turnover at such firms is high, forcing those firms to spend additional time and resources training new attorneys (compounded by the problem of inadequate readiness for practice upon graduation).”

  • Fewer Lawyers are Able to Work in Public Interest Positions

“Attorneys with excessive debt are less able to take legal aid or government jobs which, in Illinois, have starting salaries between $40,000 and $50,000 per year. Public interest offices that raise their salaries to accommodate debt and attract talented lawyers are unable to hire as many attorneys, reducing the services these offices can provide.”

  • New Attorneys Have Too Much Debt to Provide Affordable Legal Services to Poor and Middle Class Families and Individuals

“Salaries among law firms primarily serving the legal needs of middle class individuals and families are also inadequate to support the debt loads of new attorneys. … Because debt makes it difficult for attorneys to survive at that salary level, young attorneys move quickly to higher paying legal sectors if possible, and, if not, many leave the profession.”

  • As Fewer Attorneys Find Sustainable Jobs in the Private Sector, More Attorneys Enter Solo Practice

[Note: This contradicts the first point on small practices being unable to hire lawyers. It's a lot cheaper to work for a small firm than start a small practice.]

  • Attorneys Report that Debt Burdened Lawyers are Less Likely to Engage in Pro Bono Work
  • Debt Drives Young Attorneys Away from Rural Areas

“Already, rural areas of Illinois have significantly fewer lawyers per capita than more populated areas, because it is more difficult for lawyers to service significant debt in rural areas.”

[Oh God, don't abuse attorneys per capita again…]

  • Heavy Debt Burdens Decrease the Diversity of the Legal Profession

[Because there's nothing minorities need more than low-paying legal work.]

  • Threats to Professionalism

The quotations dramatize the Special Committee’s arguments effectively, but it applied good facts (I’m assuming) to bad theory. Imagine you’re a public interest firm and you have to raise your salary offers to $50,000 to attract lawyers to help them pay off their debts. This reduces the funds available to hire more attorneys, reducing the total quantity of legal services provided. Thus, it’s an indirect lawyers-pass-their-student-loans-onto-clients argument. It looks like this:

Student Loan Debt's Impact on Legal Services (Silly)

(The crayoned stars are included for illustrative clarity and because they’re cute.)

This is your garden variety price floor, the same kind that haunts minimum wage arguments. The red area that gives state bar associations frowney faces is the legal transactions, and hence, lawyer employment, that would be possible without student loan debt but are lost because of it. Remove the debt, and suddenly lawyers can happily work in low-paying jobs.

But there are at least three problems with this argument as characterized in the public interest example: (1) On page 3, the Special Committee stated that “Funding for public interest jobs is unstable,” indicating that such jobs are neither as plentiful nor as secure as the testimonials claim; (2) there are plenty of underemployed law school graduates who would love to take those kinds of jobs at $40,000 to $50,000 per year, like the solo practitioner on page 22 who made only $15,000, and we’re not told why they’re not; and (3) my criticisms of IBR notwithstanding, the Special Committee basically said that IBR doesn’t work because lawyers are scared to use it, even though for public interest lawyers the loans would be canceled after 10 years without any tax penalty. Indeed, trivializing IBR is really the only way the Special Committee could claim student debt reduces quantity of legal services.

Actually, I put up all those quotes just to show that they’re not so much evidence of student debt’s impact on the profession but are really just evidence of low demand for lawyers and low wages’ impact on the profession. In other words, even without student loan debt, these problems would still exist. No one complains that McDonald’s has low pay and high turnover—if anything, that’s built into its business model—but when lawyers dare to take higher-paying jobs than serving the poor and “middle class,” or worse, abandon their law careers, then it’s an insult to the profession. How dare they rationally choose higher-paying work? Don’t they realize that they’re lawyers?

Yes, they do realize it, but they also realize that working in law doesn’t pay very well, and they’re better off doing something else that pays more. I might be overselling this since I’m not the one gathering testimony (the new lawyers I’ve talked to have all said they’re on IBR—without reservations), but it’s unlikely that student debt is the substantial factor in lawyer underemployment here. I certainly concede that it doesn’t help.

