Friday, August 31, 2012

Making student loans dischargeable in bankruptcy: First steps

Student loans aren't  dischargeable in bankruptcy except under extraordinary circumstances.  This unjust, inefficient, and socially destructive exception to the bankruptcy laws was extracted from Congress by shills for the financial industry, who in the 1970s began mounting an effective propaganda campaign based on classic Nixonland tropes about dirty hippies flipping off the man and then making millions off the system anyway etc. etc.

Getting rid of this exception is going to be a long hard political battle.  A good place to start is with professional degrees in general, and law degrees in particular.  The law school scam is in some ways an ideal launching pad for a campaign to make student loans dischargeable.

(1) More than any other supposedly respectable institutions of higher education, law schools have taken full advantage of the combination of federal loan financing and non-dischargeability to price-gouge naive students, through highly deceptive marketing practices, that would never be tolerated if engaged in by ordinary businesses.

(2) As a result, law school graduates carry truly extraordinary levels of student debt.  A recent estimate puts the percentage of student loan debtors who carry balances of $100,000 or more in student loans as around three percent.  Yet the average (mean) educational debt of people currently enrolled in law school is going to be about $150,000 at graduation. 

(3) A professional degree that is a prerequisite for obtaining a license to practice that profession is a perfect candidate for discharge through bankruptcy.  This is because essentially all of whatever net positive economic value that degree has is captured by whatever value it adds by enabling those who have it to obtain that professional license.  This creates an opportunity for a simple, eminently fair trade: A graduate can give up his or her license to practice the profession in exchange for making the graduate's student loans dischargeable.

Creating this opportunity would create real-world consequences for offering degrees that end up having negative net present value.  (A comment posted yesterday suggests some people in legal academia don't understand this concept. Omniscience isn't a prerequisite for determining the net present value of an asset.  A degree has negative net present value if the holder of it is at present willing to in effect give it back in return for consideration less than that which the holder paid for it. Obviously the right to discharge student loans in bankruptcy is much less valuable than actually getting your direct costs and opportunity costs incurred while attending law school refunded).

In addition, as a commenter points out, allowing people to renounce their law licenses in exchange for bankruptcy right would begin to address the massive oversupply of lawyers, and would be beneficial to everyone working in the legal system other than law school employees.

A law degree has economic value to the extent that the right to practice law has economic value.  (It's to say the least extremely unclear if a law degree is on net a positive on the typical law school graduate's resume if that person isn't practicing law).  If holders of law degrees are willing to go to the extreme of renouncing the latter right, then what argument could there be for not allowing them to in effect treat the degree as a toxic asset, whose toxic effects should be able to be -- very partially -- ameliorated through bankruptcy?

Thursday, August 30, 2012

JD Underground, 2:01 AM

I"m Striking Out at OCI
midweststudent (Aug 30, 2012 - 2:01 am)

Help! My grades are not the problem (my school is an issue, but I know that others have gotten CBs). I do have a lot of public-service/not very prestigious pre-law-school experience on my resume - which employers seem to want to talk about (and which might be a problem). I only have a couple additional screeners - so at this point, I want to talk small firm 2L summer stuff. How do I go about getting a job. I've been drinking all night - apologies for typos, general lack of coherence.
The typical law student at the typical law school is now incurring levels of educational debt that make sense only on the assumption that the student will get a job with the typical employers (large law firms) who come to a school's on-campus interview (OCI).

The typical law student at the typical law school is extremely unlikely to get such a job.

In 2011, 3,375 out of the 43,001 graduates whose job status was recorded by NALP were reported to get jobs via OCI.  This is a smaller number than the 4,756 graduates who were reported to get jobs with law firms of more than 100 attorneys, although some unknown percentage of the larger figure were hired into non-partner track positions that certainly weren't acquired via OCI.

In any case, the large majority of graduates who got jobs via OCI were at T-14 schools, as at most schools the number of graduate who get jobs via this route is negligible, as is, of course, the number of graduates who get jobs with large firms.  (I looked at the extended 2011 NALP forms for two schools, one top 50 and the other top 100, and found that 24 of 460 grads got jobs via OCI).

Why do people pay so much for something that is very unlikely to produce a result making the investment worthwhile?  ITLSS has examined several of the factors at length, including asymmetrical information (in its more extreme forms, morphing into outright fraud), optimism bias, confirmation bias, and other factors that produce annual blizzards of special snowflakes.

One thing that hasn't gotten enough emphasis is what could be called the incredulity factor.  I suggest there's a baseline assumption at work among prospective law students that, if law schools cost $200,000 and more to attend, it couldn't be the case that this price simply bears no reasonable relationship whatsoever to the present value of a law degree.  Because if this were the case, that would suggest a bunch of very respectable social institutions had in effect become shams.  And that couldn't be true because . . .

Better start searching for that lost shaker of salt.

Wednesday, August 29, 2012


This week on Balkinization, Erwin Chemerinksy and Brian Tamanaha are debating the virtues and vices of UC-Irvine -- the new Orange County law school that spend $20 million of a donor's money to buy itself a fancy faculty and a highly credentialed first graduating class (none of whom paid tuition). UC-I was launched with much fanfare, on the basis of the claim that it could provide a new model for legal education, with a particular emphasis on public service.

It turns out the new model looks pretty much exactly like the old one: as dean, Chemerinsky has dedicated himself to chasing rankings by all the usual means, which of course all require an enormous operating budget, which will be funded in large part by tuition that for this year is set at $47K for California  residents and $53K for non-residents.

Tamanaha points out that these price points undercut the ability of students to pursue public service careers:

Students with debt that large are compelled by financial necessity to pursue corporate law jobs. Although public service jobs are eligible for a federal program that reduces monthly loan payments and forgives the remaining debt after 10 years, heavily indebted law students would take a huge risk to pass up a corporate law job, which is obtained though interviews in the fall of the second year, in the hope that they might later land a public service job, which is obtained near or after graduation.

Irvine law professors can saturate the atmosphere and curriculum with public service—it doesn’t matter. Irvine students will be forced to work in corporate law—and the many students who don’t land these positions will struggle under a huge debt. That is the reality of it. The “public service” goal was doomed, I argue in the book, by Dean Chemerinsky’s determination to create a "top 20" law school right out of the box.
Chemerinksy's response is that the only way for students to get jobs is for a school to be highly ranked, and the only way for a school to be highly ranked is to spend a boatload of money on chasing rankings (demurely recharacterized for rhetorical purposes as "providing a first-rate legal education.").  And by the way UC-I students do a lot of pro bono work before they graduate and we have bridge loans and scholarships for people going into public service so there.

This whole debate is strangely anachronistic, as it's framed as a struggle for the souls of law students, who must choose between high paying big firm jobs or low-paying public service work.  Tamamaha does mention that "the many students who don't land these positions will struggle under huge debt," and of course Failing Law Schools is dedicated largely to driving home this crucial point, but in this context it sounds like a debate between a couple of professors at Michigan when I was a student there 25 years ago, and public service jobs were what, except for a few zealots, people who didn't get big firms jobs "settled" for.

The reality is that under a best-case scenario (defined as UC-I being as successful in placing its graduates in the long run as UCLA and USC, which seems extremely optimistic) the solid majority of UC-I grads aren't going to get either big law firm jobs or public service law jobs.  In 2011 23.5% of UCLA grads got big firm jobs and 4.4% got federal clerkships.  LST estimates the school's public service score at 10.5%, which I believe counts every long-term job in "government" and "public interest" as a real public service lawyer job, which is almost certainly quite over-inclusive.  USC placed more people in big firms (34.3%, plus 4.3% in fed clerkships); however it placed only 11 people (5% of the class) in long-term "government" and "public interest" positions of every kind.

So realistically 40% at best of the collective classes at UCLA and USC even had a choice between a high-paying corporate job and a real public service law job.

Again, there's something perverse about arguments regarding law students having to choose between big firm lucre and virtuous public service.  That's still a live issue at Stanford, I guess. It's not the issue at UC-Irvine (or at 95% of the other law schools in the country).  The issue everywhere else is that somewhere between a solid to an overwhelming majority of grads are either not going to get real legal jobs at all, or won't get legal jobs that will allow them to service the debt incurred by attending law school in a timely manner, nor will those jobs make them eligible for PSLF.  These people aren't choosing between Davis Polk and DANY -- they're choosing between IBR and literally leaving the country.

