Tag Archives: William Henderson

LEGAL EDUCATION’S STRANGE BEDFELLOWS

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The recent New York Times editorial on the law student debt crisis didn’t attack all law schools as “scams.” Rather, along with Law School Transparency’s recent report, it exposed a soft underbelly. But in defending the bad behavior of others, many law professors and deans are doing themselves, their schools, and the profession a great disservice.

It’s a puzzling situation.

In my 30-year career as a litigator at Kirkland & Ellis, I encountered plenty of bad lawyers. I regarded them as embarrassments to the profession. But I didn’t defend their misconduct. Good doctors don’t tolerate bad ones. Gifted teachers have no patience for incompetent colleagues.

The Opposite of Leadership 

Yet the top officers of the Association of American Law Schools sent a letter to the Times editor that began:

“The New York Times fails to make its case on law school debt.”

AALS president Blake Morant (dean of George Washington University Law School), president-elect Kellye Testy (dean of the University of Washington School of Law), and executive director Judith Areen (professor and former dean at Georgetown Law and former AALS president) then explained why all is well.

If those AALS leaders speak for the organization, a lot of law deans should consider leaving it. Rather than serving the best interests of most law schools, publicly defending the bottom-feeders — while saying “no” to every proposal without offering alternatives — undermines credibility and marginalizes otherwise important voices in the reform process.

Using a Poster Child to Make a Point

The Times editorial looked at Florida Coastal, about which certain facts are incontrovertible: low admission standards; dismal first-time bar passage rates; average debt approaching $163,000 for the 93 percent of its 2014 graduates with law school loans; poor JD-employment prospects (ten months after graduation, only 35 percent of the school’s 2014 class had full-time long-term jobs requiring bar passage).

Florida Coastal isn’t alone among those exploiting law school moral hazard. Without any accountability for the fate of their graduates, many schools feed on non-dischargeable federal loans and the dysfunctional market that has allowed them to survive.

Predictable Outrage from a Inside the Bubble

In June, Scott DeVito became Florida Coastal’s new dean. In an interview about his strategic plans, he said, ““We’re going to have to build more on the parking garage because people will want to go here.”

Predictably, DeVito pushed back hard against the Times’s op-ed. (The newspaper published only a portion of his two-page letter.) He boasts that his school’s first-time bar passage rate was 75 percent in February 2015 — third best of the state’s 11 law schools. That’s true.

But the February session typically includes only 50 to 60 Florida Coastal first-time test-takers annually. DeVito doesn’t mention more recent results from the July 2015 administration, which usually includes 200 to 300 Florida Coastal grads each year: 59.3 percent first-time bar passage rate — eighth out of eleven Florida law schools.

From 2010 to 2014, the school’s July results were:

2010: 78.8% (7th out of 11)

2011: 74.6% (8th)

2012: 75.2% (9th)

2013: 67.4% (10th)

2014: 58.0% (10th)

Who among America’s law school deans is willing to defend that performance record? Their professional organization, the AALS, seems to be.

Facts Get in the Way

DeVito acknowledges that his students’ law school debt is high, but says that’s because, as a for-profit school, “taxpayers are not paying for our students’ education.” That’s a remarkable statement. Florida Coastal and every other law school receives the current system’s inherent government subsidies: non-dischargeable federal student loans, income-based repayment (IBR), and loan forgiveness programs.

Likewise, DeVito asserts that Florida Coastal students “repay their loans,” citing the school’s low default rate. The AALS letter makes the same point: “[M]ost law students…are able to repay and do. The graduate student default rate is 7 percent versus 22 percent for undergrads.”

That argument is disingenuous. The absence of a default doesn’t mean a graduate is repaying the loan or that the day of reckoning for deferred or IBR-forgiven debt will never arrive for students and taxpayers. In fact, it’s inconsistent to assert that law students “repay their loans” while also touting the benefits of IBR and loan forgiveness because students in those programs will never have to repay their loans in full. (And they still won’t be in default!)

Not Defaulting Is Not the Same as Repaying

A recent Department of Education report on colleges highlights the extent to which the absence of default is not equivalent to repayment. There’s no similar compilation for law schools, but an April 2015 Federal Reserve Bank of New York Report on Student Loan Borrowing and Repayment trends generally notes that while only 11% of all educational loan borrowers are in default, “46% of borrowers are current in their loans but are not in repayment. Only 37% of borrowers are current on their loan and actively paying down.” (Emphasis supplied)

As the New York Fed reports, the worsening repayment rate is exacerbating the long-term debt problem for students and taxpayers: “The lower overall repayment rate [compared to earlier years] helps explain the steady growth in aggregate student debt, now at nearly 1.2 trillion dollars.”

