The Volokh Conspiracy

Professor Jim Moliterno of Washington and Lee Law School has a lengthy post over at The Legal White Board, which is in part a response to my post on this blog suggesting that the jury remains out as to whether W & L’s innovative curriculum is a hit among prospective law students.

I noted that despite what appears to be have been a banner year last year in admissions, “W & L’s median LSAT score was in the top 20 of law schools when it announced its experiential curriculum in 2008, and that it’s gone down every year since.”  Moliterno replies, “Actually the W&L median LSAT was steady at 166 from 2005-2010, dropped 2 points to 164 in 2011 and stayed at 164 for 2012. It has not ‘gone down every year since [the new curriculum was announced in 2008].’”

Moliterno seems to have misunderstood what I wrote, and, in retrospect, I can see that I wasn’t clear.  I did not mean that W & L’s median LSAT score went down every year.  I meant that relative to other law schools, W & L’s median went down every year.  As a result, W & L’s median LSAT was in the top 20 among law schools in 2008, and was not even in the top 30 in 2012.

I also noted that to the extent W & L’s admissions stats are taking a dramatic turn for the better, it may not be because of its curriculum, but because W & L is being especially generous with financial aid, making it, on average, one of the least expensive law schools in the U.S. News top 40 for out of state students.

Moliterno replies that when asked about the strengths of the law school, students ranked the curriculum number one, and financial aid awards number nine.  I don’t know if the students were given a list or just asked to volunteer strengths (it wouldn’t be obvious that one should volunteer “financial aid package” as a law school “strength”), but in any event I find this an odd way to determine whether the curriculum is popular among law school applicants, most of whom, of course, do not attend W & L, including most of those who receive offers of admission.  He also claims that matriculating students are increasingly likely to flag the curriculum as a factor in attending, which does at least suggest that the curriculum is either helping more or hurting less than it had been among prospective applicants, but we still don’t know whether it’s making an overall positive difference in admissions, nor is it easy to determine how much of a factor the curriculum is as opposed to generous financial aid.  Moliterno doesn’t deny that W & L has, in fact, positioned itself as a less expensive alternative (after financial aid) to other prestigious law schools. In my view, this is especially advantageous, more so than it would have been ten or even five years ago, given legitimate concerns among students about their ability to pay back large law school debt in the current employment environment. Even students who are enthusiastic about the curricular innovation would be (much?) less likely to attend if their tuition bill was 20k a year higher.  I also would like to see more than one real banner year in admissions.  For unknown reasons, George Mason had such a year in 2010, and wound up matriculating an unexpectedly large class, but it didn’t repeat itself.

Finally, I suggested that it struck me as unlikely that W & L’s curriculum will make a significant positive difference with prospective students until W & L can show that it improves employment outcomes.  Moltinero replies, “It is too early for employment data. One full class has graduated from the new curriculum, in May 2012, and that in a time of such incredibly reduced employment of new lawyers.  No innovation, no matter how much it might improve graduates’ abilities to perform, will change employment data until employers become convinced.”  I agree, but I also think it will hard to persuade hiring partners , who, as I noted, tend to think that any innovation that they didn’t benefit from in their law school days couldn’t possibly be that important.

Note that I’m not saying that W & L’s innovative curriculum won’t eventually improve W & L’s ability to attract top students.   I can’t even be sure it hasn’t started to do so.  I just think we need more evidence before we can draw the sort of wildly enthusiastic conclusions that prompted my original post.

(Posted inadvertantly before it was ready, and edited to improve the substance.)

New York Times coverage of the mid-year ABA meeting, and the report of its Task Force on the Future of Legal Education, here.

Bill Henderson has a post over at The Legal Whiteboard that has been getting a lot of attention in law school circles, praising W & L’s innovative curriculum, which focuses on practical lawyer skills, as both an educational success and as a hit with law school applicants.   Bill goes over some of W & L’s recent admissions data, and concludes:  ”A sizeable number of prospective students really do care about practical skills training and are voting with their feet.  W&L has therefore become a big winner in the race for applicants.”

Some caution is in order here.  My understanding is that W & L’s median LSAT score was in the top 20 of law schools when it announced its experiential curriculum in 2008, and that it’s gone down every year since, while its GPA rank has, after a plunge, more or less returned to where it was.  As Bill points out, W & L had a banner “yield” last year, with many more students accepting offers than places available, with a substantial percentage of students being asked to defer, and the first-year class still filled beyond capacity.  So we’ll have to see whether future statistics reflect strong gains in GPA and LSAT ranks, or whether W & L is attracting many students, but the “best” (most sought-after because of their LSATs and GPA, which are for the most part all law schools care about thanks to US News) students are still avoiding it.

