The ‘Law School Rankings’ Are NOT Influential

…Otherwise more people would be searching for them on Google.

The Google Trends of “LSAT” made the rounds a while ago, so I can’t believe no one thought to give the infamous U.S. News law school rankings the same treatment. (I think “law school rankings” captures their influentiality better than “us news” or its derivatives do.) In November 2012, “law school rankings” was not even a tenth as popular as it was in March 2004. That week was a bit of an outlier, as you can see, but it shouldn’t be too surprising as I believe 2004 was the year after the magazine expanded from 50 to 100 ranked law schools. I guess everyone wanted to see how volatile the new rankings were. If you look at the broad 52-week moving average, “law school rankings” starts at 45.65 in week 1, January 2005, and drops to 12.88 last week, a 72 percent decline.

What’s striking is how law school-related searches bubbled upward at about the time Lehman was collapsing, but to no avail. The decline resumes after the October 2009 LSAT, which you can see here:

Here are the 13-week moving averages, showing how all-encompassing the October LSAT is. You can see the compression between the peaks and the troughs that occurs as the years go on.

And here are some test prep search terms to top things off.

Again, October 2009 was peak law school, even if commentators at the time didn’t believe it.

Generally, Google tells us that the law school terms are 70 percent less popular than they were in the mid-2000s and 45 percent less popular than in October 2009. The indexes’ diminution will continue into next year, so don’t say the rankings are influential: People ain’t buyin’ it—or at least, they ain’t searching for it on Google.

Dean Lawrence Mitchell Does Not Know Why Case Western’s Tuition Has Gone Up

…Or he deliberately misled Bloomberg‘s Lee Pacchia in an interview you can view courtesy of TaxProf Blog‘s “Case Western Dean: There Is No Oversupply of Lawyers.”

Dean Mitchell wishes to continue discussing law schools despite the poor reception of his November 2012 New York Times op-ed. Although early on he jokes that people accused him of kidnapping the Lindbergh baby, I think a line he gives at 13:33 reveals more about his perception of the debate:

One of the things the ‘Attack on Law Schools’—if I may call it that—disregards, or doesn’t assume, is that we’re working hard in good faith. You’re talking about people who, all of whom have significant opportunity costs that have gone into this business for the sake of trying to do something good.

In my opinion, bad faith doesn’t require cynically lying to make money, but defending the legal education system by raising discredited arguments, ignoring contradictory evidence, and filling knowledge gaps with conjecture qualify. Reasonable people might disagree with that definition, but I think what Dean Mitchell said in the interview, to say nothing of his selective use of Occupational Outlook Handbook information in his op-ed, suffices.

For example, Dean Mitchell peppers the interview with characterizations of law school graduates as lazy, greedy, and entitled. Thirty-eight percent of Case Western’s graduates are underemployed? It’s because they left Ohio for other cities. It’s because they won’t take lower-paying government jobs. It’s because they refuse to start small practices in the sticks. It’s because they aren’t interested in serving the poor. Then Dean Mitchell whirls around and says everything is fine: Data nine months from graduation don’t tell us of all the success stories one-year or a year-and-a-half out; law is a 40-to-50-year career so it’s premature to say the system is failing; hearsay from the admissions staff says we should be “confident” about graduates’ outcomes.

Instead of spending this post on the oversupply problem (to which I’ll only add that Pacchia discussed only new jobs and didn’t include replacements, which makes the ratio 400,000 to 212,000, not 74,000), I’m more interested in the dean’s discussion of why tuition has gone up, which I’ll present reverse-chronologically from the interview. Pacchia asks (4:35):

When we talk to people about these issues, we keep going back to the fact that tuition growth has outstripped job growth, or wage growth over the past almost two decades at a torrid pace. Why does the cost of law school tuition keep going up?

And Dean Mitchell answers:

That’s a question that any responsible law school administrator thinks about all the time. First, I point out that at my school, 20 percent of my revenue comes from our endowment, so- and believe me when I’ve spent my budget there’s nothing left. So it’s not even that our students are paying the full amount of their education. In fact, every student is subsidized to the tune of at least 20 percent simply from the income on endowment.

Where does the high price come from? Well, you know, I was looking- thinking about the ’85 to 2011 increase is often cited as being the number to look at. And medical school at 63 percent, for example. In 1985 medical school cost four times what law school cost. Also in 1985—or within a couple of years thereafter—you have a tremendous growth in starting salaries of law firms on Wall Street. Now almost anybody who teaches law could or did have one of those law jobs. I pay my faculty probably median about what the starting salary on Wall Street is. You’ve got to pay talented people to be professors, so that’s certainly one reason for the increase.

Additionally, we pay the bills like everybody else. We’ve got to pay for heating, we’ve got to pay for lighting, and we’ve developed programs for example: clinics and experiential education have exploded. That’s a very expensive form of education. You have a highly paid teacher, or a relatively highly paid teacher, teaching very small numbers of students. So when people talk about law schools as traditional cash cows, they’re imagining a time when you teach 150 kids in a class. You have a relatively small faculty doing it. You are able to charge whatever the market bore of course, but you turn a big chunk of it over to the university. I don’t turn a big chunk to the university, and I’m not teaching 150 kids in each class. So as the demands for higher quality education have increased, and as we’ve responded to that with smaller class sizes, with more skills programs, with more- other kinds of experiential endeavors, with more externships, we increase the costs.

