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Friday, December 30, 2011

Campos on Henderson's The Law School Bubble

Following up on Wednesday's post, Henderson & Zahorsky: How Long Can the Law School Bubble Last?: Paul Campos (Colorado), Bill Henderson on the Law School Bubble:

Henderson points out that the long-term trends in the cost of legal education and the value of law degrees we have witnessed over the past generation are not mutually sustainable, citing the economist Herbert Stein's aphorism that "if something cannot go on forever, it won't."  Both the logic of this position and the facts justifying it would seem unassailable, but it remains the case that a remarkable number of people in legal academia continue to treat our role in all this as if we have no actual role in all this.  Consider this quote from a law school dean:

Mark Grunewald, interim dean of the law school at Washington and Lee University, thinks any blanket restrictions on federal student lending would be disastrous and unfair. “There are real differences among prospective law students’ economic circumstances, and new blanket restrictions on lending could hurt those most in need of financial support,” he says. “It’s also unclear what the legal employment market might look like after a general economic recovery. Market forces may ultimately prove to be a better corrective.”

This quote understandably exasperates Matt Leichter, author of the awe-inspiring Law School Tuition Bubble blog, who points out that in just the past seven years Washington and Lee's tuition has risen 35% faster than inflation. (On the other hand over the same time period my law school's resident tuition has risen by a tidy 133.45% over inflation, which by comparison makes W&L look like a model of fiscal restraint. The great thing about the law school racket is that it's almost always possible to find somebody who makes your own behavior look positively admirable by comparison).

Dean Grunewald's appeal to "market forces" is, under the circumstances, particularly chutzpahesque, give that his institution would have to either cut its prices drastically or go out of business if it were subjected to the dual market discipline of being forced to:

(1) Extract roughly half of its operating income from private student loans dischargeable in bankruptcy and not guaranteed by the government; and

(2) Reveal in sufficiently explicit detail exactly what happens to graduates of his law school one and two and five years (etc.) after graduation.

Grunewald, like so many legal administrators, talks about the cost of legal education as if it were a product of the laws of thermodynamics rather than the laws of what in a more enlightened era was called "political economy."  As Leichter emphasizes there is absolutely no reason why Washington and Lee, like the vast majority of law schools couldn't provide a much cheaper legal education than it does now with little or no discernible loss of quality.  After all, average law school tuition 25 years ago was literally a third of what it is today in constant dollars if you exclude all state subsidized tuition from the analysis.  In 1985 private law school tuition and non-resident public law school tuition averaged about $13,500 a year in 2010 dollars (if you included resident tuition, then and now, this comparison would make current tuition levels look much worse, as public law school resident tuition was $3,600 in 1985, compared to about $18,500 today. Again all of this is in inflation-adjusted dollars).

In other words, providing legal education at a reasonable cost doesn't exactly require some sort of technological or cultural breakthrough.  Law schools charge absurdly uneconomical -- from the perspective of their marks students -- prices because they can get away with it, period. And they can get away with it for two reasons: because they hide the ball in regard to employment and salary outcomes for their graduates, and because the federal government quite literally pays them to behave in this way.  As Henderson points out this is a situation that, from the self-interested perspective of legal academics and especially legal administrators, is too good to last, so it won't.

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Comments

How true. Had it been as expensive when I decided to go to law school as it is today, I would have chosen another path. Of course, when I attended, my law school was housed in a utilitarian old department store building (one of only two law schools in North America at the time to have escalators). Shortly after my matriculation the law school built and moved into an ostentatious structure, and tuition zoomed. I ignore the current dean's monthly entreaties for more money.

Posted by: Jake | Dec 30, 2011 11:10:27 AM

I love this guy.

Posted by: None | Dec 30, 2011 3:05:41 PM