WHO REALLY PAYS FOR LAW STUDENT DEBT?

More public interest lawyers for our nation’s underserved citizens would be a good thing. More public debt to subsidize law schools that shouldn’t exist at all would be a bad thing.

In recent years, law schools have promoted debt forgiveness programs as a solution to rising student loan obligations. In some important ways, they are. Income-based repayment (IBR) can be a lifeline in a drowning pool of educational debt. It can also open up less remunerative options, including public interest law, for those willing to forego big bucks to avoid big law firms. But now everyone seems surprised to realize that, when all that debt is forgiven years hence, someone will have to pick up the tab.

Well, not quite everyone is surprised. More than two years ago, Professor WIlliam Henderson, one of the profession’s leading observers, saw this train wreck coming. “Unless the government’s actuarial assumptions on student loan repayments turn out to be correct,” Henderson wrote, “federal funding of higher education is on a collision course with the federal deficit.”

Tuition increases without regard to value added

Recently, the Wall Street Journal made that collision a front page story. In “Plans That Forgive Student Debt Skyrocket,” law students took center stage — and for good reason. For a decade, new lawyers have outpaced everyone, even medical students, in the rate at which they have accumulated educational debt.

Am Law columnist Matt Leichter has reported that from 1998 to 2008, private law school tuition grew at an annual rate of almost 3.5 percent, compared to 1.89 percent for medical schools and 2.85 percent for undergraduate colleges. Public law school tuition increased at an even faster pace: 6.71 percent. From 2008 to 2012, median law school debt for new graduates increased by 54 percent — from $83,000 to $128,000. (That compares to a 22 percent increase in medical student debt.)

Market disconnects

What accounts for the law school tuition explosion? For starters, the U.S. News rankings methodology incentivizes deans and administrators to spend money without regard to the beneficial impact on a student’s education. More expenditures per student mean a higher ranking, period.

Who provides that money? Students — most of whom obtain federally backed loans. To that end, the prevailing law school business model requires filling classrooms. As transparency about dismal law graduate employment outcomes has produced fewer applications at most schools, deans generally have responded by increasing acceptance rates. The overall rate for all law schools rose from 56 percent in 2004 to almost 80 percent in 2013.

Sell, sell, sell

As National Law Journal reporter Karen Sloan observed recently, “It’s a tale of two legal education worlds.” Top law schools place 90 percent of their graduates; but “more than three-quarters of ABA accredited law schools — 163 — had underemployment rates of 20 percent or more.”

Those numbers begin to explain what has now become an annual springtime ritual. As I’ve discussed in recent posts, many law school professors and deans at schools producing those underemployed graduates are proclaiming that the lawyer glut is over. Now, they say, is the best time ever to attend law school.

Outside the ivory tower, practicing lawyers know that such hopeful rhetoric isn’t transforming the market or slowing the profession’s structural changes. Last June, NALP Executive Director James Leipold wrote, “There are no indications that the employment situation will return to anything like it was before the recession.”

The most recent ABA employment statistics for the class of 2013 prove Leipold’s point: Nine months after graduation, only 57 percent had obtained long-term-full-time jobs requiring a JD. Median incomes for new graduates aren’t improving much, either. For the class of 2008, it was $72,000; for the class of 2012, it was $61,245.

IBR to the rescue

The vast majority of students borrow six-figure sums to fund their legal education. The federal government backs the loans, which survive bankruptcy. The end result is law schools with no financial skin in a game for which they reap tremendous economic rewards.

IBR is a godsend to many new lawyers who can’t get jobs that pay enough to cover their loans. It permits monthly installments totaling 10 percent of discretionary income (defined as annual income above 150 percent of the poverty level). Outstanding balances are forgiven after 10 years; for private sector workers, it’s 20 years.

Less obvious consequences

IBR has a dark side, too. If a person leaves the program early, total debt will include all accrued interest and principal, often creating a balance larger than the original loans. For those remaining in the program for the requisite 10 or 20 years, forgiven debt becomes taxable income in the year forgiven.

More insidiously for the profession, IBR allows marginal schools to exploit an already dysfunctional market. Such schools are free to ignore the realistic job prospects for their graduates (including JD-required public service positions) as they recruit new students who obtain six-figure loans to pay tuition. When graduates can’t get decent jobs, it’s not the school’s problem. Meanwhile, IBR becomes the underemployed young lawyer’s escape hatch.

The Wall Street Journal reports that graduates are using that hatch in dramatically increasing numbers: “[E]nrollment in the [IBR] plans has surged nearly 40% in just six months, to include at least 1.3 million Americans owing around $72 billion.” Those figures aren’t limited to lawyers, but they undoubtedly include many young graduates from law schools that should have closed long ago.

Bill Henderson probably finds some measure of vindication as a wider audience now frets over a problem that he foresaw years ago. But I know him well enough to believe that for him, like me, four of the least satisfying words in the English language are: “I told you so.”

ANOTHER UNFORTUNATE OP-ED

The current debate over the future of legal education is critical. Even more important is the need to base that debate on a common understanding of indisputable facts. Perhaps UC-Irvine Dean Erwin Chemerinsky and Professor Carrie Menkel-Meadow just made an honest mistake in misreading employment statistics upon which they rely in their April 14, 2014 New York Times op-ed, “Don’t Skimp on Legal Training.” If so, it was a bad one. (The Times designated my comment that includes some of the data cited in this post as a “NYT pick.”)

The offending paragraph comes early in the effort to dismiss those who use the word “crisis” — their op-ed puts it in quotation marks — to describe the challenges facing the profession. Since that word appears prominently in the subtitle of my latest book, I’ll take the bait.

Wrong From The Start

The authors support their “no crisis” argument with this:

“[A]s recently as 2007, close to 92 percent of law-school graduates reported being employed in a paid-full-time position nine months after law school. True, the employment figures had dropped by 2012, the most recent year for which data is [sic] available, but only to 84.7 percent.”

But the data on which they rely include part-time, short-term, and law school funded jobs — and only those graduates “for whom employment status was known.”

“Facts Are Stubborn Things”

Not until 2010 did the ABA require law schools to identify the types of jobs that their graduates actually obtained. The results have been startling, as data from the class of 2013 demonstrate:

– Nine months after graduation, only 57% of graduates had long-term full-time (LT-FT) jobs requiring bar passage. Another 5% held part-time or short-term positions.

– LT-FT “JD Advantage” jobs went to another 10.1%. This category includes positions — such as accountant, risk manager, human resources employee, and more — for which many graduates are now asking themselves whether law school was worth it.

– Another 4% got law school funded jobs.

– Unemployed law graduates seeking jobs increased to 11.2%.

– Average law school debt for current graduates exceeds $100,000. The rate of tuition increase in law schools between 1998 and 2008 exceeded the rate for colleges and medical schools. One reason is that U.S. News ranking criteria reward expenditures without regard to whether they add value to a student’s education.

– For 33 out of 202 ABA-accredited law schools, the LT-FT JD-required employment rate was under 40%; for 13 schools, it was under 33%.

Federally-backed student loans that survive bankruptcy fuel a dysfunctional system that has removed law schools from accountability for graduates’ employment outcomes. The current regime blocks the very “market mechanisms to weed out the weakest competitors” that the authors cite as providing the ultimate cure. As law school applications have plummeted, most schools have responded with soaring acceptance rates.

If all of that doesn’t add up to a crisis, what will it take?

The Importance of Credibility

The problem with the authors’ unfortunate attempt to minimize the situation is its power to undermine their other points that are, in fact, worth considering.

For example, they note that job prospects “obviously depend on where a person went to school and how he or she performed.” True, but many law professors now touting the happy days ahead for anyone currently contemplating law school ignore that reality.

“The cost of higher education, and the amount of debt that students graduate with, should be of concern to all.” True, but what’s their proposed solution?

“Law schools specifically should do more to provide need-based financial aid to students — rather than what most law schools have been doing in recent years, which is to shift toward financial aid based primarily on merit in order to influence their rankings. This has amounted to ‘buying’ students who have higher grades and test scores.” True, but how many schools are changing their ways? Between 2005 and 2010, law schools increased need-based financial aid from $120 million to $143 million while non-need based aid skyrocketed from $290 million to $520 million.

Like almost every law school dean in America, Dean Chemerinsky has a choice. He can acknowledge the crisis for what it is and be part of the solution, or he can live in denial and remain part of the problem. Earlier this year, National Jurist named Chemerinsky its “Most Influential Person in Legal Education.” Now is the time for him to rise to the challenge of that role.

 

FALSE ADVERTISING POSING AS LEGAL SCHOLARSHIP

Sometimes everything you need to know about a piece of purported scholarly legal research appears in its opening lines. Take, for example, the first two sentences of “Keep Calm and Carry On” in current issue of The Georgetown Journal of Legal Ethics:

“Supposedly, there is a crisis in legal education. It appears to be touted mostly by those who are in the business of realizing monetary (or, at least, reputational) gain from providing cost-efficient coverage about matters of (rather) little importance.”

At this point, Professor Rene’ Reich-Graefe’s 15-page article offers the second of its 80 footnotes: “For example, in 2011, The New York Times Company reported annual revenues of $2,323,401,000. Of those, approximately 52.57% (or $1,221,497,000) were raised in advertising revenue…”

So it turns out that the New York Times, The Wall Street Journal, and every other media outlet reporting on the troubled world of American legal education have manufactured a crisis to sell advertising space. Never mind too many law school graduates for too few JD-required jobs, more than a decade of soaring law school tuition, and crippling student debt. Everyone just needs to calm down.

The argument

Professor Reich-Graefe offers what he calls “a brief exercise in some eclectic apologetics of the present state of legal education for those of us who refuse to become card-carrying members of the contemporary ‘Hysterias-R-Us’ legal lemming movement.” Starting with a Bureau of Labor Statistics report that “lawyer employment jobs in 2010 were at 728,200,” he observes that the United States has an additional 500,000 licensed attorneys and concludes:

“One may safely assume that, at present, a good number (though certainly not all) of those licensed lawyers are gainfully employed, too — mainly within the legal profession.”

Then Reich-Graefe posits trends that he says will favor the legal profession: “Over half of currently practicing lawyers in this country will retire over the next 15 to 20 years”; “U.S. population will increase by over 100 million people, i.e., by one third, until 2060, thus, increasing total demand for legal services”; “the two largest intergenerational wealth transfers in the history of mankind…will occur in the United States over the course of the next 30 to 40 years, thus, increasing total demand for legal services even further”; and “everything in the law, by definition, will continue to change…there will be more work for more lawyers.”

His analysis culminates in a breathless conclusion: “[R]ecent law school graduates and current and future law students are standing at the threshold of the most robust legal market that ever existed in this country — a legal market which will grow, exist for, and coincide with their entire professional career [sic].”

The critique

Others have already dissected Reich-Graefe’s statistical arguments in great detail. Suffice it to say that when law professors wander into the world of numbers, someone should subject their work to peer review before publishing it. But Professor Bill Henderson makes an equally important point: Even if Reich-Graefe’s analysis and assumptions are valid, his advice — “Keep Calm and Carry On” — is dangerous.

I would add this nuance: Reich-Graefe’s advice is more dangerous for some law schools than for others. The distinction matters because law schools don’t comprise a single market. That’s not a value judgment; it’s just true. At Professor Reich-Graefe’s school, Western New England University School of Law, only 37 percent of the graduating class of 2013 obtained full-time, long-term jobs requiring a JD. Compare that to graduate employment rates (and salaries) at top schools and then try to convince yourself that all schools serve the same market for new lawyers.

The dual market should have profound implications for any particular school’s mission, but so far it hasn’t. Tuition at some schools with dismal employment outcomes isn’t significantly less than some top schools where graduation practically assures JD-required employment at a six-figure salary.

Likewise, virtually all schools have ridden the wave of dramatic tuition increases. In 2005, full-time tuition and fees at Western New England was $27,000. This year, it’s $40,000.

Shame on us

Reich-Graefe makes many of us accomplices to his claimed conspiracy against facts and reason. Shame on me for writing The Lawyer BubbleShame on Richard Susskind for writing Tomorrow’s Lawyers. Shame on Bill Henderson for his favorable review of our books in the April 2014 issue of the Michigan Law Review. Shame on Brian Tamanaha, Paul Campos, Matt Leichter, and every other voice of concern for the future of the profession and those entering it.

Deeply vested interests would prefer to embrace a different message that has a noble heritage: “Keep Calm and Carry On” — as the British government urged its citizenry during World War II. But in this context, what does “carry on” mean?

“Carry on” how, exactly?

Recently on the Legal Whiteboard, Professor Jerry Organ at St. Thomas University School of Law answered that question: filling classrooms by abandoning law school admission standards. Ten years ago, the overall admission rate for applicants was 50 percent; today it’s almost 80 percent. That trend line accompanies a pernicious business model.

It’s still tough to get into top a law school; that segment of the market isn’t sacrificing student quality to fill seats. But most members of the other law school market are. They could proceed differently. They could view the current crisis as an opportunity for dramatic innovation. They could rethink their missions. They could offer prospective students new ways to assess realistically their potential roles as attorneys while providing a practical, financially viable path for graduates to get there.

Alternatively, they can keep calm and carry on. Then they can hope that on the current field of battle they’re not carried off — on their shields.

THE END OF THE LAWYER GLUT?

Could a years-long oversupply of new attorneys finally be on the wane? Based on the trend of recent headlines, it would be easy to reach that conclusion. For example, a December 2013 Wall Street Journal headline read: “First-Year Law School Enrollment at 1977 Levels.” The first sentence of the article described the “plunge” in entering law student enrollments.