I’m willing to grant Dean Mitchell the third paragraph, but the first paragraph is a non-sequitur. Debt is debt; underemployment is underemployment. The endowment isn’t relevant to either. The second paragraph, however, is just plain inaccurate—and not just because Pacchia said wages haven’t kept up while the dean says they grew tremendously. From the Digest of Education Statistics Table 348, we find that medical school didn’t cost quadruple law school, and law school’s costs have increased more rapidly since 1988 (close enough to 1985).

Moreover, the effective hourly wage for law professors is significantly higher than it is for first-year associates, and there are always plenty of people applying for law professor jobs who would gladly work for less pay and more classes. This is the weak link in Dean Mitchell’s response: Why does a law school need “talented people” to be professors? Can’t mediocrity get students past a bar exam?

Yes, but it won’t help Case Western win the zero-sum rankings dog-pile, and Dean Mitchell neglected to point out how tuition dollars also go to scholarships to attract high-caliber applicants, even though he acknowledges scholarships in the previous exchange (2:30):

Pacchia:

That said, the economics of the situation are troubling. Case Western, like many schools charges over $40,000 a year in tuition—I think it’s 42—yet six months after graduation, your institution had 38 percent of the class of 2011 that were either unemployed, underemployed—that is in short-term jobs or part-time jobs—or going on to get another degree. Aren’t too many of your graduates finding themselves in a position where they’re leaving school with enormous debts yet no real means to pay them off?

Dean Mitchell:

This is certainly a- debt is a problem, high tuition is a problem. I should point out that 90 percent of my class receives financial aid at a mean financial aid offer of $25,000 a year. So, people talk about the sticker prices of law schools, but we discount fairly heavily. Now, that’s not to say there aren’t students paying full freight, or there are students paying most of the way, and it’s very, very expensive. And of course, it’s important that they get jobs that they can ultimately pay that debt back, with the proceeds from, the income from.

At the same time, when you look at that 38 percent, you’re looking at a nine month picture out. Now first place, the ABA has been refining reporting statistics, along with NALP. We are- we have from the very first tried our very best to be as transparent as we can. And if you look at some of the situations of some of those students, many of them are in- you say “underemployed.” They’re in volunteer positions; they’re in positions where they receive small stipends. A school like ours, about 65 percent of our students leave the state of Ohio and go to major cities where because they’re not in law school there, it takes them more time to find jobs. I haven’t myself taken a snapshot a year out, but from- I’ve talked to my admissions staff a lot, and I suspect if you look a year out, things would change dramatically. I’m really confident if you looked a year-and-a-half out, they would.

Notice how Dean Mitchell abruptly switches from people paying full freight to minimizing the underemployment problem? Pacchia lacks my awesome powers of time travel (maybe he should drop acid before his interviews?), but the follow-up question is, where does the law school get the money to pay for scholarships for 90 percent of the students? Who is paying full freight?

Using 12 years’ worth of Official Guide data—which Pacchia definitely wouldn’t have no matter how much acid he dropped—here’s how Case Western’s scholarship structure has transformed since 1999 for full-time students (it only has a few part-timers):

According to Dean Mitchell, the red “No Grant” blob has now contracted to 10 percent, one-third what it was even in 2010-11. Unless the law school received either a massive grant or an enormous bequest (and they didn’t blow it on a swank building), all these <50 percent tuition scholarships had to come from tuition:

Note how the median grant is now actually less in both nominal dollars and percent of total tuition than it was in 1999. The good news for the 15 percent of students who received at least the median grant back then is that their Stafford loans more than covered the shortfall. Today that’s not possible, meaning that even those who receive the median grant will have to take out a Grad PLUS loan, a private loan, or get the money from somewhere else. If we look at the glass-half-empty version, i.e. the percent of full-time Case Western students who receive the median grant or less, we find that they pay an increasing portion of whatever’s left:

Sixty-five percent of its 2010-11 full-time students had to cover 25-50 percent of their tuition with something other than Staffords. Thirty percent had to cover half their tuition outside of Staffords when in 1999 they were only down five percent. I wish the Official Guide were more forthcoming about how many 1Ls receive scholarships out of the total, but common sense tells us that it’s a high proportion, and even those who retain their scholarships after their first year will have to eat the next tuition increase to pay for … more scholarships for 1Ls. The system has evolved from one in which a handful of students receive generous portions to one in which most students get a few thousand bucks thrown their way, but it’s spread more thinly each year. Case Western does not have a tuition guarantee program.

This absurdity is only sustainable so long as there are students willing to pay ever increasing amounts of money to entice handsomer applicants than themselves to Case Western. Dean Mitchell doesn’t know or withheld that the students who pay full freight, near full freight, and every tuition increase in between are the law school’s bulwark against a rankings slide, even if there’s a high probability those graduates won’t be able to repay their loans without IBR/ICR or miracling high-paying jobs. These students’ continued access to unlimited federal students loans is the sine qua non of Case Western’s financial model.

