Friday, March 2, 2012

The best things in life are free

The most arresting thesis in Brian Tamanaha's forthcoming book is captured by this quote: "Law schools have raised their tuition to obscene levels because they can."  What he means is that explanations for the rising cost of law school that focus on rising expenditures -- more and higher-paid faculty, more and much higher paid administrators, more staff, more clinics, fancier facilities, more skimming of revenue by central administration, more (cross-subsidized) "scholarships," and so forth, are confusing cause and effect.  His argument is that to a great extent all these things have happened because tuition has gone up, not vice versa.

There's a lot to be said for this argument.  Tuition has gone up for a bunch of reasons that have nothing to do with what law school deans like to refer to as "the inherent cost of a first-rate legal education" (Apparently a first-rate legal education was not obtainable in the United States when most law school faculty were receiving theirs. 30 years ago Yale Law School tuition was 30% of what it is today, in constant, inflation-adjusted dollars).

As Tamanaha argues, chief among these reasons is that the demand for legal education, especially for admittance to elite law schools, has been so strong that such schools could raise their tuition by much more than the rate of inflation year after year while seeing no meaningful decline in that demand. Since almost all law schools are part of non-profit universities, this flood of cash had to be spent on operations, rather than distributing some of it to the legal owners of these enterprises in the form of profit.

In short -- although I'm not sure Tamanaha would put it quite like this -- the cost of operating a law school has gone through the roof because in a sense it "had to."

Let's take a look at this line of thinking in the context of faculty salaries. (What follows is my extrapolation of Tamanaha's thesis. He is not, as they say in the acknowledgment section of academic monographs, responsible for this extrapolation).  A generation ago, senior professors at elite law schools made about the same salary as federal judges.  Indeed at Harvard, according to Richard Posner, this was an explicit if informal norm for determining what the salary of the faculty ought to be.  Over the past three decades the salaries of federal judges have essentially kept pace with inflation, so that today they're about $170K-$180K (circuit court judges make $10K more than their district court counterparts. The Supremes make $209K).

Meanwhile, the salaries of law professors at top schools have essentially doubled in real terms.  The highest-paid professors at such schools make $350K to $400K a year (not counting employer-paid pension contributions and other benefits, but counting summer "research support," which is essentially a salary supplement).  This development led CJ John Roberts to submit a wheedling plea to Congress a couple of years ago, begging for raises for the federal judiciary, on the transparently ludicrous ground that it would soon be impossible to hire talented lawyers out of the private sector if judges had to continue to scrape by on such penurious wages.  Apparently the implicit structure of Roberts' argument was that law schools had discovered that they "had" to pay their faculty one third the salaries being pulled down by partners at top firms, because paying them one sixth of that amount, i.e., what federal judges make, would make it impossible to lure "top talent" from fancy law firms to fancy law schools.

Posner, as is his wont, rather rudely demolished his administrative superior's argument, by pointing out that there wasn't any, you know, evidence for this claim, given the enormous non-pecuniary benefits enjoyed by federal judges (power, status, working conditions), as well as some pretty sweet monetized perks (federal judges can retire after 15 years on the bench at full pay), and especially given that federal judges leave the bench for private practice even less often than law professors argue that they're overpaid.

Anyway, Posner's point about federal judge compensation could be applied equally well to law faculty. Law professors have no real power to speak of, but their working conditions are far more favorable than those of even federal judges, and at least at elite law schools it's unclear who wins the status game as between, say, a tenured Columbia law prof and a federal district or appellate judge.  So why is Columbia Law Prof getting paid twice as much as his or her Honor, when not that long ago they had the same salary?

The argument that you "have" to pay law professors at top schools $350K or they'll scuttle off to private practice is even more ludicrous than Roberts' argument that paying federal judges half that threatens to produce a constitutional crisis.  Social science and humanities professors at those schools often make "even less" than federal judges, after all. Now it's true that such professors don't have the option of running off to Davis Polk if their interrogations of the cultural discourse are insufficiently appreciated by their administrative superiors. But guess what: neither (with rare exceptions) do law professors.  Federal judges, after all, are actually engaged in their day to day work with one aspect of something related to one part of the actual practice of law. In other words, it's a lot easier to turn an ex-federal judge into, or back into, a real lawyer (many of whom of course were already real lawyers when they ascended to the bench) than to turn a law professor into one.

You could go back to paying law professors at top schools what federal judges make and, in the long run, the effect on the quality of legal education would be exactly zero.  Does that sound improbable? Flip it around: if federal judges were making $350K a year would the quality of the work product coming from the federal bench be appreciably higher? You pretty much have to be a Randroid replicant to buy that one.

Columbia law profs get paid X because Harvard law profs get paid X.  If Harvard law profs got paid X-1 that's what Columbia profs would be paid -- period, end of story. It has nothing to do with "retaining talent" within legal academia any more than the fact that CEOs in America are paid literally ten times more, in real dollars, than they were a generation ago has anything to do with "retaining talent" in corporate America. The CEO of Random Fortune 500 Firm is paid X because the CEO of Other Random Fortune 500 Firm is paid X.  They pay themselves (essentially) these preposterous sums for the same reasons law schools raise tuition: because they can.