Likewise, in January 2014, National Jurist reported on steep enrollment declines at particular schools from 2010 to 2013. The big losers in that compilation were “the University of LaVerne (down 66.2 percent) and Thomas M. Cooley Law School (down 40.6 percent).”

Most recently, the National Law Journal took a closer look at the 13 law schools that saw “1L enrollment drop by 30 percent or more in the span of 12 months, while an additional 27 reported declines of 20 to 30 percent in all.”

Taken together, these reports create an impression that the severe lawyer glut is ending.

How about a job?

For prospective law students, the size of any drop in overall enrollment isn’t relevant; employment prospects upon graduation from a particular school are. According to the ABA, just under 40,000 students began law school in the fall of 2013 — down eight percent from the entering class of 2012. That’s significant, but not all that dramatic.

Meanwhile, for the entire decade ending in 2022, the latest estimate (December 2013) from the Bureau of Labor Statistics puts the total number available positions for “Lawyers, judges, and related workers” at around 200,000. That net number takes into account deaths, retirements, and other departures from the profession. More sobering, it’s yet another downward revision from earlier BLS projections.

As the profession makes room for 20,000 new attorneys a year, why all the media attention about 1L enrollments “plunging” to a level that is still almost twice that number?

I think the answer is that some law professors are running around screaming that their hair is on fire because, for many of them, it is. The media are covering that blaze, but the larger conflagration surrounding the crisis in legal education somehow gets lost.

U.S. News to the rescue?

Professor Jerry Organ at the University of St. Thomas School of Law has an interesting analysis of the situation. Schools in trouble are “picking their poison.” One option is to maintain admission standards that preserve LSAT and GPA profiles of their entering classes. Alternatively, they can sacrifice those standards in an effort to fill their classrooms and maximization tuition revenues.

U.S. News & World Report rankings now have an ironic role in this mess. For decades, rankings have contributed to perverse behavioral incentives that have not served law schools, students, or the profession. For example, in search of students with higher LSATs that would improve a ranking, many schools diverted need-based financial aid to so-called “merit scholarships” for those with better test scores.

Likewise, revenue generation also became important in the U.S. News calculus. As the ABA Task Force Report on the Future of Legal Education notes, the ranking formulas don’t measure “programmatic quality or value” and, to that extent, “may provide misleading information to students and consumers.” They also reward “increasing a school’s expenditures for the purpose of affecting ranking, without reference to impact on value delivered or educational outcomes.”

Now the rankings methodology has presented many schools with a Hobson’s choice: If they preserve LSAT/GPA profiles of their entering classes, they will suffer a reduction in current tuition dollars as class size shrinks; if they admit less qualified applicants, they’ll preserve tuition revenues for a while, but they’ll suffer a rankings decline that will hasten their downward slide by deterring applicants for the subsequent year.

As some schools become increasingly desperate, they will be tempted to recruit those who are most vulnerable to cynical rhetoric about illusory prospects on graduation. The incentive for such mischief is obvious: However unqualified such students might be for the profession, the six-figure loans they need to finance a legal education are available with the stroke of a pen. Revenue problem solved.

Some law professors argue that the trend of recent declines in enrollment is sufficient to create a shortfall in law school graduates by 2015. Maybe they’re right. Time will tell — and not much time at that.

I think it’s more likely that over the next decade, a lot of law professors will find themselves looking for work outside academia. Meanwhile, their best hope could be to run out the student loan program clock long enough for them to retire. Then it all becomes someone else’s problem.

THE ONGOING LAW SCHOOL BAILOUT

Recently, Senators Dick Durbin (D-IL), Jack Reed (D-RI), and Elizabeth Warren (D-MA) introduced the “Protect Student Borrowers Act of 2013.” The bill would allow the Secretary of Education to require that colleges and universities pay a penalty for federal student loans in default. The penalty would increase with the school’s default rate.

Default is too long to wait before creating a better nexus between educators’ incentives and their graduates’ fate. Thousands of recent law graduates are living with the consequences of a system that immunizes schools from financial accountability for their students’ poor employment outcomes. Eighty-five percent of today’s newest lawyers have six-figure law school debt. Only about half of all 2012 graduates found full-time long-term jobs requiring a JD. The most recent Bureau of Labor Statistics employment report indicates that between December 2012 and December 2013, employment in the “all legal services” category actually declined by 1,000 people.

Demand down; supply still growing

As the profession was losing a thousand jobs last year, law schools graduated a record number of new lawyers — 46,000 — and big classes are in the pipeline. Sure, law school applications are down, but acceptance rates have gone way, way up to compensate. Recent BLS estimates suggest an ongoing lawyer glut for years to come. (For a more detailed analysis, take a look at Matt Leichter’s recent article in Am Law Daily.) And in the midst of this disaster, law school tuition keeps increasing. It’s all quite perverse.

Unfortunately, it’s also a predictable consequence of structural incentives. Most university administrators (and their law school deans) run their institutions as businesses. In the current system of financing higher education, that approach produces a myopic focus: maximizing short-term tuition revenues by filling classrooms. Added encouragement comes from U.S. News rankings criteria that, for example, actually reward expenditures regardless of added value or lack thereof. The vast majority of students borrow enormous sums to pay tuition. But — and here’s where educational institutions lack the constraints that they would encounter as true businesses — any later failure to repay those loans never becomes the school’s problem.

Instead, virtually all student loans come with the backing of the federal government. In case of default, the schools remain protected. So far, graduate student default rates have remained below those for colleges and vocational schools, but across the board, all rates are trending higher. (I wonder if low JD default rates are attributable, in part, to lawyers’ better understanding of the procedural steps that can forestall default. Attorneys also grasp the counterproductive futility of defaulting: educational debt survives bankruptcy and forcing the government to pursue a default just adds monetary penalties and collection costs to the tab.)

IBR is no panacea

Income-based tuition repayment plans may become an important potential relief valve to some indebted graduates. But IBR is new and it comes with lots of caveats. For example, during the time that a graduate remains in the program, interest on his or her overall debt continues to accrue. Exiting the system before completing the requisite repayment period (typically 25 years; 10 years for public service jobs) can produce an even greater debt than existed upon graduation.

Those who make it all the way to the end of the repayment period are off the hook for their loans and accrued interest, but debt forgiven through IBR is considered taxable income. If Congress doesn’t fix that problem, the result will be a big tax bill for a person who, by definition of ongoing participation in the IBR program, can’t afford it. Moreover, the forgiven amounts still have to come from the federal treasury at taxpayer expense, so there never was or will be a free lunch – except for the schools that received tuition but thereafter had no financial skin in the game. It has the feel of a law school bailout, doesn’t?

A better way

Maybe this three-step approach would help to restore a functioning market: 1) allow educational loans to become dischargeable in bankruptcy; 2) in the course of such a proceeding, require the bankruptcy court to determine whether educational debt was a significant factor in the debtor’s need for bankruptcy protection; and 3) in those cases where it is such a factor, permit the federal government guarantor to seek recompense from the educational institution whose conduct lies at the heart of the mess. (Requiring need-blind admissions as a prerequisite to participation in the federal loan guaranty program generally might counteract a school’s temptation to bias admissions in favor of those who can afford to pay.)

Most people profess confidence in free markets — some with an evangelistic zeal. If they really want to give the market a chance to work in the student debt setting, they’ll support a serious effort to cure the system’s current failures. Personal educational debt currently exceeds $1.2 trillion — more than all consumer credit card debt combined. Every day, that bubble is growing. Just ask a law student.

“I AM A DICTATOR.”

Some people think that law professors are boring. A dean in Cleveland is proving them wrong.

A year ago, Case Western Reserve Law School Dean Lawrence Mitchell burst onto the national scene with a New York Times op-ed selling a law degree as a great deal. Shortly thereafter, he gave a Bloomberg Law interview in which he continued to press his case. For his efforts, Mitchell took center stage in my article, “The Law School Story of the Year – Deans in Denial.”

Well, he-e-e-e-e’s b-a-a-a-a-c-k! Mitchell is now the leading man in what is becoming a tragedy for his school.

The principal antagonists

Raymond S.R. KU, became a tenured professor at Case in 2003, co-director of the Center for Law, Technology & the Arts in 2006, and associate dean for academic affairs in 2010. On Halloween 2013, Ku filed an amended complaint against Lawrence Mitchell and Case Western Reserve University for alleged retaliation because he opposed “Dean Mitchell’s unlawful discriminatory practice of sexually harassing females in the law school community.”

Lawrence Mitchell became dean in 2011. The complaint alleges that he arrived from George Washington University Law School with some personal baggage, including several marriages culminating in divorces, one of which involved a student. If the allegations about his conduct after becoming dean at Case are true, his behavior was both stupid and reprehensible. (Spoiler alert: the details are less titillating than most voyeurs might like — and the juiciest stuff is hearsay. UPDATE: Dean Mitchell has moved to strike many of the allegations as “immaterial, impertinent, and scandalous.)

Hubris revealed?

Buried in the salacious allegations that have generated media attention is paragraph 86 of the amended complaint: “In relation to the performance of his duties as dean of the Case Law School, Dean Mitchell stated vehemently, ‘I am a dictator.’”

Allegations aren’t evidence. Maybe he never said it. But what if he did? Maybe he was joking. Or maybe he believed it. Or, worst of all, maybe it was true.

In many respects — from framing a school’s mission to creating annual budgets to doling out office assignments — deans wield enormous power. But the best deans aren’t dictators; they’re consensus builders. They have line accountability to university provosts, presidents and trustees; however, they also have to deal effectively with students, alumni, and faculty. Any dean who likens his role to that of a dictator eventually becomes a problem for his institution.

Dollars behind the drama?

As the controversy swirls around Mitchell, a very good law school suffers. Case graduated 223 new attorneys in 2010. The entering first-year class of 2013 includes fewer than half that number — 100. Apparently, Mitchell’s year-end sales pitch landed on deaf ears.

In his Bloomberg Law interview last January, Dean Mitchell said, “Of course, we’re running a business at the end of the day.” From that perspective, perhaps Case University’s central administration doesn’t view things as badly as Case’s 1L numbers might suggest.

Specifically, there’s gold in law school LLM students, and Case has 85 of them entering its program this year. For a school with only 100 first-year JD students, that’s a lot. (The University of Chicago has 196 entering JD-students and 70 LLM-students.) In contrast to more extensive financial aid available for JD students, those seeking an LLM at Case are eligible only for “a limited number of merit scholarships…in the form of a partial reduction for tuition.”

What lies ahead?

Perhaps Mitchell’s business plan has been to follow the money, focusing on the lucrative LLM recruits. Maybe that’s his vision for the school as a profit-maximizing venture. Maybe that’s precisely the direction that his bosses want him to take. Maybe Case’s central administration has given Mitchell such latitude to wield power that he feels comfortable boasting about it. Or, as I suggested at the beginning, perhaps there’s no substance to any of the claims against him.

If it turns out that Mitchell’s superiors are rewarding what they regard as “business success” by allowing him to run the school as a dictator, they have forgotten an important truth. Sometimes dictators get deposed — especially if they’re defendants in lawsuits.

ARE LAWYERS BECOMING HAPPIER?

A recent scholarly study and the 2013 Am Law Midlevel Associates Survey together pose an intriguing question: Is the legal profession becoming happier? If so, that would be a welcome development.

Perhaps the answer is yes and I should take partial credit, at least for improved associate morale in some big firms. After all, for years I’ve been writing and speaking about the extent to which the profession has evolved in ways that undermine attorney well being, especially in large firms. Since the publication of my book, The Lawyer Bubble, many managing partners have invited me to address their partnership meetings on that subject. But before getting too carried away, let’s take a closer look.

No Buyer’s Remorse!

In “Buyers’ Remorse? An Empirical Assessment of the Desirability of a Lawyer Career,” Professors Ronit Dinovitzer (University of Toronto), Bryant Garth (University of California, Irvine – School of Law), and Joyce S. Sterling (University of Denver Strum College of Law) analyzed data from the After the JD project. It tracks about 4,500 lawyers from the class of 2000 who responded to questions in 2003, 2007, and 2012.

Among other things, the authors conclude that “the evidence of mass buyer’s remorse [over getting a legal degree] is thin at best.” (p. 3) I’m not convinced.

First, a new lawyer entering the market in 2000 has enjoyed better times for the profession than graduates of the last several years. That doesn’t render data from the class of 2000 meaningless, but a study based on the experience of those attorneys shouldn’t become a headline-grabber that unduly influences anyone considering a legal career today.

Second, the authors rely only on responses that attorneys provided in 2007. The answers they gave in 2012 are “currently being cleaned and readied for analysis” (p. 5), so the authors didn’t use them. What was the rush to get to print with 2007 data? Why not wait and use the 2012 results to see whether accelerating law firm trends since 2007 affected responses from even the comparatively lucky class of 2000.

(For more on those trends, including partner de-equitizations, salary reductions for non-equity partners, and the environment that has accompanied the accelerating drive to increase short-term profits, read Edwin Reeser’s excellent two-part article in the ABA Journal.)

More on the Data

In the end, After the JD is a useful source of information. But it’s an overstatement to argue, as Dinovitzer et al. assert, “the data from the AJD project are the best (and almost only) data available on the issues currently being debated.” (p. 5)

In fact, there have been dozens of studies on attorney satisfaction, including an October 2007 ABA survey in which six out of ten attorneys who have been practicing 10 years or more said they would not recommend a legal career to a young person. And that was prior to the Great Recession.

Now before defensive academics pull out their knives, let me state clearly that I’m not suggesting that the ABA’s online survey of 800 lawyers is somehow superior to the obviously more comprehensive After the JD project. It’s not. But contrary to the authors’ assertion, AJD is far from the only data available on the issues currently being debated.”