Pacchia didn’t pursue this line of questioning, but file it away for the next time a law school dean wants to have a “good faith” dialogue about the non-crisis entitled law graduates face.

A Bitter Boxing Day Op-Ed for Private Student Loan Debtors

John Hupalo, “Discharging Private Student Loans Is Counterproductive,” U.S. News & World Report.

Tagline: “For an overwhelming majority, it will impair their future ability to borrow.”

Hupalo is the CEO of Invite Education, LLC, which appears to be a college planning resource for prospective applicants and parents, but his cred comes from decades of experience in education finance.

Unfortunately, the arguments he makes in his op-ed do not benefit from his experience. He even contradicts himself within the same sentence early on:

Turning bankruptcy courts into turnstiles for the discharge of the least common form of student loan debt may temporarily assist some distressed borrowers, but the overwhelming majority will not be helped.

How does benefiting “some distressed borrowers” with the least common form of student loan debt who are not in the overwhelming majority of student debtors turn bankruptcy courts into “turnstiles”? Also, bankruptcy is not “temporary,” a discharge order is permanent.

Hupalo’s piece is concise, but I’m going to summarize the arguments and provide brief responses:

(1)  Bankruptcy appears on your credit report for 10 years and ruins your creditworthiness.

Defaulting on a loan is much worse for your creditworthiness (and sometimes job eligibility) than bankruptcy, and plenty of banks love lending money to people who can’t obtain another discharge for eight more years. They also know how to collateralize cars and houses for auto loans and mortgages. The credit hit from bankruptcy is a factor to weigh, but (a) it does recover, and (b) if the loan is large and unpayable, bankruptcy does more good than harm.

Also, I’ll add right now that debtors aren’t stupid, and moral hazard arguments are always overblown. People use the bankruptcy system as a last resort. Most of the time they file because they’ve lost their jobs, gotten divorced, or aren’t insured so they have to pay for their own radiation therapy. Included in the 2005 law that extended the “undue hardship” exception to dischargeability of private student loans was a provision that required Chapter 7 petitioners to show that their incomes were below their state’s median household income. If it’s above the median, they have to file in Chapter 13, which will require them to repay some of the debt in a 3-5-year repayment plan. With bankruptcy protections on their side, debtors can negotiate with their lenders and avoid using the courts, and bankruptcy fraud is very, very rare.

Now that we’ve got that out of the way, we continue:

(2)  Bankruptcy protections increase interest rates for private student loans.

Good.

Seriously, this is how lending works: Those who make large unsecured loans to people who can’t repay them should charge higher interest rates, demand co-signers, and not offer in-school deferments. If the loan is too risky, don’t make it. The alternative is a human capital contract, which may or may not work, but it’s a compromise option.

(3)  It’s not fair for the government to shield its loans from bankruptcy while not doing so for private loans. It’s also confusing to borrowers.

(a) Borrowers will always be confused. The federal lending system alone is very complicated, much less the bankruptcy code. (b) Aside from people who take out Parent PLUS loans, to my knowledge all other federal loans are IBR-eligible. Debtors who are on Social Security Disability can also petition the Department of Education for a hardship discharge, which the “Pay-As-You-Earn” rule-change made easier. Private loans don’t offer these options. (c) Honestly, I have slight sympathy for the fairness argument: Yes, the government is unfairly undercutting the private sector (and not even doing a good job of it). However, I think bankruptcy protections should be returned for federal loans too, and I won’t lose any sleep if the Direct Loan Program is repealed. I just don’t find Hupalo’s argument that incrementalism is unfair to be persuasive.

(4)  The seven percent private loans of all student loans are underwritten; the other 93 percent of federal loans aren’t. This is unfair.

It sure is. That’s a problem with the Direct Loan Program, but how is it relevant to private loans in bankruptcy?

(5)  Private student loan debtors can discharge their debts via the “undue hardship” exception, which is reasonably high to protect from moral hazard.

(a) The “undue hardship” standard is not defined in the bankruptcy code, leaving the statutory interpretation up to the federal appellate courts and the factual application to the caprice of bankruptcy judges. If you were worried about “confusion” before, how many people do you think know off the top of their heads if their federal circuit uses the Brunner test, the “totality of the circumstances” test, or some other one? How many people even know anything about the federal circuit they’re in? (b) Admittedly, many people who might have a shot at discharging their student loans don’t even bother trying to file an adversary proceeding against their student loan creditors, which leads the public into believing the loans are as nondischargeable as child support payments, but again, it comes down to the bankruptcy judge’s opinion. (c) When the “undue hardship” exception was first inserted into the bankruptcy code, it coincided with a five-year time limit on dischargeability, so the urgency for legislative clarity didn’t exist. With the time limit removed for federal loans in 1998, the law pretty much put debtors’ fates in bankruptcy judges’ hands. Hupalo doesn’t appear interested in discussing whether that’s a good idea.