69 comments:

  1. So, law deans and professors make outrageous salaries because there is an insatiable demand for legal education. Okay. Then, let's also say that something were to affect this insatiable demand for legal education, and let's describe this something as "requiring law schools to show how few of their students are actually employed in the law and/or making even one year's tuition and living expenses in salary."

    Ah, I see.

    ReplyDelete
  2. If Harvard law profs got paid X-1 that's what Columbia profs would be paid

    Not sure I follow you. Why wouldn't Columbia continue to pay x so that it could peel off some of Harvard's celebrity profs?

    ReplyDelete
  3. And what's the main cause of this demand? Allowing student loans to be non-dischargeable, and allowing a student to have an unlimited amount of debt. This again goes to my belief that fixing this issue will once again properly apply market forces which would bring down law school costs.

    ReplyDelete
  4. @6:53 a.m.:

    Being the dean of Columbia is awfully hard work, and if x-1 is a good enough salary for Harvard's professors, why shouldn't you save money on payroll at Columbia for redirection to other highly necessary aspects of law school administration?

    ReplyDelete
  5. @John -- I'm sure the dean would like to do that, but does s/he have the authority? Wouldn't the board need to pass on budget issues?

    ReplyDelete
  6. I think the only thing that will stop tuition growth is to cut off the easy money supply. If lenders started underwriting loans based on their statistical chances of getting their money back, the schools wouldn't be quite so flush. I think of it as an intervention . . .

    ReplyDelete
  7. Some of us have been saying this from the beginning, only to be textually assaulted by the other commenters on this blog...

    As I said many months ago--it's all about the money supply. Even with full transparency, status fools will still pay up for a long long time.

    Transparency is good, but winding down the loan faucet is much better.

    ReplyDelete
  8. @7:00 a.m.:

    CEOs convince boards of directors that they are unique, irreplaceable repositories of talent worth paying out of step with their lower rungs of management, all the time. Certainly the guy from Texas had no problems finessing $500k in "forgivable loans" from his school's pot of money, so why not?

    ReplyDelete
  9. @7:14 a.m.:

    Transparency doesn't involve Congress agreeing on how to reshape the nature of student aid, and thus is presumably easier (though by no means easy).

    I understand your point, but it's not an either-or situation. In fact, transparency might be a key step towards throttling back federal student aid, once it's demonstrated how little some degrees add to their holders' marketable skills.

    ReplyDelete
  10. During my three years in law school, several lawprofs have left the academy. They have all gone to federal, state, or local government agencies, doing what I call "high policy," leadership roles in the government. Not a single professor has left my school to enter private practice. Now this makes very little sense, considering that government pays much less than being a tenured lawprof at my school. However, it makes sense when you realize that policy work is much closer to the day to day work of a lawprof than say, being a partner at a biglaw firm. The skills it takes to make a successful career in biglaw may be completely different than what it takes to succeed in private practice, and there may be aspects of private practice, such as dealing with client demands and the nitty-gritty of law practice, that don't appeal to law professors. Additionally, it takes many years to build a successful practice, while the professors seem to take these 1-3 year sabbaticals to work in government and then come back to the academy. Even if they could, I doubt any of them would want to put in the 8 years it takes to make partner and the unspecified number of years after that it takes to build a big book of business.

    One argument that bothers me is the "oh, just get rid of USNWR and then we won't have to raise tuition every year." How will getting rid of USNWR suddenly erase the academy's very human impulse continue raising tuition and voting themselves better benefits? The analogy to a corporation is very apt. Law schools are no different from for-profit corporations, except that the "profits" accrue to management (professors and deans) rather than outside investors.

    ReplyDelete
  11. Being the dean of Columbia is awfully hard work

    Oh fuck you.

    Working in a mine is awfully hard work.

    Painting houses is awfully hard work.

    Smoozing for alumni donations and fleecing 21 year-olds into taking on six figures of non-dischargable debt for 500,000 dollars a year is the easiest money since the dutch bought manhattan island for beads.

    ReplyDelete
    Replies
    1. I was being sarcastic, but you appear to be on board with the underlying point.

      Delete
  12. During my three years in law school, several lawprofs have left the academy. They have all gone to federal, state, or local government agencies, doing what I call "high policy," leadership roles in the government. Not a single professor has left my school to enter private practice.

    Exactly. No firm wants to hire an ex-law prof, except for (maybe) someone like Dershowitz who has such a strong brand that he might help to attract a certain kind of business. Ninety-nine point nine percent of law profs lack any skill that a firm would want, and probably have a lot of tendencies that a firm would NOT want.

    ReplyDelete
  13. The main reason profs would not be brought to firms is that few would have spent years developing a book of business to bring to the table. It is not about who is the best lawyer. This is just about the practical realities of the economics of firms. If they had access to clients, they could find a place. I have known profs who have gone BACK to firms, but they still had their connections.

    ReplyDelete
  14. There's an insatiable demand for food and water, but those prices don't just keep shooting up as a result.