That's the problem. Everything else is a distraction.

Tuesday, August 28, 2012

They write letters

A lawyer received an email recently from a former professor, asking for advice on how she could improve her teaching.  Here is the lawyer's response, reprinted with permission (a few inessential details have been altered to protect identities):

The greatest problem facing your law students has little to do with the subtleties of curriculum and rhetorical style in the classroom, and everything to do with the ongoing jobs-and-economic crisis in legal education.  So the best thing that you can do to improve your teaching is to help your students obtain real jobs as lawyers, such as by making your teaching more vocational, and also by setting up networking contacts, informational interviews and lunches, and even job internships, externships, and interviews.

In making these broad statements, I'm relying on the growing recognition of the crisis in legal education and employment, as explained by Paul Campos' great blog Inside the Law School Scam and Tamanaha's book Failing Law Schools.
To give you one concrete example, I just met a young woman from BYU Law here in Salt Lake City.  I had judged this student two years each in an annual moot court competition for IP.  Her individual score was the highest both years.  She was executive editor of a law journal.  She had a perfectly average and respectable 3.3 GPA (much higher than mine, despite the B+ I made in your class).  Despite doing basically everything right, she was unemployed after graduation and the bar exam and came to me for help.  Fortunately, I was able to get her an interview and some contract work with the small firm that I work for, which may potentially lead to full time work.  Her story is one of countless similar stories.

Here are some more specific recommendations:

1. For reasons that baffle me, law school only provides meaningful feedback through one final exam at the end of the year.  What's worse is that this feedback is basically limited to a mysterious grade that, from the student's perspective, has no clear relationship to the student's performance.  Once the grade is out, the class is over, and students and professors generally spend zero time going over the exam and what people did wrong (I tried this once, the professor gave me cursory explanations that I didn't understand, as if I was annoying him, and I never tried to do it again). 
This is basically a high-risk/high-reward one shot opportunity to prove what you know.  For students like me, who learn through hands-on practice, I feel like this system failed me.  (To give you one example, I studied for many dozens of hours for Property I, and made a C+, and the next semester I didn't buy the book and used a friend's outline two days before the exam, and made a B+.).  It is as if law school teaching is designed to purposefully avoid maximizing their students' grades on the final exam, even though that is their only measure of performance and critically important to their future employment.

As strange as it sounds on the surface, I would have welcomed more quizzes, homework, practice tests, and example problems.  As far as I remember, law professors never went through practice problems with their students, even though that would help them tremendously on the exam.  As someone with an engineering background, this was very strange and confusing to me.  If students are concerned about doing more "work," you can give them the option to do either the traditional final-only track, or a homework-quiz-and-final track.
If you are concerned that grading homework is too burdensome, I would simply use scan-trons, which are easy to grade, or have the students grade their own quizzes as you work through them during class.  As you develop a body of material over the years, preparing and grading quizzes will be easier.  There will necessarily be an increase in burden on you, but I think it shouldn't be overstated, and could help students like me tremendously.  You will have to ask yourself how much extraordinary work you want to do to be an extraordinary teacher.

2. Students generally go to law school to get a job.  Law professors, in contrast, are quite academic.  Law school felt incredibly divorced from the real world practice of law - which is why people say that law school won't teach you how to practice law, and why the bar exam is an additional requirement to law practice that is very different from law school.  I would generally try to move your class into a more vocational style to address the real interests and goals of your students.
3. Most students and 1Ls enter law school without a full appreciation of the difficulties of getting a real lawyer job and paying off student debt.  This is changing fast - law school admissions are down about 25% over the last two years, which is going to put pressure on law professors (the professor-student ratio even at [my law school]) blew my mind) - but students still don't really appreciate what they are getting into.  They generally don't appreciate, for example, that A. employment statistics are absolutely meaningless, because they are based on self-selected samples, and underemployed or unemployed students are drastically less likely to report their status at all.  Students also generally don't appreciate that B. reported average indebtedness fails to include accrued interest.  If you share my (and others') concerns about these issues, I think it would be appropriate to spend part of the first class, or so, discussing these and similar realities in the legal-education-and-job market.

4. One thing I enjoyed about my Torts class was that our professor made us read the book "Damages," which I thought was fascinating.  Every character in that book seemed like a flawed hero in some quasi-Shakespearean tragedy.  And it felt like a realistic perspective on what tort law is really like.  You could give students a realistic perspective by bringing in real torts/trademark plaintiffs, defendants, attorneys, etc. and have them speak briefly (or lengthily) about the reality of legal practice.  These guest speakers would also help you establish networking connections and internship/lunch/externship/employment opportunities for your students, which many of them desperately need.

5. Basically every single class in law school is graded on a curve.  I don't know if the law school requires this, but it makes no sense to me.  It basically ensures that, if enough people do horribly, many will still pass.  Vice versa: if enough people do well, many will still get a C.  Notably, if students have scholarships that require a certain GPA level, the curve can literally force some students to lose their scholarships, even if their performance is adequate on a objective/curveless measure.  There are reports that some law schools give out so many GPA-contingent scholarships that it is mathematically impossible for every receiving student to keep their scholarship, simply because of the curve (if you're curious, you could investigate this at [your law school]).  So, if at all possible, I would try to grade exams (homework, quizzes, practice tests) without a curve.  Decide what is an A, B, or C level, and assign grades based on objective performance.

Note, also, that the curve creates the illusion that professors cannot fail to serve their students.  The professor can do an absolutely amazing job, and turn every student into the next Scalia (or Stevens).  The professor can be absolutely horrible, and teach every student nothing.  But, in both cases, the grade distribution looks exactly the same.  The professor has zero feedback on his/her performance.  Eliminating the curve would remove this illusion.  A professor who fails to serve her students (not that you ever did) would be unable to hide that fact, if there was no curve, because every student would fail.

6. Most everyone will admit, I think, that outside the highest (and lowest) range of law school performance, there is a large factor of randomness that separates B+, B, B-, and C+ students, etc.  One Georgetown professor famously admitted this in an online video (which I can't seem to find on Youtube now).  By eliminating the curve (see 5 above), you would help overcome this sense of randomness.  Also, by having practice problems, homework, quizzes, etc., you could repeatedly show students how certain answers are objectively the right answer to questions.  This would also undercut the sense of randomness.  Multiple choice questions tend to be/feel more objectively fair than essay questions (although it can still be surprisingly difficult to create good multiple choice questions, I know).

7. As a last general point, I am not an expert on education, either academic or vocational, nor am I an expert on learning.  There is an absolutely gigantic literature on how students, esp. grade school or high school students, really learn.  Philanthropists like Bill Gates have funded many millions of dollars into this research, to distinguish between good teachers and bad teachers, what methods work and what methods fail.  You can watch Bill Gates' TED talk to get a sense of this science, and then find related books on Amazon.  As far as I know, the typical law professors has zero exposure to this scientific literature.  The typical law professor just did really well at a good law school, which is very different than doing really well in an Education Ph.d program.  If I was a law professor genuinely interested in my students learning, and doing well in an objective sense (not just on a curve), then I would not only expose myself to this literature, but I would master it, and apply the techniques that distinguish the best teachers from the mediocre teachers.

Monday, August 27, 2012

Nobody has any money

Kendall Coffey, former U.S. attorney, frequent TV commentator, and now per his website one of Florida's most successful private lawyers, had a bright idea the other day, which he shared with readers of the National Law Journal:

The economy continues to inflict financial distress upon many lawyers — excruciatingly so for graduating law students. With law firms downsizing, the previously unthinkable waves of lay-offs have compounded the new grad's dilemma by pushing experienced lawyers into the swollen ranks of job-seekers.

Ironically, while thousands of new law graduates fret about the chronic joblessness that awaits them, tens of millions of Americans need attorneys but cannot afford them. And much of the unmet need rests in America's middle class, which is neither rich enough to pay $250 an hour for lawyers nor poor enough to qualify for legal aid organizations.