Every Day Is Halloween for Law Schools

Reading Karen Sloan’s National Law Journal piece “Tuition Is Still Growing” and all the commentary it’s spawned reminded me of what happens when you go to a store on November 1^st­­: the remaining Halloween candy, costumes, and decorations are dirt cheap because the store has to get rid of the undemanded surplus to make room for Thanksgiving and Christmas items. The appeal to “Supply and Demand 101″ surrounding tuition increases makes the same assumption: There’s been a drop in applications, so why isn’t there a corresponding drop in prices?? The answer should be obvious by now: the market for law degrees is not a “101″ market. If it were, I wouldn’t've called it a tuition bubble for the last two years. Here are 10 reasons why there is no cause for surprise.

(1)  Past application drops haven’t correlated to tuition drops.

2011 and beyond is not the first time law schools have seen a drop in applications and raised tuition nonetheless.

To make this more intelligible, here’re the annualized growth rates from trough to peak and peak to trough over the years.

Thus we shouldn’t be surprised tuition always goes up, though we should acknowledge that the current growth is smaller than previous applicant dips. For it’s worth I would’ve predicted average private tuition would’ve gone up by less this year, like 0.8 percent over inflation rather than 1.7 percent.

(2)  Law school applicants are transient, one-time-only, pass-through buyers.

None of the blather about how tuition is driven by students’ demand for “services,” posh buildings, etc. ever addresses this particular asymmetry. Applicants do not fully inform themselves of the market in one application cycle and then wait for the November 1^st­­ of legal education to buy discount law degrees—and don’t waste my time showing me 1Ls who bargained large scholarships out of their law schools this year. None of them were sitting around reading Big Debt, Small Law in 2008 thinking, “I’ll bide my time for four years living paycheck to paycheck and apply in 2012 when applications nosedive!” In other words, the decision to apply is much more significant than where to apply and how much to spend. No one who chose not to apply to law school, because they thought it was too expensive, has ever waited for the price to drop. Those who have chosen not to apply are never coming back.

(3)  Applicants suffer from crippling information asymmetries, and any decent information they do get will largely discourage them from applying.

I seriously doubt any potential applicants who look on Law School Transparency’s Web site or comb the ABA data for themselves are going to apply to an underperforming law school before giving up altogether and trying for med school instead. Any price comparisons they conduct will largely come from U.S. News‘s rankings, which are released every February. Even then, as I discovered when going through law schools’ Web sites two years ago, law schools set their fall tuition after students have signed up to buy the degree, so students don’t really know how much they’ll be paying until they show up for orientation. If they’re really unlucky the tuition will be published in credits per hour, which makes comparisons even more difficult. This is not “101″ price signaling.

But it gets worse. Law schools’ Web sites also proclaim that they reserve the right to revise their tuition rates without notice. Then they list numerous, unexplained fees, such as the “academic excellence fee,” and less mysterious ones like the “library technologies fee.” Nonetheless, potential applicants have no idea whether these fees are allocated to the library or “academic excellence,” or what happens if there’s a shortfall or surplus to either. Indeed, it would be very simple for a law school to simply shift more of its costs into nonsense fees and then claim it’s holding tuition steady. Applicants who check the Web sites alone wouldn’t know any better, which is why they’re forced to wait for U.S. News to tell them how much they would’ve paid if they’d applied the previous year.

(4)  Those of us who’ve been reading Krugman have learned that while “Supply and Demand 101″ says one thing, empirical facts say that nominal wages and prices tend to be “sticky downwards.”

Nominal prices frequently do not drop much absent a serious crisis, even the November 1^st example above isn’t perfect in this respect. Law schools are more likely to freeze hiring, freeze salaries, lay off (non-tenured) employees, or freeze tuition and let inflation eat at it before announcing a 30 percent nominal cut to attract applicants. Indeed, in 2011, only two private law schools reduced their nominal tuition over the previous year (University of Dayton and University of St. Thomas (MN)), Ave Maria held it constant, and another 19′s nominal increases were engulfed by inflation. Generally, nominal tuition growth has been slowing, but that’s the limit of what’s going to happen:

5.7% is the average nominal tuition increase for this period. The average deviation is 1.75%.

(5)  The disadvantages the buyers have also cut against law schools that want to signal price drops.

If a law school wanted to cut tuition to attract applicants, in the first place it would have to predict that it would get fewer paying matriculants during the next application cycle, announce it was planning to drop tuition the next year, somehow convey that to potential applicants (outside of U.S. News), hope that current students wouldn’t take a leave of absence to capitalize on the anticipated price drop, and hope the applicants don’t see it as a sign that the school is about to cut prices again, lose prestige, or fail and then still apply. The problem is, once students promise to show up, the law school has to choose to (a) cut tuition as promised, or (b) raise tuition because there’s “demand” for its degree, “services,” new buildings, etc.

(6)  Law students don’t set price ceilings and walk away if the law school raises costs ‘too high.’

If a law school sees a severe enough crunch in matriculants that affects its operating budget, it can simply raise tuition to cover the shortfall, as Cooley did this year. Why? Because the entering students don’t actually look at the tuition increase that occurs between when they apply and when they get their first bills, if it’s even announced. Between tuition and, especially, unknown living expenses, students have already committed to paying a lot of money, as much as the law school told them to pay. It’s like buying something at the grocery store and looking over the receipt when you get home and finding that they charged you more for an item than was on the price tag. Sure, you could’ve checked when you were at the register, but it’s not a big enough deal for you to care, and it’s not like you expected the store to charge you more when you weren’t looking.

