Japan’s Law Schools Should Take Lessons From Their American Counterparts

Oh Yomiuri Shimbun, why must you blight the Internet with such nonsense in your editorials on legal education?

[T]he number of lawyers employed by local governments and business corporations has not increased as much as anticipated. A large number of people are unable to find jobs after passing the bar exam.

Some law schools have been increasingly inclined to withdraw from their field of education in recent months. The move has accelerated since last autumn, when the education ministry said it would curtail grants-in-aid to law schools whose graduates perform poorly on the bar exam.

There was a time when law schools bloomed, with their number peaking at 74. But the number of law schools accepting applications for admission next spring is expected to decrease to 54. It is only natural for law schools to quit if their students do badly on the exam.

Clearly Japan’s law schools’ mistakes aren’t emulating the U.S. system but not emulating it enough. Employing the strategies used by U.S. law schools could really make a difference at these institutions because over here, we’ve internalized the following lessons. When graduates don’t pass the bar or don’t find jobs, do the following:

(1) Capture the accreditation system and calibrate it so that if graduates from all schools fail the exam at about the same rate, the schools keep their accreditation. You’re not over-enrolled if you’re just average.

(2) Blame the magazine rankings. (Don’t worry if they blame you back, you both make your money on the (prospective) applicants. It’s just part of the business.)

(3) Shake down your alumni to finance a new, gratuitous, state-of-the-art law school building. That’ll show ‘em.

(4) Blame your graduates for being greedy, entitled, and unwilling to make the tough sacrifices, like opening practices in rural areas. Lots of people in Shikoku need lawyers.

(5) Alternatively, blame your graduates for moving too far from the school and trying to make money where the jobs are, like Osaka perhaps. After all, it’s not the school’s fault for enrolling too many students for the local market; rather it’s the students’ fault for wandering too far from where their degrees have any signaling value.

(6) Advertize your school’s discounted tuition thanks to senior students who are asked to pay full freight courtesy of unlimited government loans. (Japan has those, right?)

(7) Complain that the press and the blogs don’t use any facts—because they don’t.

(8) Use Pyrrhonian skepticism to dismiss government employment projections showing that there is no need for your graduates’ professional labor.

(9) Notwithstanding (8), point to the imminent wave of retiring lawyers whose positions will need to be filled.

(10) In case Abenomics fails, waive away any predicted productivity increases in legal services, low household incomes and formation rates, the apparent income elasticity of demand for legal services, and predictions that the economy is going to stagnate for many years to come. Do not waver: The backlog of graduates will clear!

(11) Claim that your graduates are easily finding jobs after the employment data are collected. Disregard the findings of longitudinal studies like After the JD in the U.S., which found that graduates who enter the profession in good years frequently leave law practice several years later due to massive attrition.

(12) Throw out marginal product theory, the law of diminishing marginal returns, and the sheepskin effect and argue that your school’s degrees are “versatile,” ensuring that graduates will get an earnings premium in any occupation besides law practice because all schooling increases earnings for all positions regardless of the skill required.

(13) Ask rhetorically, “What else will intelligent young people do?” Obviously law is the answer.

(14) Plead that your school is virtuous because it enrolls minority students who do poorly on exams. It doesn’t matter if they never enter the profession or can’t service their debts. (They have IBR in Japan, right?)

(15) Use the crash in applicants to encourage people to apply. After all, it’s not like everyone will seriously heed this advice and make it self-defeating.

(16) U.S. law schools haven’t tried this yet, but yous should: Insist that the profession’s licensing rules are so restrictive that they prop up prices for lawyers’ services, which is why so many of the highest earners in the country are lawyers. Therefore, anyone who graduates from your law school is a lucky ducky. If anything, the country should allow foreign-trained lawyers to practice as it will drive costs down.

(17) And if all else fails, compare the number of attorneys per capita in your country or region to others because that’s an obvious measure of lawyer shortages. Duh.

So Yomiuri Shimbun and all Japanese law schools, the problem wasn’t adopting the American model; it’s not adopting it all the way.

Tuition Cuts Beyond Thunderdome

Observing some law schools gaining 1Ls as they cut tuition, The Wall Street Journal chants, “Two applicants enter! One applicant enrolls! Two applicants enter! One applicant enrolls!”

I don’t think I’ve ever seen Mad Max Beyond Thunderdome without commercials. I don’t think there’s another way either.

Back on topic, the WSJ article appears quite well researched. I’ve never been big on tuition cuts drawing the crowds, but I’m willing to disagree with some of the quoted deans—in their favor, even—and say that the tuition cuts helped their enrollments. The real question, though, is whether tuition cuts can draw applicants who otherwise wouldn’t bother taking the LSAT. I ask that because it appears that the applicants are sending their materials to multiple schools and taking whatever they consider the best deal. In that sense the nominal tuition cuts are little different from the discounts the law schools have been touting. It’s when they can convince new applicants to step out of the ether that we can really say the tuition cuts are working.

