Monday, April 30, 2012

The ninth circle

This weekend I discovered the existence of something called AAMPLE, which stands for the Alternative Admissions Model for Legal Education.  I haven't been able to run down who created and markets it, but it appears to be a standardized program that a number of law schools -- the number is unclear, but as of two years ago was apparently about 22 --employ. (Some of these schools appear to employ less pernicious -- shorter and less expensive -- variations on the program than the one described below).

It works like this: schools invite some of their rejected applicants to enroll in a six-week summer program, which involves taking a couple of upper level law school courses -- one on fourth amendment issues, and the other on negotiable instruments.  At the conclusion of the courses, the students take standard issue-spotting in-class exams. If they achieve at least a 2.5 GPA in both courses, they are offered admission to the school's fall entering class.

The original justification for these programs appears to have been that some people with bad LSAT scores and/or GPAs will do better in law school (in this context "better" means "not flunking out") than their numbers predict, and this is a good way to find out who they are.  These programs, however, should be sending up red flags to anyone looking into them.  For one thing, most law schools who have AAMPLE programs are remarkably reticent about the fact.  I went to the web sites of the 22 schools that LSAC listed as having such programs as of April 2010, and in most cases it was impossible to find any information about them, or indeed that they even existed (prospective law students can't apply for the program without first being invited to do so by the school after being rejected in the regular application process).

Those schools that do provide information about their AAMPLE programs use a canned FAQ format (compare this with this) which goes to great lengths to insulate the school from any potential complaints, legal or otherwise, and which is also very careful not to contain any information about how much this is going to cost the hopeful applicant.

How much this is going to cost turns out to be remarkably variable.  At some schools -- for example St. John's and Loyola New Orleans -- the program itself apparently costs nothing, beyond the cost of textbooks (which in themselves run several hundred dollars).  Others, for example New York Law School and Nova Southeastern, the tuition is or at least was -- more on that in a moment -- $3500, meaning that someone coming to the school to take the program could easily spend $5000 in six weeks in a last-ditch attempt to gain admittance to these schools.

Who do schools invite to participate?  Three years ago, Nova invited nearly half their rejected applicants to take part. 183 took them up on the offer, and 85 passed the courses. Now this was obviously a terrific little profit center for school, given that the program generated $640,500 in revenues.  (Some schools -- I'm unclear whether Nova is one -- credit the tuition paid by successful participants toward their first-year tuition.)  

Most of the AAMPLE participants at Nova had LSAT scores below the 23rd percentle, and a significant number were below the 13th percentile (two participants had LSAT scores between the second and the sixth percentile of the test, which represents a raw score barely better than answering the questions on the test randomly).

Now consider that, in comparison to some other schools that employ AAMPLE, Nova is relatively selective institution.  Per LSAC's latest data (which is two years out of date) it was admitting "only" 40% of applicants through the regular admissions process.  By contrast, three schools that actually promote the existence of their AAMPLE programs -- Charlotte, Florida Coastal, and Phoenix -- have been admitting between 65% and 73% of their applicants, per the same slightly outdated LSAC numbers.  Thomas Cooley, which also employs AAMPLE although you can't discover this via the school's web site, admitted 83% of its 2010 applicants. It seems probable that these schools invite the large majority of the the relatively few applicants they reject to take part in their AAMPLE programs.

My very initial research into these programs (I trust that the attorneys suing these institutions will look into these matters in more detail) has uncovered some interesting recent developments in regard to them.  Specifically, Florida Coastal, which was charging $3200 tuition for its AAMPLE program, has quite suddenly dropped the price of participating by 84.375%, to $500.  Charlotte is now charging the same price.  I was unable to discover what Phoenix is or was charging, but given that all three of these schools are owned by the same for-profit company it would be a surprise if both Charlotte and Phoenix haven't dropped their prices in concert with their corporate brethren.

Also, consider the trend at Phoenix in regard to how many participants in the program are being admitted:

  • 2005 11%
  • 2006 22%
  • 2007 20%
  • 2008 33%
  • 2009 42%
  • 2010 51%
  • 2011 Spring 80%
I don't know what "Spring" means in this context, but I suspect it means Phoenix started offering the program twice in 2011.  I also suspect that what's going on at these schools is that they've dropped the price of participation radically in an attempt to use the program to lure people through their doors who might have otherwise thought twice about attending if they had been admitted in the first instance, as opposed to treating the program as an independent profit center.  The psychological manipulation this strategy employs is not very sophisticated, but it may well prove quite effective.  (For a glimpse into the psychology of the sort of applicants who are  targeted by these schools, read this applicant's narrative of his admissions cycle).

Once again, we see how in legal academia something that sounds relatively innocuous in theory -- standardized tests have serious drawbacks, some people who score badly on the LSAT can still be competent lawyers, it's important to maintain "access" etc. etc. -- has been perverted into just another way of extracting money, coming and going, from naive, desperate people.

Friday, April 27, 2012

Storm clouds

I learned yesterday by happenstance that the University of California Hastings is cutting its incoming JD class by 20% this fall, and plans to maintain this new level going forward. This means that two years from now the school will have a total of about 240 fewer JD students enrolled than are currently attending it.  As a consequence the school is cutting its operating budget for next fiscal year by $2.1 million.  These cuts will be apparently borne exclusively by the school's staff: ten staff people are being laid off, another ten are having their positions reduced from full-time to part-time, and seven others took voluntary severance deals ("voluntary" in this context being what lawyers call a term of art).

If the school's faculty are being asked to throw anything into the pot the administration is doing a good job of not revealing this, as Frank Wu, the school's chancellor and dean -- Hastings is a free-standing state law school which is not part of either the UC system or a larger university -- mentioned nothing of the kind in his letters to the Hastings community.   Indeed per these communications it appears the faculty got a 5% raise in over the course of the 2011-2012 academic year. (It says something about the social structure of legal academia that if Hastings had laid off a single tenure-track faculty member this would have been the talk of legal academia, but the school can eliminate 20 staff positions and hardly a word about this can be found on the internet.)

From an outside perspective, an unsympathetic observer might conclude that Hastings' current situation can serve as an exemplar of the kind of rampant financial irresponsibility that we've seen all over American legal academia in recent years decades.  Consider:

In 2004-2005 Hastings charged a resident tuition rate of $20,900. This coming fall, it will charge California residents $46,500 for the privilege of attending.  This is an 83.5% increase in real inflation-adjusted dollars.

As of three years ago Hastings was getting a quarter of its $40 million annual operating budget from the state of California.  At that time Gov. Schwarzenegger attempted to eliminate the subsidy almost entirely but was rebuffed by the legislature, which kept the subsidy intact. (A mordantly charming detail: $155,000 of the school's annual operating expense was coming from California lottery proceeds). In short a heavily subsidized school has nearly doubled its price of admission but still finds itself having to make major budget cuts.

Now what could explain this situation?  Well for one thing between 2007-08 and 2009-10 Hastings decided it would be a fine time to hire nine new tenured or tenure-track faculty members, in the middle of period in which the school was in the process of nearly doubling its tuition in real terms, while the status of its state funding was in increasing question. (I should emphasize I don't mean to pick on Hastings here -- this kind of behavior is SOP at many law schools).

Meanwhile as all this was going on the employment prospects for the school's graduates were in the process of collapsing: nine months after graduation 44.4% of the 2010 class had no long-term employment of any kind, legal or non-legal, which was one of the very worst performances of any ABA-accredited law school in this category.

Obviously under these conditions cutting the size of the JD portion of the student body by 20% is both warranted and something of an act of desperation.  We will be seeing similar things and worse at many other law schools soon, although we can expect that various central administrators will be less inclined than Hastings' own administration to allow the pain to fall exclusively on law school staffs rather than faculties.

