Saturday, December 31, 2011

2011: The year the bubble began to burst

I suspect that in retrospect 2011 will be remembered as the year the law school bubble finally began to burst. It began with David Segal's first big piece in the New York Times on the lengths law schools were going to in their attempts to hide the actual employment situation from prospective students, and it ended with numerous schools rushing -- in the wake of several active and prospective class-action lawsuits -- to put something resembling actual employment and salary data up on their web sites.

A commenter asks a $6.4 billion dollar question:

I used to believe that in ten years (which can pass in the blink of an eye), tuition will go from its current level of $45,000 to $73,000; the number of law schools would go from 200 to about 220 and the "% of law grads getting real lawyer jobs" would go from its current 50% rate to about 25-30%.

In other words I assumed that we were far from that critical point.

But now I wonder.

Could we see some of the really notorious low ranked school (e.g. that one that rhymes with stooley) have trouble filling all their seats this year? That would be such an incredible development if true.
No one can know precisely when the current model of American legal education will collapse, or whether that collapse will be sudden, or take place in the social equivalent of slow motion.  But the crash is coming.  Here's the cyber-equivalent of an Escher drawing in regard to this question. First, a post from Top Law Schools, in which a Michigan State Law School 3L offers to take questions (Note that MSU is, to the extent such a definition makes sense, an ideal representative of an "average" ABA law school, in that it's currently ranked 95th-99th out of 200 ABA-accredited schools. We are, in other words, a very long way from the bottom).  Naturally, he's asked if he and his law school friends and acquaintances have jobs. His response:

I do not have a job. Several of my friends have jobs lined up (two in large firms, two in a medium-sized firm, one with a corporation, etc). However, I have a lot of friends (I'm counting 8 just off the top of my head) who graduated last year and they all have jobs now. Of course this is all anecdotal...I don't know what the percentage of employed 3Ls is. It's a pretty dismal market (as I'm sure you know) but, honestly, I'm not too worried about it. I've received an outstanding education at Michigan State and I realize I may need to wait until after I pass the bar to find a job. It sucks but it is what it is. It's just gonna take some flexibility and patience I think...through no fault of my own or MSU.

Obviously the placement is great in Michigan and pretty good in Chicago (especially if you spend 1L or 2L summer out there). Our DC placement is pretty rad too because we have a semester program down there. There's a large MSU alum group in DC as well.
Here's the other half of the drawing.

For all I know MSU just threw its NALP stats up on the internet this week (perhaps in response to the Law School Transparency Project's request to all ABA schools that they do so), so this student doesn't even know these stats are now available. Or perhaps he doesn't want to know what they are. Under the circumstances, this would be a perfectly understandable defense mechanism.

The short version of these statistics can be summed up in less than 30 words:  Nine months after graduation, MSU Law School had determined that 33 of the 348 graduates of its 2010 class were employed as attorneys in positions that paid $60,000 or more.  The average law school debt of the 85% of the class that graduated with such debt was $108,444.

In the wake of those two sentences, it really shouldn't be necessary to continue the autopsy in any greater detail, but those of a morbid disposition can linger over such factoids as the specific employment status of the 150 graduates listed as "employed" in the private practice of law.  This group includes 12 solos, 69 [!] graduates employed full-time with firms of 2 to 10 attorneys, and nine more employed part-time with firms of that size -- and one of these was listed a temporary employee. Think about that: part of what counts as "employed as an attorney" for the purpose of all those NALP figures is part-time temporary employment with a firm of ten lawyers or less . . . but again, what's the point of lingering over the crash site's gory details? Better to simply note most of the people at the scene were killed, a few escaped with injuries of varying severity, and one guy walked away without a scratch (he must have been the one paying attention in Drivers Ed).

A side issue about which I'm genuinely curious: what's with the huge numbers of graduates who are listed as taking jobs with firms of 2-10 attorneys?  Fully a third of the national class of 2009 who are listed as working in private practice nine months after graduation are in this category, and at lower-tier schools the percentage is much higher.  Conversely, at elite schools practically no one is in this group.  Intuitively, one would think it would be quite difficult to get a real job with an enterprise that would on average have to increase its total attorney workforce by 20% just to hire you.  I suspect that many jobs in this category are semi-imaginary: that is, they are temporary contract positions, featuring low hourly pay and no benefits, or (often unpaid) clerking gigs that in palmier days were filled by law students, or they represent a couple of equally unemployed classmates banding together to start a "firm."

Anyway, the juxtaposition of the MSU 3L's post and the newly published MSU placement stats raises the fundamental question of just how much real transparency, when it arrives (and we are still far away from that point), will affect the decisions of people who will have to decide whether the kind of tradeoff represented in those employment and indebtedness stats makes any sense for them.

We have a long way to go, but, on the last day of 2011, we are a lot closer to answering that question than we were on the previous New Year's Eve.

Which reminds me: Happy New Year. Let's hope it's a good one.

Thursday, December 29, 2011

Bill Henderson on the Law School Bubble

Indiana University law professor Bill Henderson, who for several years has been at the forefront of efforts to get law schools to consider the extent to which the return on investment for getting a JD does or does not justify the ever-increasing cost of doing so, has co-authored, with Rachel Zahorsky, a new article in the ABA Journal.  The focus of his piece is on the symbiotic relationship that now exists between direct federal educational loans and law school operating budgets.  Much of what he says will not be news to regular readers of this blog, but it's important to remember the extent to which many readers of a publication such as the ABA Journal are only vaguely aware of the scope of the financial crisis now enveloping the 44,000+ graduates pumped out by ABA schools every year.

Henderson points out that the long-term trends in the cost of legal education and the value of law degrees we have witnessed over the past generation are not mutually sustainable, citing the economist Herbert Stein's aphorism that "if something cannot go on forever, it won't."  Both the logic of this position and the facts justifying it would seem unassailable, but it remains the case that a remarkable number of people in legal academia continue to treat our role in all this as if we have no actual role in all this.  Consider this quote from a law school dean:

Mark Grunewald, interim dean of the law school at Washington and Lee University, thinks any blanket restrictions on federal student lending would be disastrous and unfair. “There are real differences among prospective law students’ economic circumstances, and new blanket restrictions on lending could hurt those most in need of financial support,” he says. “It’s also unclear what the legal employment market might look like after a general economic recovery. Market forces may ultimately prove to be a better corrective.”
This quote understandably exasperates Matt Leichter, author of the awe-inspiring Law School Tuition Bubble blog, who points out that in just the past seven years Washington and Lee's tuition has risen 35% faster than inflation. (On the other hand over the same time period my law school's resident tuition has risen by a tidy 133.45% over inflation, which by comparison makes W&L look like a model of fiscal restraint. The great thing about the law school racket is that it's almost always possible to find somebody who makes your own behavior look positively admirable by comparison).

Dean Grunewald's appeal to "market forces" is, under the circumstances, particularly chutzpahesque, give that his institution would have to either cut its prices drastically or go out of business if it were subjected to the dual market discipline of being forced to:

(1) Extract roughly half of its operating income from private student loans dischargeable in bankruptcy and not guaranteed by the government; and

(2) Reveal in sufficiently explicit detail exactly what happens to graduates of his law school one and two and five years (etc.) after graduation.

Grunewald, like so many legal administrators, talks about the cost of legal education as if it were a product of the laws of thermodynamics rather than the laws of what in a more enlightened era was called "political economy."  As Leichter emphasizes there is absolutely no reason why Washington and Lee, like the vast majority of law schools couldn't provide a much cheaper legal education than it does now with little or no discernible loss of quality.  After all, average law school tuition 25 years ago was literally a third of what it is today in constant dollars if you exclude all state subsidized tuition from the analysis.  In 1985 private law school tuition and non-resident public law school tuition averaged about $13,500 a year in 2010 dollars (if you included resident tuition, then and now, this comparison would make current tuition levels look much worse, as public law school resident tuition was $3,600 in 1985, compared to about $18,500 today. Again all of this is in inflation-adjusted dollars).