We’ll also have to see whether the schools with high LSAT profiles are cutting their nominal costs. I bet plenty of 2Ls would love to transfer into Columbia and pay more than $55,000 per year.

In other news, the New York Fed people have started a series titled, “The Value of a College Degree,” which rehashes everything you’ve already heard repeatedly about the average college graduate. However, its authors promise to look at wage dispersions, which tell them that “college actually does not appear to have paid off for a sizable fraction of those who made the investment.” They said it’s hard to see whether the premium is due to innate abilities but then said they were going to explore what happens to five- and six-year graduates. Hint: If the five- and six-year graduates don’t make more than the four-year graduates, there’s a good reason to suspect that there are problems with the human capital hypothesis.

Here’s my spoiler version of the wage dispersion from a while back:

Dispersal of Earnings by Education (25 -34) (Thousands, 2012)

(Vertical lines are medians.)

Yeah, so not everyone who went to college makes the median income. (Mind = blown)

I gotta run. Take care, folks.

Don’t Go to Law School: International Edition

Usually I write about legal education in Japan, whose decision to ape the U.S. legal education model has failed brilliantly, but today I have good news! Other countries do it badly too.

In the United Kingdom of all places, The Times furnishes us with, “What law school doesn’t tell you: 17,500 graduates; only 5,000 jobs.” Alas, subscription is required for the specifics, but the headline sure made me do a double-take. Being ignorant of such things, I have no idea what The Times‘ slant is, but superficially I’m pretty impressed that the U.K. has managed to out-do the U.S. in law graduate overproduction. Come on, Britons! Mimic our nondischargeable Grad PLUS loans—I dare you.

The other disaster du jour is … Korea! Korea JoongAng Daily informs us that adopting an American-style law school system has led to immiserating tuition hikes. It’s much more expensive to go to the new law schools than just taking the country’s damned bar exam old-school style.

The kicker is that Korea is phasing out the bar exam process in 2017, meaning it’s expensive legal education for all!

1,014.20 Korean won equal $1.00, so yes, law school costs, like, twice as much in Korea as it does here (even with living expenses). (I’ve heard hearsay that Korea is a higher education disaster where everyone goes to college but people in menial jobs still earn more than the typical college job.) Here’s the math:

[A] research team led by business administration professors Cheon Do-jeong, from Chonbuk National University, and Hwang In-tae, from Chung-Ang University, presented their dissertation analyzing the lawyers produced under each system.

According to Cheon and Hwang’s data, it costs an average of 22.17 million won annually over 4.77 years [$21,859], from entering law school until becoming a lawyer. The law school system costs a total of 105.79 million won [$104,309].

By contrast, the old system of taking the national bar exam cost an average of 9.32 million won annually over the course of 6.79 years [$9,190], including completing training at the Judicial Institute. The whole process amounts to 63.33 million won in total [$62,443].

My favorite quote from the article: “Furthermore, tuition increased by 9.8 percent this year.” Don’t worry, though, without government loans, the universities are going to shut down the law schools, according to a former dean. Imagine a dean saying something like that in the U.S.A.!

That’s all for now. Hope you enjoyed your Labor Day.

Slate Thinks LSAT-Takers Are Clairvoyant

The law-school shills at the Law School Truth Center inform us that Slate gives us, “One Group of Law School Applicants That’s Growing: High-Scoring Students.”

I will keep this quick.

Jordan Weissman argues that the ~7.5 percent growth in law school applicants in the 170-174 and 175-180 LSAT brackets this year is a sign that “the right people” have decided to go to apply to law school again.

It might have helped readers if he’d told them that these applicants only account for about 5 percent of the total applicant decline since 2010.

Change in Applicants by LSAT Score Share of Net Change in Applicants (2010-2014)

(Source: LSAC, Slate, author’s calculations)

It turns out about two-thirds of the decline has been in applicants with scores below 160 and 86 percent with scores below 165, so once again the lesson is that the real right people, i.e. the ones employers don’t really want to hire, are getting the message.

As for the high-LSAT scorers, part of Weissman’s problem is that people who take the LSAT do not know ex ante what their scores will be. Sure, many people study for the exam, but the proportion of “pleasant surprises” increases the higher the bracket. It’s possible that a lot of the non-applicants are people who would have done very well on the LSAT but were not confident of that fact in advance of deciding not to take the test. It’s pretty unlikely that many applicants had a high LSAT score in hand but chose not to apply.

Grade Inflation: It Depends How You Define ‘Educational Quality’

On VoxEU, we have Raphael Boleslavsky and Christopher Cotton’s, “The unrecognized benefits of grade inflation.” The authors write:

Our analysis reveals a surprising link between grade inflation and investment in education quality – schools invest more when they are allowed to inflate grades than when grade inflation is banned. …

With grade inflation, student transcripts convey less information, and therefore the employer relies less on transcripts and more on school reputation when evaluating graduates. In this way, grade inflation increases the incentives that schools have to undertake costly investments to improve quality of education, and the average ability of their graduates. To the extent that school investments and a student’s own study efforts are strategic complements in human capital development, students who anticipate greater investments by schools in turn have greater incentives to increase their own efforts. [Emphasis LSTB]

You could replace the emphasized bits about “education quality” with “wasteful spending” or the like and you’d have an accurate description of what goes on at law schools.