    There is more demand for a medical degree, and although the tuitions are high for medical school, they don't just open more medical schools while raising tuition and then letting everyone in.

    The real reason is that student loan money is there and there are very little barriers to entering law school. You don't even need employment like B-School does, you don't need academic requirements like medical school, and it's a "name" degree so it beats out regular graduate degrees that people generally know are useless unless you're already employed.

    A mix of great propaganda and easy money policies have created this scam.

    ReplyDelete
  15. I find it especially insidious that law professors at so-called religious institutions or state schools get paid so much.

    I don't think it's a Catholic, Jewish, Hindu, Muslim, etc. value to provide misleading (at best) job statistics to prospective students and enrich the faculty.

    I don't think it's the educational mission of a state school to provide misleading (at best) job statistics to prospective students and enrich the faculty.

    If a private university wants to do it, it doesn't strike me as bad as the above, but still not very seemly.

    ReplyDelete
  16. This is an unfortunate situation for society and law students (although there are less unfortunate situations). Nevertheless, this is unrelated to whether the law student is responsible for his or her own decision to go to law school and do too poorly there to achieve his or her own goals in his or her own situation.

    ReplyDelete
  17. I actually enjoy this blog, and it serves a useful function in its pinpricks at the legal academy. The problem is that, as noted by others, the solution is simple. End government guarantees of student loans and make the debt dischargeable in bankruptcy.

    To the extent that taking shots at the legal academy makes that outcome more likely, yay! But let's not kid ourselves that any other solution is sufficient, or even necessary.

    ReplyDelete
  18. I'm not sure why high tuition at T6 schools means that a state school tuition at a big ten or siimilar school would go up. Why is NYLS tuition so high? It has to be supply and demand coupled with the inane amount Columbia and NYU charge

    ReplyDelete
  19. I always laugh when I hear the "professors could earn more in private practice" statement because, with a few exceptions, professors became professors precisely because they were fleeing (i.e., could not handle and excel in) the law firm environment. Pull up any school's faculty list and it will be very apparent.

    And at what level would they re-enter the workforce at? Would you have the typical 50 something professor that's taught a canned 1L contracts course and fluffy seminar for the last 15 years (who did an appellate clerkship and two years at Cravath way back when) enter as an associate? Senior associate? Definitely can't be partner, they have no book of business, probably terrible marketing skills, and very little useful experience.

    In today's market, said law professors may find it tougher to get a big law job than recent grads/layoffs.

    ReplyDelete
  20. I agree with 9:51.

    Suppose all law schools cut their tenured professor salaries in half. For one reason or another, I highly doubt that professors will leave in droves.

    They'll probably hire lawyers instead.

    ReplyDelete
  21. The "because they can" rationale for gouging law students is not only a problem within law schools, but, unfortunately, within our society as a whole. Here is a good synopsis of where we are at:

    http://www.stansberryresearch.com/pub/reports/201112PSI_issue.html

    I'm so sick of the graft. It's just everywhere. Makes me sick.

    ReplyDelete
  22. It seems that there's general agreement here that few law professors would be able to command a high salary at a large law firm. But I wonder how many of them really appreciate that. I be many of them are so clueless that they imagine that whatever it is that real lawyers do would be a piece of cake if they took the trouble to figure out what it is.

    ReplyDelete
  23. I always thought the argument on pay was that you needed to offer competitive pay to encourage strong candidates to leave law firms to teach. However, I am not saying I agree that the amount being paid now is necessary or appropriate.

    ReplyDelete
  24. The same reasoning seems to apply to U.S. defense spending, at least when the GOP is in charge. Their singleminded focus on "nondefense discretionary spending" as the place to make budget cuts is the equivalent of government-guaranteed student loans for defense contractors.

    ReplyDelete
  25. I agree entirely with Tamanaha's conclusion, LawProf's extrapolation, and the reasons cited in comments for why this tuition growth has been possible. I have two other thoughts on why law schools have been able to raise prices so much. Here is one, and I'll hope to follow up with the other in a separate post:

    I think that law schools enjoy classic cartel power over pricing. Begin with the fact that, collectively, accredited law schools hold a virtual monopoly over entry to the legal profession. A few states will allow non-JDs or grads of unaccredited law schools to obtain law licenses, but most will not. But in most states, you must pay 3 years of tuition to an accredited law school to gain admission to the bar. You also have to do some other things, like pass the bar exam and character/fitness review, but the three years of tuition are essential.

    So accredited law schools own the market for a valuable product--the education that gives access to the legal profession. Collectively, we produce about 44,000 units of this product a year (i.e., about 44,000 JDs a year). But notice how that production is allocated among the 200 or so law schools: Each school produces a very small share of the total market. Harvard, a very large and very prestigious school, graduates only 600 JDs per year--less than 1.4% of the total market. Most other schools supply considerably less of the overall market.

    That is part of what allows each law school to continue charging so much. What would happen if Harvard enlarged its class to graduate 6000 JDs per year? Or if the T14 expanded their classes to accommodate a total of 14,000 JDs per year (i.e., each one graduated 1000 students)? The remaining schools would find a sharp drop in applicants, and tuition probably would go down at those schools.