In other words, providing legal education at a reasonable cost doesn't exactly require some sort of technological or cultural breakthrough.  Law schools charge absurdly uneconomical -- from the perspective of their marks students -- prices because they can get away with it, period. And they can get away with it for two reasons: because they hide the ball in regard to employment and salary outcomes for their graduates, and because the federal government quite literally pays them to behave in this way.  As Henderson points out this is a situation that, from the self-interested perspective of legal academics and especially legal administrators, is too good to last, so it won't.

I do want to mention one aspect of Henderson's argument that's phrased in an unfortunate fashion.  Henderson points out that many recent graduates have $150,000 or more in law school debt, and then makes the following calculation:

According to NALP, the association for legal career professionals, the median starting salary for a lawyer who graduated from law school in 2010 is $63,000. For a recent, unmarried law school graduate making $63,000 and getting single-digit-percent annual pay increases, the chasm between income and prospective repayment is impractical for both the student and the government.

This combination of high debt and moderate income makes this all-too-typical law graduate eligible for the federal government’s income-based repayment program. According to FinAid’s IBR calculator, used by many law school financial aid counselors, the student will make monthly payments of $584 the first year and $1,605 in year 25. After 25 years, the loan is forgiven. At that time, more than half of the principal, $76,000, will not have been repaid, along with $26,000 in capitalized interest.

The government write-down for this student is about $103,000, which may be offset by an eventual tax payment: Under the current Internal Revenue Code, the law school grad would have $103,000 in imputed income for the debt forgiveness. Of course, the government would have to collect it from someone near enough to retirement to be eligible for membership in AARP.
I can understand that Henderson wants to use conservative estimates, if for no other reason than to avoid charges of alarmism from his head-in-the-sand colleagues.  But to a general audience, even a general audience of ABA Journal readers, this analysis gives a wildly optimistic picture of the present situation for law school graduates.  As Henderson is well aware, that $63,000 median starting salary for the average 2010 law school graduate is a completely fictitious figure.  It's based on the approximately 40% of graduates for whom a salary was reported.  How many of the 60% of the class for whom a salary was not reported had a salary of $63,000 or higher? Given the enormously strong incentives law schools have to discover and report the salaries of any and all of their graduates who have decent jobs, the answer is surely "almost none."  This suggests that hardly more than one in five graduates in the 2010 class had a salary of $63,000, and that the true median is far lower.

A $63,000 job with $98,000 of law school debt (this was the average law school debt for the class of 2010) is not a good outcome by most definitions of what counts as economic well being among the professional classes, but it isn't a catastrophe either, especially given the overall state of the economy. (Note that $63,000 is 23% more than the median household income in America and just about exactly double the median income of white males of working age).  Those are the sorts of figures that cause middle-aged lawyers and politicians to furrow their brows, then murmur platitudes about how things were tough in 1982 as well.  But as Henderson knows, 2010 law school graduates in such circumstances are in fact far better off than the large majority of their co-graduates. The members of the latter group are in circumstances which would, if more widely known, elicit something more than furrowed brows from the people who keep voting to let the federal government unknowingly encourage new classes of law graduates to bury themselves in life-wrecking mountains of debt.

That quibble aside, this is a valuable article which I hope reaches a wide audience.

Wednesday, December 28, 2011

The startling gap in Michigan's salary stats

Like a bunch of other law schools, Michigan has recently put up much more detailed employment statistics in regard to its recent graduates.  I don't want to understate the importance of this development: it appears that, at the rate things are going, schools that don't have at least moderately informative employment stats posted on their web sites will be at a significant competitive disadvantage with schools who do during this admissions cycle.  This is especially the case given the evidence that prospective students are beginning to get much savvier about how inadequate the standard level of law school "disclosure" has been (see, for example, this surprisingly realistic thread at Top Law Schools).

Nevertheless, the new disclosure regime that's beginning to take shape is still far from optimal.  For instance, Michigan's stats, characterized by the school's CSO as "comprehensive," don't disclose anything about permanent versus temporary positions, or full time versus part time work.  Nor does the school report anything about school-funded jobs.  This seems like a particularly glaring omission, given that its close peer competitor UVA just revealed that no less than forty members of the UVA class of 2010 were in law school-funded "jobs" nine months after graduation. (On the plus side Michigan lists the precise identity of every judicial clerkship its graduates took over the last three years).

The most startling gap in Michigan's data is a product of the school's failure to gather salary information regarding its graduates.  For the class of 2010, the school reports nine-month salary data for just 56.4% of its graduates.  This isn't significantly more than the comparable percentage at Ohio State (45%), and is embarrassingly low in comparison to the figures for Chicago (94%) and Virginia (about 85%).

What could account for these differences in reporting rates?  Is Michigan simply not attempting to gather salary data beyond whatever its graduates report in response to the school's post-graduation NALP survey? (It's difficult to believe that anywhere close to 94% of Chicago's 2010 grads actually reported their salaries, and in any case the school's web site says the salary data "is taken from a variety of sources, including: student self-reporting, alumni surveys, employer information, published salary data, and electronic resources.").

If that's the case -- I'm contacting the school's placement director for more information on this point -- then consider what the reported salary numbers most likely encompass.  129 of the school's 374 2010 graduates were working for megafirms of 501+ attorneys, while another 31 were  working for firms of between 251 and 500 lawyers.  If we assume that 90% these people reported their starting salaries (a glance at the salary reporting rates for graduates with these sorts of jobs from schools that seem to rely exclusively on self-reporting suggests this is a realistic estimate), that would mean that the school has salary data for something on the order of 65 of the school's 214 graduates who did not take jobs with very large firms.  This would mean a top ten law school has failed to gather salary information for fully 70% of the 57% of its graduating class that didn't end up in Big Law.  That, I suggest, ought to be unacceptable to prospective law students considering going to Michigan, given that such people invariably have other at least superficially attractive options in regard to what law school to attend.

(A commenter points out that the reporting rate dropped from 79% in 2009. It was also 79% in 2008, and 77% in 2007, although only 68% in 2006.  In this broader context, the drop to 56.4% in 2010 certainly seems significant).

All this raises the broader issue of just how law schools go about gathering employment and especially salary data.  It would appear that the effort and resources otherwise comparable schools put into this crucial task vary widely. That is one of the many things about law schools which needs to change.

Tuesday, December 27, 2011

How many people like this are out there?

From a forum at Top Law (btw the forums on that site provide a fascinating glimpse into the world of current 0Ls):

I took the LSAT 3 times. I had taken it cold (stupid, I know) (143) and then studied really hard for a year. I would test at 154-157 consistently but on actual test day I would just freak out..I could swear the girl next to me heard my heart beat each time I tested.

I scored a 149 the next time and then cancelled for the last. I graduated at a legal studies major with a 3.57 from a private college (93 credits) but 5 years prior attended a community college (27 credits) and did terrible. LSAC configured my GPA at a 3.04. I have also been a legal assistant at a real-estate attorney’s office for two years making 35k a year and trying to pay off undergrad and cc debt.

Now I have applications pending for the NY area and being 25 years old, I feel pretty defeated. I understand that going to a 3rd or 4th tier school will bring a lot of debt and not so many job opportunities. I want to be an attorney so bad and would love to practice criminal law in NY.

The next LSAT I could take would be February 2013 and since it is so late in the cycle, if I decided to could mean waiting 2 cycles. I know that I scored well below my potential and I would be open to studying differently and doing whatever I needed to do to raise my score but waiting two cycles..

My question is..Should I try and just get in for this fall or study and try again for a hopeful scholarship? Is it possible for me to raise my score enough after taking all prior tests? I am so torn.
 The OP gets some decent feedback, i.e, he's told to rethink his career plans, to which he responds:

I know this is not an easy profession by any means. I know that receiving a law degree does not automatically lead to a life of fulfillment and financial stability...I understand this. After reading so much about how bad this profession is over the last few months, I wish I was one of these people that was unsure about wanting to go to law school and could just abandon the idea, but I cannot.

I have wanted this for the longest time and completed my undergrad knowing it was just a prerequisite to enter law school. I interned in college at a few law firms and have been a legal assistant for two years; I have just always wanted to be an attorney.

It was not for a lack of studying that left me with such a disgusting score. I obviously need to think about things and if I were to wait, study very differently. I will do what I need to do to accomplish my goals. 
The law school administrator types who burble about how federal loan money provides "access" to people who otherwise couldn't afford to go to law school for what they're charging are talking about somebody like this times several thousand, every year.