Even if W & L does wind up with increasingly strong classes while everyone else is struggling, it wouldn’t be clear that its curriculum is the primary cause, or perhaps a cause at all.  Washington & Lee has a tuition “sticker price” of around $42,000,  but is known for being among the most generous law schools with regard to financial aid.  Indeed, once financial aid is taken into account W & L may well have the lowest effective tuition for out-state-applicants of any law school in the U.S. News top 40, save for BYU (which has limited appeal to most prospective applicants) and perhaps the University of Alabama.  W & L  is also located in a small town with an especially low cost of living.  To the extent that law school applicants have become significantly more cost-conscious and reluctant to take on debt because of the awful legal job market, W & L is clearly one of the law schools most likely to benefit.  The lesson may, in fact, be that the best way to recruit students is to offer legal education at a lower cost than is offered by your competitors.

I’m not saying, however, that I know that W & L is not, at this point, receiving some reputational benefit among applicants due to its curriculum. But I at least suspect that this benefit would only really start to manifest itself if there were some evidence that W & L applicants have brighter career prospects because of this curriculum, i.e., that employers are, on a relative basis, more inclined to recruit W & L grads because of this curriculum.  There may be such evidence, but if so Henderson doesn’t mention it.  (My own experiences in the legal world suggest that hiring partners tend to be of the opinion that since THEY managed to get where they are without x or y–clinics, law and economics, legal writing classes, whatever–they couldn’t possibly be important hiring criteria.)

None of this, by the way, goes to Henderson’s main point, which is that W & L’s curriculum is proving to be an educational success–that, perhaps, should be the subject of a separate post.  And I think such experiments are great, there is no reason that all law schools should follow the same path.   And while, as Henderson mentions, some academics are skeptical that the curriculum, which depends in part on adjuncts, could be pulled off in Lexington, it’s also the case that it may be more important to have such a curriculum in such places, where students have relatively few opportunities to gain practical experience by clerking for a law firm part time during the school year.

But all that said, I don’t think Henderson provides sufficient data to conclude that “a sizeable number of prospective students really do care about practical skills training,” at least not the extent that W & L’s curriculum has actually improved the “quality” of students relative to who would be matriculating there if the law school had retained a standard curriculum.

A few days ago I posted on WSJ and NYT articles talking about the opening of new law schools in the midst of a crash in law student applications.  Since then, a couple of other professors have posted comments on the topic, and I thought I’d flag them.  NYU law professor Robert Howse, writing at Prawfslawblog, argues that the gloom and doom is overwrought, and suggests that American law schools will be able to look to foreign students, not just to fill LLM slots, but JD classes as well:

Application for JD slots are down-we all know that. But even assuming that’s a longer-term trend rather than a reflection of th economic anxieties and difficulties of the last years, there is no reason for panic or despair.  The potential of America’s law schools is only starting to be realized.

The global market for US legal education was traditionally regarded as composed of a relatively small group of foreign-educated lawyers seek advanced degrees. But this changing. Increasingly, a US JD degree is an attractive option for foreign students. And you have probably noticed more non-US JDs in your classes. In most countries law is the subject of a first degree after high school. The market could be expanded of US law schools were to offer a combination undergraduate degree in another discipline and a law degree-what about a 5 or 6 year program that leads to a BA in economics or political science or philosophy and a JD?

The fact is that American law schools have a competitive advantage. To be sure there is excellent legal education in some other countries. But my considerable global experience suggests to me that those countries are few. In most places, legal education is dominated by old-fashioned rote learning and by professors who spend much if not most of their time in private practice. Innovation is rare and slow. Class sizes are often huge.

If we are not distracted by US News rankings, we will observe that in all kinds of law schools all across the US there are world class intellectuals and leading specialists on the faculty. Of course national law schools abroad have a captive audience of students who can’t study in English and/or whose first and immediate priority is to qualify for the local bar or who can’t afford foreign study (though we can reach out to the last group through distance education and foreign campuses).   But overall the number of students with global ambitions, and the prevalence of English as a global language of law, are growing, from what I can tell.

This post prompted some pushback by my Opinio Juris colleague Kevin Jon Heller, an American legal academic who has moved to Australia to be a law professor at Melbourne University:

It is nice to see someone dissenting from the conventional doom and gloom, and Rob [Howse] makes a number of valuable points. But I feel compelled to take issue with (1) his description of non-American legal education, and (2) his assessment of the potential for American law schools to attract large numbers of foreign students ...

I am also skeptical of Rob’s belief that foreign law students represent a vast and largely untapped market for American law schools.  His point about the greater value of a JD on the international market is well taken; my law school, Melbourne, recently shifted to a JD-only model precisely in order to maximize the international marketability of our law graduates. I also agree that a graduate law degree can be a significant draw for students in countries where law is an undergraduate subject; approximately 15% of our JD students come from outside Australia.