    This is a classic cartel outcome: A group of producers collectively controls a valuable market but, rather than each producer maximizing production (to chase others out of the market and gain a larger individual share), each limits production. That allows everyone in the group to charge artificially high prices--you can think of it as sharing the economic value of the overall monopoly.

    Now, as far as I know, law schools don't have a cartel agreement--that's why I referred to outcomes rather than behavior or acts above. We don't, to the best of my knowledge, agree to limit class sizes, divide territories, fix prices, or do any of those pernicious things. Nor do we engage in subtle forms of that behavior by signalling agreement on tuition, class size, or other market factors. In fact, we compete pretty vigorously with one another to get the best students, faculty, etc.

    So how does cartel pricing occur? I think our cartel arises from prestige. Harvard won't enlarge its class to 6000 students because that would cheapen its degree; the Harvard degree is valuable in part because it's rare. And admitting all of those students would dramatically reduce the credentials of Harvard's entering class--leading to an immediate drop in USNWR rank and a broader perception that Harvard's students "just aren't what they used to be."

    The same is true at every step along the law school hierarchy--except at the very bottom with schools like Cooley, where admitting much larger classes can bring economic return without lowering prestige (can't get much lower!)

    It's true that many schools have expanded their class size over the last thirty years, but only in modest increments and only as the size and quality of the overall applicant pool has increased. Expanding class size in the absence of that growth would have produced prestige declines, which ultimately would have reduced market power for that school.

    That is how I think cartel pricing occurs in legal education without explicit cartel behavior. And cartel pricing for legal education is just like cartel pricing elsewhere--very, very high. Does this make sense to others?

    ReplyDelete
  26. For the top 50, sure. Outside of the top 50 (maybe the top 100 if you really want to stretch) there is no prestige factor. The real question is why haven't schools like Hofstra made a land grab for more students.

    ReplyDelete
  27. The system sucks, we know it, and we prattle on and on about stuff like "prestige," even though we should be wary of creating more caste systems, being progressive and all.

    Higher education (and especially legal education) is pushed higher and higher by lots of factors, and LawProf is right, they can raise the prices because they can. They can do this because of

    -easy loans
    -mistaken belief that higher education automatically means a higher job
    -asymmetry of information
    -alliance of government and non-government institutions
    -greed

    It's exactly like the housing bubble. Perhaps the intentions started off well: "Everyone can have a house! Everyone can go to college! If you want to be a lawyer, you can!" But the results are horrifying.

    ReplyDelete
  28. DJM: Absolutely. And the old, broken down antitrust lawyer in the back of my head reminds me that true cartels, those where there is a real barrier to competition from outsiders, don't need explicit agreements. Following the leader works just as well and avoids those awkward hours in the hallway outside the grand jury room in the company of, well, me thirty years ago.

    But let me suggest that this cartel is much less price uniform than it appears from the outside. Looking at LawProf's Feb 29 post and similar posts and comments it is apparent that to say HYS and the 2d tier schools charge the same tuition is true only in the trivial sense that they have the same sticker price. Most, probably pretty near all, HYS students actually pay sticker price. At the lower tiers, as we have seen, only the bottom of the entering class pays full freight. These students perform pretty much the same function as the fish in a poker game. Many, perhaps most, of the students at those schools receive various discounts in order that the school can buy their LSAT scores and GPA's and help its USN rating -- i.e "merit scholarships." This suggests that the schools actual per capita tuition revenue -- tuition revenue devided by number of enrolled students -- must vary, perhaps widely. Of course, we don't know by how much and the LS deans would rather be flayed than cough up that information.

    I am actually not sure what the significance of this is. It does not undermine your cartel point because it is cartel pricing that enables TTTU to charge some sap in the bottom of his class $55,000 per year when he has no more chance of ever paying off his loans than I do of landing a starring role opposite Salma Hayak. But I do think it must be true and that we should think about it a bit more.

    RPL

    ReplyDelete
  29. @12:25, I can't say for sure but--knowing lawyers and law professors as I do--I bet the desire for prestige plays a significant role at every school. T2 schools want to be T1, T3s push to crack T2, and T4s work and strategize to achieve at least T3. For the cartel effect to occur, the schools don't have to be prestigious in an absolute sense (or, say, to employers); they just have to want to maintain their current prestige or hope to move up the ladder. Those aims keep class size down, which leads to the cartel effect. And, as we know, schools are already doing well financially so there's not much incentive to rock the boat by vastly expanding class size.

    ReplyDelete
  30. DJM: Think you are right again. The prestige factor also accounts for the uniform sticker price. No law school wants to be considered cut rate so they all publicly declare that they charge HYS rates but discount under the table for everyone who might actually have a choice to go somewhere better.

    RPL

    ReplyDelete
  31. One of the lower tiered law schools should just make their class size 3000, and then take all the money and blow it on hookers and cocaine.

    Wait. That's the Cooley business model.

    (don't sue me bro).