For example, Professor Jerome A. Organ (University of St Thomas School of Law) recently published a compilation of 28 attorney surveys taken between 1984 and 2007. Rates of satisfied attorneys ranged from a low of 59 percent (South Carolina – 2008) to a high of 93 percent (Minnesota – 1987). The latest national study on Organ’s list (ABA/NALP – 2007) reported a satisfaction rate of 76 percent. (He excluded the ABA’s reported 55 percent satisfaction rate in 2007 because it “was not a random sample of attorneys.” n. 144.)

The Am Law Survey

Meanwhile, Am Law’s annual Midlevel Associates Survey of third-, fourth-, and fifth-year associates reported record high levels of associate satisfaction. Are their lives improving?

Anecdotal evidence of another possibility comes from an observed shift in attitudes among students in my undergraduate and law classes over the past several years. Many members of the youngest generation of lawyers (and would-be lawyers) are so concerned about finding jobs that they are now equating satisfaction with getting and keeping one long enough to repay their staggering student loans. That might explain why the same Am Law survey found that only 10 percent of men and 6.5 percent of women saw themselves as equity partners at their current firms in five years.

Now What?

Even so, inquiries that I receive from law firm managing partners provide more anecdotal proof that some firms have decided to value associate morale. The question is whether firm leaders will have the courage to push positive change into the very heart of the prevailing big law firm business model.

On that front, the news is less encouraging. In March 2013, Forbes reported on a “Career Bliss” survey of 65,000 employees that ranked “law firm associate” first on the list of “Unhappiest Jobs in America.” Likewise, in a recent Altman Weil Flash Survey, 40 percent of managing partners reported that partner morale at their firms in 2013 was lower than at the beginning of 2008 (pre-recession).

The Bottom Line

In the end, Dinovitzer et al. seem encouraged that “the overall trend is that more than three-quarters of respondents, irrespective of debt, express extreme or moderate satisfaction with the decision to become a lawyer.”

That’s supposed to be good news. But there are more than 1.2 million attorneys in the U.S.. Even a 75 to 80 percent satisfaction rate leaves more than 200,000 lawyers with what sure looks like buyer’s remorse.

The profession can do better than a “C.”

ONCE MORE ON THE MILLION DOLLAR JD DEGREE

In late July, my article “The Dangerous, Million-Dollar Distraction” appeared here before its republication at Am Law Daily and Business Insider. In it, I discussed a study purporting to calculate the lifetime premium of a law degree compared to BA holders. The authors of the study, Professors Michael Simkovic and Frank McIntyre, weren’t pleased and Am Law Daily has now published their rejoinder. Were it not for their now pervasive claims relating to my alleged confusion, errors, and mistakes, I’d let it pass because the study has already received more attention than it deserves.

The real point

There were no errors in my analysis. My view – expressed in the article – is that the decision to attend law school should not turn on the hope of future financial rewards. In that respect, Simkovic and McIntyre take a strong position that looks like career advice based on predictions about the future: “[M]any college graduates who follow the critics’ advice and skip law school will forego a lucrative career and face higher long-term risks of financial hardship.” (p. 12)

The law is a great profession that I love, but it’s not for everyone. Through the years and for many undergraduates, law school has been a default position for liberal arts majors who can’t decide what to do next. For far too many, life after law school becomes a process whereby great expectations clash with harsh reality in a way that creates career dissatisfaction and worse.

As a consequence, for me, the most important problem with the Simkovic/McIntyre study is that it uses aggregate data in inviting students individually to choose a legal career in the pursuit of financial security or a safe return on their educational investment. That is the wrong reason for anyone to become a lawyer.

Multiple markets

No one talks much about the two markets for law schools. The Simkovic/McIntyre study ignores the differences among schools and, in a response to Professor Deborah Merritt’s critique, Simkovic asserted on Brian Leiter’s Law School Reports blog that he “doesn’t think the evidence for a bimodal distribution of lifetime earnings is very compelling.” One wonders what profession he’s looking at.

For some – especially but not exclusively graduates from top law schools who land (and keep) jobs in big firms – practicing law can be lucrative. But those outcomes are on the far end of a severely skewed distribution of attorney incomes. As NALP data confirm, that skewing begins from the moment of graduation. Big law firm first-year associates earn an average of more than $130,000 yearly and average partner profits for the Am Law 100 exceed $1 million.

But big law attorneys account for only about 10 percent of all practitioners. Far more people – mostly but not exclusively graduates from law schools outside the top group – wind up at the much lower end of the distribution. According to the Bureau of Labor Statistics, the median income for all lawyers in the United States in 2010 was $112,760.

Red herrings or real issues?

Professor Simkovic — initially via Professor Leiter’s blog — called my observations about income distribution a “red herring.” But the real red herring is using the average of a skewed distribution to tout a “Million Dollar Degree” – first in his study’s original title and then persisting in the final sentence of the article’s synopsis. Of course, it attracts more attention than even his dramatically lower median (midpoint) value. (In his Leiter blog post, Simkovic endorsed $330,000 as the lifetime (40-year career) net JD-degree premium for the median (midpoint) of his sample.)

At some point below the 25th percentile, even Simkovic’s study proves that the so-called JD-degree premium turns negative. That includes a lot of lawyers, although the study doesn’t disclose the number.

Contrived controversies

My other observations to which Simkovic took exception — initially in his Leiter blog post and now in his Am Law Daily response — relate to points that his own study acknowledges: the presence of a statistical correlation doesn’t prove causation (p. 25) or predict the future (p. 38); the conclusions of any regression analysis depend on its assumptions (pp. 39-41); none of the attorneys in his 1,382-person sample graduated after 2008 (p. 13 and n. 31; companion slide 13).

(One of the more perplexing criticisms in Simkovic’s Leiter blog post was that I was wrong about half of all JD-degree holders finding themselves below the median for all JD-degree holders. My statement simply embodied the definition of a median – half above and half below that midpoint. His related comment about median incomes relative to bachelor’s degree holders is irrelevant to anything I wrote.)

Others will decide the fate of the Simkovic/McIntyre study as an enduring scholarly work. My views will not move Professor Simkovic or anyone else to a different position on the underlying issue of whether law schools today should rethink their business models in light of the profession’s ongoing transformation.

Reality therapy

But the academic debate has little bearing on my mission. Rather, as I wrote, my concern is for young people who “rely on an incomplete understanding of the study’s limitations to reinforce their own confirmation bias in favor of pursuing a legal career primarily for financial reasons.”

Several years ago, I added an undergraduate course to my workload in the hope of providing students with information that might help them in deciding whether to pursue a legal career. The vast majority of those students go on to law school, but with an increased awareness of the road ahead. They understand that even in tough economic times, many JD-degree holders will do well, while others won’t.

The reality of those less fortunate creates challenges for the entire profession because: 1) most prelaw students have a difficult time imagining that they’ll ever find themselves in the lower 25th percentile of anything; and 2) even among the so-called “winners” who wind up a lot higher in the overall income distribution, attorney career dissatisfaction remains widespread.

In short, prelaw students should tread carefully along the path toward law school. The law can lead to a great career, but it’s not for everyone.

Even if the high-end market for new attorneys were booming – which it isn’t – pursuing a JD for financial reasons is a mistake. As a wise person said long ago, ”Not everything that can be counted counts; not everything that counts can be counted.”

PRESIDENT OBAMA AND THE THIRD YEAR OF LAW SCHOOL

My article, “Obama’s Good, and Hopeless, Idea for Law Schools,” appears on The Chronicle of Higher Education blog — “The Conversation.” Here’s the link: http://chronicle.com/blogs/conversation/author/sharper/ 

THE DANGEROUS MILLION-DOLLAR DISTRACTION

A new study, renamed “The Economic Value of a Law Degree,” is the latest effort to defend a troubled model of legal education. It’s especially disheartening because, before joining Seton Hall University School of Law in 2010, co-author Michael Simkovic was an associate at Davis, Polk & Wardwell in 2009-2010. At some level, he must be aware of the difficulties confronting so many young law graduates.

Nevertheless, Simkovic and co-author Frank McIntyre (Rutgers Business School) “reject the claim that law degrees are priced above their value” (p. 41) and “estimate the mean pre-tax lifetime value of a law degree as approximately $1,000,000 (p. 1).”

As the academic debate over data and methodology continues, some professors are already relying on the study to resist necessary change. That’s bad enough. But my concern is for the most vulnerable potential victims caught in the crosshairs of the “Million Dollar Law Degree” media headlines taken from the article’s original title: today’s prelaw students. If they rely on an incomplete understanding of the study’s limitations to reinforce their own confirmation bias in favor of pursuing a legal career primarily for financial reasons, they make a serious mistake.

The naysayers are wrong?

The study targets respected academics (including Professors Herwig Schlunk, Bill Henderson, Jim Chen, Brian Tamanaha, and Paul Campos), along with “scambloggers” and anyone else arguing that legal education has become too expensive while failing to respond to a transformation of the profession that is reducing the value of young lawyers in particular. Professors Campos and Tamanaha have begun responses that are continuing. [UPDATE: Tamanaha's latest is here.] Professor Brian Leiter’s blog has become the vehicle for Simkovic’s answers.

One obvious problem with touting the $1 million average is that, for the bimodal distribution of lawyer incomes, any average is meaningless. Professor Stephen Diamond offered a rebuttal to Campos that Simkovic endorsed, calculating the net lifetime premium at the median (midpoint) to be $330,000 over a 40-year career. That might be closer to reality. But a degree that returns, at most, a lifetime average of $687 a month in added value for half of the people who get it isn’t much of an attention-getter. As noted below, even that number depends on some questionable assumptions and, at the 25th percentile, the economic prospects are far bleaker.

Causation

In the haze of statistical jargon and the illusory objectivity of numbers, it’s tempting to forget a fundamental point: statisticians investigate correlations. Even sophisticated regression analysis can’t prove causation. Every morning, the rooster crows when the sun rises. After isolating all observable variables, that correlation may be nearly perfect, but the crowing of the rooster still doesn’t cause the sun to rise.

Statistical inference can be a useful tool. But it can’t bridge the many leaps of faith involved in taking a non-random sample of 1,382 JD-degree holders – the most recent of whom graduated in 2008 (before the Great Recession) and 40 percent of whom have jobs that don’t require a JD — and concluding that it should guide the future of legal education in a 1.5 million-member profession. (p. 13 and n. 31)

Caveats

Simkovic and McIntyre provide necessary caveats throughout their analysis, but potential prelaw students (and their parents) aren’t likely to focus on them. For example, with respect to JD-degree holders with jobs that don’t require a JD, they “suggest” causation between the degree and lifetime income premiums, but admit they can’t prove it. (p. 25)

Likewise, they use recessions in the late 1990s and early 2000s as proxies for the impact of the Great Recession on current law graduates (compared to bachelor’s degree holders) (p. 32), minimizing the importance of recent seismic shifts in the legal profession and the impact on students graduating after 2008. (Simkovic graduated in 2007.)

This brings to mind the joke about a law professor who offers his rescue plan to others stranded on a deserted island: “First, assume we have a boat…” The study finesses that issue with this qualification: “[P]ast performance does not guarantee future returns. The return to a law degree in 2020 can only be known in 2020.” (p. 38)

Similarly, the results assume: 1) total tuition expense of $90,000 (presumably including the present value cost of law school loan interest repayments; otherwise, that number is too low and the resulting calculated premium too high); 2) student earnings during law school of $24,000; 3) graduation from law school at age 25 (no break after college); and 4) employment that continues to age 65. (pp. 39-41) More pessimistic assumptions would reduce the study’s calculated premiums at all income levels. At some point below even the Simkovic-McIntyre 25th percentile, there’s no lifetime premium for a JD.

Conclusions

After a long list of their study’s “important limitations” — including my personal favorite, the inability to “determine the earnings premium associated with attending any specific law school” — the authors conclude: “In sum, a law degree is often a good investment.” (p. 50) I agree. The more important inquiry is: When isn’t it?

In his Simkovic-endorsed defense of the study, Professor Diamond offers a basic management principle: any positive net present value means the project should be a go. But attending law school isn’t an aggregate “project.” It’s an individual undertaking for each student. After they graduate, half of them will remain below the median income level — some of them far below it.

The authors dismiss Bureau of Labor Statistics employment projections (pp. 6-7), but it’s difficult to ignore current reality. In 2012 alone, law schools graduated 46,000 new attorneys. For that class, nine months out only 10 percent of law schools (20 out of 200) had long-term full-time JD-required job placement rates exceeding 75 percent. The overall JD-job placement average for all law schools was 56 percent.

Some of the remaining 44 percent will do other things because they have no realistic opportunity for legal careers. Financially, it could even turn out okay for a lot of them. (In that respect, you have to admire the boldness of the authors’ footnote 8, citing the percentage of Senators and CEOs with JDs.)

But with better information about their actual prospects as practicing attorneys, how many would have skipped their three-year investments in a JD and taken the alternative path at the outset? That’s the question that the Simkovic/McIntyre study doesn’t pose and that every prospective law student should consider.

More elephants in the room 

Notwithstanding the economic benefits of a JD that many graduates certainly enjoy, attorney career dissatisfaction remains pervasive, even among the “winners” who land the most lucrative big firm jobs. That leads to the most important point of all. Anyone desiring to become an attorney shouldn’t do it for the money. Even the Simkovic/Mcntyre study with its many questionable assumptions proves that for thousands of graduates every year the money will never be there.

But the authors are undoubtedly correct about one thing: “The data suggests [sic] that law school loans are profitable for the federal government.” (p. 46) Law schools like them, too.

It doesn’t take a multiple regression analysis to see the problems confronting the legal profession — but it can be used to obscure them.