Remember also that the consumer protection argument this phenomenon entails isn’t swaying too many judges to think that purchasers of legal education aren’t reasonably prudent consumers acting reasonably, even though the media still wonder whether it’s reasonable for purchasers to commit to buying a product before knowing the total cost and without knowing that the seller regularly raises prices at will.

As for current students, they’re hosed—not that they look at their tuition bills either. They too have capitulated and will pay whatever the law school feels like charging them, and it’s not as though they’ll transfer to cheaper schools, drop out, or protest in response, which leads to…

(7)  Exit, voice, or loyalty?

One of the hopes I’ve had over the last two years is to see law students wake up to tuition increases. That’s why my blog’s title is about tuition and why I’m painstakingly revising a page that lists every law school’s tuition increases, though I’ve long since expanded beyond the topic. The truth is, law students are willing to shoulder significant tuition increases without any protest. If Albert O. Hirschman’s book Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States were applied to law students, they choose loyalty over exit and voice.

While the closest thing to law school protests I can think of were at the University of Virginia a few years ago by some 3Ls who were talked out of attending a 0L function wearing t-shirts describing how much debt they had with no jobs, the only serious example of university students choosing voice that I can think of weren’t law students but were the campus Occupiers last year, mostly at California’s public universities. It’s telling that they were almost exclusively public university students, and they perceived the states’ decisions to cut the subsidies to their universities as abandoning an important, job-creating public institution. They weren’t concerned about spending on frivolous outlays like climbing walls, and they certainly weren’t going to ask whether jobs could be created without sending everyone to residential colleges. The protesters actually appear slightly conservative, not that the six-figure salaried Lt. Pike thought that while he was pitilessly pepper-spraying non-threatening protesters. The same sentiment goes for law schools: No one is demanding spending cuts, except those who aren’t applying, and they’re not going to come back when “November 1^st” comes around.

For example, when Faulkner University increased its tuition by 43.1 percent over inflation in 2007, 22.8 percent in 2008, and 10.1 percent in 2009? No protest. New England School of Law increased its tuition by more than 15 percent two years in a row. Again, no protest. UC-Irvine might be a public-in-name-only law school whose students know that they’ll never receive any state subsidies, and its resident students paid $43,000 last year and don’t care.

Things are different today, and maybe the Faulkners and New Englands probably couldn’t get away with doubling their tuitions if they wanted to, but since law students don’t set price ceilings on how much they’re willing to pay, and given that they (wrongly believe they) are powerless once they enroll, they don’t have many options. They can drop out (exit), or they can demand transparent employment data, though that doesn’t address their personal circumstances so isn’t much of a voice.

But they won’t organize, and the students who are cunning enough to do so aren’t applying anymore. I fear that law students have lost their chance for self-help. From now on law schools will be admitting a combination of people savvy enough to play the scholarship game and people law schools know aren’t reasonable consumers, whether judges think they are or not.

(8)  Law schools have bondholders.

Unlike their graduates, law schools have some options for paying back the money they owe to their lenders. They are also allowed to file bankruptcy. Rest assured, law schools, particularly the free-standing ones, that are under their creditors’ thumbs are not going to announce large revenue cuts. For the free-standers, large tuition retrenching is more likely to occur after a Chapter 11 filing, and schools attached to universities are more likely to just be shut down by their central administrations once they realize that it’s not profitable anymore.

(9)  Speaking of which, most law schools take their orders from central universities that have their own priorities, e.g. profiting from law students.

Remember what happened to the former dean of the University of Baltimore Law School, Philip Closius, when he told the ABA that the university was hauling away 45 percent of the law students’ tuition and state subsidies for non-law school purposes? Central administrators know that students will pay what they ask, and when it’s no longer worthwhile, they’ll just close the program.

(10)  Law students are publically subsidized.

The NLJ article mentioned this, but it alone should tell us that we’re not in a “101″ market, but it had to be said.

*****

From now on, do not be surprised that average law school tuition is increasing even though applicants are not. It would take an unusual set of circumstances for any one law school to voluntarily cut its tuition and still expect to survive.

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.

Tough Choices for Some High-Ranked Law Schools

During the peak of the applications cycle, local newspapers have often run pieces about how their locale’s law schools are faring. Examples I’ve seen are here for Chicago and here for Ohio State, specifically. They frequently include details about how many applications each local law school is receiving, which is somewhat useful, but I always feel like I’m not getting the full picture because the deans the papers interview only know how many people are applying to their own schools and not the characteristics of the total applicant pool. If applicants are sending out more applications than before (they are), the deans won’t be in a position to tell us, so it’s like commenting on the size of a dust cloud without knowing the amount of dust inside it.

These articles also bring with them factual problems. The authors don’t distinguish between applicants and applications when it’s relevant, how many people are applying part-time or full-time (not that the authors’d know but they don’t ask), and even the number of applicants over the last few cycles for comparison. For instance, the Ohio State Lantern piece opens with, “For years there has been a surge of students applying to law school, but the trend has reversed nationwide, and the Ohio State Moritz College of Law is no exception.” This is the “surge” thanks to LSAC data:

I don’t know what the definition of “surge” is in this context, especially since the Lantern doesn’t comment on what happened in the mid-2000s, but the bump in the late 2000s is only slightly ahead of working-age population growth. Oh, and while we’re here, 2011 was bad for law schools, and according to my dotted-line projection, this fall is going to be really bad.