One of the greatest challenges facing the legal profession is to facilitate an effective, broad-sale union of jobless lawyers with lawyerless clients. To meet the challenge, brand new attorneys would have to be willing and able to represent America's middle class.
The problem, according to Coffey, is that neither law schools nor law graduates are prepared to represent members of the wide swath of society that lies between people (hey corporations are people) paying Vault firm partners $800 an hour to try to extend a patent for ten months, and the wretched refuse of our teeming shores, which apparently has access to a plethora of "legal aid organizations."

Despite the obvious need, especially in light of current conditions, many law schools and new graduates are neither prepared nor inclined to focus upon middle class representation. Image-conscious law schools fear that doing so might lower their rankings; law students laden with student loans might prefer careers outside of law to the modest income a middle-class practice would bring.
Instead of fleeing to the many well-paid non-law jobs whose doors fly open as soon as someone possessing a Versatile Law Degree(TM) approaches, debt-ridden law graduates who haven't been able to find jobs with big firms should represent the middle class.  All they need to do is run low-overhead law practices, made possible in this wondrous age in which we live by The Internet, Social Networking Etc:

The reality is that with prudent office economics, recent law graduates could earn decent compensation and launch successful practices, with the opportunity to continue to earn more. Rather than work for a law firm at high rates, of which two thirds goes to the employer, new lawyers could charge much lower rates and keep the earnings for themselves. Rates of between $50 and $125 per hour would make new lawyers affordable to the middle class while providing the lawyers with enough income to succeed.

The reality is that attorneys working at law firms usually receive compensation — computed on an hourly basis — within a range comparable to what a middle-class practice might generate. To maximize earnings from middle class clients means controlling overhead expenses, but these days new lawyers have little need for secretarial assistance. And using a home office or shared space can assure that the vast majority of revenues accrue to the bottom line. Hard-copy legal libraries — once a financial drain — are virtually extinct, and computerized legal research is more affordable than ever. Once a field of affordable and competent lawyers appears, middle class clients will come. 
Now why didn't anybody think of something like this before? Indeed I think we may have a whole new economic theory here: if you cut operating expenses, you can cut prices, and new markets for your product will appear.  It's so simple it's brilliant.

Sadly, no:

I've spoken with many lawyers, many readers. You know who you are. You know that I know the truth. The business of criminal defense is dying. It's awful. It sucks. And you're hanging on by a thread, if at all.  Yet, most put on their game face, talking themselves up as if they are somehow beating the odds, knocking down the world, making a killing. Nobody wants to tell their brethren that they're in the same boat, struggling daily to cover the nut and praying that the next phone call isn't another nutjob or desperate defendant without a dime to his name.

It's not that there is a shortage of criminal defendants, though crime is significantly down and serious crime even more so.  There is a shortage of criminal defendants who can afford to pay for a lawyer.  Sure, there are  some lawyers who are doing well, but you can count them on your fingers and toes, without resort to dropping trou. And there are a great many criminal defense lawyers, exceptionally good ones, who fight over crumbs these days, because that's all they can do to survive.

It's time we admit this, because walking around the courtroom hallways with our chests puffed out isn't putting any food on our tables. 

During my phone call, we spoke of the baby lawyers hanging out in the hallways trying to catch the attention of a defendant's mother with $100 in her pocket.  We spoke of n00bs, barely competent if at all, taking felonies for $1500 total.  He didn't blame them, knowing they had loans to pay.

The lawprofs are busy reinventing law school so they can continue to churn out tens of thousands of new lawyers. The talk is about law school tuition and practice-ready lawyers.  The theory is that if they can produce lawyers without the $150,000 in debt, they can service the middle class, who can't afford legal representation.

It's a lie, but the lawprofs don't realize it. They've never experienced law office finance, what it takes to pay rent and phone, or staff and equipment.  While student loan debt is a factor, it's only one of many. They don't grasp what every criminal defense lawyer faces daily, the cost of merely existing. They never paid a rent bill during their judicial clerkship or stint in the United States Attorney's office.
Indeed we haven't.  But it's not just the lawprofs . . . I wonder what sort of overhead Kendall Coffey's firm runs through each month?  Of course Coffey's clients aren't "middle class" -- Coffey is for closers.  The former U.S. Attorney for the Southern District of Florida believes it would be possible to run an actual law practice while billing $50 an hour, and that people aren't doing this because they would rather either make the big bucks doing law talking for rich people, or bailing on law altogether for apparently more lucrative alternative careers, rather than swallowing their pride and making a modest middle class living representing the Great American Middle Class.

I bet Coffey is one of those guys who thinks that somebody making $125K is "middle class."  That's the only way his math works, anyway, because real middle class people in this country (median household income is down to around $45K per year) don't have any discretionary income for something like paying a lawyer.

Nobody has any money.  That's actually the whole problem right there, in four words.

Friday, August 24, 2012

JD not needed

Why are there so few jobs for new lawyers, when our country has so many laws? Legal educators seem perplexed by this.  Some of them periodically assert that the legal job market will recover, simply because it must:  With so many laws, how can businesses get by without lawyers to advise them?

It turns out that businesses are doing quite nicely without armies of lawyers. While law schools have been raising tuition and fighting for US News fame, the rest of the country has moved on. Businesses still need some lawyers, but they don't need nearly as many as law schools hope.

Companies have discovered that college-educated workers can read and apply legal regulations without first earning a law degree. With on-the-job training, supportive software, and a few lawyers at the helm, BAs can also interview people and draft legal documents. Those BA workers can even conduct legal research and advise their companies on relevant legal changes.

This isn't the unauthorized practice of law: The BAs aren't appearing in court, nor are they charging third parties for legal advice. These workers are helping their own employers understand and apply the law. That's perfectly legit, and it has created a rapidly expanding category of workers who perform legal tasks without a JD.

To see the scope of this trend, consider these recent job postings.  I pulled these yesterday from dozens of similar listings--all in response to a single google search:

1.  The Nestle Company is looking for a legal specialist. Responsibilities include analyzing, drafting, and coordinating the processing of agreements related to real estate transactions, including preparing and filing a variety of documents such as deeds, mortgages, and memoranda of leases; coordinating due diligence, preparing and coordinating the preparation of short term leases, estoppel certificates, and subordination agreements; analyzing, drafting and coordinating the completion of other commercial agreements, including marketing services agreements, distribution agreements and other agreements with retailers an suppliers; acting as initial contact with clients on matters; conducting legal and/or business research; and responding to legal inquiries.

Sounds like an amazing job for a new JD, doesn't it? Practical experience creating real estate documents and commercial contracts, contact with clients, legal research, and responding to inquiries about the law. Not to mention the possibility of free chocolate. 

Except Nestle is looking for a paralegal with 5-7 years experience in a corporate legal department or law firm. They prefer an undergraduate degree, and strongly prefer national accreditation as a Certified Paralegal Specialist, but make no mention of a law degree. Nor could a recent law graduate qualify for this job--unless he had spent most of college and law school working as a paralegal.

2.  How about a job as a Compliance Consultant for UnitedHealth group? The person holding this job is "responsible for monitoring changes with laws and regulations to ensure compliance with State and Federal guidelines." The consultant will conduct state-specific legal research; participate in the development of business strategy; establish standard policies, procedures and best practices across the company to promote compliance with applicable laws and contractual obligations; and then implement those policies and procedures. Surely all of that requires a JD.

UnitedHealth doesn't think so. They're requiring an undergraduate degree or "equivalent work experience." They also want five or more years experience working in government or healthcare with experience in compliance; two or more years experience with regulatory filings; and two or more years experience performing data analysis and Market Conduct Exams (bet you didn't learn about those in law school). Even more intriguing, this is a telecommuting job advertised as especially attractive for retirees.

3.  What about this one: BP needs a Coordinator of Intellectual Property at its Naperville, Illinois complex. The Coordinator will manage the IP portfolio, advise on all IP related issues, develop IP strategies, help negotiate consulting, confidentiality, services and collaboration agreements, coordinate IP training of staff, and so on.  

Once again, BP doesn't think a JD is necessary for this job. Instead, the company is particularly interested in hiring "project analysts or project managers." For educational background, BP wants only a "bachelor's degree in a technical or business discipline."

4. Finally, the Kiewit Company (a major construction and engineering firm) is looking for a District Compliance Manager. This job requires a “working knowledge of all applicable local, state and federal compliance regulations; to include, but not limited to, Antitrust/Competition, Foreign Corrupt Practices, Small Business/Disadvantaged Business Enterprises, Transportation, Contract Payments and Claims, Safety, Environmental, and all Employment regulations.”