What are you gonna do, as Tony Soprano used to say with a depressive shrug. The strong temptation is to say just that, and abandon what Ayn Rand or John Chipman Gray or G. C. Montgomery Burns would no doubt call the futile struggle to save humankind from its inherent recklessness.  (This is especially tempting when the struggle to save humankind from its inherent recklessness would, if successful, interfere with one's paycheck.  See, e.g., Upton Sinclair).

How not to publish law school employment statistics

Here's what a prospective student who is considering the University of Washington will find on the school's web site when trying to figure out whether the school's current $26K resident and $40K non-resident (unlike a lot of state schools, non-residents can't get residency UW after a year) price tag is worth it:

"96% of the Class of 2010 graduates (169 out of 176) were employed as of February 2010 [this is surely a typo, which is supposed to read February 2011]. Employed does not include two (2) graduates enrolled in graduate programs. Three (3) students remained seeking employment and two (2) students were not seeking employment."

Note this page was last updated two weeks ago, so this is the school's considered response to the criticisms from the law school transparency movement that law school placement and salary data is misleading.

UW's response, in short, is to continue to trumpet a completely phony overall "employment" rate, while providing as close to no information as possible about everything else. Pretty much the only meaningful piece of information on this page, from a practical perspective, is that only 43% of "employed" 2010 UW grads had jobs of some sort in private law practice nine months after graduation.

How many of the other 57% of "employed" grads had jobs that required a law degree? How many of those jobs were temporary, or part-time, or both?  For that matter, how many of the law firm "jobs" were in one or both of those categories?  What did the 15% of jobs described as "clerkships" involve?  (Remarkably, USNWR reports that 18.0% of the UW Class of 2009 had federal Article III judicial clerkships.  This number attributes to the school the fourth-highest percentage of federal judicial clerkships for any law school, behind Yale, Stanford, and Harvard -- Harvard's listed percentage is 18.1%. Numerous attempts by the Law School Transparency project to get the school's career services office to confirm or correct that number have failed, and it's still featured in the latest available USNWR data.).  How many UW grads were "employed" by the school itself, or in school-funded positions?  How many of the 43% of its "employed" graduates who had positions with law firms were in solo practices, or in firms with two to ten employees -- a category which includes things such as doing temporary contract work for solos, two graduates forming their own firm etc?

Not least of all, what percentage of graduates had known salaries, and what were they?  Perhaps I'm missing something on the UW site, but I can't find any of the above information on it.  All it tells me is that 96% of UW's graduates are "employed" nine months after graduation.

If I look elsewhere, I can find this.  (Given that this "informational" page includes the stats for UW's Class of 2014 it can't be more than a few months old).

In recent years, Washington has continued to demonstrate tremendous ability to place its students into some of the top law firms and judicial clerkship positions of Washington state and the Northwest.  Of the class of 2010, 96% of graduates were employed within 9 months of graduation, roughly 69% of whom secured employment within the state of Washington.  43% of graduates accepted jobs with private law firms, with a median starting salary of $95,000, while 15% took on judicial clerkships.  Outside of the Northwest, job prospects are predictably less stellar for Washington students, although the school’s alumni network allows students the opportunity to pursue employment in all corners of the nation. 
Are we to assume from this that UW had salary information for 100% of the 43% of its employed graduates who were working for law firms? That seems highly improbable, given that, according to what it reported to USNWR, for its 2009 class UW did not have any salary information for nearly a quarter of its graduates employed by law firms, and on a national level the percentage of graduates not reporting salaries rose in the class of 2010.

It's instructive to compare all this to the new employment and salary data which was just made public by Ohio State.  While not perfect, the OSU data allows a prospective student to answer almost all the questions listed above within a tolerable degree of accuracy.  This is a particularly salient comparison, given that UW and OSU have very similar USNWR rankings (30th and 35th) and tuition rates, and that they are both located in major metropolitan areas of states with very similar overall unemployment figures (8.7% and 8.5% in November, respectively).

There's a special irony in UW's numbers, which is that the UW law library has a deserved reputation as a leader in compiling information about legal academic publishing.  If you want to find out what law professors published in law reviews last week, UW is a great place to go for detailed information. On the other hand, if you want to find out what percentage of the school's graduates are actually employed as lawyers of some sort nine months after graduation . . .

Monday, December 26, 2011

Adventures in lemming psychology

It seems the belief that lemmings periodically commit mass suicide as an instinctual response to overpopulation is, in the strict sense, a myth.  Lemmings reproduce so quickly that they are prone to chaotic oscillations in their population: every few years the sheer number of lemmings in an area will overwhelm the area's ecological carrying capacity, and the population will crash to near extinction.  One common result of this pattern is that lemmings will suddenly disperse in a frantic mass migration in search of food and water, leading many to drown when they try to swim across rivers and lakes.

The myth that they hurl themselves off cliffs in the equivalent of a recurrent Jonestown for Norwegian rodentia is apparently a product of the following great moment in the history of American corporate infotainment:

The 1958 Disney film White Wilderness, which won an Academy Award for Documentary Feature, [featured] staged footage [showing] lemmings jumping into certain death after faked scenes of mass migration.[12] A Canadian Broadcasting Corporation documentary, Cruel Camera, found that the lemmings used for White Wilderness were flown from Hudson Bay to Calgary, Alberta, Canada, where they did not jump off the cliff, but were in fact launched off the cliff using a turntable.[13]
A turntable?

Leaving the world of rodent biology and returning to that of human social metaphor, "lemming" has become a term for  "Law school applicants who  remain impervious to the growing evidence that law school might not be a good idea for them right now, given that they will have to have to borrow enormous amounts of money to get a degree which has, on average, a 50% chance of  being worse than useless, and a 48% chance of landing them in a series of legal jobs they'll really hate, most of which won't allow them to pay back their educational debt at the legally amortized rate."

Anyway,a term search turns up dozens of sobering internet threads, including the following hilarious series of graphics from our very own BL1Y.  (As Homer Simpson would say, it's funny because it's true).

What's interesting is that even former founts of purblind optimism, such as the forums at Top Law, have, in the course of the last year or so, begun to take on a far more realistic tone, with numerous warnings that for most people law school is a bad gamble unless you get into a T-14 or a T-6 or HYS, or if you can go for free to a decent school in an area you want to work in eventually etc. etc.  And there's already some evidence that this change in the mainstream discourse is starting to have an effect: at least a couple of lower-tier schools shrunk their incoming class sizes this fall, while the number of LSAT takers was down 16% in June and 18% in October.

Still it remains the case that 50,000 people will enroll in ABA-accredited law schools next fall, even though it seems inevitable that, for the large majority of them, this will turn out to be somewhere between a serious mistake and a life-altering catastrophe.  What drives these decisions? Leaving aside the small percentage of admits for whom the decision to attend law school at present makes sense from what the economists call an ex ante perspective, what are we to make of the tens of thousands for whom, from that same perspective, it clearly doesn't?  Some possible explanations:

(1)   Innocent ignorance

Much of this ignorance remains quite understandable and excusable at the individual level.  Most law schools still don't publish anything resembling accurate employment and salary data.  Law schools trade on the cultural prestige of the legal profession to mislead naive applicants and their often even more naive families into not looking at the official statistics with the cynical eye of, for example, a good litigator examining the products of a discovery request,  Ironically, anyone who already thinks like a (competent) lawyer is unlikely to go to law school after doing the appropriate level of due diligence.  But people don't, because they're understandably fooled by the whole Potemkin Village that is contemporary American legal education: the fancy big new buildings, the "official" statistics published under the aegis of august bodies such as the ABA (surely those people wouldn't let law schools just lie, would they?), the plentiful success stories (drawn from a pool of thousands of graduates, many of whom paid 1/10th current tuition and entered a completely different legal market), the ever-more glossy brochures, etc.

