Month: September 2012

2011 a Sudden Drop for Law Schools, but Not Their Worst Year Ever

Hidden on the ABA’s Web site is the remainder of the 2013 edition of the ABA-LSAC Official Guide to ABA Law School (PDF), which includes all kinds of tables consolidating the information found on the LSAC’s Official Guide site. This makes inputting the data a lot easier and gives us the opportunity to get a clear look at what happened to law schools between 2010 and 2011. The short answer: a sudden drop for law schools but still not a bad year.

Preliminarily, the application decline was not localized to any one region, as we’d expect.

To see just how abrupt the nosedive was, here’s the rate of change of full-time applications. The blue line is the median public law school, the red line, the median private law school.

But as I wrote last week, it’s the number of matriculants that matters, so here’re the system-wide changes.

You can see that there were more matriculants in 2011 than in the last trough year, 2007. Also obvious is that law schools accepted close to the same number of applications in 2011 as in 2010 even though there were about as many applications as in 2006. Things for the typical law school, however, are a little different.

For the average law school, 2008 was the matriculant trough year, and 2011 is actually more like 2006 than 2007 or 2008 nationwide. Regionally, although it’s a little unclear, some places were still higher in 2011 than in 2008. For instance, the boom the Southeast has seen hasn’t let up.

Between 2004 and 2011, seven law schools were accredited in that region (15.9 percent growth, includes Ave Maria, which moved from the Great Lakes). More than half the net law school growth in the previous seven years was in the Southeast, and you can see it easily.

Doing the math, cumulative full-time matriculant growth above the 2007 trough is dominated by Southeastern law schools.

I bring this up because sometimes the media will interview law school deans outside of these high growth regions about the number of applications their schools have been receiving, even though the story is about (a) who’s matriculating and why and (b) what’s going on in the Southeast and the Mideast. True, some of these new Southern schools have been around for a while and have only recently become accredited, but I think there’s something to be said about the impact of the newer law schools from Virginia through the Carolinas.

The fun question, which I can’t answer yet, is whether the 2011 matriculants have significantly lower LSAT scores than in previous declining years, like 2006. I can tell you that the change from 2010 is there, but it’s subtle, like, less than a one point drop in the 25th percentile at most schools. Among the 199 law schools surveyed (UC Irvine wasn’t in the Official Guide last year but La Verne was this year, surprisingly), the 75th percentile saw a net drop of 63 LSAT points, down 70 points in the 50th percentile, and -149 in the 25th percentile. You can see how many law schools were affected here:

And for the most part, the “spans” between the percentiles grew as well, more so on the low end.

Finally, here’s the distribution of the numeric change in LSAT points by their latest U.S. News ranking. Private law schools suffered the most last year. As I said, though, it’s barely perceptible, and seven of those points in the 25th percentile were at Emory. Illinois accounts for seven points in the public schools 25th percentile largely because its LSAT fraud came to light in September 2011.

For my last trick, here’s what happened to all those “golden,” “scavenger,” “indie,” and “marginal” law schools I wrote about a while back. The labels have not been updated for 2011, so this is what happened to those law schools that year (to say nothing of 2004-2010).

From an empirical perspective, the biggest fly in the ointment is the fact that applicants and law schools have increasingly favored electronic applications in the 2000s, which increases law schools’ acceptance rates and generally lowers their yields too, even when the number of applicants and law schools is the same, something else to keep in mind when law school administrators compare their number of applicants this year to previous ones. Nevertheless, you can see how many more law schools accept around 70 percent of their full-time applicants than in the past.

Returning to the scavenger law schools, there are still many places that reject many applicants and whose accepted applicants aren’t interested in attending anyway. The fact that these schools exist at all surprised me because I figured most people who apply to places like Duke or Cornell or Georgetown really want to go there when in fact a lot of them are either settling or are bought off with scholarships. It turns out that the average T-14 law school actually accepts more applicants than average lower-ranked law schools do. This implies that there’s a 25th percentile LSAT breakpoint, say 165, where a lot of law schools can survive by rejecting anyone below that number and survive on applicants who really do see them as safety schools. Something to explore in the future.

