Bottleneck Attack!

I dove right in to drawing the connection b’ween the number of law schools and the tuition bubble.  Then I realized that I really hadn’t sufficiently distinguished bubbles from bottlenecks and got bogged down.  I apologize for delaying your numbers-crunched, but fumbling through this post helped me crystallize my opinions on this project.

Bottleneck and bubble both try to explain rising law school tuition.  They accept cost-benefit analyses of legal education’s value (e.g. Schlunk), though bottleneckers emphasize non-monetary benefits to those earning below the break-even starting salary.  The term “bottleneck” refers to the upfront costs of entering the legal labor market that eventually pay off.  I call the argument for those who do not accept cost-benefit analyses “denial.”

Why is the bottleneck problem important?  The bottleneck is the only sophisticated argument opposing this blog’s premise, which is why I addressed it in my first substantive postThe debate is between time and space.  The bottlenecker believes in time law school can pay off, just with a few tweaks to the system; the bubbler believes that the legal education system’s size must be reduced to match the legal market’s needs before legal education becomes valuable again.

The bottleneck summarized:

The market for legal services (number of attorneys, number of law schools, rate of increase, &c.) is sound, but the horrors we’re presently experiencing are caused mainly by the recession (which is temporary) and to a lesser extent rip-off legal education prices.  Reduce law school faculties and everyone will be happy: legal education will cheapen, no schools will close, and while there’ll be a slower recovery to soak up laid-off attorneys, it’ll even out for everyone eventually.

The bubble argument contrasts:

The market for legal services is transforming, it is not and will not grow sufficiently to accommodate entering JDs and attorneys dislocated by the recession.  Critically, nondischargeability of student debt in bankruptcy has discouraged risk-analysis by lenders and has enabled expansion within law schools.  As a direct result, law schools compete over rankings and graduate employment statistics, expand programs beyond students’ and the legal market’s needs, and counterintuitively claim that the juris doctor can open any employment door.  Furthermore, legal education is so far unaffected by the recession because universities see law schools as necessary revenue sources.

The bad news for the bottleneck is that it could turn into a bubble in the future; the good news for the bubble is that it won’t go on forever.

This blog goes on hiatus if the bottleneck is right, and I’d be happy for the sake of 4Ls and 5Ls nationwide to be wrong on this one.  It should be clear, though, that both sides agree on most facts but not on some important assumptions and outcomes.

Jack Crittenden defends the bottleneck argument in his two articles, “A Wise Investment?” and, “Why is Tuition Up?  Look at All the Profs.”  He makes two noteworthy points.

First, unaccredited schools (at least the Massachusetts School of Law) aren’t charging excessive tuition and have kept tuition in check with inflation ($14,400/year as opposed to $35,000/year).

This tells us that we’re not just seeing a demand increase in legal education, nor is nondischargeability of student debt the sole cause of the tuition increases.  He does not tell us if these schools provide better employment results and statistics than their ABA-accredited counterparts.  I also wonder if the fact that Massachusetts School of Law isn’t ABA-accredited and therefore excluded from US News & World Report’s loathed rankings isn’t really a blessing in disguise: Being unranked rather than ranked poorly may free it to operate more responsibly.

Second, the reason tuitions are increasing is as follows: Law schools want to attract better students and better faculty for their US News rankings, and to a lesser extent they feel legal education requires more specialization [Isn’t the J.D. supposed to be flexible?].  They expand their staff to close their faculty/student ratios, which incidentally gives professors more time to research rather than teach—another factor measured in the rankings.  Research output indirectly provides better opportunities for students by improving schools’ prestige.  Crittenden blames onerous ABA full-time faculty requirements for inhibiting faculty reduction.

This second point is important because it shows many facts on which bubblers and bottleneckers agree—the “how” if not the “why”.

I saw Big Star at the Brooklyn Masonic Temple in November 2009, and they played Chris Bell's "I Am the Cosmos". Broke my heart of darkness.

As written above, I disagree with some of Crittenden’s assumptions.  First, he doesn’t provide a convincing explanation for law schools’ participation in the rankings dogpile, as though law schools suddenly decided in the late 1990s to pursue prestige for prestige’s sake.  I find this unsatisfying.  The rankings preceded the bubble by a decade, and since bottleneckers believe fairly compensated fulltime jobs always existed (absent recession) and will continue to do so, it’s less clear what difference the rankings make.  Even today, it’s not as though people are refusing to attend the lower-ranked law schools.  LSAT takers are increasing too.  In other words, given the high demand for legal education, there should be nothing for law schools to compete over.  Quite the opposite, if jobs are or will be available for new JDs, it’d benefit law schools to compete to cut salaries and reduce tuition to create a more efficient business model (even if that essentially means admitting they’re regional- or state-level schools).  That’s how it works for the rest of the private sector, to say nothing of state-accredited law schools.  If the legal services sector is saturated or oversaturated (which Crittenden doesn’t believe), then competition for students and faculty matters, necessitating prestige.

The important difference b’ween the bottleneck and bubble arguments lay in their solutions.  As I noted above, even if we greatly reduce faculty requirements, that won’t prevent a new bubble from forming in the future.  The bubble argument deploys the nondischargeability of student loans in its causal mechanism.  Crittenden traces the faculty expansion to the late 1990s, which is the exact same time the “undue hardship” exception (e.g. having your arms sawed off) became the only circumstance in which student loans could be discharged in bankruptcy.  It’s only when the costs of legal education were fully shifted to law students that law schools could try “punching above their weight” in the rankings.  Consequently, the bottleneck argument doesn’t convince me because without changing the bankruptcy code, this can all start over again.

Now, on to the damned numbers!

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