Righting Wrongs?

Finally, DeVito takes a noble turn, claiming that it “takes a for-profit entity to right a wrong — in this case the lack of diversity in law schools.”

In “Diversity as a Law School Survival Strategy,” St. Louis University School of Law Professor Aaron N. Taylor explains that marginal schools with the worst graduate employment outcomes have become diversity leaders: “[T]he trend of stratification may only serve to intensify racial and ethnic differences in career paths and trajectories.”

Rather than righting a wrong, it looks more like two wrongs not making a right.

A Few Profiles in Courage

To their credit, Professors William Henderson (Indiana University Maurer School of Law) and David Barnhizer (Cleveland-Marshall College of Law), among others, have embraced the Times’s message that Brian Tamanaha (Washington University School of Law) offered years ago: The current system is broken. Recognize it; accept it; help to lead the quest for meaningful reform.

Likewise, Loyola School of Law (Chicago) Dean David Yellen worries about schools that are “enrolling large numbers of students whose academic credentials suggest that they are likely to struggle gaining admission to the bar… [T]he basic point is an important one that legal education must address.”

The Real Enemy

DeVito’s effort to spin away Florida Coastal’s problems is understandable. Properly implemented, school-specific financial accountability for employment outcomes would put maximum pressure on the weakest law schools. Frankly, the demise of even a single marginal law school would come as a welcome relief. Since the Great Recession we’ve added law schools, not eliminated them.

That’s why most law schools and their mouthpiece, the AALS, should side with Dean Yellen and Professors Henderson, Barnhizer, Tamanaha, and others urging meaningful reform. To test that hypothesis, try this:

The next time someone says that introducing financial accountability for individual schools would be a bad idea, ask why.

The next time someone says that respectable law schools serving their students and the profession should not distance themselves from marginal players that could never survive in a functioning market for legal education, ask why not.

The next time someone says that a united front against change is imperative, ask who the real enemy is.

Then offer a mirror.

GAME-CHANGER?

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Almost overnight, a persistently sad situation finally has many legal educators squirming. And rightly so.

The problem has been years in the making, as has been the profession’s unwillingness to address it. Federal funding mechanisms have combined with lack of accountability and non-dischargeability in bankruptcy to block the effective operation of market forces in legal education. Well-intentioned policies have gone terribly awry; they actually encourage misbehavior among many law school deans.

As law student debt soared into six-figures, calls for change produced the equivalent of catcalls from the “voice of the profession” — the ABA. Its latest Task Force report on the subject should embarrass anyone associated with it, including the House of Delegates that approved it. As the profession’s echo chamber convinced itself that all was well, hope for meaningful change was leaving the building.

But as it did four years ago, The New York Times has now aimed its spotlight on one of the profession’s dirtiest secrets.

The Paper of Record Speaks

In January 2011, The New York Times’ David Segal wrote a series that exposed the cynical gamesmanship whereby law schools inflated their recent graduates’ employment statistics. Through the deepening Great Recession, the profession still generated 90-plus percent employment rates for recent graduates. How? By counting every short-term, part-time, and non-JD-related job as if it were a position that any law graduate would want. Part-time greeters at Wal-mart, temporary baristas at Starbucks, and associates at Cravath were all the same in the eyes of that metric: employed.

The ugly truth surprised many prospective law students, but not the ABA, which had approved the schools’ misleading reporting methods. It turned out that within nine months of graduation, only about half of all new J.D.-degree holders were obtaining full-time long-term (defined as lasting a year) jobs that required bar passage. Within two years of the Times’ expose’, the ABA succumbed to public embarrassment and required law schools to detail their employment outcomes.

And It Speaks Again…

The overall full-time long-term JD-required employment rate has barely budged since the new age of transparency began, but law school tuition and resulting student debt have outpaced inflation. As applications to law school plummeted, many deans responded by increasing acceptance rates to keep student loan revenues flowing.

So now the focus has shifted from full disclosure to flawed funding, and the Times has entered the field of battle:

— On August 25, it published my op-ed on the law school debt crisis and the ABA”s feeble response. It went viral.

— On October 24, the Times’ lead editorial was “The Law Student Debt Crisis.” It, too, went viral.

— On October 26, the first page of the Times’ business section completed the trifecta with “Study Cites Lower Standards in Law School Admissions.” The article discusses Law School Transparency’s report documenting that bottom-feeder schools are exploiting unqualified applicants.