By the way, did I mention that 2011 law graduates paid out $3.9 billion or more in student loans to their law schools?

The x-axis in previous versions of the law school debt blob animation stopped at 90 million. I had to redo it this year because in 2011, one law school made more than $101 million off its 999 mostly underemployed graduates: Cooley.

下課

Business Insider Article Shows Why Measuring Applications Alone Isn’t Helpful to Readers

Aleksi Tzatzev, “Despite Getting Sued By Graduates, This Low-Ranked Law School Has More Applicants Than Ever,” Business Insider.

The article’s opening speaks for itself:

“While some other law schools are struggling to attract applicants, New York Law School is doing better than ever.”

Additionally, according to the dean quoted in the article, NYLS received 5,998 applications in 2011, up from 4,510 in 2010 and even 5,606 in 2008.

The photo, however, is my favorite part.

I just wish I knew who was saying “People want to go to our school!” because while it’s literally correct, relative to other law schools nationally it’s not.

I should preface by saying that I’m not going to delve into part-time applications, which the dean above is obviously doing. Tracking full-timers is enough of a burden, so there will be a little apples/fruits comparison going on here, but most of the fruit are apples.

In 2008, NYLS received 4,721 full-time applications, 3,685 in 2010, and 5,054 in 2011. This is all fine and good, but the number of applications doesn’t matter so as the number of people who ultimately show up, which is why I torture readers with arcane stats like the number of “full-time matriculations per 100 applications.” This figure has the benefit of giving an estimate of how good a fit law students are with their law schools, the higher the better. Tracking it against law schools’ acceptance rates helps us distinguish between law schools that reject many of their applicants and applicants who reject the law schools they apply to, like that one in the lower right whose name we daren’t utter. Discovering schools that tend to accept more applicants who are willing to show up tells us something that the rankings don’t as it measures what applicants are thinking rather than what U.S. News wants them to think. This doesn’t mean such schools’ outcomes are any better, but that’s a little off-topic today.

In 2011, NYLS had 7.42 matriculants per 100 applications, way down from 14.11 a year earlier. An inauspicious fall, but it’s not the only New York Law School in those parts of the chart, just north of St. John’s but south of Hofstra and Pace. NYLS accepted 45.4 percent of its full-time applicants (the fourth fifth of all law schools), and its yield was only 16.3 percent (25th lowest for 2011, the bottom fifth system-wide). The size of its full-time entering class was only 375, down from 520 in 2010, the smallest class since 2004.

Although NYLS had a large haul of applications, the vast majority of them apparently preferred going elsewhere. A better title for the article would be, “Sued by Graduates, This Low-Ranked Law School Is Only Slightly More Preferred Than St. John’s, but Less Than Hofstra and Pace.”

You are, of course, invited to take Business Insider‘s survey on whether you believe law school is worth the cost of tuition.

Veterinary School Is Safer Than Law School

One of the commenters to Ohio State law professor Steven M. Davidoff of the New York Times’ Dealbook pointed everyone to the Bureau of Labor Statistics’ Occupational Outlook Handbook, but I think it’s worth a post. Professor Davidoff writes:

Law schools have come under fire during these tough economic times, with critics saying that they leave too many graduates in debt, chasing too few employment opportunities. But it could be worse. Consider the plight of veterinarians.

The average tuition and expenses for a veterinary degree at a private school has doubled in the last 10 years to over $200,000, well above the typical cost of law school. Yet their pay remains moribund at an average of $66,469 — much less than lawyers.

But unlike law schools, veterinary school is not regularly being called a scam or bubble. In fact, applications to veterinary schools were up about 2 percent last year.

Actually law schools were coming under fire before these tough economic times going back to 2007 at least.