HOW THE LAWYER BUBBLE GROWS

In June, the legal services sector lost more than 3,000 jobs. According to the latest Bureau of Labor Statistics data, the sector has gained only 1,000 net jobs since June 2012. In the last two months, 6,000 positions disappeared.

No market solutions here

In a properly functioning market, reduced demand would prompt suppliers to cut output in search of equilibrium. But the legal profession consists of several distinct and dysfunctional markets.

For example, there’s plenty of unmet demand for lawyers from people who can’t afford them. Reduced federal funding for the Legal Services Corporation has exacerbated that problem. So has the rising cost of law school tuition and resulting student debt. Over the past 25 years, tuition increases for law school have far outpaced the rest of higher education.

In another segment of the legal market, demand for corporate legal work has been flat for years. But law schools business models generally have focused on filling classrooms, regardless of whether students will ever be able to repay their six-figure educational loans. Because most tuition revenue comes from federally guaranteed loans that survive bankruptcy, schools have no financial incentive to restrict enrollments — that is, until they run out of applicants.

When might that happen? Not soon enough, although recent headlines imply otherwise.

High-profile reductions in class size

Some schools have reduced the size of their entering classes. For example, the University of the Pacific McGeorge School of Law announced that it is reducing enrollment from the current 1,000 to about 600 — an impressive 40 percent drop.

But as Dan Filler observed at the Faculty Lounge, the reality may be less impressive. Although McGeorge graduated 300 new lawyers annually from 2010 through 2012, its first-year enrollment hasn’t kept pace with those numbers. In 2012, the school had 248 (day and evening) first-year students. In 2011, it had 215. A normalized class enrollment of 200 would be a 20 percent reduction from recent levels. That’s positive, but as explained below, not nearly enough.

About those declining applications

recent Wall Street Journal article about the “plunge” in law school enrollments noted that “applications for the entering class of 2013 were down 36 percent compared with the same point in 2010…” But a more relevant statistic should be more jarring: “Law school first-year enrollments fell 8.5 percent nationwide.”

Here’s another way to look at it: For the fall of 2004 entering class, law schools admitted 55,900 of 98,700 applicants — or about 57 percent. For the fall of 2012 class, law schools admitted 50,600 of 68,000 applicants — almost 75 percent.

About those jobs

The increase in the percentage of admitted applicants is one reason that the lawyer bubble is still growing. Another is the stagnant job market. In 2008, the Bureau of Labor Statistics projected 98,500 net additional attorney positions for the entire decade ending in 2018. In 2010, it revised that estimate downward to project 73,600 net additional positions by the end of 2020.

Even allowing for attrition by retirement, death and otherwise, the BLS now estimates that there will be 235,000 openings for lawyers, judges, and related workers through 2020 — 23,500 a year. Last year alone, law schools graduated 46,000 new attorneys.

If law schools as a group reduced enrollments by 20 percent from last year’s graduating class, they would still produce almost 37,000 new lawyers annually — 370,000 for a decade requiring only 235,000 — not to mention the current backlog that began accumulating even before the Great Recession began.

One more thing

Which takes us back to the University of the Pacific McGeorge School of Law. According to its ABA submission, only 42 percent of its class of 2012 graduates found full-time long-term jobs requiring a JD. Even if the school caps entering classes at 200, its resulting placement rate would rise to only 64 percent.

U.S. News rankings considerations loom large in all of this. Law schools fear that reducing LSAT/GPA admission standards would hurt their rankings. In that respect, McGeorge’s class size announcement overshadowed a more unpleasant disclosure that new ABA rules now require: scholarship retention rates.

Many law schools try to enhance their U.S. News rankings by offering entering students with high LSATs so-called merit scholarships. But those scholarships sometimes disappear for years two and three. According to Prof. Jerry Organ’s analysis, only 42 percent of students entering McGeorge in the fall of 2011 kept their first-year scholarships. Eleven schools (out of 140 that offered conditional scholarships) did worse.

The overall picture is ugly. Some schools are laying off faculty and staff to counter the financial impact of reduced enrollments. But they’re also keeping tuition high and spending money on LSAT-enhancing scholarships that disappear after the first year, presumably to be replaced with non-dischargeable loans. Meanwhile, almost all of today’s students are incurring staggering educational debt, but many of them won’t find jobs sufficient to repay it.

That’s not a march toward market equilibrium. It’s a growing bubble.

LAW DEANS SCRAMBLE

Some law school deans are revealing what they regard as innovation in the face of the legal profession’s continuing crisis. Plummeting law school applications have tested their creativity in selling classroom seats. But recent trends — fewer applications amid a dismal job market for law graduates — haven’t deterred some efforts to preserve an unsustainable business model.

Moving through the five stages of grief

As deans confront declining applicant pools, many are moving through the five stages of grief — denial, anger, bargaining, depression, and acceptance.

Previously, I looked at deans in stage 1 — especially those who took to the editorial pages of major newspapers, touting the inherent value of a $150,000 legal degree for students who couldn’t get jobs practicing law. Apply now, they urged, because declining applications improved prospects for admission. Then you can do lots of great things that don’t require a JD.

Case Western Law School Dean Lawrence Mitchell made himself a poster child for such deans in denial, but he wasn’t alone. Other deans and former deans have similarly offered analyses that miss the mark on the causes of the lawyer bubble and offer proposals that distract attention from their own culpability. Some have advanced to stage 2 — anger over the situation and anyone who publicizes it.

From anger to bargaining

A few deans have reached stage 3 — bargaining. Some schools have reduced tuition and/or guaranteed freezes during a student’s three years. But Touro Law recently announced a special kind of bargain that targets the least informed potential applicants who are most vulnerable to law schools’ superficial sales pitches.

Under a partnership with the University of Central Florida, prospective law students can apply to an accelerated program whereby they attend UCF for three years and then complete their fourth year at Touro Law. They would receive their UCF bachelor’s degree upon completion of their 1L year at Touro.

Quite a deal, right?

Some things you should know

Touro Law inhabits the world of U.S. News and World Report’s unranked nether regions. Readers know that I’m no fan of those rankings, but it’s safe to say that no one would regard Touro as a top law school by any measure. According to U.S. News, it accepted 64 percent of all applicants last year.

Touro’s recent trends are especially revealing. (The following statistics come from the archives of the LSAC “Official Law School Guide.”)

In 2005, the school awarded 158 JD degrees. Tuition was around $26,000 a year.

In 2009, the school awarded 200 JDs. Annual tuition had increased to more than $36,000.

In 2011, the school awarded 221 JDs. Sixty percent found full-time long-term jobs requiring that degree.

In 2012, the school awarded 244 JDs, but only 53 percent had long-term full-time jobs requiring a JD. Tuition is now $43,000 a year.

In other words, as the Great Recession worsened and the demand for lawyers collapsed — especially for graduates of places such as Touro Law — the school increased both tuition and class size, even as its ability to place graduates in legal jobs declined.

The business model at work

Perhaps it’s unfair to single out Touro for behavior that has pervaded legal education: increasing class size and raising tuition as demand for new lawyers declined. But the school’s latest initiative invites close scrutiny of its motives.

According to Touro Law’s new dean, Patricia Salkin, “It’s a financial bargain for the UCF undergraduates and takes some pressure off the law school application process.”

My guess is that it’s a financial bargain for Touro Law, too, especially if it gets to keep most of the tuition that the UCF students pay to attend first year law school classes. (Annual tuition at UCF is $6,200 for residents; $22,300 for non-residents — compared to $43,000 for Touro Law.)

As for relieving the pressure of the law school application process, Touro can claim that benefit for itself, too. There’s nothing like locking in a law student three years before he or she might otherwise apply.

What are we doing to our kids?

It’s bad enough that current UCF undergraduates are eligible for this “fast-track program.” (Even the name implies a selectivity that sounds enticing, doesn’t it?) But encouraging — or even allowing — woefully uninformed high school students to apply to law school as entering UCF freshmen is something else.

The next step for some law schools seems painfully clear: setting up recruiting tables in middle school cafeterias across the country.

THREE EMBARRASSING DATA POINTS

Three recently released numbers tell an unhappy tale of what ails the legal profession in particular and society in general. Specifically, those data points reveal profound intergenerational antagonisms that are getting worse.

Dismal job prospects persist

First, the ABA reports that only 56 percent of law school graduates in the class of 2012 secured full-time, long-term jobs requiring a legal degree. The good news is that this result is no worse than last year’s. The bad news is the number of 2012 law graduates reached an all-time record high — more than 46,000. The even worse news is that the graduating class of 2013 is expected to be even bigger.

Sure, the number of students taking the LSAT has trended downward. So has the number of law school applicants. But students seeking to attend law school still outnumber the available places. Meanwhile, the number of attorneys working in big law firms has not yet returned to pre-recession levels of 2007. If, as many hope, the market for attorneys is moving toward an equilibrium between supply and demand, it has a long way to go.

Law school for all the wrong reasons

A second data point is even more distressing. According to a survey that test-prep company Kaplan Inc. conducted, 43 percent of pre-law students plan to use their degrees to find jobs in the business world, rather than in the legal industry. Even more poignantly, 42 percent said they would attend business school instead of law school, were they not already “set to go to law school.”

I don’t know what “set to go” means to these individuals, but if they want to go into business, first spending more than $100,000 and three years of their lives on a legal degree makes no sense. That’s especially true in light of another survey result: Only 5 percent said they were pursuing a career primarily for the money; 71 percent said they were “motivated by pursuing a career they are passionate about.”

Maybe these conflicted pre-law students are confused by the chorus of law school deans now writing regularly that a legal degree is a valuable vehicle to other pursuits. Let’s hope not. Many deans are simply trying to drum up student demand for their schools in the face of declining applicant pools.

Follow the money

The third data point relates to the money that fuels this dysfunctional system: federal loan dollars that are disconnected from law school accountability for student outcomes. Recently, the New York Times reported that on July 1, many student loan rates were set to double — from 3.4 percent to 6.8 percent.

Young law school graduates are among the unenviable one-percenters in this group because 85 percent of them hold, on average, more than $100,000 in debt (compared to the overall average of $27,000 for all students). Like all other educational loans, those debts survive a bankruptcy filing.

In the current economic environment, an investor would search in vain for a guaranteed 6.8 percent return and virtually no risk. According to one estimate cited in the Times article, the federal government makes 36 cents on every student loan dollar it puts out.

Kids as profit centers

Ironically, those who favor raising the current 3.4 percent interest rate on many federal student loans to 6.8 percent are the same people who express concerns that growing federal deficits will saddle the next generation. The reality is that we already treat that generation as a profit center. For too many people, there’s money to be made in sustaining the lawyer bubble.

Until it bursts.

THE LAWYER BUBBLE — Early Reviews and Upcoming Events

The New York Times published my op-ed, “The Tyranny of the Billable Hour,” tackling the larger implications of the recent DLA Piper hourly billing controversy.

And there’s this from Bloomberg Business Week: “Big Law Firms Are in ‘Crisis.’ Retired Lawyer Says.”

In related news, with the release of my new book, The Lawyer Bubble – A Profession in Crisis, my weekly posts will give way (temporarily) to a growing calendar of events, including:

TUESDAY, APRIL 2, 2013, 10:00 am to 11:00 am (CDT)
Illinois Public Media
“Focus” with Jim Meadows
WILL-AM – 580 (listen online at http://will.illinois.edu/focus)

TUESDAY, APRIL 2, 2013, 1:00 pm to 2:00 pm (CDT)
“Think” with Krys Boyd
KERA – Public Media for North Texas – 90.1 FM (online at http://www.kera.org/think/)

THURSDAY, APRIL 4, 2013, 11:00 am to Noon (EDT)
Washington, DC
The Diane Rehm Show
WAMU (88.5 FM in DC area) and NPR

FRIDAY, APRIL 5, 2013, 10:45 am to 11:00 am (EDT)
New York City
The Brian Lehrer Show
WNYC/NPR (93.9 FM/820 AM in NYC area)
(http://www.wnyc.org/shows/bl/)

SATURDAY, APRIL 6, 2013, Noon (EDT)
New Hampshire Public Radio
“Word of Mouth” with Virginia Prescott
WEVO – 89.1 FM in Concord; available online at http://nhpr.org/post/lawyer-bubble)

WEDNESDAY, APRIL 10, 2013, 8:00 am to 9:00 am (CDT)
The Joy Cardin Show
Wisconsin Public Radio (available online at http://www.wpr.org/cardin/)

FRIDAY, APRIL 12, 2013
The Shrinking Pyramid: Implications for Law Practice and the Legal Profession” — Panel discussion
Georgetown University Law Center
Center for the Study of the Legal Profession
600 New Jersey Avenue NW
Location: Gewirz – 12th floor
Washington, D.C.