Few JDs would claim a working of knowledge of that many specialized practice areas. That's fine with Kiewit, because they're not looking for a JD. Instead, they're seeking someone with "a baccalaureate degree in a construction-related field or equivalent experience and education and a minimum of 3-8 year’s experience in the compliance field.” You also have to be able to lift and carry heavy items weighing approximately 20 pounds.
*   *   *
Nestle, UnitedHealth, BP, and Kiewit still employ lawyers; so do other businesses. But these businesses do not need nearly as many lawyers as our heavily regulated economy suggests. I draw three lessons from job postings like the ones listed here.

First, law schools need to learn much more about the job market for legal services--including the many ways in which nonlawyers perform those services. Rather than dismiss declining job outcomes as a symptom of the recession or the low point in a cycle, law schools need to explore the profound changes sweeping our economy. Computers, off-shoring, out-sourcing, unbundling, and the assignment of legal tasks to nonlawyers: these are real forces, not figments of a few fertile imaginations.

Second, law schools need to rethink the type and cost of the education they offer. We have been producing the same product for at least thirty years. We've updated the look and improved a few features, but legal education in 2012 is not very different from legal education in 1982--except that it costs much, much more. The jobs described above tell us that many consumers are no longer interested in our product: They have found cheaper, better ways to obtain legal services. We can continue to ignore that part of our market, producing only the type of legal service providers we want to produce, but consumers are going to continue falling away.

Finally, these jobs cast doubt on the easy assertions many deans and faculty make about "alternative careers." I found these jobs because I was researching some of those careers. When companies advertise for compliance officers, contract managers, and IP managers, do they show any preference for JDs? I hope there are some who do, but I did not find evidence of that in the postings I read.  Instead, all of the postings I saw resembled the ones above: The employers wanted very specific workplace experience handling legal documents, rules, and issues of interest to them. I have no sense that any of the above employers would pick up a resume from a recent law graduate and say "What was I thinking? We need a real lawyer in here. This one doesn't have any practical experience but she's from a top tier school and competed in moot court. I'm sure she'll learn all the other stuff on the job."

Thursday, August 23, 2012


Don LeDuc, Cooley Law School's President, has been trumpeting supposedly low unemployment rates among lawyers. Others have taken up that cry, either by name or anonymously.  Matt Leichter debunked these arguments almost a year ago, but they keep recurring.  So let's look one more time at the facts.

LeDuc and the others imbibing Cooley-ade note that, according to the Bureau of Labor Statistics, only 2.1% of lawyers were unemployed in 2011.  Since 8.9% of the general workforce was unemployed that year, that 2.1% is a pretty alluring number.  Prospective law students are likely to jump to the conclusion that 97.9% of JDs were gainfully employed in jobs using their degrees.  Only stands to reason, right?

Sorry, but no.  As labor economists recognize, skilled workers can--and do--take jobs below their training level.  The four largest occupations in the United States are:  retail salesperson, cashier, office clerk, and fast food worker.  A JD holder can do any of those jobs.  Likewise, most law graduates could fill seven of the next eight most populous jobs: waiter or waitress; customer service representative; janitor or cleaner; laborer or freight/stock mover; secretary or administrative assistant; general or operations manager; and stock clerk or order filler.  Only one of the twelve most common U.S. jobs, registered nurse, requires training that a JD lacks.

The eleven open-to-JD occupations listed above, by the way, account for a full 21.3% of the U.S. labor force.  So a lawyer almost always can get a job.  The question is what kind of job can the lawyer get--and will the job justify the cost of obtaining a law degree?

On that question, we have very informative data.  NALP reports that, a full nine months after graduation, 9.6% of 2011 law school graduates were unemployed and seeking work; they had no jobs whatsoever.  Another 10.0% were working part-time, and still another 5% held full-time jobs for which the JD conferred no advantage.  One out of every four graduates was unemployed, working part-time, or not using their JD.

Even that is a low estimate of under-employment among law school graduates.  It doesn't account for the graduates working in temporary, contract law jobs.  It doesn't account for the graduates who are unemployed but have stopped seeking work.  It doesn't account for the graduates who disappeared, leaving no trace of any jobs for their law schools to report (6.5% in that category alone).  Nor does it account for the graduates working in "JD advantage" jobs that they might have obtained with just a BA.  All told, a full nine months after graduation, only 56% of the JD class of 2011 held full-time jobs that required bar admission.

The other 44% aren't college graduates with a BA in Renaissance Humanism or Heavy Drinking.  Those grads might take a year or two to find a suitable job.  Law graduates are hard workers with seven years of expensive higher education under their belts.  Most of them started seeking legal jobs two-and-a-half years before graduation. Their high rates of under- and unemployment nine months after graduation speak volumes about the current state of the legal market.

Touting the BLS occupational unemployment statistics is one of the most misleading statements a law school professor or administrator can make; it shows a complete misunderstanding of the labor market. The BLS, in fact, doesn't even publish these statistics on its website; labor economists know that these figures tell very little.  Instead, listen to what the BLS itself advises about careers in law:  "Competition for jobs should continue to be strong because more students are graduating from law school each year than there are jobs available." Right: About twice as many students as jobs.


The CU law faculty have been instructed by the dean to attend a reception for new students this afternoon (it's clear this is a command performance, as attendance by non-faculty staff has been described as "optional").   I suspect that the dean, who a few months ago told the media he doesn't read this blog, would not exactly be heartbroken if at least one member of his faculty didn't show up.

As much as I dislike this sort of thing I'm still going to be there, since the main reason I wouldn't show up would be that I wouldn't want to deal with any awkward questions from the brand new 1Ls, and that excuse consists of 100% moral cowardice.

This sort of event forces me to think about what percentage of the entering CU class is going to come out ahead three years from now for having spent those three years getting a law degree.  Those people in the class who are paying no or practically no tuition have a decent shot at coming out all right, especially if they know why they're going to law school and they have a realistic career plan based on that desire.  The possibly not trivial percentage of students who to some extent are engaging in conspicuous consumption on their parents' tab will be OK too.

It's better not to think about the others.

"Where do you come from?" I asked him.
"From San Carlos," he said, and smiled.
That was his native town and so it gave him pleasure to mention it and he smiled.
"I was taking care of animals," he explained. "Oh," I said, not quite understanding.
"Yes," he said, "I stayed, you see, taking care of animals. I was the last one to leave the town of San Carlos."
He did not look like a shepherd nor a herdsman and I looked at his black dusty clothes and his gray dusty face and his steel rimmed spectacles and said, "What animals were they?"
"Various animals," he said, and shook his head. "I had to leave them."
I was watching the bridge and the African looking country of the Ebro Delta and wondering how long now it would be before we would see the enemy, and listening all the while for the first noises that would signal that ever mysterious event called contact, and the old man still sat there.
"What animals were they?" I asked.
"There were three animals altogether," he explained. "There were two goats and a cat and then there were four pairs of pigeons."
"And you had to leave them?" I asked.
"Yes. Because of the artillery. The captain told me to go because of the artillery."
"And you have no family?" I asked, watching the far end of the bridge where a few last carts were hurrying down the slope of the bank.
"No," he said, "only the animals I stated. The cat, of course, will be all right. A cat can look out for itself, but I cannot think what will become of the others."
"What politics have you?" I asked.
"I am without politics," he said. "I am seventy-six years old. I have come twelve kilometers now and I think now I can go no further." "This is not a good place to stop," I said. "If you can make it, there are trucks up the road where it forks for Tortosa."
"I will wait a while," he said, "and then I will go. Where do the trucks go?"
"Towards Barcelona," I told him.
"I know no one in that direction," he said, "but thank you very much. Thank you again very much."
He looked at me very blankly and tiredly, then said, having to share his worry with some one, "The cat will be all right, I am sure. There is no need to be unquiet about the cat. But the others. Now what do you think about the others?"
"Why they'll probably come through it all right." "You think so?"
"Why not," I said, watching the far bank where now there were no carts.
"But what will they do under the artillery when I was told to leave because of the artillery?"
"Did you leave the dove cage unlocked?" I asked. "Yes."
"Then they'll fly."
"Yes, certainly they'll fly. But the others. It's better not to think about the others," he said.
"If you are rested I would go," I urged. "Get up and try to walk now."
"Thank you," he said and got to his feet, swayed from side to side and then sat down backwards in the dust.
"I was taking care of animals," he said dully, but no longer to me. "I was only taking care of animals."