And Still the Naysayers Resist…

Previous posts discussed two letters-to-the-editor responding to my August 25 Times piece — one from a law professor at Texas A&M; the other from Northeastern’s dean. There’s no need to review them here. The latest Times’ editorial is generating similarly defensive vitriol from some law professors and deans who are determined to defend the indefensible.

For example, Professor Frank Pasquale at the University of Maryland School of Law (where the full-time long-term JD-required employment rate for 2014 graduates was 57 percent) fears that the Times’ October 24 op-ed will accelerate privatization:

“Private lenders are sure to be pleased by the editorial,” Pasquale writes at Balkanization. “Law school loans are lucrative for them because of extremely low student loan default rates for law school borrowers… The stage is now set for a bootlegger/baptist coalition: as prohibitionists cut off the flow of federal loans, private lenders line up to take their place.”

But The Naysayers Are Wrong…

Pasquale offers a clever turn of phrase, but his premise is incorrect. The widespread use of deferral and income-based repayment programs means that the default rate is not the most meaningful measure of whether a loan will be repaid. Actual repayment rates are. Depending on the school, repayment rates can be pathetic.

Professor Bill Henderson at Indiana University Maurer School of Law doesn’t share Pasquale’s confidence that private lenders would step into any breach that the loss of federal funds created. Henderson also notes, correctly, that private loans don’t come with deferral and IBR options that have kept nominal default rates low as non-repayment rates have surged:

“[P]rivate lenders would need to be confident that loans would be repaid. That likelihood is going to vary by law school and by law student, raising the cost of lending.”

Precisely correct. As I’ve suggested previously, tying the availability of law school loans to school-specific employment outcomes could allow the market begin exercising its long-denied power to correct the situation. It could also mean big trouble for marginal schools.

How About Holistic?

Pasquale also chides the Times for its narrow-minded approach: “[T]he paper’s biased view of higher education in general is inflecting its take on law schools. We can only hope that policymakers take a more holistic approach.”

How about a holistic approach that permitted educational debtors to discharge their private loans in bankruptcy? In that case, Pasquale’s “stage” would no longer be “set for a bootlegger/baptist coalition” whereby “prohibitionists cut off the flow of federal loans [and] private lenders line up to take their place.” Private lenders wouldn’t rush to make fully dischargeable loans to students seeking to attend marginal schools that offered little prospect of employment generating sufficient income to repay them.

How About A Constructive Suggestion?

Policymakers could revise the federal loan program to tie student funding at a school to that school’s employment outcomes for recent graduates. In fact, it could do that while preserving deferral and IBR programs. Add dischargeability of educational debt in bankruptcy and you have the beginnings of a holistic recipe for hope.

In that respect, Professor Henderson notes: “I have faith that my legal colleagues would do a masterful job solving the problems of higher education.”

Based on the profession’s track record to date, I fear that my friend’s sentiment reflects a triumph of hope over reality. But his key message is right on target: If the profession does not put its own house in order soon, someone else will.

Marginal law schools exploiting market dysfunction may have triggered the current round of scrutiny, but outside interveners will not limit their systemic fixes to the bottom feeders. Deniers of the ongoing crisis can persist in their positions, or they can propose solutions, as I have.

The Times has pulled a loose thread on the entire legal education establishment’s sweater.

DANGEROUS ADVICE FOR LAW FIRM LEADERS

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During the past 25 years, law firm management consulting has grown from cottage industry to big business. In a recent Am Law Daily article, “What Critics of Lateral Hiring Get Wrong,” Brad Hildebrandt, one of its pioneers, provides a comforting message to his constituents:

“Large law firms are weathering the storm of the past five years and continue to transform their businesses to operate with efficiency and agility amid a new set of client expectations.”

Hildebrandt v. Altman Weil

Hildebrandt correctly notes that painting all large firms with a single brush is a mistake. But his general description of most firms today is at odds with the results of Altman Weil’s recent survey, “2014: Law Firms in Transition.” The summary of responses from 803 law firm leaders (including 42 percent of the nation’s largest 350 firms) offers these highlights:

— “The Survey shows clear consensus among law firm leaders on the changing nature of the legal market…. [But] law firms are proceeding without an apparent sense of urgency.”

— “Less than half of the law firms surveyed are responding to the pressures of the current market by significantly changing elements of their traditional business model.”

— “Most firms are not making current investments in a future they acknowledge will be different – and different in seemingly predictable ways.”