That said, I question whether American law schools are particularly well-situated to attracting foreign students who don’t intend to practice in the US. Most obviously, American legal education is absurdly insular — far more so than legal education anywhere else in the world. Outside of the elite American law schools, students receive almost no education in international law. Comparative law is almost non-existent. All, or nearly all, of the professors are American. Exchange options are limited — and many foreign law schools are off the table, no matter how elite, because they don’t offer graduate-level classes. How much do most non-elite American law students know about how law functions in the rest of the world when they graduate? I’d venture it is vastly less than law students who graduate from law schools almost anywhere else.

And then, of course, there is the expense of American legal education — something that Rob doesn’t even mention. Why would a large number of foreign students want to spend $200,000 on an American JD when they can get law degrees in their home countries for next to nothing (even at the most prestigious law schools) or can attend elite non-American law schools for half the price? (Melbourne falls into the latter category.) Rob suggests that universities create five or six year joint BA/JD programs to attract foreign students. Barring a radical transformation in financial-aid practices, however, attending such a program would simply mean more debt for a foreign student — perhaps more than $300,000. How many non-wealthy foreign students would want, or could handle, that expense?

To be sure, for students able to afford Yale, Stanford, or NYU, the additional expense of a JD may well be worth it — even taking into account that starting legal salaries tend to be much lower outside of the US. But lower-ranked schools? I don’t see it.

Professor Howse has responded at Opinio Juris:

[T]hese days the notion of American decline is it seems so widely held among pundits and professors that saying that America remains a leader in anything may start sounding atavistic and unappreciative of the genuine achievements of other societies.  My sense is that the demand for high quality legal education cannot be met in many countries by existing institutions in those countries as they now operate. That’s not based on some kind of personal arrogance but two decades of globetrotting as a legal academic. Mostly I am reporting the judgments of students and professors themselves in the countries in question.

I hope I did not say or imply that the foreign JD market is “vast”. Indeed, I mentioned one of the main limits of that market in my original post-law is a first degree in most countries and so we would need to rethink our own approach to address that extremely important factor.

Kevin makes a very important point about the expense of an American law degree compared to the cost of studying in one’s own country (or even an elite institution in a third country).  Some of my readers took me to be suggesting that I think students will pay that cost because they will have access to high-paying jobs at prestigious law firms as a result of the American degree.  That is far from certain, and we shouldn’t be marketing ourselves based on that premise.  I’ve talked to foreign students who have chosen JD study in the US, and not only in the so-called “elite” law schools.  The reasons they give for this choice are multiple, but usually involve both a perception of the relatively higher quality of US legal education to that which would be accessible to them at home and additional reasons for choosing the US over some of the great institutions in other countries that Kevin mentions.  Again, I emphasize that I am not talking about a “monopoly” by any means.  But rather that we have a degree of competitive advantage in a real market that we need to understand better, and better serve.

Volokh Conspiracy readers might also be interested in a new leader in the Economist this week, “Guilty as Charged: Cheaper legal education and more liberal rules would benefit America’s lawyers – and their clients.”  This editorial is not very persuasive, in my view, though phrased in the Economist’s house style of unshakeable self-confidence. One reason is that it runs very distinct things together.  It talks about the cost of legal education and asks whether the third year of law school is worth it, and also asks whether it would be better to make law a graduate, rather than undergraduate, degree.  Certainly these are ideas under discussion.  But it then turns to claim that a proximate cause for why the costs of legal education are so high is the guild rules that won’t allow law firms to have non-lawyer owners (save in the District of Columbia) or have public shareholders.

Does the capital financing of law firms really have much bearing on the cost of legal education?  Of course in some general way, restricted access to capital puts upward pressure on legal fees, but even so, wouldn’t things like the availability of student loans be more relevant to law school costs?  As a law professor, much as I would like to blame the massive costs of legal education on the financing of law firms, that hardly seems the direct or primary culprit.

As to the Economist’s outré idea, public shareholders for law firms, it is anything but obvious to me that law firms stand in need of that kind of capital or that it would produce very much besides mischief and unintended consequences. What is public shareholder capital required for, anyway?  Not to render legal advice; a chief reason would be to finance lawsuits, I suppose.  Given the general criticisms the Economist has made over the years of America’s lawsuit industry, making (more) capital available to finance lawsuits does not seem like such a brilliant idea.  Traditionally law firms were partnerships, in order to ensure attention to things like lawyer ethics (both through unlimited partner liability but also by not having shareholders and the conflicts of interest they present).  But it was also also because professional partnerships don’t require massive amounts of capital in order to provide professional advice; they are not engaged in industrial production.  (The Economist seems to think that the fact that an Australian law firm has gone public shows how unremarkable the idea is; as with so many of these facile cross-border comparisons, the below-decks dissimilarities greatly outweigh the above-decks similarities).