Ernest Hemingway, "Old Man at the Bridge."

Tuesday, August 21, 2012


Anders Walker, an Associate Dean at the Saint Louis University School of Law, has posted a scathing--and somewhat personal--indictment of Brian Tamanaha's book, Failing Law Schools.  Tamanaha has already responded to the personal element of Walker's attack, and Walker has fired back.  (Hat tip to TaxProf on all three posts)

Here, I want to focus on a different element of Walker's posts: The way he uses scholarship as a smokescreen to avoid talking directly about the problem of law school tuition.  During the course of his attack, Walker admits that Tamanaha "makes a convincing case that legal education is 'failing society.'"  He also agrees that "few can deny that US News has distorted incentives, that tuition has grown too fast, and that the ABA has inhibited market innovation."  Walker even concedes that Tamanaha's "data" on the relationship between tuition and faculty salaries "is hard to refute." And he acknowledges that "faculty salaries constitute the primary expense at law schools, and a direct obstacle to lowering tuition."

Huh? If Walker agrees with all of that, what's his beef with Tamanaha?  He, like many of the professors who share the online name "anon," wants to deflect discussion of the financial disaster besieging our graduates; instead, Walker wants a referendum on scholarship and interdisciplinary courses. True, one of Tamanaha's suggested reforms is that law schools might opt to differentiate, with some focusing on teaching rather than scholarship. But even that proposal rests on institutional choice and market forces, not on tyranny.  And Tamanaha makes many other proposals that would also address the financial crisis law schools have perpetuated among their graduates--and are now starting to confront themselves.

Tamanaha's book is about that crisis, and about the need for legal academics to take responsibility for their actions.  We have been raising tuition far, far faster than the rate of inflation--faster even than tuition in most other parts of higher education.  Doing that, especially after the job market tanked for lawyers, has put tens of thousands of new lawyers--our former students and new professional colleagues--in a debt crater they are unlikely ever to escape.

It is now four years since the economic collapse of 2008.  Every year since then, law schools have said that the job outlook would brighten--and it has gotten worse.  Every year, fewer students have gotten jobs, the jobs have gotten more contingent, and the salaries have fallen.  The median reported salary among 2011 law graduates was lower than the median reported salary for 2006 law graduates:  $60,000 in 2011 compared to $62,000 in 2006.  And that's before accounting for inflation:  A salary of $62,000 in 2006 is equivalent to one of $69,178 in 2011.  With just $60,000 on their pay stubs, today's graduates are far behind those of 2006--if they found jobs or reported their salaries at all.

Every year, in the face of these depressing numbers, we have continued to raise tuition.

At Saint Louis, where Dean Walker teaches, 83.5% of the school's 2011 graduates borrowed to finance their law school education.  The average amount borrowed was $120,000.  With accrued interest, that average debt (for law school alone) was $131,000 on graduation day.  Using a standard, ten-year repayment plan, those graduates will pay more than $1,500 per month.  That's more than $18,000 per year--most of it after taxes.  Where are graduates working in firms of 2-10 lawyers, public defender offices, and other government offices going to get that kind of money?  Not to mention the 6.98% of the class that was still unemployed and seeking work nine months after graduation--three months after their loan repayments started?

St. Louis's statistics aren't unusual; they're better than some and worse than others.  The financial morass for recent law school graduates spreads far and deep.

This has nothing to do with scholarship; that's a smokescreen to avoid inconvenient truths about tuition, jobs, and debt.  We don't need to save legal history or rescue legal scholarship.  I learned from great legal scholars in the 1970s, and my school offered several legal history electives, all at a fraction of today's tuition costs.  I'm confident we can cut tuition while preserving plenty of scholarship and interdisciplinary courses; surely we're as talented, frugal, and hard working as professors of earlier generations.  We can also have long, interesting discussions with practitioners about the relative proportions of doctrinal, interdisciplinary, and practice-oriented courses we should offer students.

But first we have to confront the economic crisis saddling our graduates:  Ignoring that crisis has been irresponsible.  We have already graduated years of students with too much debt and too few job prospects.  Save our students first; then we can worry about legal history.

No comment necessary

I am not making this up.

Yesterday, Sarah Kendzior published an article in Al Jazeera about the plight of adjunct professors, who make up two thirds of faculty at American universities today, where they are paid sub-poverty level wages to do the bulk of the teaching at our institutions of higher learning.  It's a thoughtful and disturbing piece which should be read in its entirety, and it even includes a reference to the dire economic circumstances of recent law school graduates. Kendzior, who just completed a PhD in anthropology, wrote that she is unsure whether she will even pursue an academic career, given how exploitative and unfair higher education in America has become.

The piece elicited an unsympathetic response from a law professor, who posted several comments.   First the professor criticized Kendzior for failing to anticipate that her investment in her degree would generate an unacceptable return:

A surfeit of academicians would seem to suggest American academia is doing quite well. I happen to be a professor. This unfortunate woman does not understand how it works. She is Iike most people who choose disciplines that are woefully oversubscribed. We should discourage people more strongly from doing that, but one hardly has to be blind to see it.
(BTW Kendzior reveals in the comments that she was on a full-tuition plus cost of living stipend during her PhD program, and incurred no educational debt).

The law professor then subsequently posted a rambling, somewhat incoherent comment, which deserves to be posted in full:

I have to say that her situation is mostly down to her, unfortunately.  Doesn't make it "OK," but she made a choice of a discipline that was going to be almost impossible to break into (stands to reason; it's pretty interesting!).

Anthropology has been oversubscribed in the U.S. since my mother, now retired from a long career in education, decided not to pursue her masters in anthropology and chose another discipline because she doubted that without a degree from a better school than even Washington University in St. Louis (don't bother if you aren't Ivy League in such a subject) she would ever get a job!  Anthropology looks like a great gig from the outside -- the profs spend a lot of time doing research because students aren't flooding the major.  And they are bummers of classes to teach, frankly, because all of them are big lecture hall required courses for students who probably preferred to be elsewhere.  Bluntly, it's less of the boring work, and what boring work there is is easy.  In fact, schools require students take courses in such areas because it is the only way to keep the professors they are paying, normally incredibly large amounts, working.  This did not "happen" to some disciplines.  It has been this way since before this woman was born.

Just bear in mind that this is what's going on.  It's an easy gig -- and understandably, it's not easy to get one!Now, there IS a horrible story here -- and that is the crime committed by years worth of anthropology professors who taught and mentored her who did not tell her to "get out" of the discipline.  Why?  You retain your relevance at research institutions by how many Ph.D students you have.  She would have been hugely valuable to them for that purpose so they were not going to advise her to get out.  They were not hugely valuable to her, unfortunately.  In other words, these people used her.  That's really bad.She did have options.  I have a colleague who just got hired at my school who is a legal anthropologist who teaches students things they need to know and does insightful and useful research in anthropology -- with a specific focus that allows him to be employed in what are among the highest paid positions in higher education.  Law professors are well into the 1 percent, believe me.  But you have to plan those things and be savvy.  Anthropologists can find work in business if properly dual trained -- but too many young folk aren't willing to compromise a bit, and in fairness, these positions are not out there growing on trees.But she seems to have landed on her feet.  She's the one being paid to write for an international publication.  I'm the one giving my stuff away for free!  The irony is not lost on me.  (emphasis added)
This professor and her legal anthropologist colleague teach at . . . Wait for it . . . the Phoenix School of Law.

Monday, August 20, 2012

Market failure

I had a conversation last week with a 2010 grad who finished near the top of his class at a second-tier school, and who has gotten run over subsequently by the job market for lawyers (graduated with $165,000 in debt, then things got bad and things got worse, I guess you know the tune).  We ended up arguing about the extent to which people enrolling in law school right now should be held responsible down the line for the consequences of that decision.