For instance, we have expanding faculties:

Law School Faculty Per School (Calendar-Year Average, Index 1999=100, Excl. P.R.)

(Source: Official Guide, author’s calculations)

We have lots of internal grants and scholarships:

Spending on Internal Grants and Scholarships Per Law School (2013 $)

(Source: ABA (pdf), Bureau of Labor Statistics, author’s calculations)

We have no (net) positive impact on job outcomes:

Percent Employed by Status (NALP)

(Source: NALP)

We have a decline in legal sector labor productivity:

Legal Sector Labor Productivity (2005=100)

(Source: Bureau of Labor Statistics)

…And all this is covered with tuition hikes on the poor souls who are paying full tuition (if that):

Median Full-Time Law School Tuition (2013 $)

(Source: ABA (pdf), FinAid.org, Bureau of Labor Statistics, author’s calculations)

None of this is necessarily the result of grade inflation, which the authors’ model takes to be endogenous when I happen to think it’s exogenous (Hell, even the law school deans say so). If anything grade inflation is a symptom of the same pressures the schools are under to signal their degrees’ prestige to employers. But job outcomes is most of what this all comes down to. If there weren’t such a wide dispersion of jobs and salaries, then there’d be less motivation to engage in these kinds of wasteful behaviors. The free student loans are the accelerant.

However, there’s no reason to believe that, in the face of grade inflation, colleges and universities would improve their reputations by carefully investing in better student outcomes; rather, they would invest the bare minimum of what the employers want to see—not what actually makes the graduates more productive. That’s why the employers complain about how law students take frivolous courses but keep hiring from elite law schools nevertheless.

Revealed preferences, people. Revealed preferences.

NALP’s Fuzzy Definition of ‘JD Advantage’…

…Is largely the same as the ABA’s, but that’s not the point, which is that you should read:

NALP’s Fuzzy Definition of ‘JD Advantage’

on The American Lawyer. It’s probably the first time I’ve written on this curious topic.

I don’t have any music for you as I’m beating a virus today that’s hampering my productivity. Since my organs haven’t liquified yet, I’m ruling out Ebola.

Peace.

The Law Apprenticeship Scam

“It’s a cruel hoax. It’s such a waste of time for someone to spend three years in this program but not have anything at the end.”

So says Robert E. Glenn, president of the Virginia Board of Bar Examiners. No, Glenn wasn’t talking about Liberty University’s 34.4 percent employment rate in full-time, long-term, bar-passage-required jobs for its class of 2013, which had an average debt level of $81,045 (only!). Rather he was referring to the low bar-passage rates of Virginia’s law readers, who along with their peers in other states are the subject of a New York Times article, “The Lawyer’s Apprentice.”

Citing data from the National Conference of Bar Examiners, which the Times deserves credit for researching, we learn that only 28 percent of apprentices passed the bar versus 73 percent of ABA law school graduates. This fact prompts the ABA’s Barry Courrier to declare:

“The A.B.A. takes the position that the most appropriate process for becoming a lawyer should include obtaining a J.D. degree from a law school approved by the A.B.A. and passing a bar examination,”

I find this response disappointing for a few reasons: One, even if these statistics are for first-time test-takers only, a 73 percent pass rate is lousy. Law schools should be held to higher standards for what they charge students.

Two, the article appears to tacitly accept the ABA’s position that we can’t have good lawyers without many years of law school (and probably college too). The elephant in this room is selection bias. The reason people go to law school rather than these apprenticeship programs is that law schools broker jobs to people who already do well on standardized tests, to wit, the LSAT. Certainly in the age of PAYE, someone who can crush the LSAT has much better odds of finding a good law job by going to law school than trying to find a lawyer who will train him or her. If anything, law school is a more reliable path to qualifying for the bar exam. Indeed, the article acknowledges that “the lack of class rankings put clerkships with judges and plum gigs at big firms out of reach” for law readers.

If you’re wondering why people who don’t do well on the LSAT go to law school instead of these programs, I give three responses. One, they aren’t widely known and have no advertising. Two, many law students still buy into the versatile JD myth. Three, the largest proportion of people opting out of law school are people who don’t do amazingly on the LSAT anyway. So there. (The Times says these programs are “underpopulated,” but given the effort the would-be apprentices must go through to get established, one might think the problem is that there really isn’t much demand for new lawyers.)

I acknowledge that many of the apprentices interviewed in the article are sincere in their desire to avoid debt and only want to do small practice work. If anything, bar authorities should make it easier for people to choose that route. Instead they offer a post hoc rationalization for credentialism in legal education.

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