    ReplyDelete
  32. It seems that there's general agreement here that few law professors would be able to command a high salary at a large law firm. But I wonder how many of them really appreciate that. I be many of them are so clueless that they imagine that whatever it is that real lawyers do would be a piece of cake if they took the trouble to figure out what it is.

    Thank you. That last bit cracked me up.

    ReplyDelete
  33. RPL and others who are interested, there's a way to get the tuition discount information if you're willing to spring for a "premium" membership with USNWR, which costs about $30. (There may be other ways to get this information, but this was the easiest access I could find.)

    The current information is at least a year out of date, since USNWR will be updating their rankings later this month. But here's a quick example using Harvard's information:

    Harvard is listed at $45,450 per year for tuition and fees. 51.5% of students receive some scholarship money--so almost half pay full sticker price. Among those who receive scholarships, more than two-thirds receive less than half of tuition. Put another way, 34.7% of the entering class receives a scholarship for less than half of tuition/fees; 15.4% receive a scholarship equal to at least half but less than full tuition/fees; 0.8% receive full tuition scholarships; and 0.6% receive more than full tuition. The other 48.5 pay full freight.

    USNWR also reports the median grant, which is $15,745. We would need the mean (rather than median) to calculate average discount precisely but, given the reported distribution (25th percentile of $7,540 and 75th percentile of $25,038), the median seems to be a pretty good substitute. We can estimate that Harvard gets $45,450 from about half its class and an average of about $29,705 from the other half.

    It's a little more complicated for public schools, because the grant information doesn't distinguish between in-state and out-of-state. Nor does USNWR report the percentage of students in each of those categories. But it's possible to make some very rough approximations. Assuming, for example, that Ohio State has only in-state students (and most do qualify for in-state after the first year), then using the USNWR information: (a) tuition/fees are $24,468; (b) 24% pay full freight; (c) the other 76% receive "average" grants of $8,500 (again, using the median as a substitute); and so (d) those 76% pay, on average, about $15,968; but (e) as at Harvard, there are a great range of scholarships, from less than half of tuition (59.9% of the class) to those receiving more than full tuition (2.0%).

    So there definitely is price competition in this market: Ohio State can't charge anyone as much as Harvard does, and we discount a lot to get certain students. But the competition occurs in the broader context of cartel pricing that keeps all prices artificially high. In fact, I suspect that cartel effect helps the lower ranking schools even more than the higher ranking ones. I may try to look at that through USNWR data.

    ReplyDelete
  34. Haven't all realized? The schools pay professors that much because it helps the students get good jobs. If they didn't pay so much, the students' potential employers would think that the school's graduates weren't worth the paper their teachers' salaries are paid with.

    So remember kids, it's always about the graduates and getting them jobs!

    ReplyDelete
  35. DJM sorry but no - you can keep raising the incoming classes into the thousands but if the law schools have access to student loans THAT will be the determining factor in prices. There will always be people reaching for that brass ring in exchange for three years at (seemingly) the govt.'s expense and being able to get out of whatever crapy career they were mired in.

    ReplyDelete
  36. Here's how the pricing works for New York Law School, again courtesy of USNWR expanded data: NYLS ranked 135 last year and enrolled about 500 full-time students per class. Full-time, sticker tuition was $46,460 and 61.8% of the students paid that full sticker. A third of the students (33.7%) received grants of less than half tuition; 4.0% received grants of at least half but less than full tuition; and 0.5% received full tuition grants. The median grant was $10,000. If we accept that as the mean, then NYLS got 61.8% of its full-time students (922 people over all three classes) to pay full sticker of $46,460 and the remaining 570 to pay an average of $36,460.

    Wow. How do they do that? Well, I know how, but even with the misleading job info, loan availability, and other facts, I'm blown away by those numbers. And NYLS collected still more money from its 431 part-time students (who received fewer grants and probably paid more over time for their JDs than the full-timers did). Makes me feel like I'm a naive middle-aged schoolteacher from Ohio.

    ReplyDelete
  37. It depends on the school, right? People would find ways to pay for HYS even without government loans. They did it before, and they would do it again. Sure, the cost of attendance has gone up, but there is a lot of money floating around right now.There are people who can pay, or who have access to private loans that they can repay.

    ReplyDelete
  38. lol @ anyone paying $46K to go to NYLS.

    ReplyDelete
  39. That is essentially the problem...everyone is loling and yet they still have no problems filling those seats at that price. Aren't government backed loans with no chance at dischargeability a grand thing?

    ReplyDelete
  40. It certainly allows those who were last in line when common sense was being passed out to get themselves into a bind.

    ReplyDelete
  41. common sense /=/ rational behavior /=/ economics under certain (these) circumstances.

    ReplyDelete
  42. I think there's yet another reason why so many students continue to pay these prices: Law schools market like crazy. As individual professors, we may lose sight of how much marketing goes on around us. Schools don't just print catalogues, wait for students to request them, and send out acceptances when the time comes--as we did back in the 70s and 80s. Instead, we do a heavy amount of increasingly sophisticated marketing.

