The Big Short

The ABA Journal reports that the total number of applicants to ABA law schools is, as of last week, down 16.7% from the same time last year.  If this trend holds, the final number of applicants in this application cycle will be around 66,000, down from 78,900 in 2011 (a number which itself was 9.9% lower than in 2010).  Note that in 2010 (the most recent year for which this figure is available), 69% of all law school applicants were accepted at at least one ABA school.  If the same ratios were to hold for 2012, that would yield only 45,550 applicants admitted to at least one school.

Furthermore, 18% of those applicants in the 2010 pool who were admitted to law school did not end up enrolling.  If all these percentages were to remain constant, that would mean only 37,300 people will enroll in ABA law schools this fall (last year's total first year class was around 52,000).

Of course that's not going to happen.
  It's safe to surmise that far more than 69% of all applicants in this cycle will be admitted to at least one school, and schools will do everything they can to lower the percentage of non-enrolling accepted applicants (what they can do, of course, is cut real mean tuition, which is what as a functional matter the sudden explosion in "merit scholarships," i.e., tuition cross-subsidization between students, is all about). Still, one would think there are practical limits on the extent to which admissions standards can be cut. If significant numbers of schools have to start admitting people with LSAT scores of 140 and 2.45 GPAs, this will surely have a marked effect on the bar passage rates of their graduates (I've been told by someone in a position to know that at a number of schools the bottom of the class in terms of entrance qualifications already consists of people whose LSAT/GPA numbers predict a zero per cent probability of bar passage).

Nevertheless, there's a real possibility that the 1L class of 2012 is going to be significantly smaller than that of 2011.  Keep in mind that a large percentage of those prospective 66,000 applicants are people who simply aren't willing to consider attending a low-ranked school, even for "free."  The conventional wisdom in legal academia right now is that as the economy (slowly) gets better the drop in applicants will be reversed, but this is far from clear.

In fact, an overall economic turnaround will harm the financial structure of legal education to the extent that growth in the legal sector lags behind average, since this will drive up the opportunity cost of going to law school relative to the likely return.  (In fact in December employment grew in every professional sector except legal services, which lost another 1800 jobs).

Another factor at play here is the strong lag effect at work, as law schools are hit with negative publicity, lawsuits, and prospective Congressional investigations, and as a consequence slowly disgorge something that begins to resemble actual employment and salary data.  As we are apparently witnessing, it takes some time for all this to percolate into the cultural conversation about law and law schools. We can expect the 2013 admissions cycle to be even more daunting for law school budget officers, their deans, and the central university administrators who collect the skim on the casino's handle cross-subsidized tuition revenue that makes up the economic base beneath the ideological superstructure of contemporary legal education.