LAW SCHOOL DECEPTION

Last Sunday, the NY Times asked: Are law schools deceiving prospective students into incurring huge debt for degrees that aren’t worth it?

Of course they are. The U.S. News is an aider and abettor. As the market for new lawyers shrinks, a key statistic in compiling the publication’s infamous rankings is “graduates known to be employed nine months after graduation.” Any job qualifies — from joining Cravath to waiting tables. According to the Times, the most recent average for all law schools is 93%. If gaming the system to produce that number doesn’t cause students to ignore the U.S. News’ rankings altogether, nothing will.

My friend, Indiana University’s Maurer School of Law Professor Bill Henderson, told the Times that looking at law schools’ self-reported employment numbers made him feel “dirty.” I assume he’s concerned that prospective students rely on that data in deciding whether and where to attend law school. I agree with him.

But an equally telling kick in the head is buried in the lengthy Times article: Most graduates who achieve their initial objectives — starting positions in big firms paying $160,000 salaries — quickly lose the feeling that they’re winners. Certainly, they must be better off than the individuals chronicled in the article. What could be worse than student debt equal to a home mortgage, albeit without the home?

Try a legal job with grueling hours, boring work, and little prospect of a long-term career. Times reporter David Segal summarized the cliche’: “Law school is a pie-eating contest where first prize is more pie.”

These distressing outcomes for students and associates aren’t inevitable. In fact, they’re relatively new phenomena with a common denominator: Business school-type metrics that make short-term pursuit of the bottom line sterile, objective, and laudable. Numbers prove who’s best and they don’t lie.

Law school administrators manipulate employment data because they have ceded their reasoned judgment to mindless ranking criteria. (“[M]illions of dollars [are] riding on students’ decisions about where to go to law school, and that creates real institutional pressures,” says one dean who believes that pandering to U.S. News rankings isn’t gaming the system; it’s making a school better.)

Likewise, today’s dominant large firm culture results from forces that produced the surge in average equity partner income for the Am Law 50 — from $300,000 in 1985 to $1.5 million in 2009. Leveraged pyramids might work for a few at the top; for everyone else — not so much.

The glut of law school applicants, as well as graduates seeking big firm jobs to repay their loans, leaves law school administrators and firm managers with no economic incentive to change their ways. The profession needs visionaries who are willing to resist perpetuating the world in which debt-laden graduates are becoming the 21st century equivalent of indentured servants.

Henderson calls for law school transparency in the form of quality employment statistics. I endorse his request and offer a parallel suggestion: Through their universities’ undergraduate prelaw programs, law schools should warn prospective students about the path ahead before their legal journeys begin.

Some students enter law school expecting to become Atticus Finch or the lead attorneys on Law & Order. Others pursue large firm equity partnerships as a way to riches. Few realize that career dissatisfaction plagues most of the so-called winners who land what they once thought were the big firm jobs of their dreams.

A legal degree can lead to many different careers. The urgency of loan repayment schedules creates a practical reality that pushes most students in big law’s direction. If past is prologue, the vast majority of them will not be happy there. They should know the truth — the whole truth — before they make their first law school tuition payments. Minimizing unwelcome surprises will create a more satisfied profession.

Meanwhile, can we all agree to ignore U.S. News rankings and rely on our own judgments instead of its stupid criteria? Likewise, can big law managers move away from their myopic focus on the current year’s equity partner profits as a definitive culture-determining metric? I didn’t think so.

12 thoughts on “LAW SCHOOL DECEPTION

  1. The questions I would pose to you and Bill Henderson (and perhaps Prof Brian Tamahana), most respectfuly, Steve, is whether there is a viable class action available out there? Is US News an “aider and abettor” in connection with such a claim? And is the ABA either an aider or abettor or does it have direct culpability?

    More interesting and indeed perhaps even scandalously shocking is a document published in late 2009 that first surfaced and was only widely reported in January 2011 from some deep catacomb of the ABA entitled “The Value Proposition of Attending Law School.” ( http://www.abanet.org/lsd/legaled/value.pdf )This paper was authored by the ABA Commission on the Impact of the Economic Crises on the Profession and Legal Needs. The paper notes in part:

    “Although many factors may influence one’s decisions about whether and where to attend law school, a proper understanding of the economic cost of a legal education is vital for making an educated decision. Far too many law students expect that earning a law degree will solve their financial problems for life. In reality, however, attending law school can become a financial burden for law students who fail to consider carefully the financial implications of their decision. ….

    Many prospective law students are already familiar with the steep price of a legal education. What many do not know, however, is that these costs often exceed the expected return on their investment in the job market. Prior to the recession, starting salaries for associates at large law firms stabilized around $160,000 a year, and many prospective law students expect to be able to earn a comparable amount. In reality, however, only 23% of the graduates of the class of 2008 started with such a high salary, including only 37% of those who went into private practice. Shockingly, most of the rest of the graduates, about 42%, started with an annual salary of less than $65,000…..