Otherwise, Davidoff is making a common error in law school discussions, equivocation: Not everyone who finishes law school is automatically employed as a lawyer, so their incomes (and lack thereof) are not included in government estimates of lawyers’ salaries. The BLS also excludes self-employed lawyers, which range from solos to biglaw partners, which further diminishes the scope of government’s lawyer wage data. This may be true for vets too, but it probably has less of an impact.

A quick comparison of the OOH entries should tell us why there aren’t any veterinarian school scamblogs.

“Employment of veterinarians is expected to grow 36 percent from 2010 to 2020, much faster than the average for all occupations. Job opportunities should be particularly good in government and in farm animal care.”

And:

“Employment of lawyers is expected to grow by 10 percent from 2010 to 2020, about as fast as the average for all occupations. Competition for jobs should continue to be strong because more students are graduating from law school each year than there are jobs available.”

Digging a little deeper:

“Overall job opportunities for veterinarians are expected to be good. Although veterinary medicine is growing quickly, there are only 28 accredited veterinary programs in the United States, which produce a limited number of graduates—about 2,500—each year. However, most veterinary graduates are attracted to companion animal care, so job opportunities in that field will be fewer than in other areas.”

And:

“Competition should continue to be strong because more students are graduating from law school each year than there are jobs available. As in the past, some recent law school graduates who have been unable to find permanent positions are turning to the growing number of temporary staffing firms that place attorneys in short-term jobs. This service allows companies to hire lawyers “as-needed” and permits beginning lawyers to develop practical skills.”

This isn’t to say that today’s vet school graduates don’t have higher debt-to-income ratios than in the past due to rising tuition, so perhaps vet school isn’t as good a choice today as it was in 1985. Many vets may be on IBR for all we know, but they have better opportunities for finding jobs as vets (36%? Wow!), which is not something we can say about 2012’s law grads.

A Note on Private Law School Tuition Projections Methodology

Diligent readers may know that as of right now I’ve updated about 60 percent of the law schools on the tuition page, which includes tuition projections for private law schools. However, the tuition projections page itself has not been updated. That’s where I am. I’ve decided that before I get to that page specifically, it’s worthwhile to discuss/digress on the methodology I’ve chosen for projecting private law schools’ tuition individually. The reason I’m doing this is that both the tuition page and the projection page have been cited by researchers and academics (the latter page even making an appearance in Chapter 9 of Brian Tamanaha’s Failing Law Schools (FYI: Yale’s projection is actually one of the most accurate ones)), and these types of people might want more detail on the numbers. I think they’re entitled to it, but I also think that casual readers won’t be so interested (you should be), so I’m creating this post separately.

As of fall 2012, there are 117 private law schools outside of Puerto Rico whose tuition the Official Guide tracks. I exclude the two private Puerto Rico law schools for two reasons: one, the dollar’s purchasing power is lower there so including them slightly distorts any averages; and two, neither behaves like stateside law schools in terms of tuition increases. Why do I not include public law schools in the projections at all? Because they are (usually) subsidized by state governments, and the goal of the tuition projections is to see where tuition inflation due to increased spending (including cross-subsidizing students) will go, not tuition inflation due to decreased subsidies. As of right now, I’m also excluding public law schools that are clearly not subsidized by their state governments, even though I sometimes include them in my synthetic, “Adjusted Private Law School” category in other discussions. That may change in future methodological analyses.

This post analyzes the projections methodology by testing it on the last year for which precise data are available: 2011. The results, incidentally, are an interesting lesson in measurement accuracy and precision. The projections are all characterized in nominal dollars to avoid the need for projecting future inflation as well. Arguably, inflation is a minor factor in law school tuition increases, but I’ll not ponder that today.

The Methodologies

There are three potential methodologies I can think of for projecting private law school tuition.