A final note: How utterly absurd and irresponsible was it for the state of California to approve the opening of a new law school at UC-Irvine in 2009? I'm not going to bother to look it up but I can guess this boondoggle was approved on the basis of some nonsense about rigorously combining theory and practice in a new model for 21st century legal education while maintaining "accessibility" to legal education for the people of California, who were previously making do with about 41 law schools (In three years the school's tuition has gone from free for its first class to $44K for residents and $54K for non-residents).

Anyway, what's going on at Hastings is merely a preview of coming attractions all across the nation. As Bette Davis once remarked, fasten your seat belts, it's going to be a bumpy night.

Thursday, April 26, 2012

Mistaken beliefs about the crisis of the American law school: Law school used to be cheap

One of the more excruciating scenes in the 1967 film The Graduate, which centers on an aimless young man who can't figure out what he's supposed to do with his life after graduating from an Ivy League college, takes place when the protagonist attempts to have an actual conversation with the middle-aged married woman with whom he's having an affair.   Desperately fishing about for a topic, he tries to get her to talk about art.  She refuses, stating that this topic holds no interest for her.  Moving on to more personal questions, he goes on to discover that she is a profoundly bored alcoholic who hasn't slept in the same room as her husband in five years, and who married him because he got her pregnant when he was a law student and she was a freshman at a fancy university.  The conversation ends like this:

  What was your major?

  Why are you asking me all this?

  Because I'm interested, Mrs. Robinson.
  Now what was your major subject
  at college?



 She nods.

  But I thought you - I guess you
  kind of lost interest in it over
  the years then.

  Kind of.

Contrary to the impression a casual reader of this blog might get, I'm a big fan of liberal arts education. I believe in learning for its own sake, that knowledge is preferable to ignorance, that a genuinely educated citizenry is crucial to maintaining democracy as something more than a word, and all that sort of thing. On a related point, I believe if university academics are going to study and write about law, they should do it in a genuinely academic way, as opposed to cranking out glorified briefs and bench memos that are supposedly "helpful" to lawyers and judges, i.e., traditional doctrinal law review articles. So I have nothing against "Law and . . ."  Indeed to the extent that law school is structured as a form of graduate education there should be nothing but "law and."

But law school should not be structured as a form of graduate education, because structuring that way makes it cost far too much.  It's a mistake to think that law school used to be cheap but is now expensive. Law school was always expensive, even a generation ago when Harvard cost barely more than $10,000 per year in 2011 dollars, and resident tuition at state law schools was almost nominal (CU's tuition 30 years ago was $975, i.e., about $200 per month in real current money).

Law school has always been expensive because the opportunity cost of going to law school has always been high.  Taking yourself out of the labor market for three years at the beginning of your working life is a very costly investment in your future.  So a generation ago, when private school tuition was in real terms a fourth of what it is today and public law school tuition was practically free, law school still cost a lot in real economic terms.  Today, of course, the cost of law school has gone from significant to basically insane. On top of the opportunity cost you're supposed to pay borrow at very high interest rates a sum of money that would outright buy a fairly decent three-bedroom house in many parts of this fair nation.

At no time in the past would the present cost of law school have made sense for anything approaching a majority of law students, and looking forward it makes even less sense.  It's one of those things, like three-bedroom houses in Las Vegas selling for $600,000 in 2006, that happened because it was in the interest of powerful political and economic interests for it to happen, not because it made the slightest degree of sense as matter of rational social action.

Law school in America has developed or devolved into a kind of faux-graduate school experience, in which with limited exceptions less pretense than ever is made of engaging in vocational training.  But here's the punch line: Do you know what graduate school generally costs? Nothing.  Now this isn't true at all in genuine economic terms, as graduate students still incur big opportunity costs and avoid paying tuition by providing plenty of slave labor to keep the wheels of the great American university system turning.  Of course at the end of all that there's a good chance graduate school will end up not being worth it, since the large majority of graduate students don't end up getting anything like the jobs they went to graduate school in order to get.  In other words they're just like law students, minus the six-figure high interest non-dischargeable debt.

Law school as graduate school is very much a luxury that the vast majority of people who are forced to purchase it can neither afford, nor would they want to buy even if they could actually afford it. This was true when it was practically free, but it's far more true today, when the total cost of attendance at many schools is approaching a quarter million dollars.

This, I think it's fair to say, represents something of a market failure.

Wednesday, April 25, 2012

Mistaken beliefs about the crisis of the American law school: If you sue a law school, it will stop publishing fraudulent employment data

A little more than a month ago, Professor Deborah Merritt emailed the career services dean at New York Law School regarding representations the school was making on its web site about career outcomes for graduates two to four years after graduation. The dean promised to respond the following week. When she didn't, Professor Merritt sent a follow-up email, to which she received no response.

Professor Merritt has invited me to write about this (lack of) correspondence in the context of NYLS's representations, especially since an increasingly popular line of defense in legal academia is that one can't merely look at first jobs, because salaries for law graduates often improve dramatically within three to five years of graduation.  This is precisely what NYLS is claiming regarding its own graduates. Let us look at the "evidence" the school presents for this claim -- "evidence" which, we should note, is presented in the context of an explicit recruiting pitch to prospective law students on the school's web site.

First, under the heading "What Can I Expect To Earn?" the school presents seriously misleading information about average salaries in first jobs upon graduation, including statements such as that graduates entering "business" reported salaries ranging "from $50,000 to $150,000."  Obviously this claim is based on the school's employment data for the class of 2010, where the salary for the "corporate/business" category is given as $50,000 to $150,000.  Now Judge Schweitzer's "sophisticated consumers" of employment information will, if they click through to another document on the web site, and read it with the attitude of opposing counsel combing through documents produced in discovery, discover that this range is based on a grand total of ten reported salaries.

Our sophisticated consumers ("sophisticated" here means "people who expect as a matter of course that institutions of higher learning will attempt to seriously mislead them if they can get away with it") will go on to perform some calculations on the "nested" statistics presented by NYLS, and realize that these salaries represent less than ten percent of the graduates employed in the "corporate/business" category (if they are even more sophisticated they will realize that "corporate/business" is in most cases a synonym for "low-paying non-legal positions graduates could have gotten without spending $200,000+ on a law degree first).  Etc.

But NYLS is being a model of transparency at this point in comparison to what comes next.  What comes next is the following statement:

The entry level salary is one indicator of what you can expect to earn, but many law graduates change jobs three times in their first few years of practice . . . Upon changing jobs, our graduates do see an increase in salary. Your first job will certainly not be your last.

A recent study of New York Law School alumni who graduated between two and four years ago showed their salary increases in their second and third jobs. First salaries in the $40,000 to $60,000 range were the most common (46 percent) but that shifted with the graduates' second and third jobs to the least common (20 percent). At the same time, salaries in the $60,000 to $90,000 range grew from 22.5 to 35.5 percent. Salaries in the range above $90,000 grew from 26 percent to 40 percent. All of these jobs changes took place within four years of graduation.
A bar graph table is then represents this information.

Let us consider what the reasonably reasonable person reasoning reasonably about whether to enroll at NYLS would reasonably conclude from this information.  Note that this information is presented as the fruit of a "recent study" by an academic enterprise, rather than as a sales pitch.  Here again we see how law schools trade on their cultural capital as academic institutions rather than as mere businesses trying to make a buck (and again the irony is that a "mere business" would be running a much bigger risk in the courts of New York state if it tried to pull anything quite this sleazy on its prospective customers). All of which is to say that an academic institution presenting data in the form of "study" is representing that something intellectually rigorous or at least minimally respectable is being offered up to the ingenue seeking reliable information on the subject at hand.

What the prospective law student would reasonably conclude from this data is:

(a)  Almost everyone who graduates from NYLS gets a first job that pays at least $40,000.

(b) More than a quarter of NYLS grads get a first job that pays more than $90,000.