Far from undermining clients’ interests, allowing non-lawyers to own equity in law firms would reduce costs and improve services to customers by encouraging law firms, many of which are still knee-deep in paper, to use technology and to employ professional managers—the kind of people who tend to expect stock options as part of their package—to focus on improving firms’ efficiency. Anyone who thinks American lawyers do not already face pressure to make money could use the services of a different kind of professional.

Other countries have started liberalising their legal professions. Australia has the world’s first publicly listed law firm, in which anybody can buy shares. Britain has blessed “alternative business structures”: lawyers can now link up with other professionals, be bought by private-equity firms and even go public. America should follow.

Finally, several readers emailed me to comment on the reasons why high achievers on the LSAT – 170 or 175+ scores would be skipping law school, given some modest softening of the competition at the top schools.  One suggestion was that these LSAT takers could essentially “bank” the score and take up law school at a top school later; they retained the option to do so.  Could well be, though I don’t think LSAT scores remain valid forever and re-taking the LSAT years and years down the road does entail some risk.  I also query whether the next year or two might not mark a bottom on terms of competition among students applying to the very top schools, as students realize that competition is indeed less stiff at the very top, and they then apply and arbitrage it away.  I’m speculating, that’s all.

My general sense about the foreign student market is, first, that for a decade at least, high education in the US, including the law schools, have been anticipating that it would be its salvation as the baby boomlet tapers off in the US.  I think there are many problems with that scenario, both from the business model of the university and the educational and mission model as well.  That, for universities generally, another day.  But for law schools, it’s simpler, I think – speaking as someone who teaches many, many LLM students from around the world, at a mid-tier school with a very strong reputation worldwide among potential LLM students.  There aren’t that many potential LLM students to go around and certainly not enough at the rates US schools charge; I’ve had family members of LLM students from past years tell me that they just can’t afford a US LLM, much as they’d like to do one.  The JD of course even more so.  Attempts to brand a law school in China and capture value back to the home US school might conceivably work for a handful of schools – NYU, perhaps, or a few others, but that model is not going to save the bricks and mortar US law schools and their professors, I think.

So I don’t think foreign students will save the law school business model, and in any case, all these considerations point to a basic conclusion.  The fundamental problem is less quality than cost.

Coming on top of news of the sharp declines in law school applications, the Wall Street Journal reports today on new law schools opening.  The headline captures it: “A Crop of New Law Schools Opens Amid a Lawyer Glut.”  Jennifer Smith reports that thought law school applications are at “their lowest in a decade,” a handful of universities are moving forward to open new law schools:

 Some of the new schools are intended for regions where law schools are scarce or are being built to round out a university’s suite of professional schools. But many of them are likely to find themselves competing for a shrinking pool of would-be lawyers and sending hopeful graduates into one of the toughest markets in years for law jobs.

Indiana Tech’s new law school in Fort Wayne will be the state’s fifth when it opens this fall. The law school the University of North Texas plans to open in Dallas next year will be just down the road from Southern Methodist University’s Dedman School of Law, and less than an hour’s drive from one in Fort Worth that Texas A&M University is in the process of buying from Texas Wesleyan University, one of nine in the state.

The numbers don’t favor these new schools. Last year the pool of law-school applicants shrank to about 68,000, down about 13% from 2011 and more than 30% from the past decade’s peak of about 100,000 in 2004, according to the Law School Admission Council, a nonprofit group that administers the Law School Admission Test and compiles admissions data.

Probably many of these universities figure that they can afford long time-lines, as the article points out, and so can treat the current downturn as merely cyclical.  These law schools have also probably been in the university pipeline for years, with long-running strategic plans that have been underway for a decade or two.  Shutting down these kinds of major plans must be very hard for a university, especially if it has invested significant resources pulling the project together.  However, the basic bet for these schools is that this current downturn is merely cyclical and not structural.  As to that, I have serious doubts.

The upfront cost of law school plus borrowing costs seems completely out of synch with the returns to law practice.  Worse, for all but the very top schools, the investment in law school appears less and less predictable.  If you’re at the top, it can still be treated as an investment with a greater or lesser net return.  If you’re very far out of the top schools, it looks like a bet – even before you can get to the net return on your lawyer job, you have to go through an up or down bet on whether you’re going to get employed in a “lawyer” job at all.  I don’t see anyone predicting a cyclical return to the growth rates of the last couple of decades in lawyer employment or general upward movement in salaries; the question is whether it gradually recovers to bring us closer to the numbers of new lawyers produced each year in relation to the law jobs out there, so to close the gap.  That would be the “good” recovery scenario, and even that one appears brutal on the business model of legal education and many of the students in the system.