TUESDAY, APRIL 23, 2013, 7:00 pm (CDT) (C-SPAN 2 is tentatively planning to cover this event)
The Book Stall at Chestnut Court
811 Elm Street
Winnetka, IL

Here are some early reviews:

The Lawyer Bubble is an important book, carefully researched, cogently argued and compellingly written. It demonstrates how two honorable callings – legal education and the practice of law – have become, far too often, unscrupulous rackets.”
—Scott Turow, author of Presumed Innocent and other novel

“Harper is a seasoned insider unafraid to say what many other lawyers in his position might…written with keen insight and scathing accusations…. Harper brings his analytical and persuasive abilities to bear in a highly entertaining and riveting narrative…. The Lawyer Bubbleis recommended reading for anyone working in a law related field. And for law school students—especially prospective ones—it really should be required reading.”
New York Journal of Books

“Anyone looking into a career in law would be well advised to read this thoroughly eye-opening warning.”
Booklist, starred review

“[Harper] is perfectly positioned to reflect on alarming developments that have brought the legal profession to a most unfortunate place…. Essential reading for anyone contemplating a legal career.”
—Kirkus Reviews

“[Harper] burns his bridges in this scathing indictment of law schools and big law firms…. his insights and admonitions are consistently on point.”
—Publishers Weekly

“Imagine that the elite lawyers of BigLaw and the legal academy were put on trial for their alleged negligence and failed stewardship. Imagine further that the State had at its disposal one of the nation’s most tenacious trial lawyers to doggedly build a complete factual record and then argue the case. The result would be The Lawyer Bubble. If I were counsel to the elite lawyers of BigLaw and the legal academy, I would advise my clients to settle the case.”
—William D. Henderson, Director of the Center on the Global Legal Profession and Professor at the Indiana University Maurer School of Law

“With wit and insight,The Lawyer Bubble offers a compelling portrait of the growing crisis in legal education and the practice of law. This book is essential reading for anyone concerned about the profession or contemplating a legal career.”
—Deborah L. Rhode, Professor of Law and Director of the Center on the Legal Profession, Stanford University

“This is a fine and important book, thoughtful and beautifully written. It makes the case – in a responsible and sober tone – that we are producing far too many lawyers for far too small a segment of American society. It is a must-read for leaders of law firms, law schools, and the bar, as the legal profession continues its wrenching transition from a profession into just another business.”
—Daniel S. Bowling III, Senior Lecturing Fellow, Duke Law School

“In this superb book, Steven Harper documents, ties together and suggests remedies for the deceit that motivates expanding law school enrollment in the face of a shrinking job market, the gaming of law school rankings and the pernicious effect of greed on the leadership of many of our nation’s leading law firms. The lessons he draws are symptomatic, and go well beyond the documented particulars.”
—Robert Helman, Partner and former Chairman (1984-98), Mayer Brown LLP; Lecturer, University of Chicago Law School

“Every sentient lawyer realizes that the legal profession is in crisis, but nobody explains the extent of the problem as well as Steven Harper. Fortunately, he also proposes some solutions – so there is still room for hope. This is an essential book.”
—Steven Lubet, author of Fugitive Justice and Lawyers’ Poker

“Steven Harper’s The Lawyer Bubble is an expression of tough love for the law, law firms and the people who work in them. The clear message is take control of your destiny and your firm to avoid the serious jeopardy that confronts far too many firms today. Whether you are a partner, associate, or law student, you should read this compassionate and forceful work.”
—Edwin B. Reeser, Former managing partner, author, and consultant on law practice management

“Harper chronicles the disruption of his once-genteel profession with considerable sadness, and places the blame squarely at the wing-tipped feet of two breeds of scoundrel: law school deans, and executive committees that have run big law firms …” –”Bar Examined” – Book Review in The Washington Monthly (March/April 2013)

PARDON MY CYNICISM

A friend sent me a letter that he received recently from Wake Forest University, where his son is a sophomore. Actually, it came from the Law School, which was “excited to announce” a “Pre-Law Program for Undergraduates.” Last summer, the school offered a single course, “Legal Theory, Practice, and Communication.” It was such a hit that the school has now added a second summer prelaw class, “Advocacy, Debate, and the Law.”

Noble motives

The letter outlines a laudable premise: “The primary purpose of this Program is to show undergraduates what law school is like. Some college students in the past have applied to law school simply because they could not decide what else to do after graduation.”

So far, so good. The letter then acknowledges that law school “is now far too expensive to engage in a ‘test drive’ for a whole year. This Program gives  college students a realistic view of law student life and educates them about the career opportunities of lawyers.”

Again, so far, so good.

A worthy endeavor

Adequately informing undergraduates tracking themselves to law school is a vitally important educational mission that is long overdue. Colleges and universities have largely refrained from efforts to penetrate the confirmation bias of young people who think they’ll lead lives depicted in Law & Order, The Good Wife, and Suits. A legal career can be personally and professionally rewarding, but it’s not for everyone.

Wake Forest boasts that its program “gives college students a realistic view of law student life and educates them about the career opportunities of lawyers.” It’s nice to give undergraduates a taste of the Socratic method so it doesn’t upend them in law school. But other aspects are far more important.

Does the program include data on new graduates’ dismal job opportunities? For example, nine months after graduation, only 56 percent of the Wake Forest Law School class of 2011 secured full-time, long-term jobs requiring a legal degree — the same as the overall average for all law schools.

Likewise, does Wake Forest’s prelaw program cover the staggering six-figure debt that now burdens the vast majority of new attorneys generally, whose median starting salaries have fallen to $60,000? Does it discuss the widespread career dissatisfaction among practicing attorneys? Let’s hope so.

Troublesome turns

Assuming Wake Forest has, indeed, included these and other essential elements of a truly valuable prelaw curriculum, other aspects of the program suggest competing agendas at work.

Why does Wake Forest offer its prelaw program only in the summer — at a cost of $3,240 per course? (“An interested student would receive maximum benefit from enrolling in both courses,” the letter notes.) Why not offer a course that provides meaningful insights into law school and the profession during the regular academic year? And don’t tell me that professorial teaching loads have become too burdensome.

Another item gave me pause. The press release announcing the Wake Forest program included this enticing remark from the law professor who co-teaches the classes: “Since we will have gotten to know the students, we will also gladly write letters of recommendation about the student’s ability to do law school work.”

His colleague added this: “In fact, we are very excited that one of our students, who applied to law school this year with our help, was accepted at several top-ranked law schools.”

Those comments don’t neutralize student confirmation bias; they reinforce it.

Closing the deal

And then there’s this: The law school admissions office “will waive the $60.00 application fee for any student who attended the summer Program this year who later applies to Wake Forest Law School.” More applications — even from unqualified students — lower a school’s acceptance rate and thereby raise its U.S. News ranking.

But that’s not all. Again, directly from the press release: “[I]f that student is admitted and enrolls at Wake Forest law school, the student will receive a tuition credit for the first year equal to the amount spent for tuition in attending the summer program. That’s right—you could get the law school to pay you back for the money spent on tuition this year for the Summer Pre-Law Program!”

Here are the only words missing from the pitch: Act now while supplies last!

Something is amiss when the lines used to sell a prelaw education read like a late-night infomercial for steak knives.

SOMEBODY’S CHILD

Nine years ago, Senator Rob Portman (R-Ohio) supported a constitutional amendment banning same-sex marriage. Now he wants Congress to repeal the provisions of the Defense of Marriage Act that deny federal recognition to such marriages. Apparently, his reversal on this issue began two years ago when his college freshman son told Portman and his wife that he was gay.

Plenty of prominent national figures have similarly changed their views. The tide of history seems overwhelming, even to conservative commentator George Will. Others can debate whether Portman and those who have announced newly acquired positions favoring gay rights are courageous, hypocrites, opportunists, or something else.

For me, the more important point is that his own child’s connection to the issue caused Portman to think differently about it. Applied to lawyers, the question become simple:

What if the profession’s influential players treated the young people pursuing a legal career as their own children?

Portman’s explanation

In 2011, Portman knew that his son was gay when 100 law graduates walked out of his commencement address at the University of Michigan.

“But you know,” he told CNN recently, “what happened to me is really personal. I mean, I hadn’t thought a lot about this issue. Again, my focus has been on other issues over my public policy career.”

His key phrases are pregnant with larger implications: “[W]hat happened to me is really personal….I hadn’t thought a lot about this issue.”

Start with law school deans

As the lawyer bubble grew over the past decade, some deans and university administrators might have behaved differently if a “really personal” dimension required them to think “a lot” about their approaches. Perhaps they would have jettisoned a myopic focus on maximizing their law school rankings and revenues.

At a minimum, most deans probably would have disclosed earlier than 2012 that fewer than half of recent graduates had long-term full-time jobs requiring a legal degree. It seems unlikely that, year after year, they would have told their own kids that those employment rates exceeded 90 percent. Perhaps, too, deans would have resisted rather than embraced skyrocketing tuition increases that have produced six-figure non-dischargeable educational debt for 85 percent of today’s youngest attorneys.

Then consider big firm senior partners

At the economic pinnacle of the profession, big firms have become a particular source of not only attorney wealth, but also career dissatisfaction. In substantial part, both phenomena happened — and continue to happen — because managing partners have obsessed over short-term metrics aimed at maximizing current year profits and mindless growth.

For example, the billable hour is the bane of every lawyer’s (and most clients’) existence, but it’s lucrative for equity partners. If senior partners found themselves pushing their own kids to increase their hours as a way to boost those partners’ already astonishing profits, maybe they’d rethink the worst consequences of a destructive regime.

Similarly, the average attorney-to-equity partner leverage ratio for the Am Law 100 has doubled since 1985 (from 1.75 to 3.5). Perhaps managing partners wouldn’t have been so quick to pull up the ladder on lawyers who sat at their Thanksgiving tables every year, alongside those managing partners’ grandchildren who accompanied them. Not every young associate in a big firm should advance to equity partner. But offering a 5 to 10 percent chance of success following 7 to 12 years of hard work isn’t a motivator. It invites new attorneys to prepare for failure.

Finally, compared to the stability of a functional family, the current big law firm lateral partner hiring frenzy adopts the equivalent of periodic divorce as a cultural norm. Pursued as a growth strategy, it destroys institutional continuity, cohesion, community, and morale. Ironically, according to Professor William Henderson’s recent American Lawyer article “Playing Not to Lose,” it offers little or no net economic value in return.

Adopting a family outlook or a parental perspective isn’t a foolproof cure for what ails the legal profession. Indeed, running law schools and big firms according to the Lannister family’s values (“The Game of Thrones”) — or those of Don Corleone’s (“The Godfather”) — might not change things very much at all.

It’s also worth remembering that Oedipus was somebody’s child, too.

ANOTHER LAW SCHOOL DEAN MISSES THE TARGET

Today’s chapter in the continuing story of proposals to reform legal education comes from James L. Huffman, emeritus dean at Lewis & Clark Law School. His February 20 Wall Street Journal op-ed recommends eliminating ABA law school accreditation requirements. Maybe that’s a good idea, but not for the reasons that Huffman offers.

Mischaracterizing the crisis

Huffman notes that the sharp decline in the number of law school applicants has created “a true crisis, and law schools are scrambling to figure out how to manage with fewer tuition-paying students.” He proposes to end that crisis by helping marginal law schools devise a way to remain in business. Specifically, he thinks that removing most accreditation requirements would unleash a wave of innovation in legal education and “let a thousand flowers bloom.”

Here’s a better idea: prune the garden.

A thread of insight

Staggering student debt accompanying dismal job prospects for recent graduates causes Huffman to lament the oversupply of lawyers. He suggests that the ABA’s task force “should start by looking within: The organization is a major source of the problem.” Then he lambasts the organization’s accreditation standards as too restrictive.

Huffman’s non sequitur fails to mention the ABA’s most obvious contribution to attorney oversupply: accrediting too many new schools — 15 since 2003 alone. Likewise, Huffman observes correctly that the ABA has become a victim of regulatory capture, but he doesn’t connect it directly to the worst consequences of that victimization: deans free to engage in deceptive behavior to fill their classrooms. Graduate employment rates looked great when schools could include short-term and part-time jobs, work that didn’t require a law degree, and temporary positions that the schools themselves had created.

Missing the real target

Why did deans do it? Because everybody did. Greater transparency risked deterring applicants, which had implications for a school’s U.S. News ranking. Unilateral candor threatened the business model.

Likewise, the rankings methodology has created powerful incentives to maximize spending on expensive new facilities. No ABA accreditation standard requires an established law school to construct a new library. But building one can help to attract applicants, and its added cost boosts the “average expenditures per student” component of a school’s ranking.

Who’s to blame?

Huffman is correct that the ABA has failed the profession. But so have deans who have allowed U.S. News rankings criteria to displace their independent judgment. Rankings have become central to their business models and the youngest generation of lawyers is paying the price.

Some metrics relating to emeritus dean Huffman’s own school prove it:

– At the time of Huffman’s op-ed, the “Admissions” section of Lewis & Clark’s website displayed this headline: “Law school surges in U.S. News & World Report rankings.” The link took the reader to an article about the school’s nine-place jump to 58th in the 2013 edition.

– Full-time tuition and fees at Lewis & Clark currently exceed $38,000 — a 50 percent increase over 2005, when it was around $25,000.

– Lewis & Clark’s annual entries in the 2006 through 2012 ABA Official Law School Guides included employment rates nine months after graduation ranging from 89 to 97 percent. But like most law schools, it achieved those spectacular results using the ABA’s expansive definition of employed. Under the new rules first applicable to the class of 2011, nine months after graduation only 46 percent of Lewis & Clark graduates had full-time long-term jobs requiring a legal degree.

Reality therapy

Huffman’s rhetoric about ABA accreditation requirements as entry barriers that inhibit competition and innovation misses the mark. Allowing schools to experiment with what he calls a “bonanza of legal education alternatives” ignores a harsh reality: There aren’t enough law jobs for the number of graduates that schools already produce, and there won’t be for a long time.

Allowing schools to increase their use of cheaper non-tenured faculty and to offer on-line classes, as Huffman suggests, won’t solve that problem. In fact, absent other necessary reforms, cost reductions leading to lower tuition would likely increase the oversupply of lawyers.

The plethora of deans publishing op-eds in major newspapers presents a new danger. When they Identify false issues and propose ineffectual reforms, they divert needed attention from the real causes of the current crisis. A thorough search for the origins of the lawyer bubble should lead most deans to a painful encounter with a mirror.

That’s an op-ed I’m eager to read.

LAW SCHOOL DISEQUILIBRIUM

It sure seems odd. On January 30, The New York Times reported this year’s dramatic decline in law school applications. A day later, a Wall Street Journal article described the many new schools that are in the works. Economists might call that “market disequilibrium.” More appropriate concepts might be incentivized idiocy and subsidized stupidity. U.S. News rankings incentivize the idiocy; taxpayer dollars subsidize the stupidity.