(2) Culpable blindness

Most people don't read the fine print.  Heck, most people don't read the big print.  Homo Economicus, Rational Maximizer of his Utility, has turned out to be pretty much as big a myth as the suicidal tribe of lemmings, hurling themselves over a cliff (with a major assist from the fine folks at the Disney Corporation).  As the cultural conversation about whether or not law school is really worth it gets louder and more fractious, the ratio between people in the first and second group changes.  2011 may well be remembered as the year in which an important tipping point was reached in regard to that ratio.  It turns out that there's nothing like -- another irony! -- a few front page stories in the New York Times plus a class action lawsuit or three to suddenly get a bunch of law schools to start "voluntarily" publishing much more candid (although still far from fully transparent) employment and salary data.   And as more schools do this, the pressure on the ancien regime holdouts increases.  It's not 1789 yet -- as a certain pharmacologically-enhanced  poster on this site pointed out a few hundred times, no one is yet storming the Bastille -- but Louis XV is already gone.

(3)   Psychological exceptionalism

The averages don't apply to me because I am not average.  I am the exception that proves the rule.  I will not make the mistakes that the average student at the law school I am going to attend makes. These include: not finishing in the top 10%  top 5%  top five graduates of the class, being socially awkward (Irony #3: the worst possible judge of whether one has a propensity for social awkwardness is a socially awkward person, i.e., the Rupert Pupkin Syndrome), insisting on interviewing only for Big Law jobs instead of, for example, taking one of the many excellent $105,000 per year positions available with smaller firms,  or settling for an assistant district attorney position in the Manhattan DA's office, not studying hard enough, spending too much time on Facebook in class, and so forth.

(4)  It's not like the federal government is going to loan me $200,000 to start a new Asian fusion restaurant or to send my band on a 16-city small venue tour.

This is more or less self-explanatory.  Seriously, I grow increasingly convinced that many of the people now going to law school, especially lower-tier law schools, are doing so because, in the short-term, it seems obviously preferable to:

(a) Working retail

(b)  Flat-out unemployment

(c) Moving back in with Mom and Dad while negotiating the financial challenges of (a) or (b).

Especially given the prestige of being a lawyer.  Oh we cynical ones, we enlightened, love to make fun of the "prestige" factor, but the fact remains that, in its own twisted way, an unemployed lawyer is something to be.  If it weren't, half the law schools in the country would have to close tomorrow, despite the federal loan pipeline and the phony stats, and everything else that makes our game the only game in town for enough people to keep this thing of ours going.

Thursday, December 22, 2011

Cautionary notes

How much debt will people now applying to law school incur from attending the schools they're considering? Law school debt is a function of the relationship between, on the one hand, tuition and cost of living, and on the other, socioeconomic status, grants and scholarships, and money earned over the course of the student's legal credentialing.

Let's start with a simple rule of thumb: the average debt incurred by graduates who incur law school debt -- currently about 90% of all graduates nationally -- is about three times the tuition the schools they attended nominally charged when those graduates were 1Ls (This ratio will naturally be somewhat higher at the rapidly shrinking cohort of state law schools that charge residents significantly less than private law school tuition).  For example, Cornell 2010 grads with law school debt averaged $126K in such debt, while their 1L tuition times three was $131K.  Texas grads had $78K in debt while their 1L tuition times three was $75K (this latter figure adjusts for the one third of UT law students who pay out of state tuition). Boston University grads had $103K in debt while their 1L tuition times three was $110K.  The comparable figures for USC were $118K and $128K.  And so forth.  (This ratio gets worse at private third and fourth tier schools. For instance at Thomas Jefferson students have $137K in debt while their 1L tuition times three was $95K).

But this rule of thumb needs to be subject to several caveats.  First, keep in mind that law schools have in recent years started offering bigger and bigger discounts to many students in regard to their advertised tuition figures.   The actual tuition paid by students at these schools is probably no more than 80% of the list price tuition.  In other words, the debt figures above represent the average debt incurred by people who are paying, on average, significantly less than MSRP.  If you're offered little or nothing in the way of a grant off list price (or if you're offered a scholarship that could easily disappear after your first year -- this is especially a problem at lower-ranked schools), you should expect to incur quite a bit more debt than the figure you will obtain by multiplying your prospective 1L tuition by three.

Second, at elite schools, the SES of the student body ensures that quite a lot of students are coming from rich families who are helping the students pay for law school.  This can be seen by the fact that 19% of Stanford graduates, 23% of Columbia grads, and 27% of Yale grads have no law school debt whatsoever. This in turn means that another portion of the class will have relatively modest debt, because while their families aren't paying for the entire cost of law school, they are "helping out" in ways that, if you don't come from a rich family, aren't relevant to your situation.  Now it's true some portion of this effect is due to need-based scholarships, which, unlike almost anywhere else in the law school world, actually do exist at the most elite schools, but if you don't have such a scholarship and come from a middle class family -- note that at an Ivy League school "middle class" means a family with an annual income in the low six figures -- expect to owe a lot more than your 1L tuition times three.

Third, before you do anything rash, do yourself a favor and calculate how quickly a debt load featuring 7% to 8% interest accumulates when you're not making payments on it.  Here's an actual example from the Class of 2011.   "Richard Roe" graduated in May from a law school solidly within the top 20.  He received a discount of more than one third off the list price of his school's tuition in all three years of his attendance.  He finished in about the 65th percentile of the class in terms of grades, served on a journal, did a bunch of other extra-curricular stuff, "networked" left and right (he is as personable as he is energetic) and basically, as the phrase has it, did everything right.   He incurred $145K in loans over the course of law school, which, because the interest on the loans accumulates, has grown to a principal balance of $165K seven months after his graduation from this excellent school.  He currently has no employment of any kind other than a school-funded "fellowship" that pays him $15 an hour to do 30 hours of work a week for a non-profit.

There is, it should be unnecessary to add (but it very much remains necessary), nothing at all unusual about either his background story or his current situation.

Fourth, keep in mind that law school debt figures are only for law school debt.  Average undergraduate debt at graduation in the United States is currently around $25K, and climbing quickly.  The current class of 1Ls who have just finished their first year exams will probably graduate with, on average, around $150K of total educational debt.  This debt is non-dischargeable in bankruptcy, which means you can't get rid of it, short of moving to parts of the world you really don't want to live in.   So, as they say in first year contracts, caveat emptor.

Wednesday, December 21, 2011

In a deep and dark December

A message for someone in the law school class of 2014:

These words aren't intended for certain people.  They're not intended for people who aren't paying for law school. They're not intended for people who know, and indeed knew before starting law school, that a job would be waiting afterwards, because they're the kind of people who can get what they want if a few phone calls get made that are going to get made.  They're not intended for people who are sure, after four months of this, that they're going to finish in the top five percent of the class. They're probably not intended for the large majority of people going to Yale or Stanford (although you never know . . .).

They're intended for you.  You're wondering, after four months of this, whether you've made a big mistake.  You're wondering this because, compared to your college experiences, law school seems like something of a joke.  Everyone -- judges in opinions, professors behind podiums, classmates in the hallway -- speaks with tremendous confidence about things they don't really seem to know anything about.  You're wondering if anyone else notices this, or if perhaps you're just not understanding what's really going on.  Other people are noticing this, and you do understand what's going on.  But don't expect anyone to talk about it.

You're wondering if you're going to be able to get the kind of job you came to law school to be able to get, or if you'll end up getting another kind of job altogether, just to pay bills that will soon enough include a massive and constantly growing pile of debt.  The answers to these questions are, respectively, no, and maybe -- if you're very "lucky."

You're wondering why you seem so much more anxious and cynical than you the person you were four months ago.  The answer is that you are no longer that person.  You are on your way to being a lawyer -- or more realistically, you are on your way to having a law degree.

You're wondering if your parents will ever be able to understand that trying to become a lawyer today has less than ever to do with anything they've seen about lawyers on TV.  They won't. Popular culture is an illusion factory that produces completely unrealistic fairy tales about everything, and especially about everything related to law.

You're wondering if your uncle the lawyer -- the guy with the nice house and the two fancy cars, and the apparently decent second marriage -- will ever be able to understand that trying to become a lawyer today has very little to do with what he experienced when he paid $1,500 a year in tuition 25 years ago at good old State U, and got a job right out of law school at the very end of the long postwar expansion in the legal services market. He won't.   As people get older, it becomes more and more difficult for them to believe that the world today could really and truly have changed in ways they don't fully understand.  (A semi-famous writer died the other day, and someone he worked with remarked that, "Time taught him nothing, because he didn't want to learn.").