My view at that moment -- it tends to change from day to day -- was that anybody who googles "law school graduate employment" will find that the first 20 hits include 19 stories about how bad the market is for new law grads, plus one new "study" from the good people at the Thomas M. Cooley School of Law, arguing that everything is actually just fine.  (If I were at Miller Canfield I'd tell these guys that they may not want to push their luck quite this far, but I suppose Cooley has been on the outright grift for so long that this stuff comes naturally to them by now).

Plus at this point even the ABA Section of Legal Education has been forced to cough up semi-meaningful employment data, and a lot of law schools (about a quarter) have gone all the way and released their 2010 NALP forms per Law School Transparency's request, while many others have put fairly transparent numbers up on their websites.  In other words anybody who does two hours of research before dropping $200K on law school will discover how bad the situation is generally, and people who under these conditions apply to any law school that doesn't disclose something like accurate employment and salary data should realize they're being quite reckless, given how bad the data look at the large number of schools who have now disclosed such data.

My correspondent disagreed.  He said I was underestimating the general naivete of young people, and specifically the extent to which they've been socialized to believe that respectable social institutions don't just rip people off.

At this moment I feel torn between the two views -- between the view that at this point you have to be willfully blind to ignore what a bad deal law school has become for most people, and the view that law schools, even more than higher education in general, still have a huge amount of cultural capital to run through before the society in general really catches on to what's happening.

Part of what's happening here is an ongoing massive market failure -- although one that, given sharply declining applications, and to a lesser extent, enrollment numbers, seems to be slowly working towards at least some correction.  And part of that failure is that another thing young people have been socialized to believe is that "the market works."

One reason why people tend to believe the market works is because in many contexts it clearly does.  There's a scene in Pulp Fiction where a character is shocked that a milkshake at a restaurant costs five dollars (about $8.50 in present dollars).  He then discovers it's a truly amazing milkshake. ("This one's a little more expensive. But when you shoot it, you'll know where that extra money went.") That's a well-functioning market: if something costs a lot, it's because it's unambiguously better than a similar product that costs less.  And most of the time, we can rely on prices to accurately reflect this.  You don't go to a car dealer and find somebody trying to sell you a nine-year-old Chevy Malibu with 137,000 miles on it for $49,000, when a brand new Lexus costs $51,000.


Tuition and fees, New York Law School:  $49,225

Tuition and fees, Stanford Law School:  $50,802

Saturday, August 18, 2012

News of the day

Many people thought law schools would freeze tuition this year.  As Karen Sloan writes in the National Law Journal, it's "Supply and Demand 101."  Law school applications dropped last year, and they fell even more sharply this year.  According to LSAC's preliminary numbers, cited in Sloan's article, 67,957 students applied for seats in this fall's entering law school classes.  That's down from a high of 98,700 earlier in the decade--a decline of almost one third.

When consumers disappear, many producers cut prices to lure them back.  But not law schools.  In 2011, applications were already declining: the drop last year was from 87,500 to 78,900.  Schools responded to that 10% decline in demand--enough to send most sellers into a tizzy--by raising tuition an average of 9% at public schools and 5% at private ones.

This year continued the madness.  With applications falling another 14% (off last year's total), schools raised tuition again.  Sloan visited the website of every ABA-accredited law school to identify tuition for the coming school year.  After calculating increases, she discovered that private schools had increased prices an average of 4% over last year, while public schools had raised in-state tuition by an average of 6%.

All of this during a time of very low inflation.  From December 2009 through December 2010, consumer prices increased just 1.5%.  During the following year, it was 3.0%.  Since December 2011, inflation has been particularly low.  Indeed, the Bureau of Labor Statistics' latest report documents that prices in July 2012 were only 1.4% higher than in July 2011.  And that number is trending downward: Prices have been flat for the last three months, raising the possibility that the annual rate of inflation will be even lower by the time it's calculated in December.

For a somewhat broader view, consider this:  From July 2008 through July 2012, consumer prices increased just 4.2%, from an index value of 219.964 to one of 229.104.  That's not 4.2% per year; that's 4.2% total.

During the same years, average tuition at private law schools increased 18.3%, from $34,298 in 2008 to the $40,585 reported by Sloan in the NLJ today.  Average in-state tuition at public law schools escalated even more rapidly, a total of 40.1%, from $16,836 in 2008 to $23,590 this year.

What accounts for these extraordinary rises?  Deans refer to a variety of factors:  rising costs, legislative cut-backs, declining returns on investments.  Even collectively, I'm skeptical that these factors required an 18.3% tuition increase at private schools (where legislative cut-backs have little impact) or a 40.1% increase at public ones.

But that's not the point.  These factors undoubtedly have affected law schools, but they have burdened our students, their families, and their prospective employers as much or more.  Families who saved money to help a child go to law school lost plenty of cash on their investments.  For some families, their largest investment (a house) is still underwater.  Health care costs are higher for everyone, not just law school employees.  In fact, the mandatory health insurance premiums paid by law students warrant a post of their own.  Legislative cut-backs are decimating jobs in government and legal aid, leaving fewer positions for law graduates to fill.  Private employers have faced at least as much economic pressure as law schools, pushing them to cut hiring, lower pay, and rely on more temporary or part-time workers.

None of these other players have been able to respond by raising prices 18-40%.  The parent of a prospective law student couldn't say, "hey, I lost a quarter of our savings during the recession, and my health care premiums keep going up, so it's going to be tough to help with your tuition.  But don't worry, I'll just tell my boss to give me a 30% salary increase!"  Nor can legal aid offices around the country say, "gee, Congress keeps cutting our budget and we don't have much in endowment income.  We might have to fire another 350 attorneys.  But, hey, here's an idea:  let's raise our fees 25%!"

Law schools don't seem to understand the privileged economic position they occupy.  The very fact that schools have succeeded in raising tuition so aggressively during the last four years testifies to their economic power.  Protective accreditation standards, blank-check federal loans, and a treasured place as gatekeeper to the legal profession have allowed schools to raise tuition year after year.  Nor have recent increases simply been making up for lost time:  They come on the heels of more than 20 years of hefty tuition increases in legal education.

It's time for law schools to wake up and smell the burning toaster.  We have been raising tuition--substantially--while our applicants have been getting poorer and their job prospects have been dwindling.  We are continuing to raise prices as applicant demand falls.  These are not wise business strategies.  Worse than that, these actions are professionally irresponsible--in the old-fashioned, non-technical sense of the phrase.

Law school professors and administrators hold the keys to the legal profession:  We decide who gets to enter the profession and how much they pay for that honor.  Over the last three decades, we have continuously raised prices to the point where we take for ourselves most of the economic benefit conferred by a legal education.  For a growing number of graduates, we have exceeded that level; attending law school leaves those graduates worse off financially than they would have been without the degree.

We should care about those outcomes.  How many of our recent graduates still lack jobs?  Of those who have jobs, how many are earning less--after making their monthly law school loan payments--than they would have with a BA and three years of workplace experience?  How many are still floating from one temporary or part-time job to another?  What will happen to the students starting classes this month, who will carry even heavier debts at graduation than the students before them?  What will our profession look like in ten years, when so many lawyers are laboring under debt and jobs have become even more contingent?

This is not a matter of how we teach or what we publish; it is a matter of what we charge.  The market does a poor job restraining those charges, especially given the federal loan program.  We have to decide for ourselves--now--on the professionally responsible course.

Thursday, August 16, 2012

Biglaw and BigEd

Are law schools really as greedy as I suggested last week?  I received some pushback on that post, from both professors and practitioners.  One critic suggested that, if I wanted to see real greed, I should take a look at starting salaries in BigLaw.  "Just look at what those kids are getting today compared to what we got!" my critic exclaimed.  So I did.

In 1985, Cravath paid new lawyers $53,000; that was the salary other BigLaw firms tried to match.  During the same year, Harvard Law School charged tuition and fees of $10,060.  Yale and Stanford were a bit higher at $10,700 and $10,776.  The CCN charged $11,076 (Chicago), $11,200 (NYU), and $11,518 (Columbia).

What are the comparable numbers today?  Cravath is paying its first-year associates $160,000--three times what it paid in 1985.  Inflation hasn't been nearly that high.  If Cravath had increased first-year salaries simply to match inflation, those salaries would be $112,849.  So today's associates are getting 42% more, in constant dollars, than associates did in 1985.  Sounds like these greedy millennials are doing pretty well for themselves, doesn't it?