Here’s a line from the Chicago piece:

“Loyola will have about the same number of applicants this year as it did five years ago, said David Yellen, dean of the law school. There was a huge increase in applications during the recession as undergraduates postponed entering the job market and went to graduate school.”

Again, this only tells us how many people are interested in that one school relative to previous years. No one can tell us how many people applied to at least one law school in Illinois, how many were accepted, and how many applied full- or part-time. Instead, we have to turn to back issues of the Official Guide, which means lots and lots of data entry and gumshoe work … Which I managed to pull off but for full-time applicants only: not all law schools have part-time programs, part-timers tend to be in a different, older demographic that law school watchers don’t seem as interested in analyzing, and I don’t have unlimited time and patience to bang the numbers into a spreadsheet. Here’s the full-time data for Illinois, for those who are curious.

All this tells us is that Illinois’ law schools are accepting more of their applicants; the statewide acceptance rate grew from about 25 percent to 30 percent, and some schools, like Southern Illinois, accept more than half of their full-time applicants. Meanwhile the number of people who showed up—the ultimate gauge of law school interest—remained the same throughout at about 2,000. Ideally, we’d know how many people Illinois law schools rejected, but if the most accommodating law school rejects only 300-450 applicants per year on average in this time period, it would seem that the fluctuations in the applicant pool isn’t that remarkable. This makes relying on deans’ knowledge of applications to their own schools a dubious reporting move.

On the regional level, things look different: The late 2000′s “surge,” at least for full-time applicants, is very much localized along the east coast, particularly in the southeast, e.g. North Carolina.

As 2007 was the applications peak, here is the matriculations comparison between 2007 and 2010:

Much of this is due to the fact that since 2004, the southeast gained seven law schools, including Ave Maria, which moved to Florida from Michigan in 2008. That’s 16 percent growth, much greater than elsewhere. By contrast, places like the Great Lakes really haven’t changed a lot, aside from losing Ave Maria. Cooley’s branch campuses are only for part-timers, I think, so they don’t affect the outcome (one more reason to stick with full-timers).

Too bad the press isn’t interviewing Wake Forest’s dean. It’s missed a good show.

This exercise has left me with a complete dataset on full-time law school applications, acceptances, and matriculations from 2004-2010. Nice. Since higher education institutions of all stripes are often judged by their “applicant yield,” the percentage of admitted applicants who matriculated, I wondered how this compared to their acceptance rates. Previously, I’d thought that the correlation would be clear: the more selective the school the higher the applicant yield. This in fact is not the case, and to my surprise, there are a bunch of law schools in the higher echelons that are not very popular with their applicants. These law schools are scavenging applicants that typically apply to law schools with very highest U.S. News rankings. To test this, I took the average acceptance rate since 2004, along with the average yield, and cut them into quintiles. The following law schools are “Golden,” that is, they have are in the lowest quintile of acceptance rates and the highest in applicant yields, in alphabetical order by state:

• Arkansas at Little Rock
• Stanford
• Yale
• Hawaii
• Maryland
• Harvard
• New Mexico
• North Carolina
• North Carolina Central

Not too many surprises there. Here are the “Indie” law schools, ones that are accommodating yet popular among accepted applicants (highest quintile for acceptances, highest for matriculations):

• Faulkner
• Southern Illinois
• Nebraska
• Duquesne
• Pontifical Catholic (Puerto Rico)
• South Dakota
• Liberty
• Regent

Again, few surprises, mostly western state public schools and the last two having a strong Christian bent. Here are the “Marginal” law schools (very accommodating, low yields):

• Phoenix
• Golden Gate
• Florida Coastal
• Miami
• New England
• Western New England
• Thomas M. Cooley
• Charlotte
• Dayton
• Appalachian

I believe Phoenix, Florida Coastal, and Charlotte are for-profit institutions. And finally, our list of scavengers, the group I find interesting:

• Southern California
• American
• George Washington
• Georgetown
• Boston College
• Cornell
• Duke
• Vanderbilt
• George Mason
• William and Mary

Three of these are in D.C., and all of them made the top 50 in U.S. News‘ last two rankings. To give you an idea how ferocious competition is among them for the handful of applicants whose LSAT scores are so high you’d think they could levitate objects with their minds, Chicago barely made it off the list.

Here’s what they look like graphed together, plus the remaining T14 law schools.

The one in the upper left is Yale, the lowermost left, Southern California, the three in the upper right are the Puerto Rican law schools, and in the lower right, Cooley (Phoenix is above it). Although the marginal law schools are the ones that face imminent applicant crisis, it’ll be interesting to see what happens with the scavengers. There will be far fewer quality applicants this year, so these law schools will either cut their class sizes (whether they announce it or not) or they’ll have to accept mere-mortal applicants and risk reducing their rankings.