The WSJ article suggested that some administrators began implementing plans to add law schools “before the current drop [in applicants] became apparent.” However, the two schools in the article, Indiana Tech and the University of North Texas-Dallas College of Law, don’t have that excuse.

Indiana Tech didn’t complete its feasibility study of a proposed new law school until May 2011. The Texas legislature authorized the creation of the UNT-Dallas College of Law in 2009, as the Great Recession deepened. In the 2011-2012 state budget, it earmarked $5 million in funding. The school plans to start classes in 2014.

As for other new schools, what exactly wasn’t apparent when they came to life? Only obvious things that those responsible for creating the schools didn’t want to see.

Follow four numbers

First, from 2003 to 2008, the number of law school applicants dropped steadily — from 100,000 to 83,000. As the Great Recession made law school an attractive place to wait out a dismal economy, total applicants rose to 88,000 before resuming a downward trajectory, perhaps to as few as 54,000 for fall 2013 admission.

Second, in the face of an applicant pool that began shrinking ten years ago, first-year enrollment from 2003 to 2009 remained around 49,000. Refugees from the Great Recession pushed it over 51,000 in 2009 and 2010 before it settled back to 48,700 in 2011.

Third, when these 40,000+ students graduate, there will be full-time legal jobs for about half of them. But that’s not a new development, only a newly disclosed one. To game the U.S. News rankings, law schools have been fudging their employment numbers for years, and they know it.

Finally, at the end of 2003, there were 187 accredited law schools in the United States. Today, there are 201. Attempting to convey the magnitude of the current crisis, University of Chicago Law Professor Brian Leiter told the Times that he expects “as many as 10 schools to close over the next decade.” But over the past ten years alone, the ABA has accredited 14.

What are the lessons?

First, a decline in applications alone doesn’t assure any change in the profession’s errant direction. The real-life experiment from 2003 to 2008 proves that for as long as the number of applicants exceeds the number of available places in law school, academic leaders who think they can make money on law students will continue to build schools.

Second, in an effort to reverse the downward trend in applications, some deans beat the bushes for additional students, even as the job market for their graduates shrinks. Case Western Reserve Law School dean Lawrence Mitchell’s recent op-ed in the NY Times is an example. Another example is an article that Professor Carla Pratt, associate dean of academic affairs at Penn State’s Dickinson School of Law, wrote last September for The National Law Journal: “Law School Is Still a Good Investment for African-Americans.

Yet another example comes from the UNT-Dallas College of Law. According to the January 31 WSJ article, professor and associate dean for academic affairs Ellen S. Pryor, acknowledges that applications have plummeted, but “the fact that the nationwide numbers are down doesn’t dishearten us from thinking we’ll get really good students and fulfill our mission.”

And what might that mission be? According to the Journal, UNT-Dallas hopes to draw a different pool of applicants than other north Texas law schools. In other words, even undergraduates who never before gave serious thought to law school should prepare themselves for an onslaught of sales pitches.

Limited accountability

Here’s one reason for the profound disconnect: Administrators and deans maintain an unhealthy distance from the economic hardships that their worst decisions inflict on graduates. Federally-guaranteed student loans fuel a system that relieves law schools of financial accountability.

Imagine how the world might change if the government as guarantor had recourse to a student’s law school for that graduate’s subsequent loan default. In the absence of such a market solution, educational debt collection has become a growth industry as law schools avoid the messes they’ve made.

Welcome to The Lawyer Bubble.

JUXTAPOSITIONS

Shortly after Thanksgiving, a California court denied Thomas Jefferson Law School’s motion to dismiss its alumni’s fraud claims. The school made headlines in early 2011 when some graduates claimed that misleading employment statistics caused them to incur staggering debt for a degree that didn’t lead to a legal job. It was the first school to face such a suit and is now the third one to lose a motion to dismiss the claims.

Reasonable consumers?

Last summer, two other law schools failed to get the cases against them thrown out: the University of San Francisco and Golden Gate University. A California state court judge hearing both cases ruled that whether those schools’ representations were “likely to deceive a reasonable consumer is a question of fact.”

The court observed, “[P]laintiffs allege that they were in fact deceived by the statements they attribute to defendant, and there is nothing before me to suggest that any of the plaintiffs were not reasonable consumers of a law school education.”

Sophisticated consumers?

The California court in the USF and Golden Gate University cases distinguished an earlier ruling that went the other way. In a similar case against New York Law School (not NYU), a New York state court judge described prospective law students as “a sophisticated subset of education consumers.” He thought that they should have looked more carefully at the numbers that the school touted, as well as data available to them from other sources. The losing plaintiffs have asked the appellate court to take another look at the issue.

Likewise, courts in Michigan and Illinois have dismissed four other lawsuits against Thomas M. Cooley Law School, DePaul University College of Law, John Marshall Law School, and Chicago-Kent Law School. Wait for the results of more appeals before accepting as definitive the schools’ quick claims of vindication.

Who’s right about these prospective consumers of legal education? Are they a special class of individuals who possess unique skills in evaluating law school representations about their graduates’ fate? Do they have special strength that allows them to resist the promise of a well-paying legal job as the reward for three years’ work and a $100,000+ investment?

Either way, aren’t they somebody’s kids?

Today, it’s seems easy to say that students who believed law school claims of 90+% employment rates and six-figure starting salaries for their graduates should have known better. But abandon such hindsight for a moment and think back to 2004, when some of the current plaintiffs were thinking about attending law school.

The lawyer bubble was growing, but until the summer of 2012 the ABA didn’t require schools to provide meaningful employment data to prospective students. Full-time, part-time, non-degree-required, and law school-funded positions were lumped together to create a rosy picture of job security that was, in fact, a cruel illusion. As the Great Recession began in 2007, that picture looked even more appealing to young people who were looking for any employment lifeboat in a sinking economy.

Accountability

So far, no plaintiff has prevailed on the merits of any claim against any law school. The preliminary rulings in California mean only that those plaintiffs get an opportunity to prove their cases. As that process unfolds, no one should let would-be law students off the hook completely. But confirmation bias is a powerful force; it takes uncommon perception to see things that contradict preconceived notions, including some students’ naive dreams about what life as a lawyer might mean.

If law schools continue to act without any serious accountability for their roles in creating the massive and growing oversupply of lawyers, greater student introspection alone won’t solve the problem. Case Western Reserve Law School Dean Lawrence E. Mitchell proved that point in his recent (and flawed) New York Times op-ed, “Law School is Worth the Money.” For those who prefer data and analysis to self-serving salesmanship, Vanderbilt Law School professor Herwig Schlunk has a response: for too many young lawyers, it isn’t.

For far too long, deans have avoided accountability for behavior that has created the lawyer bubble.  At long last, perhaps some judges will correct that injustice.

THE LAWYER BUBBLE

Case Western Reserve Law School Dean Lawrence E. Mitchell’s recent op-ed in the New York Times proves that, like many law school deans, he is living in a bubble. Indeed, the views he expresses are one reason that I wrote THE LAWYER BUBBLE – A Profession in Crisiswhich Basic Books will publish in April 2013. (Another reason is the troubling transformation of most big law firms, but that’s for another day.)

Mitchell’s spirited defense in “Law School Is Worth the Money” concludes that the “overwrought atmosphere has created irrationalities that prevent talented students from realizing their ambitions.” Apparently, he thinks everyone should just calm down, ignore facts, and keep pushing naive undergraduates into law schools, without regard to what will happen to them thereafter. He’s wrong.

Employment

Mitchell argues that a legal career is no worse choice than any other because the job market is bad in many industries. He notes that the Bureau of Labor Statistics projects growth in the number of lawyers’ jobs from 2010 to 2020 at 10 percent — about as fast as the average for all occupations.

Here’s the thing: that 10 percent growth is for the entire ten years from 2010 to 2020 – a total net increase in the number of lawyer jobs of 73,600. And that number is down from a 2008 BLS estimate of 98,500. As 44,000 new law graduates hit the market each year, law schools are pumping out enough new attorneys for a decade every two years.

Other studies factoring in attrition suggest that, given the mismatch between supply and demand, there might be law jobs for about half of all graduates over the next 10 years. Case Western Reserve, where Mitchell is dean, is typical of mid-range law schools: it’s a fine institution, but according to the ABA, nine months after graduation, only 94 of the 201-member class of 2011 had full-time long-term job requiring bar passage.

Excessive tuition

With respect to the cost of a legal education, Mitchell says that “one report shows that tuition at private law schools has increased 160 percent from 1985 to 2011.” He doesn’t identify his source, but according to the ABA, median private law school tuition in 1985 was $7,385. In 2011, it was $39,496 — a more than 400 percent increase. The rate of increase for resident public law school tuition was far greater. Assuming that he’s adjusting for constant dollars, that’s still a whopping increase.

Then Mitchell compares legal education with medical schools where, even by his calculations, tuition has increased less (63 percent since 1985). But he excuses law school excesses by arguing that medical schools began the period with average tuition four times higher. That’s a false equivalence.

It should cost far less to train a lawyer than a doctor — as it did in 1985. But today it doesn’t. Why not? Because law schools have become cash cows, returning as much as 30 percent of tuition revenues to their universities. Moreover, pandering to U.S. News ranking criteria encourages law school expenditures without regard to value added. Federally guaranteed student loans fuel the system in ways that relieve law schools from meaningful accountability as they glut the market.

Debt

Mitchell dismisses the fact that average law school debt exceeds $125,000 with the cavalier assertion that “the average lawyer’s salary exceeds that number. You’d consider a home mortgage at that ratio to be pretty sweet.” He notes that attorneys’ average starting salaries have increased 125 percent since 1985.

Unfortunately, the average includes only those who actually have lawyer jobs, and it doesn’t consider the fact that, as Above the Law’s Elie Mystal emphasizes often, the average masks the bimodal distribution of attorney income. Thanks to the skewing effect of big law firm compensation (where only 15 percent of lawyers practice), most lawyers earn far less than the industry average. Moreover, median starting salaries for new attorneys have been dropping like a rock — from $72,000 to $60,000 since 2009. Meanwhile, law school tuition keeps going the other way.

Mitchell’s real complaint is probably that prospective law students are finally beginning to see the legal world more clearly and, at long last, the results may be showing up in reduced applications to schools below the top tier. But he need not worry because ongoing market distortions make equilibrium far, far away. In 2012, almost 70,000 prospective lawyers applied for almost 50,000 law school spots — even though there may be legal jobs for only half of them.

Armed with complete information about the challenges and rewards of a legal career, the best and the brightest future lawyers will still enter the profession. They’ll incur six-figure debt that can’t be discharged in bankruptcy because they’ll conclude that the investment is worth the risk — but they’ll consider the risk. Making an informed decision requires them to separate facts from magical thinking. For that, they’re on their own because, as Dean Mitchell reveals, most deans don’t — or won’t.

THE NEXT DEBT CRISIS

One of the next big bubbles is educational debt. A recent article in The New York Times notes that it exceeds one trillion dollars — more than total consumer credit card debt. Meanwhile, according to The Wall Street Journalthe Federal Reserve Bank of New York reports that for those aged 40 to 49, the percentage of educational debt on which no payment has been made for at least 90 days has risen to almost 12 percent. Sadly, history will view these as the good old days.

Middle-aged education debt blues

Growing delinquencies among middle-aged debtors result from two phenomena. First, some people took out loans for their own education, such as the 50-year-old who woman told the WSJ that she got her bachelor’s degree in 2008. The recession pushed many newly unemployed workers into higher education as a way of reinventing themselves. For some, the strategy worked.

A second group consists of parents who took out loans to fund their kids’ education. A related Department of Education program is, according to the Journal, “among the fastest-growing of the government’s education loan programs.”

Now extrapolate

For anyone who thinks this problem is bad now, wait until today’s twenty-somethings who went to law school and can’t get jobs reach their forties. Indiana University Maurer School of Law Professor William Henderson has analyzed the origins and long-run implications of current trends. His article with Rachel Zahorsky, “The Law School Bubble,” describes them in thoughtful detail.

Recent graduates in particular know where this is going because many are already there: Lots of debt — averaging $100,000 for recent classes — and limited prospects of employment with which to repay it. Meanwhile, the nation’s law schools are turning out more than twice the number of lawyers as there are law jobs.

The problem is growing, but so is denial. Recent headlines proclaimed that a drop in law school applications must be a sign that the market is self-correcting. After all, first-year enrollment fell by seven percent — from 52,500 in 2010 to 48,700 in 2011. Now for some context: The current number is about the same as total one-L enrollment was each year from 2002 to 2006.

How are law schools responding to this continuing crisis? Some better than others.

Law school reactions

Deans at George Washington University, Hastings and Northwestern recently announced that they were considering plans to reduce enrollments. Meanwhile, Thomas M. Cooley Law School opened a new campus in Tampa where it has signed up 104 students — double the number it initially expected. Last month the WSJ quoted Cooley’s Associate Dean James Robb, who said that the school “isn’t interested in reducing the size of its entering class on the basis of the perceived benefit to society.”

All right, let society take care of itself. But how about the school’s students? Two weeks after the Journal article, the ABA reported recent law school graduate employment data that, for the first time, refined one category of “employed” to include only jobs requiring a J.D. degree. For that group, Cooley’s “full-time long-term” rate for the class of 2011 nine months after graduation was 37.5%. Remarkably, more than two dozen law schools did even worse.

I wonder how those who run Cooley — and many other law schools — would feel if they had to bear the risk that some of their alumni might default on their educational loans. For now, we’ll never know because: 1) the federal government backs the vast majority of those loans, and 2) even bankruptcy can’t discharge them.