— “Only 5.3 percent of firms are routinely looking farther than five years out in their planning.”

Altman Weil’s conclusions comport with its October 2013 Chief Legal Officer Survey. When clients rated outside law firms’ seriousness about changing legal service delivery models to provide greater value, the median score was three out of ten — for the fifth straight year.

Hildebrandt v. Georgetown/Thomson Reuters Peer Monitor and Henderson

So what are most big firms doing? Growth through aggressive lateral hiring. Hildebrandt responds to “academics, journalists, former practicing attorneys, and countless legal bloggers” who question that strategy. Count me among them.

Acquiring a well-vetted lateral partner to fill a specific strategic need is wise. But trouble arises when laterals become little more than portable books of business whose principal purpose is to enhance an acquiring firm’s top line revenues.

“Growth for growth’s sake is not a viable strategy in today’s market,” the 2014 Georgetown/Thomson Reuters Peer Monitor Report on the State of the Legal Market observes. Nevertheless, the report notes, most firms are pursuing exactly that approach: “[Growth] masks a bigger problem — the continuing failure of most firms to focus on strategic issues that are more important….”

Professor William Henderson has done extensive empirical work on this subject. “Is Reliance on Lateral Hiring Destabilizing Law Firms?” concludes: “[T]he data is telling us that for most law firms there is no statistically significant relationship between more lateral partner hiring and higher profits.”

Hildebrandt v. Citi/Hildebrandt

Big law partners acknowledge the truth behind Henderson’s data. According to the 2014 Citi/Hildebrandt Client Advisory, only 57 percent of law firm leaders describe their lateral recruits during 2008-2012 as successful, down from 60 percent last year. If those responsible for their firms’ aggressive lateral hiring strategies acknowledge an almost 50 percent failure rate, imagine how much worse the reality must be. Nevertheless, the lateral hiring frenzy continues, often to the detriment of institutional morale and firm culture.

With respect to culture and morale, Hildebrandt rejects the claim that lateral partner hiring crowds out homegrown associate talent. But the 2013 Citi/Hildebrandt Client Advisory suggests that it does: Comparing “the percentages of new equity partners attributable to lateral hires vs. internal promotions in 2007…with percentages in 2011 reveals a marked shift in favor of laterals” — a 21 percent decrease in associate promotions versus a 10 percent increase in lateral partner additions.

Nevertheless, Hildebrandt offers this assessment:

“In the six years prior to the recession, many firms admitted far too many partners—some into equity partnership, many into income partnership. A driving factor in the number of partners in the lateral marketplace is that firms are coming to grips with the mistakes of the past. Lax admissions standards have been a far greater issue than mistakes made on laterals.”

When I read that passage, it seemed familiar. In fact, Chapter 5 of my latest book, The Lawyer Bubble – A Profession in Crisis, opens with this quotation:

“The real problem of the 1980s was the lax admission standards of associates of all firms to partnerships. The way to fix that now is to make it harder to become a partner. The associate track is longer and more difficult.”

Those were Brad Hildebrandt’s words in September 1996. (“The NLJ 250 Annual Survey of the Nation’s Largest Law Firms: A Special Supplement — More Lawyers Than Ever In 250 Largest Firms,” National Law Journal)

“Fool Me Once, Shame On You…”

Evidently, most firms followed Hildebrandt’s advice in the 1990s because the overall leverage ratio in big law firms has doubled since then. His recent suggestion that “lax admission standards” caused firms to make “far too many” equity partners during the six years prior to the Great Recession of 2008-2009 is particularly puzzling. In the May 2008 issue of American Lawyer, Aric Press noted that during the “Law Firm Golden Age” from 2003 to 2007, “Partners reaped the benefits of hard work — and of pulling up the ladder behind them. Stoking these gains has been a dramatic slowdown in the naming of new equity partners.”

Meanwhile, the swelling ranks of income partners reflect a different strategy: using the non-equity partner tier as a profit center. The strategy is misguided, but pursuing it has been intentional, not a “mistake.” (Take a look at the American Lawyer article, “Crazy Like a Fox,” by Edwin Reeser and Patrick McKenna.)

Even so, Hildebrandt’s words reassure firms that are recruiting laterals for all the wrong reasons and/or tightening the equity partner admission screws. Tough love might better serve the profession.

WHO REALLY PAYS FOR LAW STUDENT DEBT?

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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.”