    In addition to the expansive websites and glossy brochures, most schools send recruiters to campuses and law school fairs. Many schools, I think, target emails and application fee waivers to high-scoring students. Once students are accepted, many schools hold friendly campus weekends (often subsidizing travel and hotel costs). We may also orchestrate calls or other contacts from current students, faculty, and alumni.

    Some schools are trying to fill seats; some are trying to woo the best applicants; most of us probably are doing some of both--trying to get those highly credentialed applicants while also filling the "full tuition" seats with the best students we can find.

    Just think of this from the 0L's perspective. The typical 0L has gotten into more than one school, even if he/she has struck out at others. Some of those schools are offering scholarships; some are matching the initial scholarships; and most are inviting you for subsidized campus weekends at which you will hear great things about law school, meet faculty and current law students, drink a bit (or more), and have a lot of fun.

    This is pretty heady stuff for a college senior. Even without misleading content, wouldn't all this marketing make you think that there's a lot of opportunity in law? It's hard for college students and their parents to recognize that law schools are selling their own product rather than acting as agents of the legal profession. Many 0Ls, I think, easily confuse the opportunity to go to law school (which they've worked and competed to secure) with the opportunity to practice law. "Surely," the 0L thinks, "if I've passed the admission gate and several schools are competing for my enrollment, I must be set for life." Others have said this but, as I receive the seasonal invitations for our own open houses, the point has really struck home to me.

    ReplyDelete
  43. Schools like Thomas Cooley and Florida Coastal were a running joke at my undergrad. How anyone can possibly be impressed by anything coming from them is beyond me.

    ReplyDelete
  44. DJM: I agree that the prestige factor is a very powerful driver of the behavior of almost all law schools below the very bottom. The USNWR rankings exacerbate this tendency by giving a pseudo-scientific character to a very negative sum position tournament.

    What's especially peculiar is that anyone who looks at the employment and salary stats, inadequate as they still are, will soon realize that prestige means almost nothing in regard to the employment market outside of very broad categories. In other words, it makes almost no difference to graduate employment outcomes whether a school is ranked 34th or 49th, but a decline of that magnitude will be considered a disaster by a school that experiences it, requiring a vigorous response (in the form of spending even more money of course).

    From what I've seen, savvier 0Ls are beginning to figure this out -- they realize that outside of maybe a dozen schools law school graduate hiring is basically regional, and that concepts like "Top 20" or "Top Tier" don't mean much. When this knowledge becomes more general, the vast sums of money schools expend to move from #24 to #20 (I'm looking at you GWU) will become obviously irrational and inefficient, as opposed to "investments" in precious reputations.

    BTW I'm giving talks on this subject tomorrow at the University of Georgia and at Stanford on Monday. I hope a few readers of the blog can come to one or the other.

    ReplyDelete
  45. Wrong wrong wrong wrong WRONG!!!

    "Since almost all law schools are part of non-profit universities, this flood of cash had to be spent on operations, rather than distributing some of it to the legal owners of these enterprises in the form of profit."

    You fail to understand that the "legal owners" are the professors and administrators of the law school, and their gigantic salaries and bullshit paid sabaticals and luxurious retirement plans are the "profit".

    So on paper, it's a non-profit exercise. But in reality, it's akin to a closely-held corporation run for the benefit of the professors.

    ReplyDelete
  46. "I always laugh when I hear the "professors could earn more in private practice" statement because, with a few exceptions, professors became professors precisely because they were fleeing (i.e., could not handle and excel in) the law firm environment."

    As an attorney who fled biglaw for public interest, I don't think there is anything wrong with not wishing to "handle and excel in" a biglaw environment. I think almost any capable law school graduate could force themselves to handle the drudgery of a biglaw associate position. However, many capable lawyers conclude reasonably that their talents are better used elsewhere.

    With that said, I agree with you that professors are delusional if they believe that they could earn more in private practice than they do as law professors for two reasons. First, if you can't "handle" biglaw for whatever reasons, no matter how legitimate, you are going to take a huge paycut, whether you go to a smaller firm, a nonprofit, or government. Second, most law professors are genuinely not eligible to be hired as practitioners, apart from entry-level jobs. This is because they almost universally know very little about the practice of law, because (a) they have very little or no practice experience; and (b) many of them have never even tried to follow the nitty-gritty of practitioners' lives, even re: practitioners in "sexy" fields like constitutional law.

    I work in a constitutional law-based field in which many professors are interested and publish profusely. They like to write great "creative," "scholarly" pieces "rethinking" how my field of law should function and when, if ever, my clients should be able to seek relief from the court. The problem with their "rethinking" is that they are not steeped in the current "thinking." There are so many practical nuances to my field that are not remotely reflected in their scholarship, which has caused me to lose a lot of respect for their enterprise. Some of their ideas seem so "creative" to them precisely because they are not grounded in (practice-based) reality.

    ReplyDelete
  47. DJM
    Thank you for the information on NYLS. I am the person who posted earlier asking how they can get away with charging so much. I still don't understand it, but I really appreciate the information.

    I knew they charged a lot but I didn't realize what a cash cow it truly is for them.