Meanwhile, a court recently dismissed Cooley alumni’s complaint alleging that the school’s employment statistics misled them into attending. The most revealing line of Senior Judge Gordon Quist’s ruling is the conclusion:

“The bottom line is that the statistics provided by Cooley and other law schools in a format required by the ABA were so vague and incomplete as to be meaningless and could not reasonably be relied upon.”

Too bad for those who did. In some ways, the profession is a terrible mess — and it’s just the beginning.

UNFORTUNATE COMMENT AWARD

Apparently, some law school deans just don’t get it and never will. One of them, Dean Rudy Hasl of Thomas Jefferson School of Law in San Diego, wins my latest Unfortunate Comment Award with his remarks reported in The Wall Street Journal:

“You can’t measure the value of a law degree in terms of what your employment number was nine months after graduation.”

All right. Then how should we measure it?

Bad facts and getting worse

Hasl was trying to explain away his school’s position in the bottom five of those reporting the new ABA-required metric: percentage of graduates with full-time long-term jobs requiring a law degree. Thomas Jefferson School of Law reported that only 27 percent of its 2011 class held such jobs nine months after graduation.

Transparency can be unflattering. For the profession overall, the full-time, degree-required, nine-month employment rate for all 2011 law graduates was 55 percent. Predictably, graduates from the top schools fared the best. But the interesting comparisons are with last year — when the ABA and U.S. News allowed schools to include part-time and non-legal jobs in classifying their graduates as employed.

According to the Journal, data that Thomas Jefferson reported to U.S. News under last year’s broader definition showed a 68 percent employment rate nine months out. That’s nothing to brag about, but this year’s 27 percent long-term degree-required employment rate is stunning. Nevertheless, Dean Hasl says not to worry.

What metric matters?

Hasl explained that the nine-month employment rate is inappropriate because a “graduate who takes the California bar exam in July…won’t get the results until late November. Many employers won’t even interview a graduate who hasn’t been licensed.”

That moves his argument to even weaker ground. The July 2011 California bar passage rates for first-time test-takers put Thomas Jefferson School of Law dead last among 20 California ABA-approved schools — with a 33 percent bar passage rate.

Last year, it became the first of many schools facing alumni suits alleging that misleading and deceptive post-graduation employment statistics induced them to attend law school in the first place. Among their defenses, some schools have asserted a variation of the “everyone does it and the ABA says it’s ok” defense. When I was a kid, that sort of excuse for failing to exercise independent judgment didn’t usually work with my parents.

The judge in a similar case against the New York School of Law (not to be confused with NYU) didn’t buy it, either. But the court dismissed that complaint on more tenuous grounds. It thought that college graduates considering law school were “a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives before making a decision regarding their post-college options.”

That reflects some serious magical thinking about the way law schools have bombarded prospective students with dubious information. Only two years ago, the overall percentage of all law school graduates supposedly employed nine months after graduation was in the 90s — but few schools bragged about the ones who were part-time baristas at Starbucks or greeters at Wal-Mart.

Now what?

Thomas Jefferson School of Law will charge full-time students $42,000 for annual tuition in 2012-2013. What are those students buying for their more than $120,000 degrees? A one-in-three chance of passing the California bar on the first try and slightly better than a one-in-four chance of holding a full-time degree-required job nine months after graduation.

If you graduated a few years ago, you might also have a spot in a putative class action against your alma mater. The court hasn’t dismissed that complaint.

DEWEY’S JEFFREY KESSLER: STARS IN THEIR EYES

This is the third in a series profiling Dewey & LeBoeuf’s former leaders. Apparently, Jeffrey Kessler (Columbia University, B.A., 1975; Columbia Law School, J.D., 1977) has become a prisoner of his celebrity clients’ mentality. A prominent sports lawyer, he analogizes big-name attorneys to top athletes: “The value for the stars has gone up, while the value of service partners has gone down.”

Kessler was a long-time partner at Weil, Gotshal & Manges before joining Dewey Ballantine in 2003. After the firm’s 2007 merger with LeBoeuf Lamb, he became chairman of the Global Litigation Department, co-chairman of the Sports Litigation Practice Group and a member of the Executive and Leadership Committees. Long before he became a member of the Gang of Four in Dewey & LeBoeuf’s office of the chairman, he was a powerhouse in the firm.

Blinded by their own light

Some attorneys have difficulty resisting the urge to absorb the ambitions and ethos of their clients. Many corporate transactional attorneys have long been investment banker and venture capital wannabees, at least when it comes to the money they’d like to make.

Of course, not all corporate practitioners are myopic thinkers. Kessler proves that narrow vision isn’t limited to transactional attorneys. But the rise of such attitudes to the top of many large law firms has occurred simultaneously with the profession’s devolution to models aimed at maximizing short-term profits and growth.

Kessler was a vocal proponent of the Dewey & LeBoeuf star system that produced staggering spreads between people like him — reportedly earning $5.5 million a year — and the service partners, some of whom made about five percent of that. It was the “barbell” system: top partners on one side; everybody else on the other.

In such a regime, there’s no shared sacrifice. What kind of partnership issues IOUs to star partners when the firm doesn’t make its target profits? Something that isn’t a partnership at all.

Lost in their own press releases

Kessler regularly finds himself in the presence of celebrity athletes. That can be a challenging environment. But once you start believing your own press releases, the result can be the plan that he and fellow Dewey & LeBoeuf partner Charles Landgraf “spearheaded” (according to fellow Gang of Four member Martin Bienenstock).

To deal with outstanding IOUs to Dewey partners whose guaranteed compensation couldn’t be paid when the firm underperformed for the year, Kessler helped to mortgage its future: for “a six- or seven-year period, starting in 2014, [a]bout six percent of the firm’s income would be put away to pay for this….”

It’s a remarkable notion. Partners didn’t get all of their previously guaranteed earnings because the firm didn’t do well enough to pay it. But rather than rethink the entire house of cards, it morphed into a scheme whereby future partnership earnings — for six or seven years — would satisfy the shortfall. Never mind that there was no way to know who would be among the firm’s partners in those future years. The money had to be promised away because the stars had to be paid.

Sense of entitlement

Kessler gives voice to the pervasive big law firm attitude that without stars there is no firm. It’s certainly true that every firm has to attract business and that some lawyers are more adept at that task than others. But Kessler’s approach produced yawning income gaps at Dewey. Similar attitudes have contributed to exploding inequality afflicting many equity partnerships. For insight into the resulting destabilization, read the recent article by Edwin Reeser and Patrick McKenna. “Spread Too Thin.”

But does Kessler really think that he and a handful of his fellow former Dewey partners are the first-ever generation of attorney stars? Twenty-five years ago when average partner profits for the Am Law 100 were $325,000 a year, did his mentors at Weil Gotshal earn twenty times more than some of their partners — or anything close in absolute dollars to what Kessler thinks he’s worth today? Does he believe that there are no stars at firms such as Skadden Arps, Simpson Thacher or other firms that have retained top-to-bottom spreads of 5-to-1 or less?

Beyond his prominence in the profession, Kessler is shaping tomorrow’s legal minds as a Lecturer-in-Law at Columbia. For anyone who cares about the future, that’s worth pondering.

DEWEY: COLLATERAL DAMAGE

The vast failure of knowledge among the nation’s brightest law students remains remarkable. Their comments in the wake of Dewey & LeBoeuf’s stunning implosion make the point regrettably clear. Even as they become collateral damage to a tragic story that has many innocent victims, some persist in allowing hope to triumph over reality.

The NY Times reported on the 30 second-year law students from the nation’s best schools who thought they’d be earning $3,000 a week as Dewey & LeBoeuf summer associates. They’re now scrambling to find another productive way to fill three months that were supposed to be a launching pad for full-time careers with starting compensation at $160,000 a year.

Idealistic dreams meet harsh reality

One Ivy League student expressed optimism that other firms would step up and offer jobs to the displaced:

“A firm may look like a corporation, yes, but we’re all part of a fraternity of lawyers. Next year one becomes a member of the bar association, a linked structure. The firms may be competitors, but at the end of the day this is still the greater legal field. I hope this sensibility that we are part of a profession will also be in the minds of people as they consider us.”

The article doesn’t say which Ivy League law school the student attends, but it — along with his undergraduate institution — has failed the educational mission miserably. Most large law firms, including Dewey & LeBoeuf, ceased membership in a profession years ago and, during the last decade, that trend has accelerated. A myopic focus on short-term business school-type metrics, two of which are growth and equity partner profits — has taken Dewey and many others down a road to unfortunate places.

Most big firms are no longer “part of a profession” that will step up to offer law students or anyone else a life preserver. If they hire people, such as former Dewey lawyers and staff, it’s because they fit those firms’ own business plans. Another student who thought he had a job at Dewey for the summer got it right: “Now every other program is full, and it’s not like they’re going to adjust their plans to accommodate the failure of this one.”

It’s all connected

Everyone wonders why the number of law school applicants continues to outpace the number of law school openings that, in turn, dwarf the demand for lawyers. One answer is that colleges and law schools don’t educate prospective law students about the daunting challenges ahead. In fact, those institutions have the opposite incentives: colleges want to maximize the placement of their graduates in professional schools because that makes them look good; law schools maximize applicants because it pumps up the selectivity component of their U.S. News & World Report rankings.

Those already in the legal profession are well aware of the true state of affairs. The great disconnect is the failure of information to make its way to prospective lawyers who could benefit most from it. The press has increased its attention to the topics — the glut of lawyers; staggering law school debt that now averages more than $100,000; increasing career dissatisfaction among practicing lawyers.

Of course, ubiquitous confirmation bias will continue to encourage prospective lawyers to see what they want to see as they rationalize that they’ll be the lucky ones running the gauntlet successfully. Some will; too many won’t. The remarks of the Ivy Leaguer who spoke with the Times shows how much work remains for those who truly care about the fate of the next generation — lawyers and non-lawyers alike. There are miles to go before any of us should sleep.

EXPLAINING ABA INTRANSIGENCE

Who are these people?

Recently, the ABA’s Council of the Section of Legal Education and Admission to the Bar rejected an important recommendation of its Special Standards Review Committee. The proposed rule would have required law school-specific disclosure of salary information. No dice, said the Council.

It raises a question that no one seems willing to ask: Who are these Council people, anyway?

Perhaps the Council’s composition is relevant to understanding why it vetoed its own committee’s effort to promote greater candor. In approving a host of other transparency initiatives that have been far too long in coming, the Council stopped short of requiring what might be the most important disclosure of all:

If a student manages to get a job upon graduation, what are the chances that it will pay well enough to cover educational loans, rent, food, and the bare necessities of life?

I don’t know how individual members voted, but their affiliations are interesting. The current chair is dean of the New England School of Law, which has a perennial place in the U.S. News & World Report unranked nether regions. (Regular readers know my disdain for the U.S. News rankings that have transformed deans into contortionists as they pander to its flawed methodology. But as an overall indicator of general quality groups rather than specific ordinal placement, they confirm what most people believe to be true anyway.)

Consider the other academics on the Council. The Chair-elect is also a dean — Washington University School of Law (23rd on the U.S. News list). The Council’s Secretary was dean at the University of Montana School of Law (#145 ). Others deans and former deans on the Council hail from Hamline University Law School (unranked), North Carolina Central University School of Law (unranked), University of Kansas School of Law (#89), University of Miami School of Law (#69), Boston University School of Law (#26). Another member is an associate dean —  University of Minnesota Law School (#19). The remaining academic Council members teach at Drexel University (#119) and Georgetown (#13).

Several other Council members who are not full-time professors have teaching affiliations with, for example, Cleveland-Marshall Law School (#135), University of Utah (#47), and Arizona State University (#26, tied with BU and Indiana University).

Each institution has its share of outstanding faculty and graduates; that’s not the point. But if these or most other schools had to disclose their recent graduates’ detailed salary information, would it make any of them look better to prospective students? Not likely.

The “appearance of impropriety” is an important ethical concept in the legal profession. Any dean or former dean on the Council who voted in favor of salary disclosure should say so. Those who don’t should live with the guilt by association that will accompany adverse inferences drawn from their silence.

Here’s the current Chairman’s spin on the situation: “There should be no doubt that the section is fully committed to clarity and accuracy of law school placement data. Current and prospective students will now have more timely access to detailed information that will help them make important decisions.”

Unless, of course, the information that students seek relates to the incomes they’ll earn after forking over $100,000-plus in tuition and incurring debt that they can’t discharge in bankruptcy.

Also from the ABA statement:

“The Council specifically declined to require the collection and publication of salary data because fewer than 45% of law graduates contacted by their law schools report their salaries. The Council felt strongly that the current collection of such data is unreliable and produces distorted information.”

If a forty-five percent response rate is sufficiently low to throw out data as unreliable because it produces distorted information, what does that say about U.S. News‘ survey used to calculate almost one-seventh of every law school’s 2013 ranking? The response rate for its “assessment by lawyers/judges” component was twelve percent.

I know, I know: “A foolish consistency is the hobgoblin of little minds.” (Emerson, R.W.,”Self-Reliance,” First Essays, 1841)

WORSE THAN CHEATERS

Scandals involving schools of higher education lying to enhance their U.S. News rankings seem to be appearing more frequently. The most recent confession came from Claremont McKenna College. Its false numbers helped make it the ninth-best liberal arts college in the country. As usual, the school’s top leader blamed a rogue player instead of acknowledging a pervasive problem: deference to idiotic metrics has displaced reasoned judgment and the resulting institutional culture promotes predictable behavior.

Some difficulties flowing from U.S. News rankings methodology make the news. Like other recent instances of misreported data, the focus on Claremont relates to false admissions statistics, namely, SATs. At the University of Illinois College of Law, it was LSATs and GPAs.