(c)  The percentage of of NYLS grads who are making more than $90,000 increases significantly within four years of graduation from the percentage expressed in (b).

(d) 75.5% of NYLS grads who change jobs within two to four years of graduation are earning more than $60,000.

All of these conclusions are based on a profoundly misleading presentation of the available data.  A straightforward presentation would include the fact that the salaries of only 26% of the NYLS class of 2010 were known, and that the "study" of how much growth supposedly took place in regard to initial salaries within two to four years of graduation was based on X number of graduates.  We of course do not know what X is but I trust the people who are currently suing NYLS will use New York's rules of civil procedure to extract this information and make it public.

Remember, all of this "information" being presented by NYLS to prospective students is being put forth even as the school is being sued for misleading prospective students about employment prospects. Now what could possibly explain such behavior? Some candidates:

(1) Arrogance

If I were a New York state judge hearing the suit against NYLS, I would be prone to consider this part of NYLS's web site to be the metaphorical equivalent of flipping me off.  On one interpretation, these appear to be people who simply feel invulnerable.  They're accused of fraud, and their reaction is to continue to publish egregiously misleading statistics under the rubric of an academic "study."

(2) Stupidity

On another interpretation, the people responsible for publishing this may be so clueless that they don't understand that the numbers they're presenting are inherently phony. There are a lot of genuinely stupid people working at law schools, and, as real academic studies have noted, one of the big drawbacks of being a stupid person is that you tend not to realize this fact about yourself.

 (3) Incompetence

This is the inevitable product of the combination of the first two factors.  NYLS put up a bunch of phony new salary stats even in the midst of getting sued for doing exactly that, got called on it by a law professor, and then proceeded to not only fail to do anything about this (such as for example taking the stats down), but to also aggravate that professor unnecessarily, by not even bothering to reply to her queries after assuring her that they would, thus leading eventually to this very unpleasant public discussion of their behavior. That's grotesque institutional incompetence, but as anybody who has had much in the way of dealings with law schools knows, pretty much par for the course in this business.

Tuesday, April 24, 2012

Mistaken beliefs about the crisis of the American law school: "It's the economy"

Recently I had dinner with a friend who teaches at a top ten law school.  He's well aware of how bad things have gotten, comparatively speaking, for his school's graduates, and spoke candidly about the extent to which his school and others like it are resorting increasingly to hiring their own graduates into short-term post-graduate positions. (Some numbers:  Cornell hired 6 of its own grads in 2010 and 26 in 2011. Columbia hired ten grads in 2010 and 38 in 2011. Virginia hired 10 grads in 2009, 40 in 2010, and 64 -- 17% of its class -- in 2011.)

I noted his school had once again increased tuition in real dollars (that is, more than inflation) for 2012, and asked him if he had any idea what his school's administration was thinking.  He told me they're thinking that this is all a temporary blip, driven by the recession, and that "soon" the big firms will be hiring as many entry-level associates as they were five years ago, and we can leave all this unpleasantness behind us (he himself is skeptical about whether this will actually happen).

I run into this line of thinking all the time, including at schools where it doesn't even make superficial sense -- which is to say at the 80% of law schools which at no time have sent more than 10% of their grads to big firms.  This is just the most obvious problem with the "it's the economy" response many legal academics and especially law school administrators tend to have when confronted with the increasingly dire employment and salary statistics of their graduates.

Columbia and Cornell and Virginia may be able to rationalize their current tuition structure if and when big firms get back to hiring as many entry-level associates as they were hiring five years ago (although even most elite schools must be approaching tuition levels that can't be raised much above inflation going forward -- is Cornell really going to be charging $78,000 per year by the end of the decade?), but what about the dozens and dozens of schools that decided they could charge nearly as much as the elites, even though even at the best of times only a handful of their graduates were getting jobs that justified such prices?

Here's another big problem with the "it's the economy" excuse for doing nothing, or burbling about helping graduates pursue (largely imaginary) alternative careers outside of traditional legal practice:  A general economic recovery, to the extent one takes place, is likely to hurt legal academia's bottom line more than it will help it.  To see why this is the case, consider this story, which indicates that for college graduates the opportunity cost of going to law school remains at something approaching an all-time low.  If more than half of all recent college graduates are un- or under-employed, this should be a positive boon to law school admissions numbers, since the real cost of going to law school is much lower than it would be if applicants could get decent jobs upon graduating from college.

Instead, despite the awful employment market for new college grads, the applicant pool for law school is crashing.  Now what do you suppose is going to happen to law school applications when, in the context of a general economic recovery, recent college grads consider whether they want to take a $40,000 job doing 40 hours of boring work per week, or whether, in the alternative, they should pursue the "prestige" inherent in a job that pays about the same salary, but requires 60 hours per week of equally if not more unpleasant work, but which also requires removing yourself from the labor market for three years and taking on $150,000 of high interest debt for the privilege of acquiring it? Which is to say that if the opportunity cost of going to law school rises more quickly than whatever job and wage growth takes place in the legal sector, then such growth as does take place is not going to help law schools out of their current predicament.

Put bluntly, nobody who has anything resembling a halfway decent alternative is going to sign up for the kinds of legal jobs most law graduates who are even getting legal jobs at all are currently getting, and likely to get going forward.  In other words, if and when the overall economy gets significantly better than it is now, the cost-benefit structure of legal education will appear absurd on its face to even more potential applicants than it does at present. 

Monday, April 23, 2012

Mistaken beliefs about the crisis of the American law school: Part I

This week I'm planning to write about various widespread but in my view mistaken beliefs regarding the intensifying crisis in American legal education.  I'm going to start with this one:

The biggest problem with American legal education is that it fails to produce practice-ready graduates.

This claim has been made by critics of the legal academic establishment for roughly a century now (every 15 years or so some sort of quasi-official report reiterates it).  It was a topic of discussion at a law school symposium this weekend on the future of the legal profession, and is apparently a theme of Jim Molitenrno's forthcoming book, A Profession in Crisis, which argues that the fundamental problems with legal education today are in large part products of the fact that more than a century ago "medical schools decided that their mission would be to turn out doctors, while law schools decided that their mission would be to turn out law professors."

Now the claim that law schools remain largely indifferent to the fact that law school teaches law students almost nothing about the practice of law is itself quite true.  What isn't the case is that this fact has in itself much to do with the increasingly unacceptable relationship between the cost of a law degree and the economic benefits it confers.  Making graduates practice-ready is a fine idea in theory -- why else are law students going to law school anyway? -- but if such reforms do nothing about, or worse yet exacerbate, the crumbling cost-benefit structure of legal education they will do nothing about this fundamental structural problem.

Producing "practice-ready" graduates (to the extent this could be done within the context of institutions that even loosely resemble current American law schools) does nothing about the problem that there aren't nearly enough legal jobs that would allow those graduates to practice their newly-acquired skills, and even fewer legal jobs that pay enough to justify the current cost of legal education.  And the only thing producing law graduates who are better prepared to practice law will do to the basic economics of the legal services industry is to make new lawyers better off than they would otherwise be relative to experienced attorneys, while doing nothing for the economic circumstances of the profession as a whole.

It appears the great hope of at least some people who advocate a more practically useful legal academic curriculum is that turning out tens of thousands of new attorneys every year who are ready to hit the ground running will drive down the cost of legal services, thus creating new markets for those services, and thus more legal jobs.  I don't understand how this theory is supposed to work in practice.  For one thing, it's difficult to envision how moving law school toward a more experiential, practice-based, clinical model is going to make legal education less expensive, again at least within the confines of anything even vaguely resembling the contemporary American law school. Any reform that doesn't make legal education less expensive while reducing the number of new attorneys is doing nothing about the real crisis, which is that law school costs far too much relative to the number of jobs available for attorneys.

