‘The Real Problem With Law Schools” Real Problem Is Poor Research, Flawed Reasoning

Eric Posner, “The Real Problem With Law Schools (They Train Too Many Lawyers),” Slate.

“A crisis is looming in legal education,” writes the author. Why this isn’t a “student debt crisis” or “jobs crisis” instead of a “legal education crisis” is unclear, but the article earns a response because it so heavily leans on my new favorite logical fallacy, argumentum ad econ one-o-oneum: the misapplication of neoclassical economic principles to a policy (non-)conundrum due to a failure to research the underlying facts, or the misunderstanding of the neoclassical economic principles themselves.

Posner believes that the group of law school professors from mostly prestigious universities who sent a letter to the ABA calling themselves the “Coalition of Concerned Colleagues” “will make the crisis worse than ever.”

If you think that handing vouchers to everyone 18 years and up to attend law school at full cost to the government plus living expenses would be the only way things could get worse than ever (if people still even bother to apply at that), you obviously don’t know economics.

The crisis could have been predicted. Demand for legal services boomed in the 1990s and 2000s. College graduates, drawn by skyrocketing pay and subsidized by government-guaranteed loans, flocked to law school in ever greater numbers. Law schools, rational market actors that they are, hiked tuition. The higher prices people were willing to pay for legal education encouraged universities to enlarge classes and open additional law schools. Not surprisingly, supply overtook demand. The mismatch is now exacerbated by the development of technological substitutes for some legal work, including online services that enable people to fill out legal forms, and a weak economy.

Begin.

(1)  If the “crisis” could have been predicted, did anyone? Did they comment on the government’s decision to nationalize graduate student lending in 2005-06?

(2)  Did demand for legal services boom in the 1990s and 2000s?

Real GDP & Legal Sector Value Added (Billions 2005 $)

Pct Change Real Legal Sector Value Added Minus Pct Change Real GDP

(3)  If the federal loans are part of the problem why not cut them?

(4)  Did pay for all lawyers grow in the 1990s/2000s, or just for those lawyers who happened to work in biglaw? Is there a difference between compensation for lawyers and compensation for J.D.s? Was this difference carefully given to applicants on a school-by-school basis? Is it today?

W&S Lawyer & Paralegal Hourly Wages (2012 $)

(5)  Did “skyrocketing pay” draw applicants, or was there a correlation to the overall (negative) employment level? If not, then why do deans sometimes argue that people hide out in law school to wait out recessions?

Applicants per Law School

(6)  Did law schools hike tuition before the 1990s? After the 2000s? Do they hike tuition even when the number of applicants drops?

Real Law School Tuition (1985-2011)

Applicants per Law School and Average Law School Tuition (2011 $)

(7)  Does higher demand for legal education influence universities’ decisions to open law schools? If so, why are some law schools still opening after 2010 when demand has already tanked?

(8)  When did supply overtake demand? Supply for what and demand for what? Is demand for legal services the same as demand for legal education?

The “crisis,” then, is just part of the normal cycle of the economy—familiar to anyone who has held a job as construction worker, software engineer, salesman, or journalist. And the market is reacting in a predictable way. Fewer people are applying to law schools; class sizes are shrinking; some law schools may shut down.

But since the 1990s applications have been counter-cyclical: People apply to law schools when they don’t have jobs, now apparently, they’re not.

Posner then argues that the “Coalition of Concerned Colleagues'” proposals don’t “make sense in light of the group’s diagnosis of the problems lawyers face” because:

(a) Reducing the number of years of law school will counterintuitively encourage more applicants, and

(b) It’ll dump lots of lawyers on the market in the transition year.

(b) is right on; (a) is silly. Demand for legal education/law licenses is no longer such that people will apply if it’s cheap even if there are no jobs, and it’s not like law schools are obligated to accept everyone who applies.

(c) More clinical courses raise prices.

True! They also don’t create jobs.

The next one is the kicker:

[Y]ou can’t blame government subsidies for the plight of young lawyers. Government guarantees lower the cost for lawyers to obtain training. If the subsidies create a larger supply of lawyers, it should also create a greater demand for their services, by reducing the costs that they pass on to clients. Depriving students of government-guaranteed loans is hardly a solution to the problem that legal education is too expensive.

(1) Government loans (they’re direct, not guaranteed) enable tuition increases per the Bennett Hypothesis 2.0. Who would be able to afford law school at current prices if Grad PLUS loans were eliminated and bankruptcy protections restored to private loans?

(2) Once the market is saturated, the cost of legal services is determined by demand for legal services. Poorer lawyers will simply quit to work in Wal-Mart or they’ll practice out of a cardboard box. They do not pass their law school costs onto their clients, but things like malpractice insurance, bar fees, etc. create a price floor that makes it harder to serve people who don’t have money.

Posner then argues that loan forgiveness/bankruptcy will create a moral hazard, but IBR has been in operation since 2009 and the mass of IBR freeloaders has yet to apply.

[P]roposals to create a two-year curriculum and other fast-track routes to the bar will mainly help clients by reducing the cost of legal services.

No it will reduce law schools’ incomes. Who benefits? Everyone else.

Did I say that defending unlimited government student lending was the kicker? Ha! This is better:

The only realistic way to help lawyers today is to increase the demand for legal services—somehow convincing governments, for example, to pay for adequate representation of indigent defendants—but in the long term, greater demand will create the expectation of yet more job growth, and that could lead to another bust. The critics seem to think the legal profession can escape the logic of the market. It can’t.

In other words, after the law schools get their cut of the tax base, then the government should tax people to fund services we more urgently need. Readers are invited to enlighten the LSTB as to how an article whose title indicates we should train fewer lawyers can conclude by arguing for not training fewer lawyers.

The worst thing anyone can say about the “Coalition of Concerned Colleagues'” letter to the ABA is that it was too cautious re. the Direct Loan Program, which isn’t even worth a comment on a scamblog. Rather, Posner’s argumentum ad econ one-o-oneum is the only kind of logic we really need to escape from.

5 comments

  1. Apparently, Eric Posner is unaware that cities, towns, counties, states and the feds are cutting back expenditures – at every opportunity. This has been going on for at least the last 4-5 years. How in the hell is that a formula for increasing aid to indigent clients?! Furthermore, the public -especially those who have been hit by the recession – is not interested in providing more funding for poor legal clients.

  2. There you go, Matt, using logic, reason, and data again. Don’t you know that these LawProfs go for empty rhetoric, and we’re all just supposed to smile and nod at their sheer awesomeness? They are the experts, you know…!11!1eleven!!

  3. I will say for Posner that he is the first ‘expert’ voice to state that the problem with the legal job market is supply/demand related, and not a cyclical or skills gap problem–though does not make up for the deficiencies in his article.

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