Of course, such behavior is reprehensible. But do the rogue villains differ more in degree than in kind from deans who game the system? Some solicit transfer students whose low LSATs led to their rejection as entering one-Ls, but whose scores don’t count when they arrive as tuition-paying 2-Ls. Like the rogues, they seek to boost selectivity scores as measured by LSATs and undergraduate GPAs that comprise more than 20 percent of a law school’s total U.S. News ranking.

Similarly, employment rates at graduation and nine months later account for 18 percent of a law school’s ranking. That encourages deans to hire their own graduates for short-term projects and — until recent ABA revisions become fully effective — permits them to count every part-time, non-legal job as employment.

Expenditures per student account for about 10 percent of a law school’s score. That encourages deans to spend more money and increase tuition to cover the resulting costs while students incur more debt. The resulting vicious circle exacerbates intergenerational antagonisms that are rapidly becoming the legal profession’s — and society’s — next big crisis.

All of the recent attention about bogus admissions and placement numbers shines an important light on some dirty little corners of academia. But more profound rankings methodology problems have gone unnoticed. Specifically, selectivity and placement factors combined barely equal the weight that the ranking system gives to “Quality Assessment” — which accounts for 40 percent of a school’s overall score.

How does the U.S. News perform “Quality Assessment”? Two ways.

First, it sends out surveys to four individuals at all accredited law schools throughout the country: dean, dean of academic affairs, chair of faculty appointments, and the most recently tenured faculty member. The survey asks each recipient to rate all other schools on a scale from marginal (1) to outstanding (5). It doesn’t require that any respondent have any knowledge about any of the 190 schools that he or she rates. (Respondents have a “don’t know” option, but U.S. News doesn’t disclose how many used it. After all, that information would taint its misleading 66 percent response rate.)

A second assessment score comes from lawyers and judges. They, too, get the U.S. News survey asking for (1) to (5) responses about every school. Apart from 750 hiring partners and recruiters at law firms who made the newly developed U.S. News-Best Lawyers list of “Best Law Firms,” information about the “legal professionals, including hiring partners of law firms, state attorneys general, and selected state and federal judges” receiving the survey isn’t disclosed. But the anemic response rate is: 14 percent. One can reasonably ask why such flawed attempts at “quality assessment” should count at all.

One answer is that eliminating them would magnify the importance of the other factors, including test scores. In that respect, there’s a curious aspect of the recent NY Times article about Claremont’s false SATs. It quoted Robert Franek at length. Franek is senior vice president of The Princeton Review, a test-preparation business that has flourished as a principal benefactor of the U.S. News rankings mania.

The Princeton Review does rankings, too. Anyone who regards its list of law schools with the “Best Career Prospects” as meaningful should take a look at the top five for 2012 and ask, “Where are Harvard, Yale and Stanford?”

And then there’s The Princeton Review‘s original October 12, 2010 press release (subsequently revised) that announced the 2011 winner in the “Best Law School Professors” category: Brown.

Brown, of course, doesn’t have a law school.

THE LAW SCHOOL QUANDARY

Law school deans are getting conflicting advice. Let’s sort it out.

“Provide more practical training” has become the latest mantra. At the recent annual meeting of the Association of American Law Schools, Susan Hackett, a legal consultant and former general counsel of the Association of Corporate Counsel, argued for a year of executive-style classes covering business topics and skills. Here’s a better suggestion: students seeking a business school education should attend business school.

Meanwhile, according to the National Law Journal, Peter Kalis, chairman of K&L Gates, said that some current law school criticism is misplaced: “I believe law schools should concentrate on the education of law students from the perspective of acculturating them in the rule of law. Law students should spend that time being immersed in and becoming familiar with common law subjects.” More fee simple, anyone?

Finally, a Northwestern University law professor and a first-year Kirkland & Ellis associate offered a dramatic solution to the shortage of attorneys. You probably didn’t know there was one. Although the U.S. already leads the world in lawyers per capita, the authors concluded that allowing colleges to offer undergraduate law programs would: 1) reduce law school tuition to zero (for such students); 2) produce more lawyers; 3) cause some attorneys to charge lower fees; and 4) assure broader access to legal services for lower- and middle-income Americans. While not prohibiting law schools from offering today’s $150,000 J.D. degree programs, the plan would put most law schools out of business.

Where to begin? One reason the United States has too many lawyers is that law school has long been a default solution for college students. But when youthful expectations clash with the harsh reality that most attorneys endure, career dissatisfaction results. Allowing poorly informed undergraduates to pursue a law degree right out of high school would be exponentially worse — for them and the profession. (Commenters to the on-line version of the article destroyed the authors’ cavalier comparison of their scheme to the UK system. If you’re wondering why The Wall Street Journal editorial board published such a flawed piece, you’re not alone.)

What do students think?

At the same time, today’s law students like the education they’re getting. According to the recently released 2011 Law School Survey of Student Engagement of 33,000 current students at 95 law schools in the U.S. and Canada, 83 percent of respondents said that their experience in law school was “good” or “excellent.” Eighty percent said they definitely or probably would attend the same law school if they could start over again. Maybe most of these students will join the ranks of unhappy scambloggers when they can’t get jobs to repay their loans, but for the moment they’re satisfied.

But the same study revealed that 40 percent of students felt that their legal education had so far contributed only some or very little to their acquisition of job- or work-related knowledge and skills. In other words, some like their law school experience, even if it’s not equipping them in a practical way for positions they hope to obtain.

A final point may resolve this apparent contradiction. When students seek their first law jobs, curriculum makes little difference. Candid big firm interviewers admit that, except insofar as a particular course might give a recruit something interesting to discuss in an interview, subject matter is irrelevant. In fact, dramatic curriculum innovation is underway at many schools and, however worthwhile it otherwise may be, affected students haven’t become more desirable to prospective employers:

“There’s no employer out there right now — not law firms, not the Department of Justice, not the ACLU — that are seeking out these graduates,” Indiana University Maurer School of Law Professor William Henderson observed at the AALS meeting. “These programs haven’t affected hiring patterns. It’s still all sorted out with credentials. It’s based on the brand of the law school.”

If the vast majority of students are happy with the law school experience and changing it won’t improve their job prospects, perhaps the legal academy and its critics should consider focusing attention elsewhere. Here’s an idea: Provide prospective law students better information about the real life that most lawyers lead. For too many of them, it comes as an unpleasant surprise. Forewarned is forearmed.

UNFORTUNATE COMMENT AWARD

Today’s “Unfortunate Comment Award” winner is ABA President William (“Bill”) Robinson III, who thinks he has found those responsible for the glut of unemployed, debt-ridden young lawyers: the lawyers themselves.

“It’s inconceivable to me that someone with a college education, or a graduate-level education, would not know before deciding to go to law school that the economy has declined over the last several years and that the job market out there is not as opportune as it might have been five, six, seven, eight years ago,” he told Reuters during a January 4 interview.

Which year we talkin’ ’bout, Willis?

Recent graduates made the decision to attend law school in the mid-2000s, when the economy was booming. Even most students now in their third year decided to apply by spring 2008 — before the crash — when they registered for the LSAT. Some of those current 3-Ls were undergraduates in the first-ever offering of a course on the legal profession that I still teach at Northwestern. What were they thinking? I’ll tell you.

I’ve written that colleges and law schools still make little effort to bridge a pervasive expectations-reality gap. Anyone investigating law schools in early 2008 saw slick promotional materials that reinforced the pervasive media image of a glamorous legal career.

Jobs? No problem. Prospective students read that for all recent graduates of all law schools, the overall average employment rate was 93 percent. They had no reason to assume that schools self-reported misleading statistics to the ABA, NALP, and the all-powerful U.S. News ranking machine.

But unlike most of their law school-bound peers, my students scrutinized the flawed U.S. News approach. Among other things, they discovered that employment rates based on the ABA’s annual law school questionnaire were cruel jokes. That questionnaire allowed deans to report graduates as employed, even if they were flipping burgers or working for faculty members as temporary research assistants.

Law school websites followed that lead because the U.S. News rankings methodology penalized greater transparency and candor. In his Reuters interview, Robinson suggested that problematic employment statistics afflicted “no more than four” out of 200 accredited institutions, but he’s just plain wrong. Like their prospective students, most deans still obsess over U.S. News rankings as essential elements of their business models.

The beat goes on

With the ABA’s assistance, such law school deception continues today. Only last month — December 2011 — did the Section on Legal Education and Admission to the Bar finally approve changes in collecting and publishing law graduate placement data: Full- or part-time jobs? Bar passage required? Law school-funded? Some might consider that information relevant to a prospective law student trying to make an informed decision. Until this year, the ABA didn’t. The U.S. News rankings guru, Robert Morse, deferred to the ABA.

The ABA is accelerating the new reporting process so that “the placement data for the class of 2011 will be published during the summer of 2012, not the summer of 2013.” That’s right, even now, a pre-law student looking at ABA-sanctioned employment information won’t find the whole ugly truth. (Notable exceptions include the University of Chicago and Yale.) Consequently, any law school still looks like a decent investment of time and money, but as Professor William Henderson and Rachel Zahorsky note in the January 2012 issue of the ABA Journal, it often isn’t.

Students haven’t been blind to the economy. But bragging about 90+ percent employment rates didn’t (and doesn’t) deter prospective lawyers. Quite the contrary. Law school has long been the last bastion of the liberal arts major who can’t decide what’s next. The promise of a near-certain job in tough times makes that default solution more appealing.

Even the relatively few undergraduates (including the undergraduates in my class) paying close attention to big firm layoffs in 2009 were hopeful. They thought that by the time they came out of law school, the economy and the market for attorneys would improve. So did many smart, informed people. Youthful optimism isn’t a sin.

Which takes me to ABA President Robinson’s most telling comment in the Reuters interview: “We’re not talking about kids who are making these decisions.”

Perhaps we’re not talking about his 20-something offspring, but they’re somebody’s kids. The ABA and most law school deans owed them a better shake than they’ve received.

It’s ironic and unfortunate: one of the most visible spokesmen in a noble profession blames the victims.

A NEW LAW SCHOOL MISSION – PART II

The second and final installment of “Great Expectations Meet Painful Realities” — my latest contribution to the debate about the legal profession’s growing crisis — is now available in the December 2011 issue of Circuit Rider, the official publication of the Seventh Circuit Bar Association. My article begins on page 26. For those who are interested, here’s the link to Part I.

TOO LITTLE; TOO LATE

The ABA is thinking about punishing law schools that lie. What courage!

At the front end of the experience, intentionally inflated undergraduate GPAs and LSATs for Villanova’s admitted students led to an ABA censure in August. The school must now employ an independent compliance monitor for two years. Next up in the hot seat: the University of Illinois College of Law. Now, at the back end, the ABA is considering imposing penalties on law schools that misrepresent graduate job placement data.

This one-school-at-a-time approach misses the larger targets. Along with many law schools’ dubious sales tactics, the ABA itself has contributed to the chronic oversupply of lawyers.

Don’t let a recent Wall Street Journal article about the declining number of law school applicants fool you. Excess supply persists. Although total applicants are down ten percent from last year, the number of students starting law school has actually been rising. Meanwhile, the projected growth in new attorney jobs remains far below what’s required to achieve full employment for lawyers hoping to work as lawyers.

In the fall of 2002, first-year enrollment was 48,400. By 2009 — the last year for which the LSAC has published information — it had climbed to 51,600. In other words, demand still exceeds supply. This year’s ten percent applicant drop — to 78,900 — won’t prompt schools to reduce capacity. Rather, it will encourage growth.

And the ABA isn’t stopping them. Between 1970 and 2010, the number of law schools increased from 144 to 200. During the same period, the total number of law students soared from 64,000 to 145,000.

Meanwhile, the Bureau of Labor Statistics estimates that there will be only 98,000 net additional legal jobs for the entire decade ending in 2018. At current enrollments, law schools will produce five times that many graduates; baby boomer retirements won’t bridge that gap.

Last year’s drop in applicants may mean that some recent graduates are giving more thought to whether law school is the right path. That would be great news for them and the profession. Unfortunately, the accreditation of new schools and the growth of existing ones is bad news for many would-be lawyers.

Having facilitated a situation that continues to inflict tragic consequences on many unsuspecting victims, the ABA has avoided leading serious remedial efforts. In light of its recent punt on the requirement that law schools report meaningful information about their graduates’ employment status, its now-contemplated scrutiny of individual schools’ placement statistics rings hollow. To wit: the Wal-Mart greeter with a law degree still counts as employed.

The ABA’s piecemeal approach won’t solve the problem. Most law schools are prisoners of short-term profit-maxizing business models and metrics. That’s why too many resort to half-truths or outright deception to enhance U.S. News rankings, pump up demand, and put tuition-paying butts in classrooms.

Until students understand the deep methodological flaws in the U.S. News rankings, too many deans will continue manipulating them. Independent audit of the data that schools submit would help. But it should be part of a larger strategy: providing better information to prospective law students long before they sit for the LSAT.

The law can be a noble calling, but it’s not for everyone. When those enrolling in law school understand what’s ahead — including the possibility that their dream jobs won’t be there — they make better decisions and the entire profession wins. Here’s the harsh truth that will surprise many recruits: Some deans don’t act with much nobility when it comes to pursuing tuition dollars.

In an 1891 letter to his fiance, Louis Brandeis wrote: “If the broad light of day could be let in upon men’s actions, it would purify them as the sun disinfects.” Twenty years later, he was less optimistic about improving human behavior when he focused instead on practical remedies for misconduct: “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

The ABA isn’t going to start stripping schools of their accreditations, but it can put them under brighter lights. Adding surveillance cameras and a few more cops on the beat wouldn’t hurt, either.