After all, given the basic structure of American legal education, making that education more clinically intensive would be even more expensive than maintaining the present model, which remains centered on tenure-track law professors teaching classes with 50 and 75 and 120 students in them. (The simplest way to drive down the cost of legal education would be to make the tenure-track faculty teach the same number of classes their predecessors  were teaching in the 1970s. It's true this might result in 5000 rather than 10,000 law review articles being published per year, but under the circumstances this might be a price worth paying).

Now it's true that a genuinely clinical model could be cheaper within the context of a radical restructuring of legal education -- one in which for example law school is transformed into an undergraduate major followed by a year or two of supervised apprenticeship work.  But within the current model, in which law schools are supposed to be a combination of graduate schools of law and vocational training centers, doing what would actually be necessary to produce graduates who are more ready to practice law than current graduates would drive up the cost of legal education even beyond its present absurd and unsustainable level. And doing so would certainly not do anything about the fact that ABA-accredited law schools are producing (at least) two law graduates for every legal job.

In other words, to the limited extent that making new graduates more practice-ready would enhance their future earning potential, it would to that same extent decrease the future earnings of older graduates. And if the increased cost of producing practice-ready lawyers turns out to be higher than the enhancement of earning potential such reforms produce that would actually make law degrees even worse investments for future graduates than they have been for recent ones.   The problem, as these statistics illustrate, is that it appears essentially the same number of real legal jobs that existed 25 years ago are now being pursued by literally twice as many lawyers. Which of those lawyers get and keep those jobs is not nearly as important as the fact that the ratio between legal jobs and people with law degrees continues to get worse every year.

Friday, April 20, 2012

Stories from all over

(1) Business Insider has published a story about ten recent law graduates.  This sort of thing is useful in that it puts human faces on otherwise soulless data (as a very distinguished law school dean once said, one ruined career is a tragedy, 100,000 ruined careers is a statistic).   Anecdotes can be dismissed as anecdotal, and moreover American culture loves to turn structural social disasters into morality tales about Hard Work and Individual Responsibility; nevertheless personal narratives will speak to some people who are relatively impervious to other kinds of arguments.  And it's a sign of progress when a national publication treats the drastic lack of law jobs for people with law degrees as more like a well-known fact than a shocking revelation.

(2) LSAC is jacking up the cost of applying to law school (h/t TaxProf).  In the wacky world of monopolist pricing the following quote from the LSAC's President regarding why a sharp decline in the demand for his organization's services means its time to raise the prices for them sharply makes a certain amount of twisted sense:

"This mode of doing business probably was sustainable in an environment of record-level candidate volumes," Bernstine wrote. "Today, with successive double-digit volume declines and significant operating deficits, it's sustainable no longer."
People (for now) have to take the LSAT if they're going to apply to law school, and the marginal cost of doing so probably has almost no effect on the volume of applicants -- the cost of applying to law school accounts for about one of every one thousand dollars in direct and opportunity costs that the average matriculant will spend attending law school -- so LSAC, far more than even law schools themselves, can still raise prices with relative impunity.  

(3) I've been contacted by several people who attended Cornell's admitted students' weekend recently regarding statements made by the career services dean about how many 2011 Cornell grads got jobs with big firms.  The dean stated that 55% of the class did, when stats posted by the school itself on its web site indicate 38.8% of the class got jobs with firms of more than 100 attorneys.  When some members of the audience raised questions about this discrepancy the administrator at first replied that the 55% figure referred to jobs at graduation rather than at nine months (which makes no sense unless you assume a third of Cornell grads who went into big law in the fall of 2011 had gotten fired by February), and before he "ran out of the room," claiming he was out of time.

It seems likely that what happened here is that the career services dean mistakenly quoted class of 2010 numbers regarding how many Cornell grads got jobs with NLJ250 firms when referring to the class of 2011 -- it stretches credulity that he would intentionally mis-characterize information that the school itself had already posted on its website.  But this is yet another cautionary tale about the level of basic competence that often seems lacking among law school administrative personnel in general and CSO people in particular.

We all make mistakes, but as I've said in related contexts, what does this person get paid a (likely well into six figures salary) for except to know things like this? Cornell went from placing more than three quarters of its class in big law in 2010 (when 58% of the class got NLJ250 jobs, and no less than 76% of the class took jobs with firms of more than 100 attorneys) to putting less than two of every five of its most recent class into such positions. That is obviously a fact that would be of considerable significance to many if not most of the people visiting the school for the ASW event, yet the person whose institutional role is precisely to answer questions regarding such things wasn't able to do so accurately.  As I've also said in related contexts, law schools have pretty much forfeited the right to be given the benefit of the doubt in these situations, so minimal competence is a must if they want to avoid the appearance of serious impropriety.

Thursday, April 19, 2012

Learning to Excel

I posted a link to the new ABA employment numbers on TLS yesterday, and some clever person transformed them into a handy Google document.  (Update: see also this very useful bar graph).  The categories are percentage of graduates with long term employment of all types nine months after graduation (legal and non-legal; both federal and state judicial clerkships are counted as long-term employment in the ABA numbers), percentage of grads with jobs with firms of more than 50 lawyers + federal clerkships, percentage of grads with jobs with firms of more than 250 lawyers + federal clerkships, and then a catch-all category (51+/Fed/PI/Academia/Government) that tries to include every graduate who got anything resembling a legal or quasi-legal non-temp job other than with a small (less than 50 lawyers) firm.

The data are worth browsing at length, and I'm just going to flag a couple of points.

(1) Given law school reporting methods, "long-term" employment is in one sense a meaningless category, while in another it can be revelatory.   It's meaningless in the sense that Yale and Drake have almost exactly the same outcome in the category (90.34% and 89.51% of 2010 grads with long-term employment as of 2/15/2011).  But  Drake's numbers are based on 54.5% of its grads listing themselves as working either as solos, with firms of ten or fewer lawyers, or in "business and industry," (trans: retail) while Yale has 4.4% of its class in these categories, all of whom with the exception of one grad are in the business and industry category, which at Yale means McKinsey rather than Home Depot.  Schools 7-15 ranked by percentage of graduates with long-term employment nine months after graduation:


So in the sense of being a positive indicator of something "long-term employment" is obviously a meaningless metric.

(2) In another sense -- as a red flag -- "long-term employment" percentages are revelatory.  Look at some of the schools where somewhere between one in five and two in five grads don't have "long-term employment" nine months after graduation, keeping mind that this category includes every paid form of employment, legal and non-legal, that does not have a definite term of less than one year (again judicial clerkships count as long-term):

George Washington
Wash U St. Louis
Boston U
Boston College
Notre Dame

These are all "top 30" schools -- six are in the top 20.  At all of them, a huge percentage of the graduating class is functionally unemployed nine months after graduation.  What seems to be happening at these sorts of schools is that a big percentage of the class isn't getting any sort of real legal job, but continues to hang on in the hope of doing so, while at the Drakes and Tulsas large numbers of people either take $40K jobs with three-lawyer family law firms or simply give up on a law job altogether and enter "business and industry."

Of course there are a lot of low-ranked law schools with horrible "long-term" employment numbers as well, which I would gather means that at those schools even the $40K small firm job isn't an option for most of the class.

(3) These stats put an exclamation point on how few law graduates are getting jobs that even arguably justify taking out $125K in high interest non-dischargeable loan debt (this is roughly the mean educational debt load for this spring's graduating law school class).  Such jobs are largely limited to the 50+ lawyer firm plus federal clerkship category -- indeed in this regard that category is no doubt over-inclusive -- yet a total of 25 law schools sent even 30% of their 2010 class into such jobs. Meanwhile the median percentage for all law schools in regard to what might be called the percentage of graduates who had what would be acceptable salary outcomes relative  to the current average cost of law school attendance was 8.75%.