Not so much.  Law school tuition has gone up even faster than BigLaw starting salaries.  This year, Harvard is charging tuition and fees of $50,880--five times what it charged in 1985.  The multipliers for the rest of YS/CCN are similar; they range from 4.59 (Chicago) to 4.95 (Stanford).  A student who attends one of these schools and lands a BigLaw job today is actually worse off financially than a student who did the same in 1985--much worse off.

Here's another way to put it:  In the mid 1980s, three years of tuition at Harvard Law School cost about $30,180.  A student who landed a job at Cravath or another top-salary firm earned $53,000 in her first year--considerably more than the full amount she paid Harvard.  Three years of law school tuition was 57% of the BigLaw graduate's first-year, pre-tax salary. Today, the same student will pay about $152,640 to Harvard for three years of schooling.  That total is 95% of a BigLaw graduate's first-year, pre-tax salary.

But what about scholarships?  Perhaps fewer students pay full freight at Harvard today than they did in 1985.  Maybe, although only half of today's Harvard students receive any scholarship aid.  And the scholarship would have to be pretty substantial--more than $30,000 per year--to put today's graduate in the same position as the 1985 one.  The bottom line is that even the most financially successful law graduates today, coming from the most elite schools, reap a substantially smaller initial return on their law school investment than students did a generation ago.  BigLaw is paying more, but BigEd's tuition has gone up even faster.

Compared to other schools, HYS and CCN have been fairly conservative in their tuition increases.  In 1985, UC-Hastings charged California residents $1,212 for a year of law school.  This year, tuition and fees are $44,186.  A year at Hastings now costs thirty-six times more than it did in 1985.  Here are three other comparisons that I made for schools picked with a random number generator:

  • At the University of Missouri-Columbia, resident tuition and fees have risen from $2,490 in 1985 to $18,582 this year.  A year today costs 7.5 times more than it did in 1985.
  • At the University of Iowa, resident tuition and fees have risen from $1,680 in 1985 to $27,344 this year.  A year today costs 16.3 times more than it did in 1985.
  • At Villanova, tuition and fees were $7,000 in 1985; today they are $38,910.  That's 5.6 times more expensive than in 1985.

None of this touches the plight of today's graduates who work for government, mid-law, small-law, document review companies, and alternative employers.  Tuition has gone up for these students, just as it has for the graduates gaining BigLaw jobs.  But starting salaries in these other tracks have risen much more slowly than in BigLaw; some actually lag behind 1985 salaries in constant dollars.  That's a subject for another post.

Starting salaries, of course, do not reflect the lifetime financial rewards that lawyers receive from investing in a JD. Salaries for many of today's job entrants will go up over time.  But so did salaries for those who entered the legal job market in the 1980s.  Indeed, the period from 1980 through 2000 produced particularly rich rewards for many attorneys.  There's little reason to think that today's starting salaries--in any law-related field--will increase at higher rates than starting salaries did in the 1980s.

Investing in law school still pays off financially for some students, although that group is rapidly shrinking.  But even for the biggest winners, the investment won't pay off nearly as well as it did in the 1980s.  Some of the loss comes from changes in the legal market, but the lion's share derives from the much higher cost of legal education.  Whatever legal jobs they pursue--even if they are lucky enough to land those lucrative BigLaw jobs--our children will reap far lower financial returns from their law degrees than we did.

Update: [PC] Here's some more comparative data.  Most of the run-up in starting salaries at big firms took place between the late 1950s and the mid-1980s.  In real dollars the going rate is currently 14% lower than it was in 2006.

They write letters

I got an e-mail a couple of days ago from someone I'd corresponded with a bit during his/her 1L year at a law school well within the top 20.  The person finished with top quarter of the class grades and had a substantial scholarship, but decided to drop out anyway.  His/her thoughts:

Whenever I talk to people thinking about law school for the "what else do I do with a poli sci major?" approach (I was one of them), I tell them to look for jobs with startups.  I work at one now, and when I decided not to pursue law as a career, I shotgunned as many startups as I could find that were hiring (which is almost all of them), and got great responses. I ended up getting to pick the job that made most sense to me.  The thing about startups is that they have more to do than employees can complete, and are really just looking for smart, motivated, hard working people willing to learn on the job.   I was lucky to find a company that employs 6 JD's, as well as myself, and had designed a pathway to hire people like me (hence it made the most sense compared to the others).  But instead of going to law school, these "smart kids who did everything right," should just apply for marketing or business development positions with startups.  

The kids who on the surface, pre-ITLSS, think law school is a good career move (I mean the ones who got into Top 30 schools with scholarships), will get these jobs, although I do have to add the caveat that being in a city that is full of startups (Bay Area, Los Angeles, NYC, Boston, Austin, Boulder, Portland, Seattle are probably the best bets now, but new hubs are popping up in all kinds of places) makes this much more feasible.  Anyway, I've given this advice to 4 or 5 undergrads considering law school who actually took it and all have thanked me within a month.  Thought you might be interested in another response to stupid reasons for attending law school, from someone who made that mistake and then recovered.

I'm not going to comment on how feasible this route may be as an alternative to law school, or for law students who are considering dropping out (I know nothing about startups),  but I'm posting it as something some people may want to consider.

Wednesday, August 15, 2012

Fixing a hole

One of my college roommates had a cat which had a remarkable ability to feign nonchalance if, for instance, it tried to jump onto a high ledge and failed.  Within a split second of crashing to the floor, Toonces would immediately begin an unhurried and dignified exit away from the scene of the disaster, to the point where you could almost hear him say "I meant to do that."

In the next couple of weeks, as 1L orientation starts at most law schools, I suspect we're going to hear a lot about the institutional sense of prudence and social responsibility that has led to enrolling a class x% smaller than usual.  What seems to have happened is that by this spring it was becoming obvious to a large number of schools that they would have to either enroll a significantly smaller class than normal, or enroll a class with lower LSAT/GPA numbers, or throw a lot more money at applicants, or some combination.

The same thing happened last year, but preliminary indications are that this year will feature even more stress on enrollment numbers, to the point where over the last few weeks word is beginning to trickle out regarding reduced class sizes at various schools, including:

Texas: 300 1Ls, down from 375 last year and 400 the year before.
Minnesota:  220 1Ls (normal graduating class is around 275).
Arizona:  125, down from 158 last year.
Wake Forest: 130, down from 185
Hastings:  320, down from 400
Penn State: 170, down from 220
Hamline: 134, down from 200
William Mitchell: 250, down from 309

In addition, Rutgers-Camden is looking at a class one half its normal size, and Cooley is projecting another big drop after last year's 29% decline (in its case this represents several hundred fewer 1Ls compared to the class of 2013).

Of course schools don't know exactly what a class's size will be until students actually enroll, since people deposited at one school will be getting pulled off wait lists at other schools until the last minute, plus some people will decide not to go to law school at all, or at least not this year.  So it's going to be an interesting couple of weeks.

At schools where the operating budget is largely tuition-driven (a category that includes the vast majority of law schools) an unplanned or planned as of six weeks ago shortfall in the size of the first year class is likely to create fiscal problems. Some faculties will take the opportunity to reassess things such as hiring plans and other new major expenditures for this coming year, while others will ignore the first rule for dealing with the discovery that one is in a hole, and will continue full steam ahead.  The most common rationalizations employed by schools in the latter category are likely to include:

(1) As soon as the economy gets back to normal, so will we.

Leaving aside that in terms of the broader economy the present situation may well now represent a new normal, this ignores that the market for lawyers has been contracting for at least 20 years, and that there's every indication it will continue to do so.

(2) We can retool ourselves in such a way as to ensure we'll get a comparatively bigger piece of a shrinking overall pie.

This of course is just Special Snowflake Syndrome at the institutional rather than the individual level.

(3) We need to spend even more than we're spending now, because in a hyper-competitive environment rankings are more important than ever.

This is my personal favorite, as it is much favored within my own institution, despite the fact that we increased tuition from $7,600 to $31,100 between 2003 and 2011, without any apparent effect on the school's ranking, which actually declined slightly.  In any case this argument ignores that law school ranking in general and reputational ranking in particular -- the latter is inevitably the main justification for new major expenditures -- is quite sticky.