The reports on LSAT numbers and law school applications are striking for the steepness of the downturn.  But something I don’t fully understand is why the decline is so sharp among the highest LSAT scores – 170 and above, and (if I understood correctly) even steeper at 175+.  Do these students have such wonderful opportunities outside of the top five or six law schools that would make it not worth picking up the degree as a credential along with way, and then going on to hedge fund work or whatever, still making a zillion dollars? Especially as there has to some softening of the competition to get in to the top five schools.  Is the cost of that education so high that even a Harvard or Yale law degree, even as a pure credential, is no longer worth it?  Are there other ways of signaling talent that make even those law degrees no longer as valuable as credentials – meaning, you actually have to plan to practice law for some years and take into account the cost of borrowing and opportunity costs for some other activity.

Have the costs and benefits of the most elite degrees shifted so very much for those who are competitive for those schools?  This is something I don’t understand very well. If you have a somewhat competitive but still considerably lower LSAT, I understand why you might very rationally conclude that the bet is not worth it, especially given the burden of actually paying off the loans even if you do get a decent lawyer job.  But if you are competitive for the top five, perhaps top ten schools?

Meanwhile, talk is turning to layoffs and buyouts at bottom ranked law schools.  Vermont Law School, the Boston Globe notes, has turned to both. No faculty were involved, but Bill Henderson is quoted in the Times story on what happens when lack of tuition-paying bodies meets law school expenses:

“In the ’80s and ’90s, a liberal arts graduate who didn’t know what to do went to law school,” Professor Henderson of Indiana said. “Now you get $120,000 in debt and a default plan of last resort whose value is just too speculative. Students are voting with their feet. There are going to be massive layoffs in law schools this fall. We won’t have the bodies we need to meet the payroll.”

The pain will not be spread evenly, however – “we” law schools are not a homogenous cohort.  It’s obvious that schools at the bottom face enormous pressures; they were able to price for a long time thanks to loans but also the fact that they were a little bit like a monopoly supplier: students rationally go to the best school they can get into.  Since Harvard won’t admit them, that school, no matter how ranked, is essentially their “Harvard.” That being so, schools have the ability to charge approximately what Harvard does to those students.  At some point the gap between what students pay and what they might eventually earn widens to overtake that dynamic, but it means that law school pricing bears no relationship to any ordinary pricing model that the highest ranked schools charge the most for their degrees.

In my experience of discussions of these business model issues, the assumption is that if you teach anywhere in the mid tier schools, there will belt-tightening and budgetary constraint, but not disaster.  It’s the bottom tier that’s in trouble.  Which might be true.  But I think the distress might be much more widespread into the mid-tier.  The reasons are two-fold.

One is that even if one closed the bottom twenty percent of law schools, I’m skeptical that it would take the pressure off lawyer employment in a meaningful way – and by extension, on law schools further up the food chain.  The bottom tier students are mostly not competing with the mid-tier schools and their students for jobs; they inhabit different credential and employment worlds, so much so that even if all those annual graduates disappeared from the market, it wouldn’t really help the mid tier or above students, because they weren’t competing for those (non)-jobs anyway.  The structural problems of lawyer employment are not just a glut of homogenous graduates, but that the jobs that traditionally existed for mid-tier law students-lawyers, but not really for bottom tier graduates, have cratered structurally for reasons all their own.

The other reason is something that University of Baltimore professor Richard Bourne noted in a 2012 paper – the cost structures of the T-15-T-50 schools resemble those of the T-15 schools, but without the deep resources to support them.  That amounts to supporting the research agendas of the professors and the upwardly mobile aspirations of these schools which require scholarship.  Much of it turns out to be Red Queen behavior – running in place since all the other schools in that tier are doing the same – and consuming ever greater resources doing so.  But the professors find it in their individual interests to play the free-agency game, particularly as the rewards at the very top schools have increasingly been not merely prestige but monetary, and the schools have their own reputational reasons.  This also means doing everything possible to purchase the highest LSAT scores – with the effect, Bourne argues, that the lower performing students (locked into finishing law school by having jumped over the first year cliff in borrowed money for tuition) wind up subsidizing the higher performing students who bring better LSAT scores.  There’s a looming question whether this cost model can be supported by schools that have small or negligible endowments and essentially tuition dependent.  But those schools, Bourne points out, are often ranked T-15 to T-50.

(The Atlantic also has a scary – if you’re a law professor, anyway – article titled, “Law School Applications Are Collapsing (As They Should Be)“.)

