Would you go to law school today?

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

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

Tell or don't sell

 Long time blog contributor Avor writes:

Back to basics

Legal academia is very much on the defensive at the moment, which is all to the good.   The mixture of outrage and pearl-clutching which greeted David Segal's latest entry in his series in the New York Times on the state of American legal education is a sign of, if nothing else, the extent to which law school faculty and administrators are finally noticing that we are dealing with that most dreaded of things, a genuine public relations crisis.  (Unlike the economic and personal disaster which has been overwhelming a growing percentage of our graduates for many years now, this is one crisis which cannot be ignored).

Given that reaction, this seems like a good time for a restatement of some fundamental points, to help avoid a deflection of the conversation into tangential issues such as the actual value of legal scholarship, how much law professors get paid, how much Socratic method nonsense still inhabits our classrooms, etc.  (Many thanks to Matt Leichter's invaluable Law School Tuition Bubble for collecting and analyzing much of the data cited below).

POINT ONE:  Over the past 20 years, the share of the nation's GDP attributable to the legal services sector has deteriorated significantly.  In the late 1980s, the legal services sector represented slightly more than 2% of GDP (the same percentage as in the mid-1970s).  As of 2009, that figure had declined to 1.37%.  Contrary to the standard narrative within legal academia, which assumes an increasing or at least steady demand for legal services relative to overall economic growth, the demand for legal services within the American economy has been declining, relative to the rest of the economy, for the past  two decades.  In other words, "law" (as an economic entity) appears to be a mature industry in relative decline.

POINT TWO:  The rate at which American law schools are producing aspiring lawyers far outstrips the demand for new lawyers, and this has been the case for many years now.  The Bureau of Labor Statistics estimates that the economy will produce an average of approximately 24,400 new jobs for lawyers per year over the next decade.  ABA-accredited law schools are producing 45,000 new graduates per year, while non-accredited schools produce several thousand more (Approximately 53,000 people pass state bar examinations each year).  An important sub-point about these statistics is that the BLS estimates are not for how many jobs will be filled by new law school graduates: they are for all new legal jobs.  What this means is one can't assume, for instance, that half the 50,000 aspiring lawyers (conservatively speaking) that enter the market each year will get law jobs within a year of graduation, since some of those new jobs are going to be taken by people already in the market for attorney jobs who were not currently employed as attorneys. Obviously, this problem gets worse over time, as the surplus of lawyers without law jobs continues to increase.

POINT THREE:  The cost of law school is, in economic terms, arbitrary.  Given the faith in well-functioning markets that well-functioning citizens in our society are expected to maintain, this point is extremely counter-intuitive, but it is, given points one and two, essentially undeniable.  For more than twenty years now, the demand for the services of American law school graduates has been declining relative to the demand for other economic goods (not constantly, of course, but the overall trend is clearly negative).  For much if not all of that same time, the output of American law schools has far exceeded the demand for that output, and now appears to be in a roughly two to one ratio.  Yet since 1985, tuition at private law schools has increased by 2.5 times in real terms, while resident tuition at public law schools has increased more than fivefold, again in real terms.  In other words, over the past quarter century, the relative change in the cost of acquiring a law degree has borne no rational relationship to the relative change in the value of a law degree.

POINT FOUR: There is, to this point, almost no sign that this arbitrary relationship between the change in the cost of acquiring law degrees and the change in their value is going to move toward a more orthodox economic relationship, in which the decreases in value trigger decreases in price.  Law schools continue to raise tuition at far faster than the rate of inflation, and the market for the graduates of law schools -- which it bears repeating has been bad relative to the rest of the economy for many years, for reasons that have nothing to do with the recession that began in 2008 -- continues to deteriorate.  An extrapolation of current trends into the very near future, i.e., four years from now, suggests that private law school tuition will average $50,000 per year, and will be more than $60,000 at some schools, while average resident tuition at public law schools will be as high as private law school tuition was in 2007.  This means that the total cost (tuition and related expenses, plus opportunity cost) of attending law school will be approaching $300,000 for many students and will be at least $200,000 for the vast majority. Meanwhile, it appears that around half these graduates will not have real legal careers, defined as long-term employment in jobs requiring law degrees, and that indeed for a significant percentage of them acquiring a law degree will have made them less employable than they would have been otherwise (In other words, for these graduates, law school will have turned out to have been a bad investment even without regard to the direct costs and opportunity costs incurred by attending it).

POINT FIVE:  These otherwise unsustainable trends are being maintained by a combination of unlimited federal educational loan money and, to a lesser extent, poor information regarding the actual relationship between the costs and benefits of acquiring a law degree.  Any significant change in either of these factors, but especially the first, will lead to a massive disruption in the current economic structure of legal education in America.

Brave new world

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

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

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

Suggests that law schools should teach law students how to be architects and designers rather than mechanics.  The lawyers of the future will focus, more than today’s lawyers, on the building blocks of law. Computers and non-lawyers will handle the mechanical tasks. Training lawyers demands the sort of theoretical perspective that Segal disdains. * * * The real problem * * * is not that law professors are teaching theory rather than the way to the courthouse, but that their choices of which theories to teach pay insufficient attention to the skills and knowledge today’s and tomorrow’s market demands.

I agree with what I take to be one of Ribstein's implicit points here, which is that it doesn't make any economic sense to charge people $150,000 so that they can be licensed to perform routine tasks that can easily be outsourced to non-lawyers and even machines, and that an educational model based on doing so is unsustainable in the long run.

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

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

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

The birth of a salesman

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

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

The cost of legal scholarship

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

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

Skin in the game

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

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

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

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

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

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

In making this proposal, we might be accused of having an institutional conflict of interest.  We’re pretty confident that few students at Yale (like few employees at Zappos) would take the bribe to quit early. But if we’re right, this is something about which to be proud. If 20 percent of the students at another school took the offer, applicants might think twice before enrolling. And if the percentage taking the rebate becomes too large, government should think twice before lending.

 Precisely. No one (as far as I'm aware) has yet argued that a JD from Yale Law School is, all things considered, a bad bargain.  On one level, the whole problem with contemporary legal education is that 199 other law schools are to greater and lesser extents trying to be Yale Law School, when it makes sense for perhaps five or ten of them to engage in that particular enterprise.  The Yale model appears to work, by and large, for Yale graduates.  A cheap knockoff (although cheap is hardly the right word) of the Yale model doesn't work -- in either academic or economic terms -- for the vast majority of law students who are subjected to it.

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