    Susan

    ReplyDelete
  48. Lawprof:

    Good luck at your talks. Be sure to let us know when you come to New York! Though it would have to be a breakfast talk or an after 10pm talk for me to be sure I could make it!

    ReplyDelete
  49. DJM,

    How are the Mortiz faculty reacting to your contributions here? Are they aware of it? I saw a story today in the Lantern where Kathy Northern (almost) warned prospective students not to apply, saying "law school is an expensive way to find yourself, its an expensive way to wait out a recession" (or something like that). Of course, she followed that up with a remark about how law school was training "problem solvers" and that while the world may not need more lawyers, it always needs more problem solvers. I don't know why she said that. Still, the article gave one the impression that she's aware of an employment problem among graduates and not afraid to make some mild statements to that effect in the University paper. That's pretty good.

    ReplyDelete
  50. Ah, but Law Prof, you forgot that being in the academy is a sacrifice. It's like the year I spent at Harvard and all of these students were telling me that the wanted to be in "public service" instead of joining law firms.

    That, of course, mean that they wanted to be federal judges.

    Somehow, service to one's country sounds different if you sign-up for the armed services.

    But those battered souls, they sacrifice themselves for academia.

    ReplyDelete
  51. DJM: Thanks for the information on tuition discounting. I was not aware of it but I am a newby to this field. Is there any information on how many of the "grant" dollars are traditional scholarships -- i.e. transfers from endowed funds to operations -- and how much are pure price discrimination? My sense is that in the well endowed schools -- e.g. HYS -- there is more of the former but I have no data.

    RPL

    ReplyDelete
  52. The United States of America needs federal judges. It is a part of our system. There is nothing wrong with wanting to be a federal judge, and nothing wrong with being a federal judge.And there are people at HLS who have served in the armed forces.

    ReplyDelete
  53. @5:23, I'm not sure how many of my colleagues know that I'm commenting here, but I know that a growing number are sympathetic to these issues. Quite a number of people have started talking about rising student debt, falling salaries and job prospects, and related issues. I'm sure that's still a minority of the faculty, but I'll be interested to see how the conversation grows and where it leads.

    LawProf--show them the light at Georgia and Stanford!

    ReplyDelete
  54. RPL, I don't know of any data about the funding sources for scholarships but, as many have noted here before, it's hard to separate endowed funds from tuition dollars in any event. If donors support more of X, then the school can use tuition dollars to buy more of Y.

    The traditional wisdom among academic fundraisers, I think, is that donors like to give money for scholarships. It's a natural way to satisfy the common desire to "give back," and it can establish a very personal connection to the school--especially if you get to meet "your" scholar(s) every year. During the last decade, I think donors have also been very receptive to the suggestion that their alma maters need more scholarship money specifically to attract highly credentialed students and move up in the rankings. Donors like the concept of their school attracting the "best students" and they often are keenly interested in seeing their school rise in the rankings.

    For those reasons, schools probably have a fair amount of donor money for scholarships. But I doubt that all of the money comes from endowment. And however the accounting goes, the non-scholarship students still pay more to keep the heat and lights on. (Hmm, maybe that's what happened to the hot water at Moritz during the last few years? Inside joke for you Buckeyes.)

    ReplyDelete
  55. 6:37: no need to condemn HLS students who want to do public service work in order to condemn legal academics whose behavior is problematic. You're conflating two completely unrelated things. Besides, unless these HLS students told you that by public service, they only meant that they wanted to be federal judges, they were likely referring to practicing as a government attorney first. I didn't know many students at HLS who yammered on about their desire to be a federal judge - a lot of people eventually discovered this desire, usually due to clerking, but at HLS, most people who said public service meant something like prosecution, PD, civil AUSA work, etc.

    Being a federal judge is absolutely a form of public service, and it involves financial sacrifice for appointees from the private sector. But, I agree, it's the sort of financial sacrifice the merits the littlest violin.

    ReplyDelete
  56. Yes, when HLS students say "public service" they mean what 8:20 says they mean. They do know, however, that being a federal judge is not a completely far-fetched goal.

    ReplyDelete
  57. DJM

    Here is an important point about those scholarship calculations. As lawprof has explained before- many schools have stipulations on scholarships. I don't have access to the usnwr database. So I can't check for myself. But if they only list the scholarships given to 1Ls, it is wrong to assume the same number of people have those scholarships for 2L and 3L.
    Schools give those scholarships to more people than can keep them under the curve, so a number of 2Ls will lose their scholarship and have to pay full tuition.

    ReplyDelete
  58. I agree there is simply no way a terrible school like NYLS could charge so much if Columbia had a lower tuition. Oddly, people assume CUNY is a terrible law school because it is so cheap. (there may be many reasons why cuny is a terrible law school but I do know people who assume there must be something wrong with it if it is so relatively inexpensive.). If NYLS charged less, they would possibly lose prestige.

    Isn't that a strange situation?