It also ignores that prospective students are getting much more sophisticated about how meaningless law school rankings are outside of very wide bands.  There's essentially no evidence that employers care at all about whether a school is ranked 31st or 54th, despite the fact that law schools treat much smaller movements within the rankings as of apocalyptic significance.  Prospective students are figuring this out much faster than law schools are, which means there's less excuse than ever for schools in an increasingly deeper hole to keep digging.

Tuesday, August 14, 2012

To the Class of 2015

To the class of 2015, welcome.   At this point in the proceedings, tradition dictates that I spend some time elaborating just how amazing and talented each and every one of you truly is.

But I’m not going to that this year. And let me tell you why: If so many people hadn’t spent that last 20-odd years telling you just how talented and amazing you truly are, you might not be sitting here today. And just where are you today? 

You’re sitting in the faux courtroom of the Titanic School of Law, preparing to spend the next three years sailing straight into the iceberg known as the American legal profession.  OK, everyone in an odd-numbered seat, raise your hand.  Thank you.  None of you are going to get jobs as lawyers. Do you know why? Because you’re not going to hustle and network enough.  

J/K LOL! That’s not why. The real reason is because there are only enough legal jobs (sort of) for half of you. So half of you aren’t getting a job as a lawyer.  Hey I know people go to law school because they’re bad at math but that equation’s not too tough to figure out, am I right?

And you people in the even-numbered seats, don’t start fist-bumping each other just yet.   You know what the jobs you’re going to get are going to pay?  $40,000!  Sounds impossible doesn’t it? You’re going to be real lawyers after all.  But check it out: last year the median reported salary for people graduating outside the top dozen or so law schools was $55,000.  And that’s a big exaggeration, because only 35% of the graduates of non-elite law schools had their salaries recorded. Guess which graduates were more likely to have their salaries recorded?  You in the middle of the front  row in the Princeton sweatshirt. That’s right – the ones with higher salaries.  Well reasoned my fine young man: I do believe you’re already thinking like a lawyer!

So half of you aren’t going to be lawyers, and as an added extra bonus you’ll pick up a degree which makes it a lot harder to get non-legal jobs.  Oh wait, what’s that you say? A law degree is “versatile?”  You’re killing me Smalls.   Let me clue you in on a little secret: non-lawyers hate hiring people with law degrees. It’s true!  They think you’re going to run off to a high-paying legal job as soon as one opens up, or they think they’ve got something wrong with you because you’re not practicing law, or they think you’ll sue them, or they just generally hate lawyers.  

Plus most of you – future lawyers and non-lawyers with law degrees alike, are going to have unbelievably massive debt when you graduate. I mean have you seen what we’re charging now to go here? Every year we jack up tuition far faster than inflation yet again and I tell myself, that’s it, we’ve gone too far this time, they’re going to stop coming – and every year here you are again!

Maybe you haven’t done the numbers. Allow me:  You got a $30,000 “scholarship,” right?  Oh man I love that one:  Target should call their discount rack “the scholarship section.”   So you’re going to pay $33,000 this year in tuition.  Hold on tight to that scholarship, because we’re going to raise tuition on you $2000 each of the next two years. So that’s $105,000 right there.  It’s nice that your parents are paying your rent and otherwise helping out with living expenses, but you’re still going to borrow another $500 a month or so over the next three years or so for books, car payments, cell phone bills, and so on.  And don’t forget the bar review course (That’s where you learn all the stuff we didn’t really teach you).

So you’ll be lucky if you only take out $125,000 in loans. But wait, there's more: You know what the balance on those loans will be when the first payment comes due?   $147,000!  Amazing isn’t it. The mean old federal government just got rid of the subsidized loans that pay your interest while you’re in school, so interest will be accruing the whole time you’re here.  It’s like an astonishingly huge credit card bill on which you never make a payment. Plus this doesn't include your other educational debt, which we don't know and don't want to know anything about.

So a very few years from now, with the exception of a handful of you who will be lucky enough to sign up to be helots for a giant law firm, plus a few others who come from rich and well connected families (actually there’s a lot of overlap in those two groups for deeply mysterious reasons we’ve never been able to understand), all of you will be either practicing law for peanuts, or not practicing law at all and trying to figure out how to remove the stigma of your law degree from what you will be thinking of as your permanent record,  while struggling with veritable and growing mountain of high interest debt that you can’t get rid of – lawyers say “discharge” – in bankruptcy.

All of which raises an obvious question: Why would anybody sign up to do what you're doing to yourselves? I don't know and I don't want to know -- I'm actually being paid $300,000 per year to never ask that question to myself or anybody else.  So forget everything I just said. You can be sure it's something you'll never hear a law school dean say again.

Monday, August 13, 2012

Memo to the faculty

A very interesting document has come my way, authored by a faculty member and former interim dean of Tulane Law School.  It was apparently drafted for a law school committee, and it features a fairly straightforward, although understated, description of the employment and salary crisis facing law school graduates in general and Tulane graduates in particular.  Here is the most notable passage: 

A rule of thumb in assessing student loan debt is that debt should not exceed starting salary.  This means that an average student graduating from TLS needs a job paying around $117,000 to manage their debt load.  Of graduates reporting their salaries for the 2010 class, one-third had such jobs, two-thirds did not. [Elsewhere the memo notes that salaries were reported for only 38% of the class, so in fact barely more than 10% of TLS graduates obtained salaries equal to the putative average student debt load, which as we have seen is understated by about 15%].  A loan calculator available online from FinAid spells out that to repay a loan of $117,000 and avoid financial difficulty means that our graduates need a job that pays around $161,000.  That is above the top salary paid in the nation by law firms to entry level hires. Consider also that the top salary available for law graduates in Nola is roughly $100,000.

Thus, the sort of job needed to comfortably pay off our average loan is currently out of reach of most of our graduates. [Emphasis added]  The highest starting salaries are offered by the top 250 firms in the U.S. as measured by the National Law Journal – the “NLJ 250.”  As Brian Tamanaha comments in a soon to be published book, Failing Law Schools:  “To offer a few examples, Tulane University Law School, Temple University James E. Beasley School of Law, North Carolina, University of Minnesota Law School, Ohio State University Michael E. Moritz College of Law—all well regarded law schools—placed 10-12 percent of their graduates in NLJ 250 firms in 2010.”  This is obviously not a large percentage of the class, yet these jobs are the only ones that offer the security of loan repayment without financial hardship.

Again, while understated, this is at least a fairly straightforward admission of the fact that a Tulane law degree -- like almost all law degrees these days -- doesn't come close to being worth what it costs to acquire. Now on one level there's every reason for recent grads, current students, and incoming students at TLS to be upset about the fact that it would be completely impossible to deduce this rather significant piece of information from anything the school has to say about itself.  And they should get upset about the extent (i.e., total) of the denial in which the law school engages as a matter of institutional self-presentation and -- just as significant -- policy.

In other words it's not just that Tulane gives no hint to the outside world that it has any awareness that its cost structure makes no sense -- it's that there's no real evidence that it's doing anything about this, besides indulging in the usual hand-waving about trying to make its graduates more "practice-ready" (How many times does it have to be pointed out that making people marginally more prepared for jobs that don't exist doesn't actually help matters?).

Still, it's a sign of progress that someone at Tulane in a position of some administrative responsibility is actually grappling with the real problem, even if only at the level of acknowledging it exists.  Indeed none of this should be taken as a criticism of Tulane in particular -- it's not as if Tulane is offering a worse return on investment than the typical law school.  If anything, it's offering a better one -- it doesn't cost more than the average law school to attend, and around  13% of its graduates are currently getting jobs that at least arguably justify the cost of attendance, which is a higher percentage than at the majority of law schools.

At this moment, as law school faculties gather for their beginning of the year meetings to discuss strategic planning in a hyper-networked kinetic professional environment or what have you, it's especially important for people to stay focused on the fact that (Yale, Stanford, and Harvard, please leave the room) law degrees cost more than they're worth, instead of wandering off into pointless arguments about the purported value of legal scholarship and its relation to good teaching (as somebody at JDU pointed out law professors could stand on their heads while reading Fifty Shades of Gray and that would be fine with everyone as long as their students actually got jobs), or curricular reform, or whether we should have Starbucks or Peaberry in the faculty lounge, etc. etc.

Entire memo posted below the fold: