Day: 2011/04/18

How to Make Transparency Work: The Sorting Hat


If U.S. senators are calling for transparency in law school statistics, it’s probably time to think through what a transparency regime would look like. By now, it’s become the sacred cow of legal ed reform. How can anyone be against it? Of course, no one can be—it would do a great deal of good—but its advocates are starting to oversell it as a panacea to legal education’s ills.

Before evaluating a transparency regime, we need a brief recap of why we have law schools: If we had a free market in legal services, i.e. a complete neophyte can walk into court, announce that she is someone’s attorney, and then represent that client, we fear that she will be incompetent or unethical. Anyone who’s familiar with law knows that formal education can enable students to learn things more efficiently than experience. One of my favorite examples is hearsay exceptions. There are more than a dozen examples of these, and if you don’t know them in court, you lose. It’s quicker to memorize them than to learn them on the job. We are also concerned with incompetent representation because we believe that any time the state threatens to deprive people of their rights (like their lives in an intentional homicide trial), we feel duty bound to protect those rights as best as possible. These are the only real reasons we can justify formal legal education as a barrier to legal market entry.

This barrier has become increasingly ineffective; it’s both too high and too low in the wrong ways. Too high in that it’s frequently not worth the investment; too low in that it fails to prevent market saturation. Transparentists believe that if law schools publish their graduates’ employment information nine months after graduation (because bar exam results are in by then), prospective students will have reasonable knowledge of the legal labor market they wish to enter. As a result, the barrier to legal labor market entry will rise and fall in the right ways, they argue. Costs will drop because people will recognize that the reported starting salaries do not justify the tuition costs, and those who choose not to attend will force enrollments to drop and educational quality to increase. Transparentists present their arguments as a “market-based” solution even though they don’t admit that we do not have a free market in legal services, and more importantly that law schools are the most significant barrier to such a free market. To transparentists, those who are unemployed after graduating law school (or who flunked out) are fully responsible for that outcome because they were fully informed of that possibility before deciding to attend.

What would really happen if we had transparent, disaggregated law school employment data? The best case scenario would still create an oversupply of attorneys, and legal education would still be too expensive. Here’s why:

Data from students nine months after graduation are insufficient to provide a clear picture of what a legal education’s earning potential is and what market conditions will be like at graduation

This is a common first response but worth repeating. Prospective law students will be relying on data far in advance of the market they will be entering—farther than people might think. Let’s say a college junior in 2012 is considering law school. He will look at the employment data in March of 2012, using it as a basis to take the LSAT. He will do so in June, October, December, and possibly February of his senior year (2012-2013). By the time his scores come back, he will be completing applications due March of 2013. The ABA’s new proposals require the law schools’ data to be posted on their websites by March 31, and plenty require applications to be submitted before then. Let’s assume our applicant matriculates in September 2013 and graduates in May, 2016. That means he will hit the market four years after the 2012 numbers were published. Transparentists would reply that even if our student graduated during a recession, his unemployment would appear in his class’s employment data, discouraging potential applicants for the fall of 2017. However, plenty of people would apply assuming the economy would recover just for them, and the cycle would continue.

As to the career earning potential of a juris doctor, I appeal to Herwig Schlunk, who states in a footnote:

Law students may not appreciate how volatile attorney income is, even in the case of established attorneys. Not all associates become partners. Not all partners become senior partners. Law firms blow up, leaving non-rain-making partners in the lurch. In-house attorneys are subject to all the usual vicissitudes of corporate down-sizing. And so on.

I add that governments cut budgets too. The reality is that as of now a legal career is not a long-term career choice such as medicine or dentistry—two industries that create a shortage of practitioners unlike law.

Finally, in substance the data will never be an accurate sample of any given class. It will always skew toward those stable employment and decent salaries. Even if non-responses are included, they would still be insufficient for prospective students to base a career choice.

Legal practice is specializing

[T]he legal marketplace is not a totally free market, because it is regulated in a number of ways. One of these regulations restricts the use of specialty status by lawyers. In Peel v. Attorney Registration and Disciplinary Commission, the Supreme Court permitted lawyers to call themselves “specialists” but permitted ethics rules to require additional restrictions to prevent the term specialist from being misleading. This has had a chilling effect on the growth of legal specialties in the United States. Although the legal profession will probably never follow the path of the medical profession and limit practice in specialty areas to certified specialists, lawyers are moving inexorably in the direction of specialization. Gary Munneke, “Requiem for a GP: End of an Era” (12)

Pace University Law School Professor Gary Munneke wrote an excellent article in the February issue of the New York State Bar Association Journal (I can send copies for those desiring) describing the decline of general practitioners. He made a few points relevant to legal education that I’ll expand on.