Back in 2008 or so, a VC reader told me that because of my blogging about the housing bubble in 2004-05, he put off buying a house and was very glad he did.  Now, he said, he was wondering when would be the best time to buy a house from a capital gains perspective.  I responded that the best time to buy real estate, or really any investment, is when “everyone” is saying it’s a terrible investment.  On Wall Street, when buyers have almost disappeared from a market, and prices seem in permanent free fall (as in March 2009), it’s referred to as “capitulation.” (Both then and in October 2008, I was busy buying closed-end mutual funds, which “capitulated” to an even greater degree than the market as a whole, and for which I had an objective measure of their relative undervaluation.)

If we’re not as this stage with regard to demand for law school, we are damn close, with applications running about half the level  of six years ago.  Law school certainly isn’t for everyone, and how worthwhile economically it might be for anyone in particular has to start with that individual’s opportunity cost and where he gets admitted–it’s a very different decision if you currently are thriving as a consultant than if you are currently advancing your barista skills at Starbucks, and very different if you get into Harvard than into a newly accredited school in a saturated legal market, and very different if you can keep your current job and get an automatic pay raise (as in some government jobs) for getting a law degree and if you will likely need to hang out a shingle but have poor social skills.

But there hasn’t been a better time to apply to law school in a long time, if ever.  Worried about going into debt?  Go to a law school school somewhat below where your credentials would allow, and they will shower you with aid–just for example, I heard from one VC reader who got into only Cardozo and Fordham last year, and Cardozo offered a free ride.  Always dreamed of going to a top 10 law school?  You may never have less competition than now.  Want to keep your current job and go part-time, but got rejected a few years from the only law school in town with a part-time program?  This year, they will probably take you.

I don’t want to get into a debate whether law school, in general, is “worth it,” because once again it’s a matter of both opportunity costs and opportunity.  How “worth it” is it nowadays to pursue an alternative like a Ph.D. in anthropology or history, a masters’ degree in journalism, an MPP, or to go back to school and get the proper credentials to become a public school teacher?  Young people are struggling in all sorts of fields, but young law grads seem to have much larger megaphone than unemployed teachers, journalists, and historians.  The result spells potential opportunity for prospective law students, if they look at the situation with eyes wide open to the costs and benefits..

Last week I had the pleasure of reading a pre-publication draft of Brian Tamanaha’s new book, Failing Law Schools, which has not yet been released but can be pre-ordered now. I found the book engrossing and its argument powerful. I read it in 2 days after receiving a copy, and I think it should be required reading for all legal academics.

Brian’s basic argument is that law schools have been on an unsustainable path fueled by the ready availability of student loans, the cartel power of the ABA, and the influence of the U.S. News rankings, all of which have led schools to adopt policies that help law professors more than they serve students. In most states, you can’t be a lawyer unless you graduated from an ABA-accredited school. Law professors have run the ABA accreditation process, however, and have done so in ways that ensure that all ABA-accredited schools treat professors extremely well and that law schools are quite nice places to work. This has led to a surprisingly uniform educational system in which nearly every school adopts a high tuition model that gives professors low teaching loads, nice salaries, and lots of time for research. Some professors work extremely hard and produce important scholarship, which is the goal. But many other professors just coast and take advantage of their good fortune after making it past the (typically low) tenure hurdle. And Deans generally can’t treat the hard workers and productive scholars better than the dead wood because Deans generally require faculty support to stay in office: A Dean who favors the productive scholars and top teachers too much may not stay in office long. So salaries for all professors are high and course loads are low, whether the professors work 80 hours a week or 20.

While this is a great situation for law professors who want a cushy life, it doesn’t serve students. The high cost model of legal education means that students are mostly denied ways of obtaining low-cost legal educations, which has led to spiraling costs for legal education that make law school best suited for the wealthy, those on scholarship, and those able to compete successfully for corporate or public-interest jobs. Some applicants don’t realize this, in part because loans are so easy to obtain and schools are in no hurry to point out the economics of legal education. And even while law school is so expensive, the obsessive focus by law school applicants and alumni on the U.S. News ranking has led schools to change their programs and their admission standards to whatever helps their U.S. News ranking, even if it hurts the quality of their educational programs. Maximizing U.S. News rankings has led schools to restructure their admissions standards, limit part-time programs, raise the number of transfers, and raise tuitions to make room for scholarships that can be used to maximize the numbers of the entering class. A Dean who doesn’t do this won’t stay a Dean long; the U.S. News rankings are so widely considered authoritative that a Dean whose school falls in the ranking is considered a failure. So even at the high dollar figure of most law schools, the focus is on making changes that maximize rankings, not delivering the most effective education for students. The model is unsustainable, Brian argues, and we have begun to see that already with the recent drop in law school applications that may soon threaten the viability of a number of law schools.