(1)  The current methodology merely extends the linear regression for each law school’s tuition individually into the future based on its Official Guide tuition data going back to 2004 or whenever it was first available. The basis is that past tuition increases are a guide for future ones.

(2)  If one believes that various factors distort individual law schools’ tuition trends, an alternative is to take the annualized rate of average private law school tuition increases and apply it to private law schools individually, an “ecological” methodology.

(3)  Finally, one can try to accommodate both methodologies by calculating the annualized rate for each law school individually and using that rate into the future. In fact, this methodology takes the worst qualities of both: it makes any distortions exponential rather than linear.

The Facts: What Do We Know about Law School Tuition

Before jumping into the analysis, it’s necessary to discuss a few empirical findings from what’s available in the Official Guide from 2004 to 2011 and elsewhere.

  • One would think that law school tuition grows exponentially, but in reality it’s better characterized as linear growth because the R­2­­ statistic (shown below) is closer to one for linear regression than exponential regression. This is why I chose the linear regression methodology in the first place.

  • Even so, the rate of nominal tuition increases has dropped recently, and we know it’s below five percent in 2012 as well. Unfortunately, even the linear regression model doesn’t capture this for 2011. It’s about 16 percent higher than what actually happened.

Comparing the average growth rate from 2004-2009 (5.74 percent) to the average growth rate in 2010-2011 (4.27 percent), the rate dropped by about a quarter, and it stayed at about that level in 2012, according to the National Law Journal.

  • Speaking of distortions, a handful of law schools saw rapid tuition growth between 2004 and 2011. The furthest outlier is Faulkner University, which after obtaining ABA accreditation went from charging $15,000 per year in 2006 to $32,200 in 2011, a 14 percent annualized increase that dwarfs all other private law schools. Six others increased their tuition by more than a 4.9 percent annualized rate, placing them in the third average deviation or higher of tuition increases (the mean is 3.1 percent annualized). These law schools frustrate tuition projections for a few reasons:
    • (1) The first and third methodologies above, which use individualized rates, are certain to overstate these schools’ tuition in the future. Faulkner in particular is way, way out there.
    • (2) Given the drop in applications, I doubt private law schools will go on building sprees as they did in the past. Then again, there appears to be an endless supply of wealthy alumni who are willing to finance new buildings, so I could be terribly wrong.

  • As stated above, it’s very unlikely law school tuition will increase at a high rate again. Although I don’t expect the average nominal price to drop (the prices are very sticky downwards), I also don’t expect them to go above five percent ever again.

The Test

For 2011, all three methodologies produce average private law school tuition figures ranging from $40,100 (linear regression) to $40,300 (individual annualized rate), all high as the actual rate was about $39,700. However, comparing the absolute values of the variances between the projected tuition and the actual tuition provides a clearer finding: the average annualized rate is the most accurate but also the most dispersed.

Linear Regression Average Annualized Rate (5.51%) Individual Annualized Rate
Average Variance 2.2% 1.6% 2.0%
Avg. Deviation % of Variance 27.7% 37.6% 31.3%

However, since we know that law school tuition is not likely to grow as quickly as it did in the past, we’d want to know the actual variances, not their absolute values, because law schools that come in below the projected average will probably be more accurate in the long run than those actually at the average. When we do this, we find just how poorly the methodology I’ve chosen performs in terms of precision (had to say it).

Linear Regression Average Annualized Rate (5.51%) Individual Annualized Rate
Average Variance 1.2% 1.1% 1.6%
Avg. Deviation % of Variance 78.87% 3.3% 2.3%

Here’s what it looks like. To clarify, I counted these using the “FREQUENCY” function, meaning the tick marks on the x-axis mean that the result is greater than the previous tick mark but less than or equal to the current one, so on the red line, 36 private law schools’ projected tuitions were greater than one percent but less than or equal to two percent above what their actual tuitions were, a very precise yet mildly inaccurate finding that would rapidly compound over time.

