Speaking in Links–Law School Tuition Compared to Gambling

Two links from our friends at the ABA Journal.

(1)  Martha Neil, “As Summer Classes Plummet 80% at Some BigLaw Firms, Clients Balk at Paying for Law Student Work

In the buyer’s market for legal services, law students, and soon I predict new lawyers, will not receive the stratospheric salaries of the 90s and 00s.  As legal education becomes more expensive the legal profession will be less lucrative.  Disappearing six-figure salaries will make it even less so.

(2)  Stephanie Francis Ward, “Lowering the Stakes: How Law Schools Can Help Next Gen Lawyers Take Gamble Out of Heavy Tuition

Ms. Ward interviews three discussants, two law school deans and one of Law School Transparency’s co-founders, about, “[T]uition, disclosure and what could and should change about legal education to train the next generation of lawyers without saddling them with crushing debt.”  Essentially, they propound a modified Bottleneck argument (which I labored against in my last post), except they have no problem with the size of law schools and the cost of legal education.

Now, all the bomb shelter-building crazies who read The Law School Tuition Bubble should know I’m vexed just by reading the title.  The “stakes” (graduate employment outcomes) alone aren’t what needs to be lowered, nor should tuition be a “gamble.”  Instead, tuition needs to drop, programs need to contract, and the legal establishment must lobby for dischargeability of student debt in bankruptcy.  If that means some or many law schools must shut down even if temporarily, so be it. As a side note, while I support Law School Transparency’s efforts in particular, I’d be happier if it weren’t run by botteneckers.  Here’re some quick thoughts on the piece.

  • They accept that law schools’ and NALP’s bald employment statistics conceal how bad the economy is and how few new JDs are in the jobs they want or even if their jobs required a J.D. in the first place.  They also mention low response rates’ effect on the data, and they recommend external auditing of law graduates’ employment.  Good.
  • Dean Van Zandt (Northwestern) calculates that on average a law degree only pays off if one’s starting salary is $65,000 per year.  Given that many law schools (53 by his calculation) report average and median starting salaries below this, he blames prospective students’ unrealistic optimism for attending these schools.  Three sub-points:

(1) Van Zandt ignores the bimodality of starting salaries: they are either well below this median or ludicrously above it.  $65,000 is still a generous salary, but more graduates start earning more than $65k than actually at $65k.  Given the link above, salaries will probably start dropping in the future because no one wants to pay six-figures for a fresh junior associate.  Consequently, even fewer law schools are providing breakeven outcomes to their students.  I don’t know why Van Zandt (and the others) seem not to care that these 53 law schools are essentially on notice that they’re not providing a legal education worth having, yet they aren’t calling them out and warning prospective students to avoid them at all costs.  They find it easier to blame the students’ optimism alone.

(2) Some loan forgiveness exists for lower-paying public sector jobs, so the $65k number isn’t so bad for some graduates in reality, but loan forgiveness just shifts the bubble’s costs on to taxpayers.  It certainly doesn’t help those who are unemployed or earn <$65k in the private sector.

(3) The $65,000 payoff number ignores the tuition bubble.  Legal education is overpriced relative to its outcomes to begin with.  If it were more reasonably priced, the breakeven starting salary would be lower.  Technically this cuts against my above point because it would imply that the market can handle more of these 53 law schools than Van Zandt’s calculation suggests.  However, the bubble must burst before anyone can calculate the actual breakeven number.

  • Dean Polden (Santa Clara) claims the tuition increases are due to (a) Gen-Y students wanting more “services” (like IT people and fulltime career-services staff), and (b) more faculty to teach hands-on negotiating-type courses.  Van Zandt concurs but then adds rankings/faculty salaries connection, and that there’s no countervailing force against law school expansion.

(1) Honestly, Dean Polden is in denial, so I guess he’s not even a bottlenecker.  The tuition increases are due to law school faculty competition as Dean Van Zandt points out, not Millennials’ alleged need for pampering.  Moreover, there’s no reason to believe the students are the ones demanding the services.  Because of the bubble, we have every reason to believe law schools offer these services and advertise them to prospective students.  Finally, if law school were a breakeven or better investment for everyone, no one would feel the need for broader career service support.

(2) No one mentioned student loan dischargeability, and they implied that the system is fine as it is, i.e. that legal education isn’t overexpanded (even within law schools) and tuitions are reasonable.

(3) Law schools also spend money on “law school porn”—marketing publications for rankings purposes.  Something I didn’t know about.  I wonder if the law school porn advertises their IT services and career counseling staff…

  • Dean Van Zandt argues law schools aren’t universities’ cash cows.  They cover their own overhead but provide prestige.  Looking back on the Big Bubble Battle, perhaps I overstated or was wrong about the cash cow argument: if the bubble money is flowing to excess instructors, then it can’t go to the university.  Perhaps the cash cow was true in the past.  It remains true that law schools have not been hit by the recession.
  • Their answers to the “What pressures do you face when setting tuition?” question imply tuition is solely based on competitive factors and not market outcomes.  Absent the earlier “countervailing forces”, it sounds like a tuition bubble to me.  Additionally, isn’t it odd that “Our endowment took a hit in the recession so we have to cut staff,” or, “The state’s cutting our funding,” or, “We need to cut this admiralty law professor because we’re in an arid, landlocked state, and most of our graduates stay instate anyway as general practioners,” aren’t involved in the tuition-setting calculus during the worst recession in the decade?  Higher education institutions are making analogous decisions; law schools are not.
  • It’s pretty weird that they agree the education is worth the cost after claiming prospective students are unreasonably optimistic.
  • 3L McEntee (Transparency) essentially predicts a 3-4-year (2009-2012) lost generation of new attorneys.
  • Update: At some point Dean Polden commented that legal education at California’s public schools is becoming as expensive as private schools.  Hopefully the state government won’t fund the bubble to make up the difference.

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