You're wondering if you have any real choice about sticking this out, given that you don't seem to have any other promising career prospects at the moment, and after all going to law school is the kind of thing that at least allows you to tell people you're going to law school.  You do have a choice.  The biggest mistakes in life are committed by people worrying about what other people will think.  Here's what other people are thinking about you: They aren't.  And even if they are, why do you care what they think about you? Have you ever thought they should make crucial life decisions on the basis of what impression those decisions might make on you?

There's a good book called Deep Survival, about people in perilous situations of various kinds.  An interesting piece of information in it is that small children -- those younger than about seven or eight years old -- have some of the best survival rates among people lost in the wilderness. The reason, it turns out, is that small children, unlike older people, don't talk themselves into continuing down paths that seem to be leading nowhere.  When they get tired, they rest.  If they start to get cold, they try to warm up. If they're thirsty, they drink. And when they realize they're lost, they stop and wait for someone to find them.

Tuesday, December 20, 2011

Law school dean publishes realistic economic analysis of legal education

This morning, as I was out for a pre-dawn jog, I saw an unusual sight: the bronze statute of Frank Shorter in front of the CU football stadium spontaneously detached itself  from the podium and flew around the stadium three times.  I wondered if this event might be an augury of some sort, and sure enough when I turned on my computer I found the first page of this article had materialized on the screen.

Jim Chen, who is not merely a law professor, but who is at this moment an actual dean of an actual ABA-accredited law school, has written a concise, accessible, and quite devastating indictment of the current financial structure of American legal education.  Chen's analytical frame is based on a simple, plausible assumption: a lawyer's eligibility for a home mortgage is a good proxy for whether a law degree is a good investment.

Chen's analysis divides eligibility into three categories: those who qualify for a mortgage quite comfortably, those who qualify by what might be termed normal conservative assumptions, and those who will be, as the expression goes, "house poor," but will be marginally qualified under liberal (and government-subsidized) qualification terms.

The first category requires a ratio of annual income to law school debt equal to six times a year's worth of law school tuition.  The second requires a ratio of three times, while the third stipulates a ratio of two to one.  For example, if the graduate paid $40,000 per year in tuition (average mean tuition at private law schools last year was $38,292, so it's probably just about $40,000 this year.  Current 1Ls at T-14s will pay an average of more than $50,000 per year in tuition by the time they graduate, as mean tuition at those schools last year was already $47,298) that means the graduate would need to earn $240,000 per year to qualify for a mortgage quite comfortably, $120,000 per year to qualify for a mortgage under normal front-end to back-end debt ratios, and $80,000 per year to scrape into a mortgage that will leave the homeowner markedly house-poor.

Chen makes the following assumptions:

(1) The graduate borrowed the full cost of tuition to attend law school, but did not borrow anything for living expenses.

(2)  The graduate's law school debt will be amortized over 25 years at a fixed interest rate of 6%.

(3)  The graduate entered law school -- and presumably left it -- with no other educational or consumer debt.

It should be obvious that all these assumptions are quite favorable to law schools.  A very significant percentage of current law graduates -- about half -- are graduating with law school debt loads larger than the total three-year cost of their tuition.  (Average law school debt among 2010 private law school graduates was in fact just about exactly three times the annual average tuition those students paid.  Among public law school graduates it was closer to four times).  Current law school loans average about 7.5% (6.9% for the first $22,000 borrowed per year, 7.9% for amounts beyond that).  Current average undergraduate educational debt is $25,000.  Most law students enter law school with at least some consumer debt.

So it's fair to say that Chen's analytical framework very much gives law schools the benefit of the doubt when evaluating the long-term economic value of the services they provide to their students.  This is even more evident when we consider the salary figures Chen adduces for the purposes of his analysis.  Chen quotes NALP via the BLS occupational outlook for the proposition that recent law school graduates earn, on average, $68,500 nine months after graduation.   I will not belabor here how this is a wholly fictitious figure. Consider that Ohio State, much to its credit, just released salary date for its 2010 class revealing that the 45% of the class that reported "salary" (more accurately wage) data reported a median figure of $65,000.  The real median figure for the class is of course much lower than that, since we can be quite certain that the 55% of the class that did not report income figures is making considerably less than the 45% who did.  Now consider that, terms of law school rankings, OSU is currently in the 83rd percentile.

Indeed it's quite likely that, on a national level, the true nine-month out median wage for Class of 2010 graduates of ABA-accredited schools is less than $40,000.  Following Chen's analysis, this suggests that, for the current modal graduate, law school would be a very good investment if average law tuition were $6,000 per year, a reasonably solid investment if it were $13,000 per year, and a very marginal investment if it were $20,000 per year.  And again, all these figures are based on Chen's markedly optimistic assumptions about the actual amount of debt law graduates have, the cost of servicing that debt, and the ability of law graduates to do so.

In short, a law school dean is in the process of publishing a scholarly paper that all but explicitly argues that, at present, law school is a bad investment for the vast majority of current and prospective law students.  This is truly what can be called a sign of real progress.

Monday, December 19, 2011

Why new law grads don't report their salaries

While going over the new employment and salary figures posted by Chicago and Ohio State I had one of those insights about something which seems incredibly obvious once one has noticed it, which makes it all the more vexing that I hadn't noticed it previously.  (Update: I should emphasize that these stats, while still featuring significant gaps, are a big improvement over what most law schools provide).

It's this: a huge percentage of recent law graduates who are being surveyed regarding their salaries don't actually have salaries.

A salary is the whole sum someone is paid in return for work performed.  A key mark of professional status is that one is paid a salary, rather than hourly, or by piece rate. (The category is over-inclusive in that some non-professional workers receive salaries, but the key point is that "real" professional positions feature salaries rather than hourly compensation. This distinction has various legal consequences, most notably that salaried employees don't have to paid overtime).

Because lawyers are professionals, they have salaries. That's why NALP, the ABA, and USNWR ask for salary information, and publish mean and median salary ranges for attorneys nine months after graduation.  Except, increasingly, lawyers don't have salaries.  Very large numbers of new lawyers (and indeed a vast and growing army of veteran attorneys) are paid by the hour, working temporary contracts as law clerks, document reviewers, and other positions that do not feature, among many other things, a salary.

Once one has realized this it helps explain the otherwise somewhat puzzling fact that such a large proportion of recent law grads are sufficiently compliant in regard to their alma mater's requests for information that they're willing to respond to employment surveys, but nevertheless apparently aren't willing to disclose their salaries.  For instance Ohio State determined the employment status nine months after graduation of 100% of its 2010 class, but has salary information for just 45% of the class, or 51% of employed graduates.  Of course some people with salaries will refuse to disclose them, but the most obvious explanation for why so many recent law graduates refuse to disclose their salaries is that they don't have salaries.

Conversely, as a commenter suggests, some non-salaried grads will multiply their hourly wage by 2000 and report an annual "salary," especially given that the current reporting system doesn't distinguish between salaried and non-salaried work for the purpose of reporting compensation. It would be a good thing if every law school were required to report what percentage of its most recent graduating class it had been able to determine held positions as salaried attorneys. Non-salaried and non-attorney positions would be excluded explicitly from the questions designed to elicit this percentage.  (Among other things such a requirement would spur career services offices to find as much information as possible about their graduates. Of course this incentive would make it all the more imperative to audit the reported percentages).

Consider OSU's salary information, which according to their career placement office "is self-reported by graduates."  Fourteen 2010 OSU graduates obtained jobs with firms of more than 500 attorneys, and apparently all 14 reported their salaries.  (Note: DJM suggests that career service offices attribute salaries to graduates who don't actually report them but are working at firms where the starting salaries for associates are quasi-public information, so perhaps the placement's office's representation that their salary information is based on self-reporting shouldn't be taken literally).  Meanwhile, only six of 23 graduates working for firms of 2-10 attorneys reported their salaries.  A plausible explanation for this enormous variance in reporting rates is that in a large proportion of these cases these graduates are law clerks or contract attorneys, being paid by the hour. In other words, they don't have salaries to report.