Skills Training

I don’t want to spend too much time rehashing the argument from last week, but training costs are baked into all prices for final goods and services (i.e. not second-hand stuff). Normally, if you make the workers pay for the training—even if it’s good training—in theory they won’t pay for it if it won’t raise their incomes. The fact that lawyers’ incomes aren’t high is due to lack of demand for lawyers and the fact that some occupations might be more productive than law, not want of skills training. The theory the state bars (save New York) rely on here is identical to the one they use for student loan debt, except they’re substituting training costs with debt.

Training Costs' Impact on Legal Services (Silly)

For example, returning to the California bar’s task force report:

We emphasize, above all, that we expect future improvement in practice-readiness will prepare new lawyers for the changing legal job market far better than they are today, which will help them become productive lawyers with the capacity to begin repaying educational debt at the earliest opportunity, and ultimately will lower costs to clients, who, in today’s legal market, are too often forced to bear the costs of training young lawyers, either in the form of increased fees or ineffective lawyering. (17)

Let’s think this through: If lawyers are trained well, they will be more productive, so they will serve more clients effectively than poorly trained lawyers. So far so good. It won’t necessarily reduce costs to clients, both because they’re already “forced to bear the costs of training young lawyers” and because they’d be charging market-rate prices. However, if lawyers are selling their services at the market rate, then skills training won’t raise their wages much to help them to pay off their loans, and it certainly won’t result in all law school graduates being employed as lawyers. J.D. overproduction and all that.

I add again that better training is good, but it won’t create jobs as the California, Illinois, and Massachusetts bars believe.

Poverty

I think I’ve discredited the theories the state bars are working under. Here’s mine: Demand for legal services is low during a depression and is also income elastic, meaning rich people lavish money on lawyers for the same reason that they lavish money on shiny rocks and pieces of canvas that some European splattered paint all over hundreds of years ago. Similarly, poor people spend less on lawyers because they need shelter, food, clothing, medical care, etc. more urgently. Yes, America is in fact a very poor country.

Here’s what I mean:

Income Elasticity of Demand for Legal Services (Silly)

(Again, illustrations included for clarity.)

The red portion that gives the LSTB a frowney face is due to poor people being poor. That’s bad, and it also means they won’t hire lawyers. Note also that the slope of the line is greater than 1, which is to show that I’m theorizing that legal services are a “superior good,” which means that when income increases the quantity purchased increase more quickly. If we want poor people to afford legal services, then the state must pay for it.

Thus, in the real world, when people lose their jobs or their incomes fall due to our leave-no-rentier-behind policies, they do not hire lawyers. State bars should stop internalizing external causes of lawyer unemployment, and should admit that there are too many law schools. And if you think I’m a pessimist, then what does that make the authors of these bar reports that treat poverty as a permanent, unsolvable blight on humanity?

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 staff 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.

Chronicle Publishes Law School Dean’s Argument From Authority

Via the ABA Journal, Katherine Mangan, “America’s Longest-Serving Law Dean Defends the Value of a Law Degree,” Chronicle of Higher Education.

The news is Rudy Hasl, the dean of Thomas Jefferson School of Law, whose former career services staff claimed under oath that she was told to juke graduate employment data, is stepping down after 32 years of law school deanery. To honor him, the Chronicle captures his parting thoughts because he’s a law school dean, which means anything he says should be taken with equal validity to what anyone who researches the issues says.

This has been a tumultuous period for law schools. It’s not that we haven’t gone through similar periods. It’s just that the trough is a little bit deeper and the issues are a little more difficult than they were in previous times when we reached those bottoming-out periods.

So the problems are quantitative, not qualitative. The fact that the applicant nosedive is occurring during a period of McJobbery for college graduates instead of high employment doesn’t faze the dean. However, we have to credit his gall for looking at employment data and saying, “BAH!”

I remind students that what law schools are providing is a set of skills that are valued in our society and that will ultimately lead to a meaningful employment opportunity. To try to measure that by what job you have on graduation, or even nine months later, doesn’t make sense.

In 2010, only 46.2 percent of TJSL’s graduates were employed long term; 19 percent were unknown. In 2011 that dropped to 37 percent and 3.4 percent, respectively, but don’t worry 31.4 percent of them were unemployed and seeking. While we should credit TJSL for doing a better job of finding its unemployed graduates for the purposes of the employment survey, it doesn’t look as though society values their skills much.