UGLINESS INSIDE THE AM LAW 100 – PART 2

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Part I of this series considered the possibility that a key metric — average partner profits — has lost much of its value in describing anything meaningful about big law firms. In eat-what-you-kill firms, the explosive growth of top-to-bottom spreads within equity partnerships has skewed the distribution of income away from the bell-shaped curve that underpins the statistical validity of any average.

Part II considers the implications.

Searching for explanations beyond the obvious

In recent years, equity partners at the top of most big firms have engineered a massive redistribution of incomes in their favor. Why? The next time a senior partner talks about holding the line on equity partner headcount or reducing entry-level partner compensation as a way to strengthen the partnership, consider the source and scrutinize the claim.

One popular assertion is that the high end of the internal equity partner income gap attracts lateral partners. In fact, some firms boast about their large spreads because they hope it will entice laterals. But Professor William Henderson’s recent analysis demonstrates that lateral hiring typically doesn’t enhance a firm’s profits. Sometimes selective lateral hiring works. But infrequent success doesn’t make aggressive and indiscriminate lateral hiring to enhance top line revenues a wise business plan.

According to Citi’s 2012 Law Firm Leaders Survey, even law firm managing partners acknowledge that, financially, almost half of all lateral hires are no better than a break-even proposition. If leaders are willing to admit that an ongoing strategy has a failure rate approaching 50 percent, imagine how bad the reality must actually be. Even worse, the non-financial implications for the acquiring firm’s culture can be devastating — but there’s no metric for assessing those untoward consequences.

A related argument is that without the high end of the range, legacy partners will leave. Firm leaders should consider resisting such threats. Even if such partners aren’t bluffing, it may be wiser to let them go.

“We’re helping young attorneys and building a future”

Other supposed benefits to recruiting rainmakers at the high end of a firm’s internal partner income distribution are the supposedly new opportunities that they can provide to younger attorneys. But the 2013 Client Advisory from Citi Private Bank-Hildebrandt Consulting shows that lateral partner hiring comes at the expense of associate promotions from within. Homegrown talent is losing the equity partner race to outsiders.

In a similar attempt to spin another current trend as beneficial to young lawyers, some managing partners assert that lower equity partner compensation levels lower the bar for admission, making equity status easier to attain. Someone under consideration for promotion can more persuasively make the business case (i.e., that potential partner’s client billings) required for equity participation.

Such sophistry assumes that an economic test makes any sense for most young partners in today’s big firms. In fact, it never did. But now the prevailing model incentivizes senior partners to hoard billings, preserve their own positions, and build client silos — just in case they someday find themselves searching for a better deal elsewhere in the overheated lateral market.

Finally, senior leaders urge that current growth strategies will better position their firms for the future. Such appealing rhetoric is difficult to reconcile with many partners’ contradictory behavior: guarding client silos, pulling up the equity partner ladder, reducing entry level partner compensation, and making it increasingly difficult for home-grown talent ever to reach the rarified profit participation levels of today’s managing partners.

Broader implications of short-term greed

In his latest book, Tomorrow’s Lawyers, Richard Susskind wrote that most law firm leaders he meets “have only a few years left to serve and hope they can hold out until retirement… Operating as managers rather than leaders, they are more focused on short-term profitability than long-term strategic health.”

Viewed through that lens, the annual Am Law 100 rankings make greed respectable while masking insidious internal equity partner compensation gaps that benefit a relatively few. Annual increases in average partner profits imply the presence of sound leadership and a firm’s financial success. But an undisclosed metric — growing internal inequality — may actually portend failure.

Don’t take my word for it. Ask lawyers from what was once Dewey & LeBoeuf and a host of other recent fatalities. Their average partner profits looked pretty good — all the way to the end.

SOMEBODY’S CHILD

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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.

A COMMENDABLE (AND COURAGEOUS) COMMENT AWARD

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As the executive director of National Association for Law Placement (NALP) — the organization that sets the rules whereby big law firm employers and their prospective new hires find each other — James Leipold has a tough job. Sometimes, NALP has looked like a victim of regulatory capture. Students’ interests have often taken a back seat to two constituencies that wield far more economic power, namely, law schools and big law firms.

Such power was one reason that NALP initially “back-pedaled” in early 2010, when big firms balked at NALP’s request to provide detailed information about equity partners’ gender and race. At the time, Leipold acknowledged that some firms threatened to withhold all information from the annual NALP employer directory, which “represents an important revenue source for us.”

Another example of big law firm influence over NALP is the evolution of the rules governing employment offers — including the powerlessness of students when a big firm unilaterally rescinds a previously accepted one. But NALP’s shortcomings are topics for another day.