    The combination of the rising cost of a legal education and the realities of the legal job market mean that going to law school may not pay off for a large number of law students. Dean David Van Zandt of Northwestern Law School estimates that to make a positive return on the investment of going to law school, given the current costs, the average law student must earn an average annual salary of at least $65,315. As the data above show, however, over 40% of law school graduates have starting salaries below this threshold. Thus, many students start out in a position from which it may be difficult to recoup their investment in legal education. Even students who do ultimately prosper over the course of a career face difficulties from high debt loads during the beginning of their career. High debt can limit career choices, prevent employment in the public service sector, or delay home ownership or marriage. In short, going to law school can bring more financial difficulty than many law students expect.” [Footnotes omitted]

    I frankly cannot fathom why this four page report has been buried in ABA catacombs for months and why it was was not delivered to every prospective law school applicant after its rather clandestine publication by the ABA, nor why the 979 word report was never prominently posted on the NALP web site nor why this critical warning is not contained in every law school catalogue. It could be easily argued, I would suggest, that the report is a veritable “smoking gun” evidencing the fact that critical material information was being withheld from law school applicants.

    Perhaps it is time for those concerned with the issue to take out their blue books and respond to the question, given the facts outlined by you, those in the New York Times, Bill Henderson, Brian Tamahana and by me in http://kowalskiandassociatesblog.com/2010/07/25/what-if-they-built-a-new-law-school-and-nobody-came/ , what are the rights and remedies of the parties?

    Jerry Kowalski

  2. These law schools are beyond short-sighted. First, over time, all scams get exposed, particularly when in the Internet Era everyone is a potential journalist, publisher, muck-raker and activist. That description includes most of those who will be among the scammed.

    The other trend that bodes ill for schools is the trend toward e-learning, which ultimately will render many, if not most, universities (and their grad schools) irrelevant. In an interview in the Aug 6 issue of TechCrunch (http://techcrunch.com/2010/08/06/bill-gates-education/), Bill Gates is quoted as saying he thinks “the idea of young adults having to go to universities in order to get an education is going to go away relatively soon.”

    “Five years from now on the web for free you’ll be able to find the best lectures in the world,” Gates said at the Techonomy conference in Lake Tahoe, CA today. “It will be better than any single university,” he continued, adding that “college needs to be less ‘place-based.'”

    His overall point is that it’s just too expensive and too hard to get these upper-level educations. “And soon place-based college educations will be five times less important than they are today.”

    Anyone who scoffs that law professors can’t be displaced by e-learning isn’t paying attention at all. It won’t be that there will be no law professors. There will, but there will be a lot fewer, and they’ll be distributing their lessons via the Web, which will allow the best-reviewed of them to have many thousands of law students throughout the world, each paying a small fraction of the current cost.

    Here’s how precarious the top-tier schools’ positions are:

    How significant would Harvard Law School be if the top 20-30% of their professors were lured away with a stake in a well-funded e-learning startup through which they could teach the way they want to, eliminate all the university system foolishness and politics, and get obscenely wealthy?

    And if you think the barrier will be testing or certification, once again you’re not paying attention. The pace of evolution and innovation in e-learning is dazzling. Just look at the amount of capital flowing into it.

    “Whom the Gods would destroy, they first make mad with power.” -Euripides. “Mad with power” aptly describes the cynical practice of hustling students out of a couple of hundred thousand dollars each for an overhyped law school education.

  3. That’s a very interesting and thought provoking article. I don’t think there’s any question that lawyers’ training needs to change (see http://intelligentchallenge.wordpress.com/2010/08/03/your-training-was-useless-%C2%A0discuss/).
    However, the post seems to lay all the blame at the feet of the law schools. While I don’t seek to defend them (being from the UK, I don’t feel qualified to comment on many of the assertions), I would say that the profession is undergoing wholesale change of a pace and of the type not seen before.
    Deregulation, globalisation,commoditisation, new competitors and changing client buying patterns are leading to a turbulent environment in which many of the leading law firms are re-assessing their business model and organisational structure. If the leading law firms are struggling to see five years ahead, and consequently find it difficult to assess their likely needs, it must be even harder for law schools who are one step removed from the market.

  4. As Jerry stated above, the fact that the ABA’s “Value Proposition of Law School” was issued well over a year ago, but was unceremoniously buried deep within the bowels of the ABA website is reason enough for revoking the ABA’s accreditation powers.

    The ABA alone has the power to regulate law schools and to demand that these institutions provide students with the practical skills required to secure gainful legal employment, or, if that fails, to establish a solo practice. Instead of taking desperately needed action, what does the ABA do? Form committee after committee and issue opinion after opinion that is tantamount to fiddling while Rome burns.

  5. The simplest and cleanest solution is to allow law-school debt to be discharged in bankruptcy. That would remove the incentive to loan to any but the most creditworthy students and it would remove the incentive to admit any but the most promising. It would also trim the swollen ranks of lawyers, now almost a million, in the U.S.