And although in the case of Chicago we're looking at a very small cohort, it's striking that the school doesn't have "salary" information for about the same number of its graduates who report working for firms of ten lawyers or less.  Consider that for the class of 2009 NALP has salary data for slightly more than a third of graduates working for firms of that size, which suggests strongly that large numbers of recent graduates working for small firms simply don't have salaries to report.

Indeed legal employers of all types, faced with a sea of desperate recent and not-so-recent law graduates, are increasingly willing to fill positions that formerly would have been filled by, on the one hand, law students, or, on the other, salaried attorneys, with a new class of non-salaried hourly workers who have law degrees. The former positions are law clerk jobs, that traditionally haven't required those who fill them to be admitted to the bar, while the latter are jobs that used to be filled by salaried lawyers but  can now be filled by people who, because they can be paid relatively low hourly wages and do not need to be provided benefits, are much cheaper to hire than salaried attorneys. (There is an even more dire subcategory of recent graduates who are working literally for free. The US Attorney's office in Denver recently advertised a year-long position for a new law graduate, with a "salary" of zero).

In other words, in addition to all the other problems that plague the fight for transparency regarding employment and "salary" data, the language we continue to use out of habit is increasingly out of date.  If you ask people who don't have salaries about their salaries, it's not surprising that you will end up with a poor response rate.

Saturday, December 17, 2011

Social change and the politics of law school

Philip Hart, (Michigan Law School, Class of 1937)  a great man who was known as "the conscience of the Senate" -- his colleagues voted unanimously to name the Senate office building after him -- once said that when he came to Washington his goal was to save the world.  After a time he decided it would make more sense to limit his ambitions to trying to save his country.  Eventually, he said, he was just trying to save the dunes.

Politics, Max Weber remarked, is always "the slow boring of hard boards."  Serious social reform is always a difficult, slow, and frustrating process, which rewards its proponents with many more defeats than victories.  That reform happens, roughly speaking, in two ways: on the structural, institutional level, and on the personal, individual level.  On this blog I've been emphasizing the former, which isn't to say that the latter isn't important as well (indeed the former would never happen without the latter).

Friday, December 16, 2011

What legal education could be; what law school is

What would the ideal legal educational experience include?  As DJM suggested in a long and thoughtful comment yesterday, "an excellent professional education isn't all one thing or another. It's a mixture of theory, doctrine, supervised practice, feedback, and 'skills' training that is far broader than many people realize."  The ideal legal educational experience, had we but world enough and time, would include offerings such as Stanley Fish's class on law, liberalism, and religion -- that is, academic experiences in the best sense, taught by brilliant scholars and talented teachers, who would place the rigorous study of legal doctrine (Fish emphasizes to me that, in conjunction with the class's eclectic reading list, his students are expected to become completely conversant with the constitutional doctrines regarding the religion clauses) in a broad and rich intellectual context.

It would also include experiences like this one:

Thursday, December 15, 2011

Stanley Fish, Superstar

I’ve been a big admirer of Stanley Fish’s writing since my undergraduate days 30 years ago.  Since then I’ve gotten to know him a little bit – we’ve spoken on the phone occasionally and had dinner a couple of times, and he provided a blurb for one of my books in my younger and more vulnerable years – and he remains one of the three smartest people I’ve ever met.

So I read his New York Times piece on teaching law with special interest.  Fish’s main point, that “law is surely a practice but it is also a subject, and if it ceases to be a subject – ceases to be an object of analysis in classrooms and in [the academic literature] – its practice will be diminished,” is in a sense wholly unobjectionable.

Any social practice as pragmatically important and morally and politically fraught as law will, by its nature, always be an important subject for academic inquiry.  And that sort of inquiry, as Fish points out, “is reflective . . . It is developed not on the wing, but in a course of study. It is academic knowledge in the best sense, knowledge that becomes yours by [among other things] pondering abstract, hypothetical questions.”  Law, in other words, is a subject that ought to be studied in universities, by people who are seeking knowledge for its own sake, rather than pursuing some more immediate practical goal.

So far so good.   But Fish’s argument goes much further than this.

Wednesday, December 14, 2011

Stop your sobbing

I will have more to say about Stanley Fish's defense of what could be called a graduate school model of legal education shortly, but for now I just want to highlight the following response in the comments, as an illustration of what the reform movement is up against  (Note this is from an actual lawyer, not a law professor):

Bravo to Professor Fish for standing up for the values that made law a profession -- rather than the trade school the whiners would have it be. As a practitioner, and the owner of a law firm with 7 other lawyers, I find the current attitude of whining by recent former students to be pathetic. These folks who have the ability to engage in research and analytical thinking chose to embark on a career in the naive and bizarre belief that they were entitled to earn large sums helping big companies takeover or sue other big companies, or legally evade regulations and taxes. Now, because of a periodic hiccup in our capitalist economy, the entitled have to figure out how to add value -- ie sell their labor, instead of being fawned over. 16 years ago, I quit a position with a large firm to start a small firm to bring justice for individuals. I love my work, and the people I hire are passionate about using the law to help make America work for all citizens. If people don't want to practice law in areas or at salary levels that the market will pay them for, then I would ask: Why are they any different than factory workers, farmers or any other Americans?

Tuesday, December 13, 2011

On bullshit and law schools

25 years ago a Princeton philosophy professor named Harry Frankfurt published an interesting essay called "On Bullshit."  The essay distinguished between the liar and the bullshitter as follows: The liar believes that A is the case, but he wants to convince you both that Z is the case, and that he believes Z is the case.  The bullshitter, by contrast, wants to convince you that Z is the case and that he believes Z is the case, but he is indifferent as to whether Z is the case or not:

The fact about himself that the liar hides is that he is attempting to lead us away from a correct apprehension of reality; we are not to know that he wants us to believe something he supposes to be false. The fact about himself that the bullshitter hides, on the other hand, is that the truth-values of his statements are of no central interest to him; what we are not to understand is that his intention is neither to report the truth nor to conceal it. This does not mean that his speech is anarchically impulsive, but that the motive guiding and controlling it is unconcerned with how the things about which he speaks truly are.

Monday, December 12, 2011

An Early Christmas Present for the Potential Law School Class of 2015

I’ve been looking at some of the discussion threads at, which advertises itself as “created to provide you with the necessary information to successfully navigate you through the law school application process and find the ideal law school, so that your next three years can be as rewarding and enjoyable as possible.”  This seems like a useful public service, to which in this season of giving I’d like to add my own contribution.

Saturday, December 10, 2011

Class stratification and social indifference

One aspect of the current crisis which can be particularly disheartening is the level of indifference many people in legal academia display towards it.  It's true that almost no one has the sheer chutzpah to come right out and say, when confronted with the fact that law school is turning into something of a catastrophe for a larger and larger percentage of our graduates, "I've got mine, Jack" (suitably dressed up in academic jargon of course).  Plenty of people are ready to engage in what a perceptive colleague of mine describes as "upper-class hand-wringing."

But talk is cheap -- while doing anything to change the status quo is another matter altogether.  And, as my colleague suggests, this is to a significant extent a class-based phenomenon.  I actually heard a middle-aged law professor say recently, in the context of a broad-ranging discussion of this subject, that it wasn't necessarily a big problem that more than half our graduates aren't getting real law jobs, because after all the prospect of practicing law for the rest of one's professional life was something she herself had found distasteful in the years immediately following her graduation from law school.

Really, what can one say in response to this sort of money-sheltered ignorance? It's no coincidence this person comes from the sort of background where the prospect of not being able to pay the rent or fix a broken car or go to the dentist will always remain, short of social revolution, as abstract as the prospect of being a third world peasant.

Of course a certain percentage of our students -- I would guess about one in five -- come from similar backgrounds.  For them, if law school "doesn't work out," they can go backpacking in Europe for six months and then try something else.

A much larger percentage of our students come from middle class to upper middle class backgrounds, broadly defined.  These are people who probably aren't going to face the prospect of real hardcore poverty, because they do have enough social capital to fall back on -- for instance they can move back in with their parents, as more and more law graduates are doing -- until they can figure out a way, via IBR and their previous educational and work experience, to carve out some semblance of a middle class existence after they've given up on trying to be real lawyers (although many of them won't be able to buy houses, start families, or engage in some other traditional indulgences of American middle class life).