Wednesday, April 18, 2012

ABA releases employment data for Class of 2010

The ABA Section for Legal Education has released its Placement Summary Report for the Class of 2010.  While this data is already 14 months out of date (it represents the status of 2010 graduates as of February 15, 2011) it also provides the most complete picture yet of the employment status of law school graduates at ABA-accredited schools, as it essentially makes something resembling NALP national data available for individual schools.  The biggest gap in the ABA data relative to the NALP numbers is that the former don't reveal how many jobs require a JD.  For example I would advises prospective law students to translate jobs in the"business and industry" category into "Starbucks and Target".

I would also encourage people to pay close attention to the percentage of graduates who have jobs with law firms with more than 10 lawyers.  (Entry-level jobs with firms of ten lawyers or less make up a problematic category for a variety of reasons, the most obvious being that almost no such jobs either pay anywhere close to enough or feature long-term prospects for advancement that would justify the current cost of law school attendance for most students). Also, the ABA numbers don't include any salary data.  However, one can look at the national NALP data to get  a good idea of what jobs in particular employment categories are likely to pay.

You can look up schools individually, or download the whole report in the form of a spreadsheet. Probably the most interesting new piece of information made available by the report is data on how many 2010 graduates were in law-school funded jobs nine months after graduation, and were counted as "employed" for the purposes of schools' nine-month employment rates.  Such positions made up 4.81% of all jobs law schools reported their graduates held nine months after graduation, and not counting them for employment purposes drops the overall nine month employment rate for 2010 grads from 84.5% to 80.4% (Based on what I've seen I expect the number of 2011 graduates in these positions to be quite a bit higher. For example Cornell, which has released its class of 2011 numbers, went from having 6 to 26 graduates in such positions nine months after graduation).

Note that this data does not represent how many otherwise unemployed graduates are being put in law school-funded positions: it only represents how many are in such positions nine months after graduation.  The most striking illustration of this distinction is provided by the University of Michigan, which is listed as having seven 2010 graduates in law-school funded positions in February 2011, but which on its web site states that 61 graduates took such positions at some point after graduation.  New York University provides another illustration: in response to a reporter's query the school revealed that it funded 38 class of 2010 graduates in post-graduate positions; the ABA data lists 22 graduates in such positions nine months after graduation.

Of course the nine-month data is particularly salient, because it's what makes these "jobs" most problematic from the standpoint of transparency, as they (along with other factors, such as counting paid work of any kind as employment) artificially inflate a school's reported overall employment rate. For example, UCLA's overall employment percentage at nine months drops from 93.1% to 81.3% when short-term law school-funded positions are excluded (That nearly 20% of the 2010 class at the nation's 15th ranked law school was in effect unemployed nine months after graduation ought to give anyone pause).

A few observations about individual schools and overall patterns:

Yale and Harvard put 19 and 29 people in law-school funded jobs nine months after graduation -- 9% and 5% of their 2010 classes respectively.   Interestingly, they are the only schools at which a significant number of graduates had law-school funded positions nine months after graduation and those jobs are predominantly long-term (defined as a duration of at least one year) rather than short-term.  At least some of these jobs may be fellowships in the genuine sense of the world -- that is, positions that graduates took for some reason other than desperation. The other member of the Holy Trinity put just two graduates in law school-funded positions (both were long-term).

The majority of third and fourth-tier schools were funding no jobs for their classes of 2010 nine months after graduation. Given the unemployment rate at these schools this is obviously a product of limited resources.
Here is a list of schools that had at least ten 2010 graduates in law school funded positions nine months after graduation (any such positions that were long term are listed parenthetically):

American:           19   (2)
BU:                    26   (1)
BC:                    35   (1)
Hastings             58  (2)
UCLA               41  (3)
Case West         18
Chapman           23
CUNY              24 (4)
Denver              23  (1)
Duke                 10 (2)
Emory               20 (1)
Fl Coast            59 (5)
Florida              21 (1)
Fordham           73 (3)
George Mason  18  (3)
GWU                26 (2)
GULC               73 (7)
Golden Gate      20
Harvard             29 (27)
Hofstra              27
ITT                   19
UIUC                20  (9)
John Marshall    26   (6)
Lewis & Cl        23  (1)
Loyola Mary      16
Maryland           20 (4)
McGeorge         54
Miami                35 (4)
Mich State         37 (8)
Minnesota          40 (7)
NYLS                29 (5)
NYU                  22 (9)
Northeastern       17
Northwestern      10 (2)
Notre Dame        25 (2)
Ohio State           17 (4)
Oregon                11
Pace                    22 (2)
Penn                    13 (2)
Rutgers                12 (1)
San Diego            18
San Francisco      30  (1)
Santa Clara          14 (1)
USC                    17
Temple                41 (1)
Texas                  24 (3)
Vanderbilt           22 (1)
Virginia               40 (1)
Wake Forest       11
W & L                13 (8)
Washington         13 (1)
Yale                    19 (19)
Cardozo              59

Update: Paul Caron has this information presented in terms of percentage of jobs and percentage of all grads here.

I would anticipate this list will have something like twice as many schools on it for the Class of 2011.

Tuesday, April 17, 2012

The average income of experienced attorneys appears to be collapsing

That stark conclusion leaps out from the data in this survey conducted by the Alabama Bar Association.  What's particularly useful about this survey is that the bar has conducted it three times now in 12-year intervals (1986, 1998, and 2010, measuring the economic condition of active members of the Alabama bar in the previous year in each case).  So the survey provides us with three snapshots of the legal profession in one state over nearly a quarter century.

A crucial caveat about the dollar figures in these reports: they are nominal dollars rather than inflation-adjusted.  Between 1985 and 2009 the CPI doubled, while between 1997 and 2009 it increased by 33.7%.  So, for example, when the survey measures how many Alabama attorneys were making $100,000 or more in 1985, that's equivalent to asking how many Alabama attorneys were making $200,000 or more in 2009, in real dollars.  (The answer, by the way, is that 17% of Alabama attorneys were making $200K+ in 1985 in 2009 dollars, while 8.7% of Alabama attorneys were making $200K+ in 2009.)

More fun facts:

54% of Alabama attorneys were making at least $100,000 per year in 1985 in 2009 dollars, as compared to 28% in 2009.

23% of Alabama attorneys were making less than $25,000 in 2009.

37% were making less than $50,000.  (The median level of years in the profession of respondents was 11 to 20).

In 1997 76% of Alabama attorneys were making at least $67,000 per year in 2009 dollars.  In 2009 approximately 49% were making at least $67,000.

In 1997, 40% of Alabama attorneys were making at least $134,000 per year in 2009 dollars. In 2009 20% of Alabama attorneys were making at least that much.

A particularly telling statistic is that the starting salary for newly hired attorneys in 1998 in Alabama was only $44,100, in 2009 dollars, while the starting salary for newly hired attorneys in 2009 was between $75,000 and $100,000 (only the range is available for the latter year).  What this means, of course, is that the relationship between starting salaries and salaries for experienced attorneys has (at least in Alabama) experienced a radical reversal over the course of the last 12-15 years.  In the late 1990s starting salaries for attorneys in Alabama averaged about half of what all attorneys in the state were making, while today starting salaries are considerably higher than the average income of the state's attorneys as a whole.

The total number of active licensed attorneys in the state doubled between 1986 and 2010, and increased by a third between 1998 and 2010 (the fact that the total number of attorneys has increased at exactly the same rate as the CPI is either a coincidence or rather dark cosmic joke).

Again, what's particularly valuable about this sort of survey is that it gives us an idea of how the legal profession as a whole is changing, as opposed to NALP surveys about employment and salaries nine months after graduation, or worse yet figures about the going rate for BigLaw starting associates (Note that in real dollars the going rate for BigLaw went from $116,000 in 1997 to $160,000 in 2006 -- a fact which obviously has exactly zero relevance to lawyers in Alabama, who over roughly the same time frame were seeing their incomes contract by about a third).

