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Monday, January 10, 2011

NY Times: Is Law School a Losing Game?

New York Times, Is Law School a Losing Game?, by David Segal:

[A] generation of J.D.’s face the grimmest job market in decades. Since 2008, some 15,000 attorney and legal-staff jobs at large firms have vanished, according to a Northwestern Law study. Associates have been laid off, partners nudged out the door and recruitment programs have been scaled back or eliminated. ...

But improbably enough, law schools have concluded that life for newly minted grads is getting sweeter, at least by one crucial measure. In 1997, when U.S. News first published a statistic called “graduates known to be employed nine months after graduation,” law schools reported an average employment rate of 84%. In the most recent U.S. News rankings, 93% of grads were working — nearly a 10-point jump.

In the Wonderland of these statistics, a remarkable number of law school grads are not just busy — they are raking it in. Many schools, even those that have failed to break into the U.S. News top 40, state that the median starting salary of graduates in the private sector is $160,000. That seems highly unlikely, given that Harvard and Yale, at the top of the pile, list the exact same figure.

How do law schools depict a feast amid so much famine?

“Enron-type accounting standards have become the norm,” says William Henderson of Indiana University, one of many exasperated law professors who are asking the ABA to overhaul the way law schools assess themselves. “Every time I look at this data, I feel dirty.”

It is an open secret, Professor Henderson and others say, that schools finesse survey information in dozens of ways. And the survey’s guidelines, which are established not by U.S. News but by the ABA, in conjunction with an organization called the National Association for Law Placement, all but invite trimming.

A law grad, for instance, counts as “employed after nine months” even if he or she has a job that doesn’t require a law degree. Waiting tables at Applebee’s? You’re employed. Stocking aisles at Home Depot? You’re working, too.

Number-fudging games are endemic, professors and deans say, because the fortunes of law schools rise and fall on rankings, with reputations and huge sums of money hanging in the balance. You may think of law schools as training grounds for new lawyers, but that is just part of it. They are also cash cows.

Tuition at even mediocre law schools can cost up to $43,000 a year. Those huge lecture-hall classes — remember “The Paper Chase”? — keep teaching costs down. There are no labs or expensive equipment to maintain. So much money flows into law schools that law professors are among the highest paid in academia, and law schools that are part of universities often subsidize the money-losing fields of higher education.

“If you’re a law school and you add 25 kids to your class, that’s a million dollars, and you don’t even have to hire another teacher,” says Allen Tanenbaum, a lawyer in Atlanta who led the ABA’s commission on the impact of the economic crisis on the profession and legal needs. “That additional income goes straight to the bottom line.” ...

I think the student loans that kids leave law school with are more scandalous than payday loans,” says Andrew Morriss, a law professor at the University of Alabama. ...

[Henderson:] “What we have here is powder keg, and if law schools don’t solve this problem, there will be a day when the Federal Trade Commission, or some plaintiff’s lawyer, shows up and says ‘This looks like illegal deception.’” ...

(Hat Tip: Brad Mank, Ann Murphy, Michael Talbert.)

http://taxprof.typepad.com/taxprof_blog/2011/01/ny-times.html

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Comments

What's funny is that the money doesn't even go to the law professors. Rather, it goes into things like new buildings (often unnecessary), or back to the undergraduate school.

That being said, I think there should be more law schools and more graduates. The best kind of cures come not when a problem creates an annoyance, but rather when the problem creates a total disaster.

Posted by: anon | Jan 10, 2011 6:20:50 AM

After being an attorney for almost 18 years, I have one piece of advice for people who want to go to law school: don't do it. Generally speaking, practicing law is not worth it.

In my experience, those attorneys who make a fortune practicing law are very talented and would likely have made a fortune in other endeavors, such as running a business.

Posted by: Allan | Jan 10, 2011 8:36:27 AM

Why is nobody talking about the false premise upon which this article is based?

The "most recent" us news statistics (from April 2010) reported 2008 placement statistics -- not 2009 as article seems to imply. When people graduated law school in May of 2008 - legal employment prospects were not bleak. Big law hadn't started major layoffs. The vast majority of people graduating from aba approved law schools were getting legal work -- not working at the home depot.

Posted by: Jamie | Jan 10, 2011 8:27:45 PM

I am a 3L at at T2 school. I was thrilled to see this get attention in the New York Times.

I hope that all you Professors and Deans understand that the status quo won't be sustained much longer. In a very short time, outside forces will intervene and end the status quo that your careers and salaries are based upon. The collapse of the legal profession is about to reach you.

The only question is what forces will intervene. It could be the market. All day yesterday this article was the most emailed on the NYT. That means that concerned friends and parents sent that article to 0L's. Yesterday alone, thousands were deterred from attending law school. The word is getting out. Law school is a lousy investment and career move.

The ABA could intervene, but we all know this is unlikely. The ABA will likely continue to stand on the sidelines and wring it's proverbial hands while the ship sinks. If I were a Professor or a Dean, this is the least likely threat to worry about.

The Department of Education could require audits of employment statistics and default rates by schools. It could publish the results. This would put about 1/3 of law schools out of business immediately. The DoE could also cut off access to federal student loans to Universities and programs with high default rates.

It's going to be exciting to watch this transformation happen. Some schools will embrace it. Others will fight it. Some will remain in denial right up until those outside forces intervene and shut the school down.

Regardless of what happens, I assure you that the status quo of the law school industry is over.

Prepare yourselves, Professors. The days when you could make $200,000 a year for teaching 2 classes a semester is over!

Tomorrow is going to be much different!

Posted by: 3L | Jan 11, 2011 7:11:06 AM