    Susan

    ReplyDelete
  59. Good points DJM. It is also the case, at least at the undergraduate level, that "need based" aid has evolved into a pretty insidious price discrimination scheme. Since the top schools have raised their basic price (T, R & B) to just shy of $50,000 even very affluent upper middle class families have to ask for "aid." $50,000 is almost a third of the after tax income of a family earning $250,000 and living in a high tax state like New Jersey. And anyone who has ever gone through the process of turning over every detail of their financial status before being told the price they will be charged cannot be blamed for thinking that the object of the exercise is less to help them out than to squeeze them to the absolute limit of their ability and endurance.

    RPL

    ReplyDelete
  60. @4:08, excellent point about the scholarship stipulations. I was thinking "what is the lowest rate students might pay at these schools?" and forgot for those purposes about the stipulations. We don't play the scholarship scam at Moritz--our stipulations are so minimal that no more than 1 student per year has lost his/her aid. But that's definitely not true at a lot of other schools--those schools are raking in a *lot* more money from sticker price tuition than my calculation suggested.

    RPL, so true about college aid becoming price discrimination as well. And let's not forget that Claremont McKenna was caught falsifying their entering student stats. When elite liberal arts colleges are corrupt, there's not much left for academia to brag about.

    ReplyDelete
  61. What did people do before easily available student loans?

    ReplyDelete
  62. DJM: A few final thoughts on the price discrimination scam, which is a bit off topic but not much .

    It wasn't always thus. As recently as 1980 the base price (T,R&B) at these schools was about $7200, about $20,000 in today's dollars, an amount our hypothetical affluent, upper middle class family could, with some saving and good planning, be expected to pay. The inflation adjusted amount hadn't changed much since 1970. At that price "need based" aid was actually aimed at people who were, in relative terms at least, needy.

    It's not just the corruption but the astonishing arrogance that strikes me. These dull, boring upper middle class suburban families (whom most academics not so secretly despise) are these schools' core customers. Oh, sure, they have the one percenter's, the inheritors and celebrities. But there aren't enough of them to fill the seats; they need these families to put bodies in the classrooms. Subjecting your core customers to the humiliation of being means tested before being fleeced like sheep is a business model that works only if they need what you are selling very badly indeed. And they do. A certain segment of America's coastal upper middle class has become terrified that, in an uncertain economy, their children will fall out of the comfortable stratum of society they now occupy. They believe that a degree from the Ivys Plus (i.e. one of the eight Ivys plus Stanford, Duke, Chicago a few others)is their best guaranty this will not happen to their children and they are willing to do almost anything to obtain one. Going to one of these schools is seen as almost a necessity. But if this turns out not to be the case, or if the customers stop believing it, this might turn out to have been a very bad business model.

    RPL

    ReplyDelete
  63. DJM -- do you and colleagues set the tuition at your school?

    ReplyDelete
  64. And your colleagues

    ReplyDelete
  65. A long time ago I know there were state agencies that would guarantee your loan if you couldn't get one from the bank.

    But then I graduated law school with the maximum loans of 20,000.

    ReplyDelete
  66. Susan @4:15 - It's an interesting point that you make on CUNY being assumed to be a terrible school because of its low tuition. But I don't agree that there is no way that "a terrible school like NYLS could charge so much if Columbia had a lower tuition." Columbia and NYLS, though only three miles apart, live in completely separate worlds. I am nearly certain that no student now at Columbia even applied at NYLS. And no student at NYLS could have been admitted to Columbia. So Columbia could lower its tuition to $0 and this would have no effect on NYLS or its students. On your comment that NYLS is a "terrible school" I'm so not sure. To confess I'm 3,000 miles and a generation and a half from NYLS so I'm armed with the power of ignorance. But in a different market it is probable that nearly all of its graduates would have gotten jobs as attorneys and performed journeyman's work throughout their long careers. Surely at some point in the past they must have done so. But as LawProf put it 2-17-12,"There aren't enough jobs." NYLS's problem is not that it doesn't provide a decent legal education but that at it's position in the market, even with a decent legal education a very small percent of its graduates (probably 10% to 20%) will ever get or keep a job as a lawyer. William Ockham

    ReplyDelete
  67. 4:18 p.m. - You are right, right, right, right, Right!!! Can't we once and forever do away with the word "non-profit"? This isn't even an accounting concept anymore. It's just a magical incantation that those inside of the nomenklatura mumble to stay prying eyes. The dean (now former dean) of my law school with a nominal salary of $390,000 (plus more off books financial goodies) just disclosed $500,000 loan from the school, the repayment of which was waived at loan origination. His wife, Jane Cohen got a tenured professorship ($319,000 last year) and her own $323,000 forgivable loan. Some non-profit. William Ockham

    ReplyDelete
  68. An update on my prior comment at 3:27 AM - At the time that professor Cohen and her husband joined the faculty at my law school her publications consisted of a single law review article. Since that time she has published two additional law review articles, one in the law review of our school where she and her husband teach and the other with the title, "Forward--and Forward!:Toward the Felicitous Relationship of Words and Ideas" on page 1 of the inaugural edition of the law review Blackacre (law school association unrevealed). William Ockham

    ReplyDelete

Note: Only a member of this blog may post a comment.