And what do the people running Alabama's law schools have to say about this?

John Carroll, dean of Cumberland School of Law, said the job market was tougher for graduates then, but numbers for 2011 graduates show improvement
"It is something that all law schools are concerned about, and they work hard at placing their graduates," he said. "Hopefully, it bottomed out in 2010 and it will be even better for 2012 graduates."
That statement, besides being false even on its own terms, is also largely irrelevant to the crisis this report illuminates. This blog has focused almost exclusively on the crisis in the American legal profession in regard to its effect on new graduates.  But that is very much the tip of the iceberg. The real problem is much deeper -- much more structural and systematic -- than that new graduates can't get jobs, even though that fact by itself represents a significant crisis in its own right.  The real problem is that, as Hyman Roth once put it in a related context, "this is the business we've chosen" -- and that business is falling apart.

Addendum: Tuition changes at Alabama law schools between 2004-2005 and 2010-2011:

Cumberland:  $23,758 to $32,900. Increase over inflation: 19.96%

Faulkner:  $15,000 (2005) to $31,000. Increase over inflation: 79.03%

University of Alabama:  (Resident)  $8,150 to $15,760. Increase over inflation: 67.93%

Courtesy LSTB.

Monday, April 16, 2012

Future events such as these will affect you in the future

I’ve just read a revealing essay by Christopher Edley, the dean of UC-Berkeley’s law school, which was brought to my attention by Brian Tamanaha.  Dean Edley looks back over the development of his institution on the 100th anniversary of its founding, considers where his law school is today, and tries to peer into the future.  It’s not a long piece, and I encourage people to read the whole thing rather than just relying on my summary of what he has to say. What he has to say includes:

(1)    At least at elite law schools, law professors who try to publish things that might be of practical value to lawyers may well harm their academic careers by doing so -- and they probably shouldn’t be trying to do so anyway, given that they know little or nothing about legal practice:

Those law school academics who believe that our research, even the theoretical genres, can be professionally valuable have largely failed to build bridges to the realm of practicing lawyers. The career payoff for professors who do so is usually nil or negative, and it is difficult to build a bridge when you are almost clueless about the world across the chasm: extensive experience in law practice is not valued when hiring professors nearly as much as a doctoral dissertation or a couple of frame-breaking law review articles.  (p. 320)

(2)    Law schools teach people how to think about tough questions, and about the importance of ethical behavior, and these traits are valuable for many endeavors besides practicing law:

Starting with the first day of class, we train law students to probe beneath the simple or obvious answer, and to work hard at identifying the points of weakness in their analysis, and the strengths in the opposing position. We teach them about the purposes, strengths, and weaknesses of alternative procedures for making decisions; about how it often improves a decision if the competing positions are carefully presented by a motivated advocate, and if decisions are based on evidence and revealed principles. They learn that the answers to complex or important problems are often complex and controvertible, and that simplistic and facile answers are therefore suspect on their face. They learn to anticipate confusion, conflict, and surprise, and to engineer their client’s affairs accordingly. They learn the importance of integrity and ethical behavior, and how to wrestle intelligently with such issues. The value of these professional traits is obvious, and not only in courtrooms or for people who have passed a bar exam. (pp. 323-24)

(3)    Given (2), elite law schools should move from inculcating generally useful habits of mind and ethical sensitivities in their students to actually preparing them to do things besides practice law (since preparing their students to practice law is  something  such schools can’t really do very well anyway given the current composition of their faculties; see (1) supra).

I often say that lawyers are so valuable as leaders and managers because we don’t really know anything; much of the training is, at least implicitly, about learning by asking smart questions. By this I mean that the traditional role of lawyers as problem solvers often requires that they know how to master hitherto unfamiliar things about the client’s world. It could be epidemiology or architecture, the structure of the widget industry or of a genome, the market movements of currency derivatives or the balance sheet of a landlord . . .

The value of legal training in extralegal career patterns can surely be enhanced by a great law school that goes beyond implicit preparation through the inculcation of habits of mind to explicit professional preparation for these wider roles—this in addition to the foundational training for conventional, licensed practice as lawyers.  (p. 324)

(4)     Indeed, when you consider the inherent intellectual value of the law school experience, why shouldn’t law schools alter their curricula in ways that would allow them take over much of what, for example, MBA programs are supposed to be doing?

Concretely, the Great Law School will soon include curricular and co-curricular tracks for students who intend to enter the business world—not as counsel, but as client, entrepreneur, and manager.  The study of business law will be augmented by the study of business strategy and management. We know for a fact that some of our students plan to be real estate developers, investment bankers, or leaders in health care delivery. Our curriculum can easily do more to prepare them, and should. Much of the detail in a traditional M.B.A. curriculum can be elided, while some of the traditional legal doctrine and theory can be retooled or recalibrated to better suit the early stages of the intended career path. (Id).

And there’s no need to stop there. How many people will need to get a Masters in Public Policy or Public Health or Journalism when they will have the Great Law School of the Future at their disposal? After all, law school graduates go on to be not just “investment bankers [but also] community organizers, hospital administrators, journalists, and diplomats. Given this increasingly powerful and varied reality for people trained in the law, just what is the profession for which we are preparing our students?” (p.321).

(5)    Although training people to enter professions other than law will be time consuming, luckily UC-Berkeley law students are bright enough that the school’s faculty have the freedom not to bother  spending too much time preparing their students to pass the bar, let alone trying to teach them how to be lawyers, which again the faculty isn’t really qualified to do anyway:

A principal luxury for the faculty of elite law schools is that our highly competitive admissions process gives us students so capable that we are assured of high bar passage rates almost no matter what we teach. This is liberating and especially comforting for the many professors with little firsthand knowledge of legal practice. Once the admissions committees and job placement offices have done their work, virtually all our students will have fine careers, provided the faculty does them no harm. If only a modest fraction of three years’ coursework is perforce aligned with licensure, there is room for the expansive training mission I propose. Students have time to take several courses in anticipation of careers that make use of the law but do not entail the practice of law. [p. 325]

(6)     To be a great public law school means to be especially dedicated to grappling with difficult public policy issues in a public-regarding way.  What it does not mean is that such a school is or can be less expensive than private law schools, since lower expense is incompatible with a quality legal education:

There is a distinctive responsibility in public law schools to engage a portfolio of the most difficult and important problems of the society with an intentionality and collective effort that I consider essential to its public character. This contrasts with the typically laissez-faire ethos of elite private institutions, even when lightly colored by the public-regarding nature of the legal profession, or the civic leadership expected of wealthy institutions. If this distinction is not apparent in a public law school, at least in its aspiration, then that school’s only raison d’ĂȘtre is to be inexpensive—today an impossible burden if quality is also a priority. [pp. 325-26, emphasis in original]

(7)     The great law school of the future will be a kind of international factory for exporting (American) Rule of Law values to the rest of the world.  This is imperative, because the benefits of exposure to American legal civilization are too important to be left up to the haphazard influence of international business transactions. Rather, those benefits should be pursued directly through the exercise of “soft cultural power” (as opposed to the old colonialist resolve to civilize lesser breeds without the law at gunpoint if necessary). Part of this evangelical enterprise will involve bringing large numbers of foreign students to American law schools so that they may learn our ways first hand:

Imagine Great American Law Schools in which perhaps half of the students are citizens of other nations, and the student experience is structured to exploit that diversity. These might be in LL.M. programs or J.D. programs or something yet to be devised. The consequences for global legal culture could be profound in a matter of just one or two decades. This is a transformation of a wholly different order than simply requiring American law students to take a basic course in some kind of international law—which, though certainly an advance, is just an intellectual tease.