[The decline of general practitioners] will place greater pressure on law students and recent graduates to make specific career choices at an earlier time than they have in the past…[N]ot all lawyers will provide services directly to clients; many solo and small firm lawyers will work with other organizations, both inside and outside the private practice of law, to complete discrete legal tasks. These contract lawyers will perform outsourced work from law firms and law departments on a project-by-project basis. They will compete with off-shore outsourcers for this work. (13-14)

Who decides to go to law school with this type of career in mind? How does law school prepare utility outfielder attorneys?

Munneke gives us the vestigial GP:

[T]here may be room for a primary care lawyer, who sees clients when they are legally injured and refers them to a legal specialist who can serve their needs. Such a lawyer could be funded by referral fees from the specialists, because we do not have an insurance system that pays the primary care professional as medicine does. The primary care lawyer would have to be trusted by people in the community, possess a broad general knowledge of legal problems, and maintain contacts with a wide variety of specialists in order to make the right referral in the right circumstances. (14)

This career requires experience and business contacts—not things you find in typical law students.

Above, Munneke argues that the bar’s ambivalence about viewing law as a business will inhibit specialization. I think legal education provides far greater resistance: three years, mired in 19th century curricula, oriented towards general practice, and ostensibly designed to prepare people for a generalized bar exam.

What does specialized legal practice mean for transparency’s efficacy? Until the bar certifies specialties and allows shorter, tailored education, law schools’ employment data won’t be very helpful to prospective law students looking to move into specific careers. We also know from the outset that it’ll be too expensive because tuition will pay for an over-generalized education that students wouldn’t be fully using.

Transparency will lead to the “optimal level of lawyer overproduction”

Law schools will continue to over-enroll applicants. It won’t be as bad as it is today thankfully, but they will all believe that they’ll be in the 95-98% who are employed as lawyers nine months after graduation. Those 2-5%, or whatever unemployment level people would be willing to accept, wouldn’t just vanish. They would still have student loans on degrees they can’t use. They also wouldn’t stop seeking work in the legal labor market, which would suppress wages. The question we have to ask ourselves is why should we force unemployed graduates to subsidize the educations of the employed ones? Why should we allow law schools to justify continued access to student loans on the belief that creating unemployable lawyers is necessary?

Tuition will only drop to reflect the median starting salary

Similarly, transparency would do great damage to today’s overvalued legal education, but because some practice areas are more lucrative than others, tuition will only drop to whatever the median graduate earns. Not only will unemployed graduates be subsidizing the employed ones, but the underemployed graduates will be subsidizing the better-employed ones. Again, we’d be allowing the law schools to blame their students for their suboptimal career outcomes rather than using a fair way of financing legal education whether by Macchiarola and Arun’s 10-year put option on student loans or by human capital contracts.

Eeyore Law Students

There’s a possibility that beyond the cognitive biases that people lob against prospective law students—what I see as the “If only the applicants weren’t so stupid!!” lament—it may be that people are going to law school despite knowing the outcomes won’t be good. Demosthenes of America wrote a depressing post titled, “The Eeyore Lemming,” noting people who go to law school not because they expect salaries or employment security, but because it gives them a backup identity. The Last Psychiatrist arrived at the same conclusion.

A Modest Proposal

It’s due to these reasons that we need to supplement transparency’s incomplete solution with the fantasy of J.K. Rowling’s sorting hat. Not that I’m the world’s biggest Harry Potter fan, but wouldn’t it be better if, from the beginning, we simply put a stinky, hideous, lice-infested hat on people’s heads and told them to their faces that they’d end up in certain legal fields and not others, or that they’d be unemployed after spending three years (really four, if we include the LSAT/application year) of their lives? So long as legal education fails to specialize along practice lines and adopt a reasonable financing mechanism, law school will still vastly favor the sellers over the buyers.

In seriousness, the law school problem didn’t come about because prospective law students lacked transparent employment statistics; rather, it came about because the federal government unflinchingly lends as much money to law students as the law schools charge while simultaneously publishing BLS reports stating there are too many law students. Of course, it’s politically easier for law schools to blame their students for lacking clairvoyant Muppet-esque headgear than it is to blame their benefactors’ loose lending policies; otherwise the government would cut their funding. One wonders if Senator Boxer—to say nothing of the transparentists—understands this.