Today’s commendation goes to Leipold because he recently stood up to deans who wanted him to provide prospective law students with a “better message” about the legal job market. That is, they wanted him to lie. Leipold said he was “surprised” at this turn of events, including deans who asked him to describe the job market as “good.” He refused. But his real act of courage was in revealing that some deans were applying such pressure. They should be ashamed. And they should be named.

Nothing new

Many deans have been hyping their schools with misleading employment statistics for a long time. Truth is finally catching up to a lot of them, notably with the ABA’s newly required data. Harsh reality hit with the news that, nine months after graduation, slightly more than half of all 2011 law graduates were able to get full-time long-term jobs requiring bar passage. The recent past has been bad and the current picture is ugly. So some deans have tried to shape perceptions about the future.

Leipold rightly resisted. The employment prospects for law graduates generally are not likely to brighten any time soon. Leipold could have said even more about that: there are still far more law school applicants than places for them; most estimates project that over the next decade, schools will produce twice as many law graduates as the number of legal jobs available for them. Even at the so-called pinnacle of the profession — big law firms — the total number of attorneys has yet to return to pre-recession levels.

The case for names

What will stop this insanity? Unfortunately, the problematic deans are responding to institutional pressures. That’s because law schools have become large cash cows for their universities. The impulse to run a school as a business that maximizes short-term profits is irresistible to them and their superiors. Every incentive they see encourages them to pump-and-dump: pump up demand for law students and dump debt-ridden graduates on a glutted market. Their unemployed graduates become someone else’s problem.

It turns out that the someone else is not just the victimized students themselves. Eventually, the profession itself suffers. Staggering student debt will haunt some graduates forever because bankruptcy won’t discharge it. Income-based repayment programs will help some of them, but as Professor William Henderson observes, taxpayers could wind up paying large portions of those participants’ ultimate obligations when the federal government picks up the tab for residual unpaid debt.

Will anything make these deans stop? The villains are giving all other deans a bad rap. They know who they are. Now, James Leipold does, too. Perhaps it’s time for the rest of us to learn their names. Where all else has failed to alter unfortunate behavior, maybe public humiliation will help. Nothing else seems to be working.

The Most Unfortunate Comment Award to Date

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The words seem so innocuous — “federally guaranteed student loans.” But what do they mean when someone actually defaults and the government has to make good on its guarantee? A recent article in The New York Times provides the answer.

A brief review of the business model

This post is the latest in what became my unintended series on the law school business model. It began with The Wall Street Journal’s misrepresentation in a lead op-ed piece. The Journal claimed that Congress made student loans non-dischargeable in 1976 because of widespread abuse. That is, graduates benefited from government loans and then declared bankruptcy on the eve of lucrative careers to avoid their debt. There’s no delicate way to put this: The WSJ was perpetuating a thirty-five-year-old myth.

Then I considered law schools that offer tuition discounts in the form of merit scholarships. There’s no mystery there: a secretive process of awarding money facilitates an individualized approach to pricing that maximizes tuition revenues while enhancing a school’s U.S. News ranking.

Most recently, I turned to yet another element of the current law school business model: raising the list price of tuition while reserving the flexibility to move lower as needed to attract particular candidates.

Follow the money

Now consider the source of all that tuition money. Some people are able to pay their own way, regardless of the cost. But they’re in the minority. Matt Leichter reports that the 44,000 law graduates in the class of 2010 took on $3.6 billion in debt, up sharply from $3.1 billion only two years earlier. The number is climbing as tuition goes up.

The chances that recent graduates will secure a job requiring a law degree are about 50-50. Although others will get non-legal jobs that pay reasonably well, the ranks of new lawyers with loans they can’t afford to repay is growing.

So what?

Students now have an income-based repayment (IBR) option for federal loans; that may afford some relief. But as Professor William Henderson explains in “The Law School Tuition Bubble,” two problems arise. First, dedicating fifteen percent of income for the requisite twenty-five years of a total IBR plan is akin to a permanent tax on the already low incomes of those lawyers. Forget about saving for retirement or funding their own kids’ higher education.

Second, those IBR participants who make it all the way to the end of the twenty-five years will have their remaining loan balances forgiven. That will add more debt that that the federal treasury will bear — for anyone who worries about such things.

Default

For recent graduates with limited job prospects, IBR is better than nothing. But some will default on their loans, just as their predecessors have. This poses no problem for law schools; they’ve already collected their tuition money and don’t have to return it.

Default poses no problem for lenders, either. That’s because educational debt is not dischargeable in bankruptcy, except in rare cases that satisfy the “undue hardship” requirement.