I believe the exporting of American legality should be a priority in the decades immediately ahead, and an effort with lead roles for law schools will be more legitimate and effective than an effort left to multinational commercial interests.  [p. 329]


Dean Edley’s frank admission in the context of (1) and (5) that it doesn’t make sense for the current Berkeley tenure-track faculty (43% of whom have PhDs and very few of whom have any extensive experience practicing law) to spend time trying to write what the likes of John Roberts and Harry Edwards consider “practical” legal scholarship, or for that matter trying to teach people how to be lawyers, is refreshing in its candor.  It does serve as a reminder of what an odd situation has developed in legal academia – one in which the ABA’s accreditation rules prohibit more than 20% of a law school’s teaching to be done by practicing lawyers, while allowing law schools, if they so choose, (as many have) to staff their tenure-track faculties almost exclusively with people who have never really practiced law, and now increasingly don’t even have law degrees.

The claims in (2) are of course the standard fare about the supposed benefits of learning to “think like a lawyer.” The problem with these sorts of claims is that learning “to probe beneath the simple or obvious answer” and that “answers to complex or important problems are often complex and controvertible, and that simplistic and facile answers are therefore suspect on their face” etc., are lessons that are learned in any course of general learning worthy of the name, and most particularly by exposure to a liberal arts education. Indeed it’s difficult to see why anything resembling the standard law school experience would be as intellectually edifying in the general sense (as opposed to the narrowly professional sense that Dean Edley clearly disdains) as a good undergraduate course of study. 

The arguments in (3) and (4) are startling for both their sheer hubris and their deeply implausible character.  There’s something arresting about the claim that precisely because lawyers don’t, in Dean Edley’s words, “really know anything” they are uniquely well qualified to teach people to do just about anything – to, for example, run an investment bank, or a hospital, or a political system, or a magazine, or a diplomatic mission. Noting that this conclusion doesn’t seem to follow from the premise is something of an understatement.

But even this rhetorical gesture seems unremarkable in comparison to (5), where Dean Edley in effect announces that, given both how smart law students at elite schools are, and how many of them are going to do something other than practice law, we need not concern ourselves much regarding the extent to which, if at all, the faculties of “great law schools” are in fact teaching anybody anything about practicing law, and that therefore it makes sense for such faculties to devote their energies to other matters, especially given that these faculties are now better suited to other tasks than teaching people how to be lawyers.  (If this sounds like it must be a caricature of Dean Edley’s argument, that’s only because his argument really is this outlandish.) 

As for (6) this could perhaps be called The Ontological Argument for the Existence of $51,000 Per Year Public Law School Resident Tuition.   Those of a less scholastic bent might be tempted to point out that if you conceptualize the Great Public Law School as a place that’s cranking out quasi-MBA and MPH and MPP graduates who also pick up law degrees in the process, while at the same time making the great globe itself safe for democracy and the Federal Rules of Civil Procedure, such an institution is naturally going to require an astronomical operating budget to make any pretense of fulfilling this ambitious vision of its role in the world.

The key fact about (7) is that, beneath the all-too-familiar idea that Americans ought to be telling the rest of the world how to live, lurks the economic base that is supposed to support all this ideological superstructure, in the form of enormous numbers of rich foreigners who will pay to buy their children the prestige associated with the names of America’s great universities.  (Apparently just as the Chinese have bought our bonds they will now bail us out by buying our $225,000 law degrees.)

Finally, note that Dean Edley’s whole argument is premised on the idea that so many Berkeley law grads are making or at least will make good livings doing something other than practicing law that it makes sense to organize law schools – or at least “great public law schools” – around this supposed fact.  But he provides no evidence for this claim, while a glance at Berkeley’s employment outcomes for its last two graduating classes reveals that no less than 94% of the school’s graduates who got jobs acquired employment for which bar admission was required.   Note too that about half of Berkeley’s 2011 graduating class was making less than $62,000 per year – i.e., a figure equal to perhaps half the average 2011 graduate’s total educational debt. This seems like a problematic equation, given Dean Edley’s confident assertion that “virtually all” of the school’s graduates will go on to have “fine careers.”  

In sum, this essay illustrates the extent to which some powerful people in elite legal academia remain in something close to total denial about the actual situation facing their graduates.   And it should be unnecessary to point out that, when one moves from the context of a handful of elite law schools to that of the social and economic space which 95% of American law schools occupy, the essay’s vision of what The Law School of the Future will look like moves from the category of the deeply implausible to that of the truly bizarre.

Friday, April 13, 2012

Money Heaven

December 15, 2008:

Securities and Exchange Commission inspectors have been working overtime to go through the records of Bernard Madoff and his investment firm. Bloomberg News reports that investigators "found evidence he ran an unregistered money-management business alongside his firm’s brokerage and investment-advisory subsidiaries." Also, "Investigators are still trying to figure out where customers’ money went," as Madoff's estimate of $50 billion in losses may be "roughly accurate."

Madoff, the 70-year-old former chairman of Nasdaq, confessed to employees—including his sons—that his well-performing investment firm was actually a Ponzi scheme, as the returns to earlier investors were taken from money of new investors. Madoff allegedly oversaw the entire operation from the 17th floor of the Lipstick Building on Third Avenue (pictured), two floors from his company's trading floor. The NY Times calls the floor" Where Wealth Went to Vanish," and notes another big question is "how one person could have pulled off such a far-reaching, long-running fraud, carrying out all the simple practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations and bank transfers."

The head of Seabreeze Partners, a Palm Beach and NY hedge fund, told the BBC, "It appears that at least $15bn of wealth, much of which was concentrated in southern Florida and New York City, has gone to money heaven." In Palm Beach, where many of Madoff's clients were recruited, one woman explained to the Times how to pronounce the scamming investor's name: "Made off. You know, like he made off with all our money.”
I hear all the time from recent law graduates who have $100,000 or $150,000 or $200,000 in educational debt, and who are either working in jobs, legal and non-legal, that barely pay their modest living expenses, or who don't have jobs at all.  Many if not most of these people are never going to find work that allows them to pay more than a nominal amount on what they owe on their loans.

I got together recently with one of my oldest friends in this business, a guy I worked with at Latham more than 20 years ago.  He was in the original associate class that got Lathamed in the early 90s, and he was amused to learn from me that Latham had become a verb. Since then he has worked almost continuously as a lawyer, and currently holds a government job that most people in the legal world right now would probably consider in about the 95th percentile of desirability in terms of legal work (decent salary, reasonable lifestyle, good job security).

He graduated at the top of his class from a pretty good private law school in the late 80s with about $55K in debt.  I asked him if he still owed anything on his law school loans, and he laughed and told me that the balance on them was almost exactly the same today as it was the day he graduated.  He's worked as a lawyer for 20+ years, he's in his late 50s, and he can't possibly retire any time in the foreseeable future. He's never been in default on a loan and is currently trying to move his balance into the federal government's ten-year loan forgiveness program for government and public interest work.

Over the next few years, a lot of politicians are going to slowly come to the realization that when Cameron and Abigail "borrow" $150,000 of taxpayer money and give it to an institution of higher learning, that money is going to money heaven. Sure, it's technically a "loan," but it's the special kind of loan that we know in advance is not going to get paid back, because to pay back a loan of that size you need a high-paying job, and they're never going to have that kind of job. It would be far more efficient for the government to simply give money to these institutions themselves (a good deal less money of course, subject to all sorts of appropriate restrictions on what the institutions can spend it on) than to "give" it to Cameron and Abigail first, so they can spend the rest of their lives in debt servitude.  But that would be socialism and make the ghosts of Ronald Reagan and J.P. Morgan and John Calvin very sad so we can't do that.

Right now Sen. Dick Durbin of Illinois is trying to do something about this.  He isn't hearing from many law grads, and given his general remarks on the topic, he like almost everyone else of his generation needs to be brought up to speed on what's been happening to legal education and the legal profession in the years since he went to law school and began his own career.

People can go here to tell him their stories. Please do.