Whether legal education “leads to” a meaningful employment opportunity is a claim that’s difficult to substantiate. Those making it must demonstrate that (a) the graduate’s job requires a law degree, or (b) the substantive knowledge gained in law school is a substantial factor in the graduate’s employment. Contributions that supplemental knowledge like computer programming or chemical engineering adds to a job must be discounted as well. This does not bode well for law degree holders, which is not to say they’ll be unemployed forever (the economy has to recover someday, right?), just that many of them will find their earnings no higher than college graduates’. They’ll be IBR-ing away their law school loans while think tanks tell them that people in their positions should pay more because they’ve gotten a free lunch.

The good news for TJSL, though, is that under Dean Hasl’s stewardship the law school is solving the profession’s “diversity problem.”

The legal profession has been slow to respond to the increasing demand for diversity. Students of color made up 10 to 12 percent of the student body when I arrived here, at Thomas Jefferson School of Law, in 2005, and they’re a little over a third of our student body today. For me it’s an important social issue that we produce individuals who can work within their communities to provide service and develop leadership … I’m optimistic that we’re producing graduates who will be quite attractive to firms and have a great future ahead of them.

Tell that to all of TJSL’s unemployed graduates. They’re unlikely to ever work in firms, and in 2011 only 11 out of 236 graduates were employed full-time/long-term at law firms larger than 10 lawyers. A mere two of them were at firms larger than 50. Law school deans’ optimism is not valid grounds for future predictions, nor does it put food on graduates’ tables.

The we-need-more-minorities plea never fails to displease me. The idea that minorities are better off and can better serve their communities with mountains of law school debt is toxic garbage. Those interested in making the profession more accessible can do so by … making the profession more accessible: eliminating the three-year graduate education requirement, focusing licensing along practice lines rather than generalist lines. These policies would make it a lot easier for minorities, and everyone else, to become lawyers, and the only people who lose out are the handsomely compensated deans.

Speaking of which, Rudy Hasl did quite well for himself a-deaning. According to Guidestar, in 2011 TJSL paid him $366,514 in base compensation plus $51,332 in other compensation. If you think that’s too low for a law school dean, fret not, for TJSL also extended him a $977,179 loan for “housing assistance”—something I’ve never seen in my admittedly scant experience with Guidestar reports. Such a large loan for “housing assistance” suggests that he’s not living in the 21st century’s answer to Pruitt-Igoe (a fucking depressing documentary I wholeheartedly recommend).

Maybe instead of allowing Dean Hasl to dictate an editorial with unsubstantiated claims to readers, the Chronicle should ask him how he intends to repay such a generous loan while in retirement.

New Am Law Daily Article: ‘A Tale of Two (California) Law Schools’

‘A Tale of Two (California) Law Schools’

I’ve written about the University of La Verne and UC-Irvine in the past; this article synthesizes them.

If you live in New York and have any sense in you, you’ll see Bob Mould at Williamsburg Park tonight.

Also, I’ve revised up to Michigan in the tuition increases page. Halfway there.

In the Dog Days of Global Warming Summer, the ABA Speaks

ABA President Names Task Force on the Future of Legal Education,” ABA Now

Debra Cassens Weiss, “No Fudging: Revising Standards Bars Law Schools from Publishing Misleading Consumer Info,” ABA Journal

On reading government white papers, one of my graduate school professors said, “It’s not what they’re thinking, it’s what they want you to think they’re thinking.” This characterizes what happens in August when the ABA House of Delegates holds its annual meeting, but the ABA announced two things: (1) concurring with the Section of Legal Education on its revised transparency standards, with sanctions, and (2) a new task force on the future of legal education.

The new standards are what they are. I’ve looked through the data and am surprised that so few people didn’t return the surveys at all (<5%, but the real story is the Puerto Rican law schools that either haven’t reported to the ABA or put little effort in doing so). As I showed last week, there are some statistical tools one can use to determine if people who work at law firms tend to actually be licensed attorneys and not paralegals or janitors. The latter would probably pay well, but now I’m just being cynical. And “Business & Industry” is as worthless a category as it ever was.