Importantly, Brian does not argue that every school needs to change. His basic argument is that there are lots of different kinds of law schools, and they should be allowed to follow different models. There is no one way to create a lawyer, contrary to the assumption of the ABA accreditation process. The “top” schools can and should continue basically as-is. Their students want a 3-year academic degree in a scholarly atmosphere, and their graduates generally can get the jobs needed to pay off loans quickly. So there is no need to change there. But less elite institutions should be free to adopt lower cost models. They should be free to rely more on adjuncts, or have professors with higher teaching loads or who don’t focus on research. They should be free to offer two-year degrees instead of three-year degrees. A diversity of offerings will better serve students who have different needs and different abilities to pay for legal education. One-size-fits-all just can’t work.

I found Tamanaha’s analysis compelling, and his basic deregulatory solution pretty convincing. (I wasn’t fully convinced by all of the details in the various proposals he makes, but that’s a quibble in the overall scheme of things.) Whether people agree or disagree with the book, it should — and I think will — receive a wide audience among legal academics. Tamanaha’s book is both thoughtful and damning, made all the more persuasive because Tamanaha is an experienced and respected academic who builds his argument carefully step by step with an insider’s understanding. It’s definitely worth a careful read — and for defenders of the status quo, a thoughtful response.

The National Law Journal reports on the under-reporting of estimated cost-of-living expenses at many law schools. The story begins:

The news just keeps getting worse — at least as far as financing a legal education goes.

Law School Transparency has recalculated its estimates of the debt that law students stand to incur after discovering that a number of schools had low-balled the cost-of-living figures that they provided to U.S. News & World Report. On average, schools underreported those expenses — upon which the organization pegged its initial estimates — by $5,000, according to the Law School Transparency’s executive director, Kyle McEntee.

Additionally, the organization made several mistakes in its handling of the U.S. News data, which contributed to the problems, he said.

Here is the post that led to this story.

In an effort to educate potential law students about the real costs of attending law school, Law School Transparency has launched a “Data Clearinghouse”, a database of “consumer information” on law schools, including much information law schools have been reluctant to disclose.

The latest addition to the database are projections of the full cost of attending each law school in the nation. Based on Law School Transparency’s calculations, these costs can vary widely. As the NLJ reported:

As part of the comprehensive database of law school employment statistics it launched this week, the organization has projected the total cost of law school loans for students who will graduate in 2015 and 2016 — that is, the ones who will start law school this year or next. The former will owe an average of $195,265 and the latter will owe an average $200,595.

“My jaw dropped when I ran the numbers,” McEntee said.

He added a few caveats. The calculations are based on the assumption that students will borrow the full tuition amount in the form of federal loans, even though many students receive some scholarship money. They also assume that students at public law schools pay out-of state-tuition levels, which generally are higher than in-state rates. . . .

The City University of New York School of Law features the lowest projected debt for the class of 2015, at $96,242. The University of California, Berkeley School of Law had the highest, at $273,667, although that figure assumes graduates paid out-of-state tuition rates; most students from outside California qualify for in-state tuition after one year.

New York University School of Law had the next-highest projected debt at $266,462.

Some of the numbers are quite revealing — and some of the numbers are quite wrong. In a quick review of the numbers for a handful of schools, I’ve found substantial under-reporting of cost-of-living estimates. Lets start with the alleged cheapest school on the list, CUNY. According to the database, the estimated annual cost of living is only $7,425. Really? In New York City? (Yes, it’s Queens. But still.) But it turns out that $7,425 is not the estimated cost of living for CUNY. According to the law school’s website, the actual figure is more than double the reported amount, $17,943. That’s quite a difference.

CUNY is not the only school for which the numbers in the Law School Transparency database are inaccurate. The University of Louisville is another low-cost school according to the database, with a reported cost of living of only $10,490. Again, however, a quick check of the law school website reveals a much higher figure. Louisville estimates the cost of living for its prospective students at over $18,000 per year. Florida State’s reported number is $13,000, but their cost-of-living calculator estimates costs of over $17,000. Albany Law School’s reported number is $12,300, but their website reveals costs of $18,000. And so on.

I contacted the folks at Law School Transparency to ask about the problems with their data. They said they relied upon data provided to U.S. News, and pledged to do more research so that they could provide more accurate numbers (numbers which should be up shortly, perhaps later tonight). The faulty data, they argue, is further evidence of how law schools misreport to U.S. News and highlights the need for more standardized and complete reporting. Fair enough. Yet the whole point of their site, as I understand it, is to give law school “consumers” access to more complete and accurate information than they are getting from U.S. News and law schools themselves. Further, some of these numbers — such as the CUNY cost-of-living figure — should have been dead giveaways that something was wrong.