Then there's a group of people who come from truly modest social and economic backgrounds. Since we've tripled tuition over the past seven years there are fewer and fewer of these, and what they're going to do when they end up not getting legal jobs is something that isn't pleasant to think about, which is why for the most part we simply don't.

Part of all this is generational: it's difficult for the older faculty in particular to come to grips with just how much more expensive law school is now, and how much worse the job market has gotten for lawyers -- not merely in the last three years, but over the course of a slow but fairly steady two-decade-long contraction that predated the current recession (This contraction was masked in part by the fact that starting salaries -- though not long-term compensation prospects -- kept going up for those law grads who got associate positions with big firms).

But part of it is very much class-based.  If people come from the sort of background where from early childhood on they and most of the people they socialize with went to expensive private schools, elite undergraduate colleges, and tony graduate and professional programs, it's a lot harder for those people to genuinely understand -- at both an intellectual and emotional level -- that most people in this country, and even in our own classrooms, don't have an attractive Plan B in life when Plan A turns into a six-figures-of-high-interest-nondischargable-debt-with-no-reasonable-job-prospects disaster.

When facing something like the current crisis of the American law school, that sort of background makes it a lot easier to wring one's hands, utter sympathetic-sounding banalities, and then do nothing.

Friday, December 9, 2011

I can't believe it's a law dean

If I were the dean of a law school that was getting sued for luring students to my school via wildly misleading employment and salary figures, here's what Item One on my day planner would not be: "Publish op-ed full of wildly misleading employment figures in legal employment magazine."

Thursday, December 8, 2011

Options for law schools

It's becoming increasingly clear that, for a very large percentage of recent law graduates (perhaps an actual majority) the expected return on investment on a license to practice law hasn't been worth the cost of acquiring one, and that, given ongoing structural changes in the economics of the practice of law, and the rapidly increasing cost of legal education, this problem is only going to get worse going forward.

Legal academia has several options in regard to how it's going to deal with what appears to be a growing crisis in regard to its long-term financial viability. Now it's probable that, even given these ongoing changes, a handful of law schools will still be able to provide a reasonable ROI for a large enough percentage of their students to allow these schools to continue to operate without any significant change in the way they currently do business.  But it also seems probable that, for the vast majority of schools, that won't be a viable long-term option.

(1) Denial 

This is by far the most popular option at present.  It takes the form of treating changes in economics of law practice as temporary rather than structural, ignores the fact that even prior to the recession a third of law grads weren't getting law jobs, and treats the skyrocketing cost of legal education as a product of forces beyond legal administrative control.  The upside of this approach is that it doesn't require anyone to do anything. The downside is that, except for a handful of elite schools, this approach won't be sustainable in the face of economic reality.

(2)  Moving to a consumption model of legal education

A consumption model of legal education assumes that there are a sufficiently large number of students for whom legal education can be modeled as consumption rather than investment.  Schools operating on this model will have a large number of students who are treating law school in the way that affluent families have traditionally treated undergraduate education, that is, as a kind of high-toned finishing school whose main functions are social signaling, networking, and conspicuous consumption, rather than as a way to acquire more straightforwardly marketable skills.  (That undergraduate tuition seems to have some of the characteristics of a Veblen good suggests that this model is in fact quite viable for elite undergraduate institutions).

Given the social cachet still associated with the identity of the lawyer (which can of course be overstated and may be deteriorating) this model may be viable for some schools.  This approach could prove particularly successful for schools located in places where rich people and their children like to congregate -- for example wealthy college towns with good weather, excellent restaurants, and easy access to first-rate ski resorts  -- although needless to say the supply of reasonably literate trust fund slackers seeking more respectable social identities is, even in contemporary America, somewhat limited.

(3) Reform

The third option for schools outside the charmed circle of the elite is to change or (eventually) die.  Change will come in the form of cutting operating costs significantly, and restructuring what law schools do in ways that will allow them to take advantage of new sources of operating revenue, such as for example contributing to undergraduate education, and selling new degree programs catering to people who want to do something other than practice law.

Operating costs can be cut in many ways, some of which will probably include larger teaching loads for tenure track faculty, larger percentages of classes taught be adjuncts -- ABA accreditation standards currently put strict limits on this option, but those are likely to give way in the face of economic pressure -- serious cutbacks in law library budgets, less extravagance in regard to physical plants, and a reduction in an administrative class that has more than tripled in size at law schools over the course of the last decade.

All of these changes will be painful for people currently working inside of law schools, so little can be expected to happen in this regard until the scope of the growing crisis makes it clear that  option (1) is no longer viable.  How long that will take is difficult to predict, and of course is likely to vary a good deal depending upon a school's position in the legal academic hierarchy.

Wednesday, December 7, 2011

There are no new jobs

I've just gotten William Ian Miller's new book, LOSING IT: in which an aging professor LAMENTS his shrinking BRAIN, which he flatters himself formerly did him Noble Service.  It is, as anyone who has read Miller's previous books can anticipate, mordantly hilarious:

Tuesday, December 6, 2011

Some progress on transparency

The ABA Section of Legal Education and Admissions to the Bar has approved a new questionnaire which will require law schools to report more employment information than they're currently required to divulge.  Key points:

Monday, December 5, 2011

Crisis and denial

 Updated below

Every January, the Association of American Law Schools holds its annual conference at big hotel in a major city, at which a couple of thousand law faculty from around the nation gather together to participate in and attend dozens of panels, as well as to do the other things academics do at professional conferences, i.e., “network” in the halls, explore the local restaurant scene, etc.

A couple of months ago, I was one of a half dozen legal academics who were asked to participate in a proposed panel that would be part of the conference’s “Hot Topics” sessions.  These sessions are put together relatively late in the conference planning process, and are intended to deal with topics that have become particularly timely in recent months.

The proposed panel, which the organizer went to a good deal of trouble to put together, was entitled “Beyond Transparency: The Crisis of Confidence in Legal Education.”  The other panelists were all people who have published serious critiques of the state of the contemporary American law school. These critiques come from a variety of perspectives, but broadly speaking all share the view that, given the changing economics of legal education and legal practice, American law schools need to make major changes in the way they operate, and that the sooner legal academics acknowledge this, the better.

Last week the AALS committee in charge of such things rejected the proposal, giving as its reason the existence of a full day workshop  on “The Future of the Legal Profession and Legal Education: Changes in Law Practice: Implications for Legal Education.”   According to the committee, the proposed panel was seen as conflicting with that program.

Friday, December 2, 2011

Simple math

Let's do some simple math.  Ten years from now, how many new lawyers will have entered the market for legal services in the American economy?  If we assume (somewhat optimistically) that the ABA doesn't accredit any more law schools over the next decade, ABA-accredited schools will place about 450,000 graduates into the market.  Non-accredited schools will put about another 100,000 into it.

How many new positions for lawyers will be created, via the combination of economic growth and currently employed lawyers leaving the profession altogether?  The Bureau of Labor Statistics estimates the number as being about 244,000.  (A state by state analysis of the relationship between lawyers and legal jobs put the number at closer to 195,000, but we'll assume the higher figure).  That's a 300,000-lawyer surplus added to the current surplus.

This daunting figure does need to be reduced a bit, by a couple of factors.

Thursday, December 1, 2011

Cutting off the addicts

Law schools have become addicted to federal educational loan money.  Under current law, schools can charge whatever they want for tuition, and the federal government will loan 100% of that amount, plus 100% of estimated living expenses, to any admitted student who isn't in default on an educational loan, no questions asked.  You don't have to have a Ph.D. in economics (something an increasing number of law professors actually have, not that it seems to be doing any good in regard to this particular subject) to realize this is a recipe for reckless financial behavior on the part of everyone -- students, schools, and the government -- involved in these transactions.

These are very high-interest loans that aren't dischargeable in bankruptcy, which means that the people who are borrowing the money will be doing severe damage to their financial futures if they aren't able to repay the loans in a timely manner.  Despite the best efforts of legal academia to hide the fact, it's becoming increasingly clear that an actual majority of recent law school graduates and current students are or will soon find themselves in that precise position.

Wednesday, November 30, 2011

Would you go to law school today?