Coming to a State Bar near You ¬– Beggar Thy Neighbor

In my last post on the Massachusetts Bar Association’s underemployment report, I was flying blind because the link to the report was broken, and it wasn’t readily available on the MBA’s Web site. It’s up today, so I can give it a fairer read, and I was surprised to find two endnotes to the LSTB. Yay. More importantly I can give it a fairer review instead of criticizing its co-chairpersons’s public statements. Go to the source…

Link here.

I won’t spend too much time on the report, especially since I’m not a Massachusetts lawyer, but the report has a few novel ideas that I haven’t seen batted around. Here’s my outline.

I. Comparison to Medical and Dental Schools and ‘Reinventing’ the Third Year

“Currently, there is no appreciable underemployment in the medical profession … While comparisons are myriad, there are several striking differences between the medical school and law school teaching models. First, the number of students admitted to medical school is tightly controlled.” (3)

This might explain why physicians can have catastrophic levels of education debt without med school scamblogs proliferating. A current and projected shortage means that no matter what med students learn in class, they won’t have an underemployment problem.

“By comparison to recent law school statistics, there is no appreciable underemployment among recently minted dentists … As with the medical profession, the number of students admitted to dental school appears carefully regulated.” (4)

Ditto.

Let me be clear, engineering a shortage of practitioners is bad for the economy and is indefensible on moral grounds. It drives up prices because sick people have no alternatives and must pay wages and rents for medical services (unless they leave the country, e.g. destination surgery). Advocating the same for legal education is no less unconscionable. However, in both cases the report starts with “Interestingly, profession x has no underemployment problem,” and ends with “Profession x also happens to severely limit entry into its ranks,” and then discusses profession x’s education model as though that’s what causes its non-underemployment problem.

As a result, while programs like Northeastern’s cooperative model might help, even if every law school in the state adopts it, there will still be underemployed graduates. The solution to the problem must address the problem.

II. Encouraging U.S. News to Add a “Practical Training Element” to Its Rankings

“Because the criteria used in the U.S. News rankings incentivizes law schools to adjust their programs to achieve higher rankings in those areas, one way to motivate law schools to change their curriculum so as to have a greater practical focus would be if one of the criteria used in the ranking system was the effectiveness of the law school in preparing its graduates for the practice of law.” (8)

Wait, shouldn’t “practice preparation” be the primary criterion U.S. News uses to rank law schools? Maybe job placement after that? It’s a decent idea, but U.S. News is a for-profit magazine and since it already has law schools over a barrel, I don’t see it changing its methodology a whole lot to accommodate them. More importantly, we should be looking for solutions that diminish U.S. News‘ hegemonic role in determining law schools’ fates. I see it as part of the problem, not the solution.

III. Legal Residency Program

“A legal residency program, conducted under the auspices of the MBA (in partnership with the Board of Bar Overseers and participating Massachusetts-based law schools and law firms), would be the most comprehensive approach to providing practical training for new lawyers. In such a program, recent law school graduates could apply for legal residency positions with Massachusetts law firms participating in residency training.” (9)

This is good idea, except the problem is there are too many law graduates. Having a bottleneck of residency applicants just illustrates the problem.

IV. (I’m skipping the MBA’s discussion on improving law school transparency…)

V. …The Good Stuff! “Obstacles to Employment” (15)

The MBA discusses cunning plans it can use to reduce the number of lawyers in-state.

(a)   Lowering the Bar Passage Rate – The problem isn’t that too many people are passing the Massachusetts bar exam; the problem is that there are too many law schools and law graduates.

(b)  Limiting Reciprocity – The MBA wisely concluded that making it harder for out-state lawyers to obtain a Massachusetts license would do more harm than good.

(c)   Reciprocal Pro Hac Vice Rules – Instead of the current system of liberally allowing out-state attorneys to represent clients in Massachusetts, the MBA wants to close the valve to give more work to its own lawyers. No discussion of costs to clients.

(d)  “Establish Incentives to Explore Legal Practice Outside of the Commonwealth upon Graduation” – This, my reader, is the kicker.

“In an effort to better manage the volume of graduates from the nine Massachusetts law schools entering the Massachusetts legal community, or until such time as market forces reduce the oversupply of lawyers seeking employment in Massachusetts, the task force recommends that Massachusetts law schools increase exposure to legal practice opportunities in the surrounding five New England states. This exposure would provide additional employment opportunities for Massachusetts law school graduates while decreasing the load on the existing Massachusetts legal job market.”

State bar association adapts “beggar thy neighbor” philosophy to its law graduate surplus problem, dumping them on its adjacent states. The problem is there is no neighbor that has a lawyer shortage itself. Though tiny, since 1940 New England’s population hasn’t even doubled, but its number of law schools has nearly tripled. It is currently the most law-school saturated region in the United States. Even if places like Roger Williams closed shop, it’s not like Rhode Island would suddenly have a huge lawyer shortage.

VI. The Law School Law Firm

The MBA closes with a bunch of recommendations for soaking up unemployed law graduates, the most interesting one is the “law school law firm,” which is a non-profit law firm staffed by grizzled elder lawyers and employing law graduates to help them learn the ropes. It’s a good idea, but if it’s so effective, why not simply make law a college degree and have them go through this process?