That blue bump on the far right is, of course, Faulkner, but the blue bump on the far left is Cooley, which raised its tuition by much more than we’d expect based on a linear regression of its previous costs going back to 2004. Here’s a simpler chart to make things clearer, same >x­­≥% rule.

It’s obvious that the individual annualized rate is the worst of both worlds; it’s less accurate and less precise than the average annualized rate. I’m eliminating it as a viable alternative to individual linear regression.

But there you have it: An unpleasant tradeoff. Either I switch to a methodology that precisely predicts tuition will be higher than it will be (though it “rescues” Faulkner and predicts its tuition much more accurately), or I stay with the original methodology that is more accurate on average but more imprecise overall.

Conclusion

Of the three methodologies I’ve tested, none really gives me the results I want, but then again, I have a perfectionist streak. I may run this variance test again when the 2012 tuition numbers come out in official form (U.S. News is close, but … perfectionism), but trying to find a one-size-fits-all formula for projecting private law school tuition increases might not be possible. I have other ideas up my sleeve, like basing the trend on the last three years’ tuition, excluding more recently accredited law schools entirely, or listing the law schools’ annualized tuition growth rates and/or R‘s and highlighting those that are unusually high or low.

In the meantime, though, I’ll stay the course for at least three reasons: (1) I think linear regression provides a reasonably accurate assessment for average private law school tuition overall (half the R2‘s are greater than .993), (2) the numbers aren’t outrageously wrong even 10 years out, which is more than enough, and (3) my original motivations for publishing the tuition projections remain valid. Law school tuition will continue to increase, though not as high as in the past, I think, and it’s important for anyone who cares about the issue to see that. I particularly hope that any potential applicants who see either the tuition page or the projections will see law schools’ Janus-faced behavior, how they can speak solemnities about lawyers’ important roles and responsibilities in society while at the same time collecting rents from taxpayers and showing contempt for their students’ futures.

New Am Law Daily Article: ‘A Tale of Two (California) Law Schools’

‘A Tale of Two (California) Law Schools’

I’ve written about the University of La Verne and UC-Irvine in the past; this article synthesizes them.

If you live in New York and have any sense in you, you’ll see Bob Mould at Williamsburg Park tonight.

Also, I’ve revised up to Michigan in the tuition increases page. Halfway there.

The ‘Golden Ticket’ Cliché Strikes the Canadian Legal Profession

Siobhan McClelland, “Becoming a Lawyer: Is a Law Degree Still a ‘Golden Ticket’,” Huffington Post Canada.

I guess the now-defunct Law Students for a Fair Profession can now say I told you so.

I’m not going to research Canadian law schools, but McClelland’s article appears well-researched and worthwhile for those interested in the topic. The only comparison I can add for readers is that without knowing the number of law students at Canada’s law schools, the number of Canadian law schools (13, I think) per 10 million residents was ~3.9 in 2011 as opposed to 6.3 in the U.S. Add in all the non-ABA law schools and that number jumps to ~7.6. I have to recheck the number of non-ABA law schools and I exclude correspondence/online schools because it just gets too depressing.

Otherwise, it’s like a slow-mo instant replay. No articling positions; no jobs; and tuition is skyrocketing. Osgoode Hall charges *gasp* $25,000 per year in tuition (~$25,300 US). Canada’s great, but until its law school graduates emerge from for-profit law schools with $140,000 in debt, and zero hope of articling positions, then it can compete against the U.S.A. in the whose-legal-licensing-system-is-more-incompetently-implemented game.

Washington Bar Not Facing Retirement Crisis by Boomers

Via Mark Hansen, “Washington State Legal Community Braces for Huge Turnover in Lawyer Population,” ABA Journal.

Adam Worcester, “Legal profession braces for turnover as half the state’s lawyers say they want out,” Puget Sound Business Journal.