Thursday, April 12, 2012

Stetson Law School Wants You

Are you currently considering enrolling in a certified program of legal education at an outstanding university located in an outstanding city in an outstanding state?  If  so and things don't work out you might consider the Stetson College of Law in Tampa Bay, FLA, which it would be fair to say is very interested in speaking with you at your earliest convenience.  But even if it's not convenient for you to apply for admission this week or this month or this spring that's OK, because if you don't act now you can apply as late as July 1st for admission to the Fall 2012 class. Classes start just 47 days later, but I'm pretty sure that will give the Admissions Office more than enough time to determine if you are not currently an involuntary resident of a correctional facility meet the school's entrance requirements.

Now if you should happen to be a member of cynical lazy Generation Y, that is, somebody who has an Entitlement Mentality, you may be prone to ask cynical lazy questions such as "is going to the Stetson College of Law a good idea?" If so, you're probably not the kind of person they're looking for.  No, Stetson is looking for people who want to "effectively seek justice in the world," not people obsessed with crass questions of that nature.  For example, if you want to know what the chances are that you'll get a job as a lawyer if you go to Stetson you won't find a single piece of information anywhere on the school's web site that will give you the slightest hint as to what the odds are that you'll achieve that goal after going to this law school.

The cynical lazy entitled compilers of the Law School Transparency Index ask 18 questions regarding the employment and salary data each of the nation's ABA-accredited law schools provide to prospective students. Some schools actually provide prospective students with most of the answers -- for example Michigan State's web site allows 0Ls to learn the answers to 15 of the 18 questions. Stetson answers none of the questions. That's right, Stetson wants you to apply for admission without knowing literally anything about employment outcomes for its graduates, other than that 84% of its 2010 graduates were "employed" nine months after graduation.  Now cynical lazy entitled etc. G-Yers might note that this (un)employment rate is actually double the current national unemployment rate -- a rate which is calculated using a denominator that includes graduates of genuine ABA-accredited Colleges of Law, but also includes high school dropouts, certifiably crazy people, Rick Santorum, etc.

One thing our cynical lazy potential applicant can figure out without filing a class action law suit first is how much it costs to go to Stetson, and how much debt its recent graduates have incurred.  Stetson is charging $36,168 for full-time attendance this fall, which is actually about 11% less than average tuition was at the average private ABA law school last fall.   It's telling, however, that this "bargain" price still managed to leave the school's class of 2011 with an average of $133,082 in high-interest, non-dischargeable law school debt. (This figure doesn't include undergraduate or other educational debt, or consumer debt).

A lot of progress has been made in the last couple of years in regard to raising consciousness about the extent to which law schools are trying to get away with behavior that wouldn't be tolerated if they were ordinary businesses as opposed to centers of higher learning.  Something like this is a reminder of how far we still have to go. In all candor, if you're on the Stetson faculty, does this seem like an acceptable situation to you? Do you think it's OK to represent to your students that it's a wise decision for them to incur six figures of (high interest non-dischargeable) debt to go to your school? If so, what's your basis for that belief?  Because that is in fact what you are representing to your students, implicitly if not explicitly, every single day that you "do your job."  Are you comfortable making that representation?  If you're not, maybe you should do something about that.

Update:  It's worth emphasizing that Stetson is not a "bad" law school, in the sense of being significantly below average.  First, it's more or less in the middle of the USNWR rankings (41st percentile).  More significantly, as a commenter notes, in the context of Florida law schools in particular it's actually one of the better law schools in the state, ranking behind UF, Miami, and FSU, but ahead of a half dozen other ABA schools. In terms of expected return on investment it's also "average" -- which is to say the modal student there can anticipate a fairly catastrophic outcome.  It is, in other words, a typical American law school in 2012.

Wednesday, April 11, 2012

You can't win if you don't play

An acquaintance of mine, a professor at a top business school, is a big fan of state-run lotteries.  "It's a tax that poor people pay voluntarily!" he tells me with starry-eyed wonder.  This is the kind of thing that makes me sympathetic to Marxist accounts of false consciousness.  Clearly a considerable amount of weight is being put here on the concept of what counts as "voluntary."

Lotteries are interesting examples of the practical limits of providing people with transparent information.  It seems probable that even poorly educated and relatively innumerate people understand that purchasing a lottery ticket is on average a markedly losing proposition for the purchaser, since it's well known that the government makes a lot of money on lotteries. So why do people buy lottery tickets?  The most benign explanation is that playing the lottery is a form of consumption -- that people enjoy gambling for its own sake and therefore derive psychic income from it, even though gambling has a negative return on investment in simple pecuniary terms.  Less benign explanations include magical thinking and its near cousin desperation.

The less benign accounts take on particular force when one sees statistics on how much money poor people spend on lottery tickets relative to middle class and upper class people (Supposedly people with incomes of less than $13,000 per year spend something like 9% of their income on lotteries).

Increasingly, choosing to attend law school is coming to resemble purchasing an enormous number of lottery tickets.  Let us count the ways:

(1) Collective outcomes are markedly negative for law school graduates as a group. In other words, the winners in the law school game are now seriously outnumbered by the losers, in both simple numerical and aggregated utility terms.  This is certainly true for law graduates as a whole, and is also true at a very large majority of individual schools, indeed quite possibly all schools outside the top X (X here being a very small number whose precise identity I'm not interested in quibbling about at the moment). 

(2) The law school game, like the lottery, is based in large part on redistributing wealth from some students to other students. This is most obvious in the context of tuition cross-subsidization via "merit" scholarships, but is true in a deeper sense in that, under contemporary conditions, winning at the law school game requires that there be many losers whose losses are precisely what make one a winner (in other words the game has become strongly negative sum).  You can't finish in the top 10% of the class unless 90% of your classmates don't.

(3) Outcomes are largely random.  People do well in law school not because they work hard (everybody works hard, at least until they recognize outcomes are largely random) but because they have a knack for doing well on issue-spotting exams, that do a very good job of measuring how well people do on issue-spotting exams but measure nothing else of value.  In this sense law school grades are not much different than lottery numbers. Some come up, most don't, and this fact doesn't have much to do with the inherent virtue or vice of the players. Update: To clarify, I'm not saying law school grades are random in the literal sense that a lottery ticket's outcome is random.  Obviously some people are better at taking issue-spotting than others, and those people will on average get better grades in law school. What I'm saying is that the relationship between the ability to do well on issue-spotting exams is a poor proxy for intelligence in general, hard work, or the ability to practice law.  People with otherwise very similar intellectual abilities and capacities for diligence often experience very different outcomes in regard to law school grades (after all the large majority of students at any particular school are very similar to each other in these regards). In this more limited sense the grades are random, in that they're being achieved on the basis of factors that are irrelevant to anything anyone would actually care about measuring.

(4) In the case of both lotteries and law schools, the crucial ideological justification for the game is that the participants are entering into it voluntarily.  This is why the one thing on which even the most dedicated defenders of the legal academic status quo agree is that law schools should be transparent about outcomes.  Nobody is willing to defend a gamble in which those who run it lie about the odds.  But here is where the analogy between lotteries and law schools is most troubling.  After all, the state doesn't need to lie about the odds to get the poorest of its citizens to spend nearly one out of every ten dollars on lottery tickets.  "All you need is a dollar and a dream!" appears to work just as well, in at least some social contexts, as "98% of our graduates have jobs nine months after graduation."

In other words, what if you give people good information about the extent to which you're ripping them off, and they insist on getting ripped off anyway?  Of course in the world in which rational agents maximize their utility on the basis of adequate information regarding costs, benefits, and risk this can't happen by definition. But it turns out we don't live in that world.  We live in a world of markedly bounded rationality, where people are prone to optimism bias, have short time horizons and poor options within them, and are therefore more than willing to spend a dollar on a dream -- or $150,000 that they don't have as the case may be.