In conclusion, after reading the report myself, I liked my idea in my previous post: tell Massachusetts’ law schools to draw straws.

Bloomberg Casually Slaps Law Schools, Uses Some Misleading Facts

Josh Block and Janet Lorin, “Law School Debt Exceeds $100,000 Amid Jobs Shortage,” Bloomberg.

I have to say this has been a weird week for media coverage on law schools. On the one hand they’re somewhat more critical of law schools and show a willingness to research some facts, but on the other hand, they’re making pretty clear factual errors. For my part, yes, I like being an ass and pointing out their flaws. The LSTB is not inspired by Beat the Press for nothing. Then again as much as I enjoy criticizing legal education, I want the media to be accurate. This Bloomberg piece follows spiritually from the Slate/Reuters piece from earlier this week.

Law school graduates are leaving college with an average of $100,433 in debt at a time when new lawyers outnumber legal jobs, according to a survey from U.S. News & World Report.

Is “college” debt undergrad or law school debt? If it’s undergrad, it’s quadruple the $25,000 figure we see bandied about. If it’s law school debt, then it’s probably accurate but not by the methodology the authors use. U.S. News provides the average debts of law schools’ graduating classes. Taking the average of this is not the same as lining up 44,000 people’s debt figures.

This decade, U.S. law schools will produce four times as many new lawyers as there will be jobs for them, according to the U.S. Bureau of Labor Statistics.

This one made my eyes bug out. Then I realized that Bloomberg is only looking at net jobs, not net jobs plus replacements. That means it’s only double the number of graduates. Also, there will certainly be fewer than 440,000 ABA law school graduates by 2020. It won’t match supply to demand, but it will be significantly fewer. 35,000 graduates per year is still too many but better.

Average tuition and fees for private law schools have jumped 73 percent since 1999 to $35,743 in 2009, an American Bar Association survey shows.

This figure ignores inflation. Average private law school tuition actually grew by 34 percent. Still bad, but this is a pretty big mistake.

Ultimately, while I’m glad media are taking a critical eye towards legal education–especially discovering the BLS–they shouldn’t do it so flippantly. It reduces their credibility and makes them look partisan when they’re not supposed to be.

ABA Journal Discovers U.S. News’ Debt Rankings

Debra Cassens Wiess, “Average Debt of Private Law School Grads Is $125K; It’s Highest at These Five Schools” ABA Journal

The average education debt for law grads at private schools last year was nearly $125,000, while the average for grads of public law schools was more than $75,700, according to new figures released by the ABA.

This refers to the numbers found in this ABA document (PDF). No, the law schools don’t send 45,000 graduates’ debt numbers to the ABA, they take the average of their students’ debt loads and send that, which the ABA then averages again. It’s a deceptive number, and the ABA never says how many law schools are reporting their average student’s debt levels each year. Thus for the average of private law schools’ average student’s debt to go from $106,246 to $125,000 is completely incredulous. Indeed the average of the average private law school that reported to U.S. News was $116,744 (112/116 reporting). Speaking of which…

Meanwhile, U.S. News & World Report has released its own figures on the “10 law schools that lead to the most debt.” At those 10 schools, average student debt was more than $147,000 in 2011.

This has been out since the rankings. I know because I looked at this and dorked it into my spreadsheets before bothering with “Oh my God, Harvard’s number three! Wowohwowohwow, &c.” Actually, I didn’t do that. Point is, this is old news.

Also, take a good look at how many people took on debt at John Marshall (IL): 50%. Bullshit. It didn’t have or send all the data.

<editorial mode> Omitting detailed debt figures for each law school from the Official Guide is utterly irresponsible. Why the public gets more accurate numbers from a for-profit magazine before the non-profit accrediting authority is similarly baffling. Maybe people would’ve flinched at law school if they’d seen how much it cost, but instead, they get the Official Guide we know and love, which shills things like this in its “Types of Employment” section (PDF page 42):

Business and industry jobs may include positions in accounting firms; insurance companies; banking and financial institutions; corporations, companies, and organizations of all sizes, such as private hospitals, retail establishments, and consulting and public relations firms; political campaigns; and trade associations.

TheGuideforgets to mention it may include retail. It gets better:

Law-trained individuals also pursue a wide variety of nonlegal careers outside the practice of law itself. Lawyers also work in the media and public relations; as teachers at colleges, graduate schools, and law schools; and in politics and administration.

Again, this what the ABA says. It does not come out and say, “There aren’t enough lawyer jobs for everyone, many of these careers don’t need law degrees, and the people who don’t report their employment or salaries do so because they were hosed.” See for yourself; it’s a gold mine. Between U.S. News‘ “5 Ways to Strengthen Your Law School Application” and the ABA’s whitewashing of legal education’s value, I wonder why there aren’t more scam blogs. Pravda has nothing on contemporary American institutions. </editorial mode>

‘U.S. News Data Show 2011 May Be Beginning of End for Law School Tuition Bubble’ on the Am Law Daily

Didn’t have time to write this one here for the LSTB, so this post is all original.

“U.S. News Data Show 2011 May Be Beginning of End for Law School Tuition Bubble“