Moreover, the federal guarantee kicks in for private lenders, at which point the government foots the bill. But that’s not the end of the story. As the Times article explains, the newest growth industry is student loan debt collection. Last year, the government paid more than $1.4 billion to debt collection organizations it hired to track down student defaulters.

A Most Unfortunate Comment

For anyone who doubts that this is unapologetic intergenerational exploitation of the young by the old, consider these comments from Jerry Ashton, a consultant for the debt collection industry and the winner of the most Unfortunate Comment Award to date:

“As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February [2011], I couldn’t believe the accumulated wealth they represented – for our industry. It was lip-smacking.”

Ashton included a photograph of several students to which he added these details: “a girl wearing a t-shirt emblazoned with the fine sum of $90,000, another with $65,000, a third with $20,000 and over there a really attractive $120,000 was printed on another shirt.”

Someday this will all come crashing down. I fear that people like Ashton — and merger/acquisitions specialist Mark Russell, who described student loans as the debt collection industry’s “new oil well” — will make money on that event. too. Shame on them. Shame on all of us.

BACK TO SCHOOL SPECIAL: LAW SCHOOL TUITION!

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A recent article in The Wall Street Journal highlights the efforts of some law schools to generate applicants (and enroll students) in the declining legal market. The print version of the paper included a large photograph of University of Illinois College of Law Dean Bruce P. Smith. It’s an odd time for that school to seek publicity. Not long ago, the ABA fined the school $250,000 for intentionally submitting false LSAT and GPA data.

The new initiatives include scholarships, although for many schools those aren’t really new. For years, some law schools have used non-need-based financial aid to lure students with high LSATs. Lurking behind the current initiatives — and the counterproductive behavior of far too many law school deans — are the ubiquitous U.S. News rankings. Obsession over those rankings created a climate that produced the University of Illinois College of Law’s sanctionable conduct.

There’s just one problem…

The difficulty for many “merit” scholarship recipients is two-fold. First, the money often disappears after year one. For years two and three, the law school business model reasserts its power and, for most students, loans for tuition keep school revenues and profits flowing. The New York Times wrote about that phenomenon last year.

I don’t know what the University of Illinois College of Law’s approach will be, but tuition there is $44,520 for non-residents and $37,100 for residents. Dean Smith said that grants went to every member of the class of 2014 (including those admitted from the wait list) at a total cost of $3.6 million. Maintaining that average of $18,000 per student (assuming enrollment of 200) for all three years would be a daunting task. After all, it’s a state school and Illinois is in terrible financial shape.

Make that two problems…

The more abiding challenge for many students surfaces a bit later: limited job opportunities. For example, the University of Illinois College of Law awarded 190 J.D. degrees in 2011. According to its July 2012 ABA employment report, nine months after graduation, only 96 had full-time long term jobs requiring bar passage.

Other schools mentioned in the WSJ article include:

USC (Gould School of Law): 207 graduates in 2011; nine months after graduation, 134 with full-time long term jobs requiring bar passage.

UCLA: 344 graduates in 2011; 211 with full-time long term jobs requiring bar passage.

George Washington University: 518 graduates in 2011; 421 with full-time long term jobs requiring bar passage.

Brooklyn Law School: 455 graduates in 2011; 215 with full-time long term jobs requiring bar passage.

The overall full-time long term employment rate for all 2011 law school graduates with jobs requiring bar passage was 55 percent.

An old trick

The premise of these scholarship programs is simple. Rather than reduce tuition for everyone, keep the list price high (hotel managers would call it a room’s “rack rate”) for those who can afford it and offer differential discounts to those who are price sensitive at the margin. The secrecy of individual grants creates a perfect environment for implementing what economists might call pricing along the demand curve. Extract as much as possible from each buyer while maximizing total sales (enrollments).

For anyone with a long-run perspective that extends beyond filling up next year’s law school classrooms, the approach might seem a bit perplexing. If there are twice as many law jobs as there are graduating students with J.D.s, might it make more sense to adopt a strategy that reduced total enrollment?

To their credit, some schools, including George Washington University, are doing that. But for the most part, each law school is striving to maintain enrollments and the credentials of entering classes. Insofar as they are now throwing scholarship money at prospective students who are uncertain about whether to attend law school at all, they’re making things even worse.

U.S. News strikes again

Professor William Henderson correctly closes the article with this observation: “It’s the fear of a U.S. News downward spiral. It’s hard to come up in the rankings when your applications are going down.”