According to the original article:

“A recent Washington State Bar Association survey discovered that 7,200 of its members – almost a quarter of the state’s practicing attorneys – are considering retirement within five years … Seventy-one percent of the WSBA membership is age 50 or older, with 21 percent being 61 or above.”

According to the numbers, Washington has 23,741 active and resident lawyers in 2012, and in 2010 14,231 were actually working as lawyers (including self-employed lawyers).  If 7,200 members constitute nearly a quarter of the state’s practicing lawyers, that means there should be around 28,000 attorneys on the rolls, which clearly isn’t the case. Someone isn’t right here.

But it doesn’t matter because when an industry’s practitioners are so old and all about to retire, one must be dying to know how such a bizarre set of circumstances could’ve arisen. I’d think industries would reflect the population, but the two stated answers, blame Bill Gates and blame selfish Gen-Xers don’t persuade me.

“First, dot-com companies lured away many potential lawyers and other professional workers. Second, an emphasis on work-life balance soured Generation Xers on following traditional career paths.”

Using ABA and Census data, it appears that Washington’s lawyer population grew faster than its normal population, and it doesn’t appear significantly different than the rest of the country. Note that anyone over 50 today would’ve been at least 25 in 1987, so all these Boomer lawyers have been working in a growing legal market—or, rather, growing numbers of active and resident lawyers.

If the dot-coms were luring necessary people away, the solution would normally be to raise salaries. If work-life balance is the issue, then give workers more work life balance. The fact that they didn’t indicates that Washington’s legal needs were being met.

I’d be remiss if I didn’t point out that the original article said as much.

To be sure, not all industry observers see a crisis brewing. Tammy Gibson, the Seattle division director for staffing firm Robert Half Legal, said the pool of attorney candidates remains deep.

“I’ve not noticed any less count of potential recruits,” Gibson said. “What I am seeing is that there’s becoming more competition within firms.”

In sharp contrast to last year, larger firms are asking specifically for candidates they can train to become senior partners. Smaller firms, meanwhile, are expanding searches nationwide.

The result for job seekers has been multiple offers, quick placements, and increased incentives such as signing bonuses and reimbursement for moving expenses. Firms trying to retain lawyers, on the other hand, are raising salaries and offering other compensation, such as flextime and telecommuting.

See?

If the profession is grayer than in the past, and if the wages and benefits are stagnant until people start retiring, then it sounds like the problem’s with demand for profession’s services and not everyone else. It’s not as though the clients of retired lawyers will be unable to find new counselors to handle their matters.

The News-Gazette Has Not Heard of the Great Recession

Julie Wurth, “Global recession, glut of attorneys blamed for drop,” the News-Gazette

Most articles that discuss law school application cycles usually start by saying that applicants surged to law school in 2008, even though they didn’t compared to 2004. The News-Gazette‘s article, by contrast does a better job until it gets to the last half of this paragraph:

“The number of applicants shot up in 2002 and 2003 and topped 100,000 in 2004, then dropped 4.8 percent in 2005 and 7.4 percent in 2006. The assumption was the market was simply correcting, but the numbers continued to slide through 2008 as the recession hit full force, Margolis said. The number rose again temporarily in 2009, as the economy appeared to improve, but fell by 10.7 percent in 2011 after firms began to lay off lawyers and cut back on hiring.” [Emphasis LSTB]

The economy appeared to improve in 2009?

Take a good look at those last four years. The civilian employment-population ratio dropped continuously, and it’s leveled off so far in 2012. If you can see an “apparent improvement” in 2009, you have gifted eyesight.

Saying a nonexistent improvement to the economy caused the applicant uptick is a strange claim. Normally we find that law school applications are countercyclical—as the first half of the quote suggests—but the News-Gazette denies that. Why would fewer people than we’d expect apply to law school than in previous recessions? Maybe it’s because someone like Scott Bullock warned them not to, but attributing success to scambloggers is not a hypothesis the LSAC isn’t going to volunteer to the News-Gazette.

Think of the workers tomorrow.