Back to basics

Legal academia is very much on the defensive at the moment, which is all to the good.   The mixture of outrage and pearl-clutching which greeted David Segal's latest entry in his series in the New York Times on the state of American legal education is a sign of, if nothing else, the extent to which law school faculty and administrators are finally noticing that we are dealing with that most dreaded of things, a genuine public relations crisis.  (Unlike the economic and personal disaster which has been overwhelming a growing percentage of our graduates for many years now, this is one crisis which cannot be ignored).

Given that reaction, this seems like a good time for a restatement of some fundamental points, to help avoid a deflection of the conversation into tangential issues such as the actual value of legal scholarship, how much law professors get paid, how much Socratic method nonsense still inhabits our classrooms, etc.  (Many thanks to Matt Leichter's invaluable Law School Tuition Bubble for collecting and analyzing much of the data cited below).

POINT ONE:  Over the past 20 years, the share of the nation's GDP attributable to the legal services sector has deteriorated significantly.  In the late 1980s, the legal services sector represented slightly more than 2% of GDP (the same percentage as in the mid-1970s).  As of 2009, that figure had declined to 1.37%.  Contrary to the standard narrative within legal academia, which assumes an increasing or at least steady demand for legal services relative to overall economic growth, the demand for legal services within the American economy has been declining, relative to the rest of the economy, for the past  two decades.  In other words, "law" (as an economic entity) appears to be a mature industry in relative decline.

POINT TWO:  The rate at which American law schools are producing aspiring lawyers far outstrips the demand for new lawyers, and this has been the case for many years now.  The Bureau of Labor Statistics estimates that the economy will produce an average of approximately 24,400 new jobs for lawyers per year over the next decade.  ABA-accredited law schools are producing 45,000 new graduates per year, while non-accredited schools produce several thousand more (Approximately 53,000 people pass state bar examinations each year).  An important sub-point about these statistics is that the BLS estimates are not for how many jobs will be filled by new law school graduates: they are for all new legal jobs.  What this means is one can't assume, for instance, that half the 50,000 aspiring lawyers (conservatively speaking) that enter the market each year will get law jobs within a year of graduation, since some of those new jobs are going to be taken by people already in the market for attorney jobs who were not currently employed as attorneys. Obviously, this problem gets worse over time, as the surplus of lawyers without law jobs continues to increase.

POINT THREE:  The cost of law school is, in economic terms, arbitrary.  Given the faith in well-functioning markets that well-functioning citizens in our society are expected to maintain, this point is extremely counter-intuitive, but it is, given points one and two, essentially undeniable.  For more than twenty years now, the demand for the services of American law school graduates has been declining relative to the demand for other economic goods (not constantly, of course, but the overall trend is clearly negative).  For much if not all of that same time, the output of American law schools has far exceeded the demand for that output, and now appears to be in a roughly two to one ratio.  Yet since 1985, tuition at private law schools has increased by 2.5 times in real terms, while resident tuition at public law schools has increased more than fivefold, again in real terms.  In other words, over the past quarter century, the relative change in the cost of acquiring a law degree has borne no rational relationship to the relative change in the value of a law degree.

POINT FOUR: There is, to this point, almost no sign that this arbitrary relationship between the change in the cost of acquiring law degrees and the change in their value is going to move toward a more orthodox economic relationship, in which the decreases in value trigger decreases in price.  Law schools continue to raise tuition at far faster than the rate of inflation, and the market for the graduates of law schools -- which it bears repeating has been bad relative to the rest of the economy for many years, for reasons that have nothing to do with the recession that began in 2008 -- continues to deteriorate.  An extrapolation of current trends into the very near future, i.e., four years from now, suggests that private law school tuition will average $50,000 per year, and will be more than $60,000 at some schools, while average resident tuition at public law schools will be as high as private law school tuition was in 2007.  This means that the total cost (tuition and related expenses, plus opportunity cost) of attending law school will be approaching $300,000 for many students and will be at least $200,000 for the vast majority. Meanwhile, it appears that around half these graduates will not have real legal careers, defined as long-term employment in jobs requiring law degrees, and that indeed for a significant percentage of them acquiring a law degree will have made them less employable than they would have been otherwise (In other words, for these graduates, law school will have turned out to have been a bad investment even without regard to the direct costs and opportunity costs incurred by attending it).

POINT FIVE:  These otherwise unsustainable trends are being maintained by a combination of unlimited federal educational loan money and, to a lesser extent, poor information regarding the actual relationship between the costs and benefits of acquiring a law degree.  Any significant change in either of these factors, but especially the first, will lead to a massive disruption in the current economic structure of legal education in America.