  6. I’m not sure if any amount of evidence can talk a prospective law student out of attending. It’s simply impossible to tell a 22-24 year old they’re making a bad decision. These kids are coming off a great “accomplishment” – graduating college. They don’t yet realize anyone with a pulse can graduate. They feel like they’re superstars who can do anything. You show them statistics that say “only the top 10% will get a job that enables the student to pay off their debt” and their answer is “Oh that’s cool I’ll be in the top 5%.”

    So, I believe that even if law schools were completely transparent with their employment statistics, including details regarding how much each graduate is known to make, as long as there are a couple of those $150K + earners in the group, they will continue to sign up believing they will follow suit.

    • The notion that some students will make the same decision when in possession of the facts does not excuse nondisclosure of facts to them in the first place. If students choose to take the plunge knowing the risks involved, they properly bear that risk, but not otherwise.

      As a profession that deals with the topics of ethics and misrepresentation regularly, one would think this is obvious.

  7. I agree with EVRENSEVEN. I recently got in touch with a family friend on the cusp of graduating from Columbia (undergrad). His father is a successful solo estate-planning and tax attorney. The son told me that “what my dad does is SO BORING” and that he wanted to do “constitutional law.” Not business law, and not litigation, because those are “boring”. He then went on to tell me that even though law school was hard to get into and the economy was bad, “with a JD, you can do anything.” I wanted to shake him and say, “with a Columbia undergrad degree, you can do anything.” Don’t throw $200,000 on top of that on a lark. Even if I had told him (I made a few roundabout comments), he didn’t want to hear it anyway….

  8. Perhaps there are even more answers. For one, think even more radically about law, and acquire multiple skills. For example, science and language. Start the path in undergrad. Continue it with law schools invovled in multi-discplinary programs.

    For an example, consider the path taken by former K & E lawyer Gary Marchant, and consider his current law school and post. Dr. Marchant has a PhD in genetics and teaches science and law related courses at ASU in both the law school and, apparently, its undergrad program.
    Use the link below to see more on Dr. Marchant. He is doing great cutting edge work, and the world needs many more lawyers who “get” science and can speak more than just English.

    https://webapp4.asu.edu/directory/person/228973

    Kirk Hartley
    http://www.globaltort.com

  9. I appreciate this post and the comments — as a former career development director at a top 25 law school, I can tell hours of stories of difficult conversations I had with students and alumni about their career paths and choices. Not to mention the constant administrative pressure to find employed law grads, however one chooses to define that term.

    I can recall sitting in AALS meetings over 5 years ago and hearing some future thinking presenters discuss how the law school business model was predicated on student willingness to leverage future income and, surprise, surprise, how that model was not sustainable in the long term. That said, I do think the posting and some of the comments focus a bit too much on the big law firm model as the optimal paradigm — for good or ill. Most law graduates have never and never will practice in a large law firm. That has been true for decades. Many find great satisfaction meeting important legal needs in different practice environments. The clinker is how law school debt has upped the ante on being able to shoulder the lower salary despite the cost of debt re-payment. We need to think about ways to enable lawyers to find satisfaction in the profession and get them out from under debt peonage as part of the bargain.

    There are a lot of pressing legal needs in our communities that are not being met. It isn’t for lack of available legal talent in our country.

  10. The hell of an associate position at a large firm can always be mitigated by drugs or alcohol. My best friend has sold his ADHD medication to his uncle (who is now a partner at a large firm) for 15+ years now. Got the guy through law school and then some:)

    One of the key issues in discussions such as these, which sadly go over-looked, is that there are always many many people who will take a significant risk for a high pay-out. Helping them make a more informed judgement is good, but at the end of the day you will not have stopped a large number of them from making very risky decisions that could ruin their lives.

    I’m applying to law school like many of my friends, and most of us realize how awful the market is and how horrible life at a large firm can be. The decision ultimately comes down to this: ~50k/yr with no risk or the possibility of 160k/yr+ with high risk? In our case, the latter won out and largely for two reasons. First, the thought of 60 years of the normal, the average, and the mundane is simply too difficult to bear. Disneyland as a family vacation spot is, in a word, disgusting. And lastly, why not think that YOU will be able to find a way to make it through all the slog in law school and beyond? Whether by way of an unrelenting competitiveness, cheating, deceiving, schmoozing, or boozing… the possibilites themselves provide hope.

    The student loan bubble (which this discussion is both a part and most relevant to) can be subsumed under a larger issue in society, one in which individuals make unwise financial decisions in the face of well-perceived risks. Certainly a decline in really any substantive moral or ethical framework at a societal level (that works to stop basic morally irrational decisions) plays some part in all of this.*

    ———————-

    *If I end up burdening both my family and society with my inability to pay back debt from a decision in which I was well-informed about, then how can that not be considered a moral issue?

    • “Well-informed” seems to be the missing ingredient here. “Misinformed” is antithetical to that. All of the coverage of this issue is about schools allegedly cooking their placement stats and otherwise affirmatively misinforming prospective law degree consumers.

      How is that different than any other consumer product company engaging in the same behavior and, as a result, properly experiencing the dual response of public revulsion and regulatory redress? Right now, the former dominates. Hopefully, the latter will show up before too long.

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