As for the task force, its got its work cut out for it. We’ve seen the Massachusetts State Bar Association bend over backwards to avoid suggesting that any of the state’s law schools close, consolidate, or reduce their enrollment to meet the state’s needs. In the end, though, there’s still an unwillingness to cut losses, by which I mean talking straight to underemployed recent (and not-so-recent) graduates and conceding that their law degrees are pretty much worthless. They’re unlikely to work in professional white-collar jobs absent serious policy reform, and they can put their loans on Income-Based Repayment so they can just go away.

If I recall, I don’t think I believed the ABA could put together any transparency requirements, so that’s good for them. However, I doubt the task force will recommend state bar authorities simply require undergraduate legal education for licensing rather than the current graduate-level one, reforming or abolishing the Direct Loan Program, revising the bankruptcy code, and some kind of contrition regarding the consequences of its needlessly lax accreditation standards.

For example, over the weekend, the Oregonian jumped onto the law school-trashing bandwagon and it even got a quote from New England School of Law dean John O’Brien, whose mentality reflects the ABA’s:

“It’s not the ABA’s job to police the number of law schools,” O’Brien said. “Law schools are like other businesses. Ultimately, that’s what they are. If there are people who feel there is a void that needs to be filled around the country, the process is to apply for ABA approval. If you meet those standards, you get approved.”

Even though the ABA could tighten bar passage requirements to ensure that law schools weren’t frivolously enrolling students on government loans, they don’t have to because they’re businesses in the “unregulated” market. For instance, why the ABA re-provisionally accredited the University of La Verne when barely half of its graduates passed the California bar last year (less than half if you exclude graduates who took other states’ bars instead) is colossal regulatory failure. The aforementioned Puerto Rico law schools appear to be failure factories, not that they send data to the ABA.

Point is, if the task force is serious, it’s going to have to start by justifying the La Vernes of the system and why it keeps accrediting them. If they’re “businesses” then why should they profit on debt?

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.

‘Clever Plans to Reform Legal Education Won’t Make Legal Services Any Cheaper’ up on Am Law Daily

It’s a revised version of my post from a couple weeks ago, “WSJ Op-Ed Reaches Acceptable Conclusion on False Premises.” Link is here:

Clever Plans to Reform Legal Education Won’t Make Legal Services Any Cheaper

Hopefully this will inspire better proposals from reformers.

FixUC Stumbles onto Human Capital Contracts

Nanette Asimov, “Plan Would Eliminate Tuition to UC’s Benefit,” in SFGate.com

Leanne Maxwell, “UC Considers Students’ ‘Delayed Tuition’ Proposal,” in sfist.com

News outlets are reporting on a proposal (PDF) produced by a student organization, FixUC, which operates out of University of California-Riverside. More importantly, the university is actually considering it. The proposal is essentially the kind of human capital contracts plan endorsed by economists from Richard Vedder to Robert Reich: instead of paying tuition up front, students pay after they graduate (or drop out). In this incarnation, graduates will pay 5 percent of their incomes over 20 years; FixUC argues that graduates earning $50,000 on average over 20 years will pay the current four-year tuition, $50,000, back to the university. Tuition, though, isn’t total cost of attendance, including living expenses, textbooks, etc.

As readers know, I’m a fan of these kinds of proposals. With good enforcement, they provide clear data on the value of specific degrees, encourage efficient education, and prevent the drain on college graduates’ incomes to interest payments on student debt. I’ve written in more detail on the potential benefits of human capital contracts before.

As of now, the proposal only applies to undergraduates, so UC will still be able to loot its law students’ future incomes at $40,000 – $50,000 per year to pay for other programs, excessive administrators, and pepper-spraying security. If it were applied to legal education, UC’s programs would be able to offer cheap national-level education, though it’s doubtful it’d still be worthwhile.

I have two concerns to write about:

(1)  From a practical standpoint, “graduates’ income” here isn’t defined. Is it gross income? Net income? Net income above the poverty line, which Income-Based Repayment uses? Much rests on the assumption that the premium of a college degree over a high school degree is sufficient to make the endeavor worthwhile for students, including forgoing four years of full-time income, which FixUC doesn’t discuss. If the premium of opportunity costs plus five percent more income plus one dollar doesn’t materialize, then it’s still a drain on the economy going to the university.