Here's a question for everybody in the legal profession, from 1Ls facing their first exams to people who have spent decades practicing law (It should be especially germane to legal academics in particular):

If you were given what in our sandlot baseball games we used to call a do-over, would you go to law school today?  By this I mean, if you were in the same place in life you were at when you enrolled in law school, would you do it again, given what you now know both about this profession, and about the changes in the costs and benefits of entering it?

Monday, November 28, 2011

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.

Sunday, November 27, 2011

Brave new world

This weekend the New York Times ran an editorial with a good first sentence ("American legal education is in crisis"). What followed was a rather confused analysis of that crisis, which failed to grapple with its essence, which is that the cost of acquiring law degrees from ABA-accredited law schools has gone through the roof at the same historical moment when the market for the services of the graduates of those schools has been contracting.  This is a very bad development for people with law degrees. Making law graduates more "practice ready" upon graduation would shift some of the costs of these developments somewhat among lawyers, i.e., from recent to older graduates, but it would not in itself make legal education any less expensive or any more remunerative for lawyers as a class.

The problem, in short, is that at present ABA law schools are pumping out two graduates for every available legal job, and that the cost of acquiring what jobs there are has gotten far too high. No amount of pedagogical reform by itself is going to change that.

Predictably, legal academics have jumped all over the Paper of Record for the editorial's short-sightedness.  Commenting on David Segal's article last week on the same subject, Larry Ribstein observes that an article he's written

Suggests that law schools should teach law students how to be architects and designers rather than mechanics.  The lawyers of the future will focus, more than today’s lawyers, on the building blocks of law. Computers and non-lawyers will handle the mechanical tasks. Training lawyers demands the sort of theoretical perspective that Segal disdains. * * * The real problem * * * is not that law professors are teaching theory rather than the way to the courthouse, but that their choices of which theories to teach pay insufficient attention to the skills and knowledge today’s and tomorrow’s market demands.
I agree with what I take to be one of Ribstein's implicit points here, which is that it doesn't make any economic sense to charge people $150,000 so that they can be licensed to perform routine tasks that can easily be outsourced to non-lawyers and even machines, and that an educational model based on doing so is unsustainable in the long run.

What this line of thinking doesn't acknowledge is that, to spin out Ribstein's metaphor, society (or if you prefer, "the market") doesn't need nearly as many architects and designers as it needs mechanics.  The Carnegie Foundation/McCrate Report criticisms that appear every 15 years or so point out that law schools aren't very good at producing legal mechanics, which is true.  Ribstein et. al. point out that, given the rapidly changing nature of the market for legal services, it's not an efficient use of social resources to dedicate three years of very expensive postgraduate education to producing legal mechanics, which is also true.

But does it follow from these criticisms that we ought to be trying to reconfigure law schools in their present form to produce 50,000 legal "architects and designers" per year, at an average cost, including opportunity costs, to these hypothetical proteges of the brave new legal world of more than $200,000 each? I don't think that follows at all (Of course all this assumes it would even be possible to restructure the American law school in such a way as to perform this impressive feat.  As the old econ joke puts it, assume a can opener).

A more realistic goal, in my view, is to focus first on producing fewer lawyers per year at a much reduced cost.  That goal requires less in the way of visionary speculation and more in the way of political will to face up to unpleasant facts.

Wednesday, November 23, 2011

The birth of a salesman

I've striven mightily over the past three months to avoid turning this blog into a forum for encouraging squalid little arguments between law professors, but Dave Hoffman's post on Concurring Opinions exhausts my capacity to avoid public exasperation, given how it attributes imaginary views and preposterous behavior to conveniently clueless straw men, before moving on to avuncular -- and shockingly self-revealing -- ruminations, intended to "help" the increasingly desperate and confused students paying his salary.

Hoffman claims that David Segal and I "argue (ironically) that law schools are contributing to the problems of the legal profession by not raising higher barriers to entry."  I don't know what would be "ironic" about that argument, but in any case I've certainly never made it, and if Segal has I haven't seen where (a link would be nice).  Hoffman then proceeds to fantasize about the idiotic behavior that I, apparently egged on by the nefarious Mr. Segal, must engage in when students ask me for career advice, early in the fall of their first semester of law school:

Monday, November 21, 2011

The cost of legal scholarship

Over the past few weeks I worked with David Segal of the New York Times to create estimates of how much tuition money ABA-accredited law schools currently collect, how much legal scholarship gets published, how much of the former is used to pay for the latter, and how these figures have changed over time.  It was an interesting and fun exercise, and some of the results were published yesterday.

In this post I'm going to review the raw numbers involved in the analysis, which are quite striking in a number of ways.

Sunday, November 20, 2011

Skin in the game

Akhil Amar and Ian Ayres have a piece in Slate that features an ingenious scheme for requiring law schools to tie their own financial welfare more closely to that of their graduates.  Amar and Ayres insist that if law schools want to continue to fund their operations via federal loan money, they should have to disclose the professional and economic status of their graduates -- and not merely after graduation, but for a decade afterwards.

The latter point is becoming more important all the time, as it becomes increasingly the case that even those "lucky" graduates (perhaps 15% of all law school grads) who acquire high-paying big firm jobs at graduation find themselves scrambling for much-lower paying and less glamorous positions a few years later, while still carrying educational debt loads that can no longer be managed on the salaries they'll now be making. (This assumes -- and with every passing year it becomes a more problematic assumption -- that laid-off big firm associates go on to get other legal jobs).

The authors also make an excellent point when they argue that schools should have to dis-aggregate graduate information in a way that would allow prospective students and people completing their first year to consider the long-term outcomes of graduates with records similar to their own (It's one thing to think you'll be the exception to the rule when you're making that bet in a relative informational vacuum: it's quite another when you realize before you enroll or after your first year that literally no graduate from your law school with your credentials is making as much as $60,000 per year three years after graduation).

But Amar and Ayres are well aware that greatly increased transparency only begins to address what they with refreshing straightforwardness call "the crisis facing legal education."  Their analysis recognizes that better information about employment and debt ties the financial fortunes of law schools to those of their graduates only indirectly.  Further, as long as law schools don't pay any collective price for the lottery ticket mentality of their more irrationally optimistic students, they'll have no self-interested reasons not to continue to cultivate that mentality.  Hence what's needed is a device that will both help more students sober up before tossing good money after bad, and hit law schools in their pocketbooks when students who should drop out are given some powerful incentive to do so.

Amar's and Ayres' refund proposal -- which would require law schools to give back half a student's first-year tuition if the student drops out -- does just this.  It's of course not the only way to force law schools to put more of their own skin in the game, but it's a thoughtful attempt to grapple with what is perhaps the most fundamental financial problem with the current structure of legal education: that the rewards that flow from the billions of dollars in federal government loans taken out by law students every year are front-loaded onto the current bottom lines of law schools, while the risks of those loans are back-loaded onto students and (eventually) taxpayers.

I'm also glad to see the authors deal head on with the question of a potential conflict of interest:

In making this proposal, we might be accused of having an institutional conflict of interest.  We’re pretty confident that few students at Yale (like few employees at Zappos) would take the bribe to quit early. But if we’re right, this is something about which to be proud. If 20 percent of the students at another school took the offer, applicants might think twice before enrolling. And if the percentage taking the rebate becomes too large, government should think twice before lending.
 Precisely. No one (as far as I'm aware) has yet argued that a JD from Yale Law School is, all things considered, a bad bargain.  On one level, the whole problem with contemporary legal education is that 199 other law schools are to greater and lesser extents trying to be Yale Law School, when it makes sense for perhaps five or ten of them to engage in that particular enterprise.  The Yale model appears to work, by and large, for Yale graduates.  A cheap knockoff (although cheap is hardly the right word) of the Yale model doesn't work -- in either academic or economic terms -- for the vast majority of law students who are subjected to it.

This article is a very encouraging sign that people at the top of the legal academic hierarchy are coming to grips with the extent to which the basic economics of law school no longer make sense. Even more encouraging is Amar's and Ayres' recognition that what they quite properly call the crisis of contemporary American legal education requires a much more creative response than the kind of mildly reformist tweaking almost always advocated by people at the top of the social heap.  That two people at the top of our particular heap have come up with such a response is very good news indeed.