My own curiosity was piqued not just by the CUNY number, but also by the variation in living cost estimates for schools in particular cities. In Chicago, for instance, the estimated cost of living varies dramatically, from Loyola ($15K) to UChicago ($17K) to DePaul ($28K). This seems like a massive difference across a single city, and is the sort of thing that jumps out after even the most casual review of the numbers. It’s hard to see such figures and not suspect that something is wrong.

Closer to home, I noticed that the estimated cost of living for Cleveland-Marshall was approximately $4,000 less than that for my own institution, Case Western Reserve University, even though the two schools are only a few miles apart. This didn’t seem right — if anything, it’s cheaper to live near Case than it is to live downtown. And here again the reported data was wrong. The cost reported in the database was $16,000, and yet Cleveland-Marshall’s own website lists expenses of over $19,000. Case’s data, I’m proud to report, was accurately reported.

As noted above, the folks at Law School Transparency were quite responsive when I pointed out these errors. They pledged to double-check the numbers and post corrections as soon as possible. This is all to the good, but this is also work that should have been done before trumpeting the data to prospective law students and the press. Some numbers, such as CUNY’s $7,425 cost of living estimate or the $10K spread in living costs across schools in Chicago, should have been red flags that something was amiss. At the very least, it should have been obvious that the cost-of-living numbers they decided to post were not apples-to-apples comparisons. Law schools deserve criticism for their relative lack of transparency, as does U.S. News insofar as it publishes inaccurate information or presents a misleading picture of specific schools. But the self-appointed watchmen of law school transparency should be held to a high standard as well, and need to be more careful about presenting false or misleading information themselves, whatever the source.

UPDATE: The cost of living data has been updated on Law School Transparency’s website. Quite a few schools have moved around in these rankings quite a bit. LST’s Kyle McEntee also comments below.

SECOND UPDATE: NLJ reports on this story.

This week the premier legal ethics blog, Legal Ethics Forum, is hosting a symposium on “Legal Education’s Response to the Economic Realities Facing the Profession.” In this symposium, “scholars on the legal profession from the United States and around the world will post contributions about the implications of economic pressures on the way we teach our students.” They have what looks like a fantastic line-up (including my colleague Cassandra Burke Robertson), so this will be a must read for those interested in how legal education and the legal profession are responding to broader economic changes.

Over at Inside the Law School Scam, the anonymous “Lawprof” has some interesting posts, here and here, on why law school tuitions have grown so much over the last 20 to 30 years. I agree with some of it, but I wonder if it’s also missing a significant part of the picture: The combined role of rising law firm salaries and readily-available student loans.

I’m not an expert in these topics, but here’s my sense of what’s happening. Law school tuition has risen greatly, but so have the salaries offered to first-year associates at large law firms. For example, when I was in law school in the mid-1990s, Harvard Law’s tuition was about $20,000 a year. In contrast, today’s tuition is $45,450 per year. But the salaries at the big law firms that most students aim to work for have gone up at about the same rate. When I was interviewing for a job at the big law firms in DC in 1995-96, the big DC law firms paid $74,000 to their first-year associates. Today the standard first-year salary at a big DC law firm is $160,000. If you compare the rates of increase since the mid 1990s, then, tuition has gone up 127% and salaries have gone up 116% (both in unadjusted dollars).

That’s a slight difference, but not much. The ratio of law-school-cost to employed-lawyer-income has been relatively steady. And while the ratio is hardly fixed, I don’t think it’s entirely random. My sense is that the high salaries offered to associates at big law firms have made many students less sensitive to debt than they otherwise would be, which has in turn lessened pressure on schools to limit tuition hikes. Put another way, if law school buys you a ticket to make $160k a year plus a bonus, with your salary rising steadily to $210,00 plus bonus by your fourth year, you’re not going to be as sensitive to the cost of that ticket as you otherwise would be. And if you’re not as sensitive to the cost of the ticket, the cost of the ticket is more likely to rise.

Government-supported student loans are the other part of the picture. Government support enables loans to be obtained regardless of how likely it is that a particular student will get one of those high-paying jobs. This makes it easier for students to take on loans now without fully confronting how they’ll pay the loans back later. As a result, it’s easy for students to take on debt now and just be optimistic that they’ll get a great job later. The shameful lack of candor among law schools about student employment prospects certainly hasn’t helped, at least to the extent students actually rely on those representations. But the ready availability of the loans, plus the known prospect of a possible $160,000 a year salary (plus a bonus) after just three years of study, has created an environment in which law schools haven’t had the pressure to limit tuition increases that they would have had otherwise. Today’s high tuition is a cumulative product of that culture.