(2)  One point in the proposal reads:

“Campuses will be encouraged to refrain from giving preferential treatment to departments and majors that lead students to more traditionally lucrative careers.”

I fail to see the problem with investing in lucrative education. As much as I enjoyed reading Theaetetus, that doesn’t mean I think electrical engineers should subsidize it. Doing so promotes education as consumption rather than investment. People should take a Plato seminar because it’ll enrich them, not because someone else is paying for it.

As a caveat, I’ve written elsewhere that I’m acclimated to a worldview of downward mobility for young adults, but FixUC’s proposal boldly promises to be revenue positive for the university. Thing is, I’m not sure that on net UC’s college degrees are really worth $50,000 given the corruption EduBubble routinely accuses of UC. Human capital contracts are generally better than student loans, but while universities have an incentive to maximize graduates’ employment, they still get paid if graduates ultimately lose money in the long run. “Better than student loans” isn’t the same thing as “revenue positive for students” and society.

WSJ Op-Ed Reaches Acceptable Conclusion on False Premises

Distantly following the op-ed published by Clifford Winston and Robert W. Crandall that called for deregulating legal services entirely, the Wall Street Journal has now published an op-ed by a law professor and a lawyer, John O. McGinnis (Northwestern) and Russell D. Mangas (Kirkland & Ellis, Chicago), advocating allowing undergrads to sit for bar exams. This is a much better argument than Winston’s and Crandall’s, and certainly better than law school gimmicks of offering refunds or changing the law school tuition structure, but it’s still due a few criticisms. A more complete copy of the editorial, “First Thing We Do, Let’s Kill All the Law Schools,” can be at TaxProf Blog.

McGinnis and Mangas write:

“The high cost of graduate legal education limits the supply of lawyers and leads to higher legal fees … States should permit undergraduate colleges to offer majors in law that will entitle graduates to take the bar exam. If they want to add a practical requirement, states could also ask graduates to serve one-year apprenticeships before becoming eligible for admission to the bar … This option would reduce the law school tuition to zero. And the three years of students going without income would be replaced by a year of paid apprenticeship and two years earning a living as a lawyer.”

What’s this? A proposal I get to agree with? Ya~y! Instead of “pushing the string” of having people pay for graduate education and then letting the market decide if they get to use it, McGinnis and Mangas let the market make the first move (whether law as a college degree is still worth pursuing is obviously debatable). Good job. The problem, though, is that in a few important respects their plan has already been implemented in California, and the alleged benefit of cheaper lawyers hasn’t been documented.

First, the op-ed’s tagline, that the high cost of legal education is somehow limiting the number of attorneys is utterly false. There is no direct financial barrier to attending an ABA law school. Law students can take out student loans to pay the exorbitant tuition. That’s the problem. Indeed, the ABA collects data on the number of lawyers in the U.S., and it actually released this in the form of a spreadsheet on its Web site recently. By comparing its national lawyer count to the population, we find that there are more lawyers per capita than ever before, so high tuition has not created a shortage of able-bodied lawyers.

I have a lot more to say on how accurate this is, but that's for a different post.

Second, McGinnis and Mangas adopt the persistent, widespread belief that lawyers are passing their student loan payments onto their clients in the form of higher fees. This belief is untested and there’s good reason to believe that the opposite is in fact true, that the “incidence” of student debt falls on student debtors and not clients. To make things more confusing, towards the end McGinnis and Mangas abruptly change course:

“[T]he great benefit of the undergraduate option would be lowering the cost of legal education, thus increasing the supply of lawyers willing to charge lower fees.” [Emphasis LSTB]

The emphasized qualifier materially changes the argument, and the authors should have been more specific about what they were talking about from the beginning. Now it appears that McGinnis and Mangas believe that there are enough attorneys, but student debt is stymieing them from charging less. One wonders why they aren’t demanding the end of the Direct Loan program, restoring bankruptcy protections to student debtors, expanding income-based repayment programs for lawyers, or supporting a mass student debt write-down, as those would increase the “effective” number of lawyers far more quickly than their proposal would.