Thank goodness the U.S. News rankings’ guru Robert Morse clarified his magazine’s position on all of this: “[T]he rankings should not be a management tool that law school administrators use as the basis for proving that their school is improving or declining.”

Unfortunately, they do.

THE NEXT DEBT CRISIS

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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 Journal, the 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.

IS IT REALLY MORE COMPLEX THAN GREED?

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Revisionism is already obfuscating the story of Dewey & LeBoeuf’s demise. If facts get lost, the profession’s leaders will learn precious little from an important tragedy.

For example, the day after Dewey & LeBoeuf filed its bankruptcy petition, Clifford Winston and Robert W. Crandall, two non-lawyer fellows at the Brookings Institution, wrote an op-ed piece for The Wall Street Journal offering this analysis: “Dewey’s collapse has been attributed to the firm being highly leveraged and unable to attract investment from businesses outside the legal profession.”

Attributed by whom? They don’t say. Anyone paying attention knows that outside investors bought $150 million in Dewey bonds. But apparently for commentators whose agenda includes proving that overregulation is the cause of everyone’s problems — including the legal profession’s — there’s no reason to let facts get in the way.

Another miss

On the same day that the Winston & Crandall article appeared, a less egregious but equally mistaken assessment came from Indiana University Maurer School of Law Professor William Henderson in the Am Law Daily: “More Complex than Greed.” Bill and I agree on many things. I consider him a friend and an important voice in a troubled profession. But I think his analysis of Dewey & LeBoeuf’s failure misses the mark.

Henderson suggests, “One storyline that will attract many followers is that large law firm lawyers, long viewed as the profession’s elite class, have lost their way, betraying their professional ideals in the pursuit of money and glory. This narrative reinforces that lawyer-joke mentality that lawyers just need to become better people. That narrative is wrong.”

What’s wrong with it? In my view, not much, as “House of Cards” in the July/August issue of The American Lawyer now makes painfully clear.

What happened?

Rather than the greed that pervades “House of Cards,” Henderson suggests that Dewey & LeBoeuf reveals the failure of law firms to innovate in response to growing threats from new business models, such as Axiom and Novus Law. Innovation is an important issue and Henderson is right to push it. But as the story of Dewey’s failure unfolds, the inability to innovate in the ways that Henderson suggests — using technology and cheaper labor to achieve efficiencies and cost savings — won’t emerge as the leading culprit.

Rather, greed and the betrayal of professional ideals lie at the heart of what is destabilizing many big law firms. In that respect, most current leaders have changed the model from what it was 25 years ago. Am Law 100 firms’ average partner profits soared from $325,000 in 1987 to $1.4 million in 2011. Behind that stunning increase are leadership choices, some of which eroded partnership values. As a result, many big firms have become more fragile. If greed doesn’t explain the following pervasive trends, what does?

— Short-term metrics — billings, billlable hours, leverage — drive partner compensation decisions in most big firms. Values that can’t be measured — collegiality, community, sense of shared purpose — get ignored. When a K-1 becomes the glue that holds partnerships together, disintegration comes rapidly with a financial setback.

— Yawning gaps in the highest-to-lowest equity partner compensation. Twenty-five years ago at non-lockstep firms, the typical spread was 4-to-1 or 5-to-1; now it often exceeds 10-to-1 and is growing. That happens because people at the top decide that “more” is better (for them). Among other things, the concomitant loss of the equity partner “middle class” reduces the accountability of senior leaders.

— Leverage has more than doubled since 1985 and the ranks of non-equity partners have swelled. That happens when people in charge pull up the ladder.

— Lateral hiring and merger frenzy is rampant. One reason is that many law firm leaders have decided that bigger is better. The fact that “everybody else is doing it” reinforces errant behavior. Growth also allows managers to rationalize their bigger paychecks on the grounds that they’re presiding over larger institutions.

Throughout it all, associate satisfaction languishes at historic lows. No one surveys partners systematically, but plenty of them are unhappy, too. Unfortunately, such metrics that don’t connect directly to the short-term bottom line often get ignored.

Innovation won’t solve the problem

A few successful, stable law firms have shunned the now prevailing big law model. They innovate as needed, but far more important has been their ability to create a culture in which some short-term profit gives way to the profession’s long-term values. What is now missing from most big law firms was once pervasive: a long-run institutional vision and the willingness to implement it. Too often, greed gets in the way.

With all due respect to Messrs. Winston, Crandall and Henderson, sometimes the simplest explanation may also be the correct one.

THE LAW SCHOOL QUANDARY

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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

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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.