The issue, though, isn’t one of willingness to charge less but of incentive. If law graduates can make more money doing non-legal work, they typically will, irrespective of student loans. This is how labor markets work. It should not surprise anyone that lawyers would rather make more money than less, any more than plumbers, electricians, etc. The only question is whether those high-paying jobs are plentiful enough for people to be able to choose them. Ultimately, if lawyers can’t make a living serving the poor and have higher paying options, then we need to subsidize legal services, not legal education.

Returning to the problem, in principle, the incidence of student debt is much like that of a tax, which rests on the relative elasticities of demand and supply for the product. For legal services, this boils down to an empirical question: do clients have alternatives to lawyers with excessive student debt? Answer: Certainly. For the incidence of lawyers’ student debt to fall on clients, (nearly) all lawyers would have to be making the same payments on their student loans. Thus, the more unevenly distributed student debt is among lawyers, the more lawyers will have to eat their student loan payments to compete with those who have less debt. Here’s what we know about law school debt’s distribution.

(1)  About 15 percent of all ABA grads finish with zero law school debt.

(2)  Some law schools are cheaper than others, especially public law schools and those in Puerto Rico, so those who graduate with debt have varying amounts. (Notice that Professor McGinnis voices no concern that Northwestern’s graduates will be unemployable when Mr. Mangas’ firm decides to switch to hiring NIU or SIU grads to cut costs.)

(3)  Older lawyers often have less student debt than more recent grads, so their loan payments are smaller.

(4)  Some states allow graduates of cheaper, non-ABA schools to sit for their bar exams, or they allow people to forgo the legal education requirement altogether.

(4), here, is critical. California has scores of dirt-cheap state accredited, unaccredited, correspondence, and online law schools. This system is not new, either, yet no one has compared the cost structures of California’s legal sector to “ABA-only” states’. Surely by now there are more than enough non-ABA attorneys licensed in California to have made a qualitative difference in the cost of legal services as McGinnis and Mangas argue, yet California’s ABA law schools (including public ones) aren’t competing with the non-ABA ones in terms of price. They charge about $40,000 per year in tuition, and they increase it each year over inflation.

Why aren’t California’s more price sensitive firms hiring grads directly from the People’s College of Law in Los Angeles rather than from UCLA? Better yet, given non-ABA graduates’ higher bar failure rates, why aren’t firms sending associates to stand around outside LSAT test centers, handing people their business cards and saying, “Send us your LSAT score and your undergraduate transcript, and if we like you, we’ll give you a clerk position. If you like the work, we’ll pay half of your tuition for a correspondence degree, you’ll take the bar, and we’ll give you an associate position afterwards. The benefits: You get paid and trained now, and save money and time. We get to charge our clients less; and the only loser is the overpriced, middleman ABA law school.”

Better yet, they could simply hire people straight out of college (California doesn’t even require that much) and have them qualify for the bar by “reading the law,” which California allows. Firms could do this, but instead, they hire Stanford’s top5%mootcourtlawreviewrequired. Either California’s lawyers are all monumentally bad businesspeople, or student debt isn’t their problem.

On the contrary, debt is a fantastic, time-honored motivator, probably only a notch below holding a person’s loved ones hostage. The threat of financial ruin greatly benefits employers, providing them with willing debt peons who will eagerly overwork themselves to escape their condition. This is why student debt as a political issue is brought up by folks who identify with Occupy Wall Street and not Citizens United.

I don’t mean to close so critically; McGinnis’ and Mangas’ plan would save would-be lawyers’ time and money while probably providing better practical training for lawyers, which are good reasons for states to adopt it, but that’s all it does. The fact that the McGinnises and Mangases (to say nothing of the Winstons and Crandalls, etc.) of the world aren’t saying, “Let’s adopt the California model because it’s proven to make legal services cheaper,” leads me to conclude that they’re arguing from false premises. It will take a lot of courage for the profession to admit that noblesse oblige and low-cost education won’t entice lawyers to serve the destitute and student debt just reduces the standards of living of law school graduates, who have to work harder and pay more overhead to banks or ED to stay afloat, especially if they don’t work as lawyers.

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