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Saturday, June 23, 2012

Prospective Students Tell Law Schools: 'Show Me The Money'

Show MeNational Law Journal, It's a Buyers' Market at Law School: Suddenly in Demand, Prospective Students Wonder, "How Much Money Can I Get?":

It's anything but business as usual during this year's law school admissions cycle. That seemed obvious to the nearly 500 prelaw advisers and law school admissions officers who gathered in Washington in mid-June for a five-day conference of the Pre-Law Advisors National Council.

"It's quite competitive this year," said Heather Struck, assistant dean at Cornell University's College of Arts and Sciences and chairwoman of the organization. "I have seen, anecdotally, some very generous merit scholarship offers."

Law schools experienced a 25% decline in applicants nationwide during the past two years, due in part to the tight job market for new lawyers and a more widespread understanding of the high costs of attending. Many have responded by accepting a larger percentage of applicants and sweetening their scholarship packages, in hopes of locking in prospective students.

For their part, many would-be law students sense opportunity and are aggressively negotiating scholarship offers from competing schools, according to prelaw advisers and admissions deans. "I think every conversation I've had over the past six weeks has been, 'And how much money can I get?' " Wake Forest University School of Law assistant dean for admissions and financial aid Jay Shively said during one conference panel discussion.

Law schools typically dole out merit scholarships to students with sterling academic credentials, but Shively said that even applicants with LSAT scores and undergraduate grade-point averages below Wake Forest's median have been leveraging competing offers for money. "Although it's a daunting time for jobs, there has never been a better time to apply to law school," Shively said. "It's a buyers' market right now, and the numbers have never been better." ...

The trickle-down effect of competition for students may be hitting lower-tier schools the hardest. Sherolyn Hurst, assistant dean for admissions and scholarships at the unranked Texas Wesleyan University School of Law, acknowledged that her school has had a hard time competing. "It's frustrating for me," she said. "I'm seeing colleagues offering scholarships to people they wouldn't have admitted last year. We don't have millions of dollars in an endowment, but we're trying to do right by our students."

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Comments

Students shouldn't just look at cost. They should look at value and job prospects.

The problem is that many law schools haven't adjusted their faculty hiring to maximize job opportunities for their students.

There are a few key areas where the Big Law legal market is booming:

Tax
Bankruptcy
Patents
Commercial Law
Financial Regulation
Energy Regulation
Health Care Regulation
Telecom Regulation
Securities Regulation

The schools that have full time faculty in these areas have a big advantage over the schools that rely on adjuncts, or don't even offer classes in these areas.

Especially if the faculty either:

1. Have Big Law experience and contacts at their old firms.

Or

2. Actively publish research that policy makers and law firm partners actually read--i.e., research with high SSRN download counts and practical applicability--as opposed to research that only law review editors read.

Some law schools get it--Chicago just hired two bankruptcy professors, one with substantial firm experience, the other from Columbia, thereby seriously damaging a rival.

Some law school's don't.

U.C. Berkeley cut faculty salaries 11% across the board and lost their Bankruptcy Prof. to Harvard and their Patents prof to Stanford. Their corporate faculty are fleeing in droves to schools that will actually pay a living wage.

NYU is obsessed with hiring people who either have PhDs in economics or are "diverse" instead of people with practical experience in law firms, banks, or consulting firms. And by diverse, I don't just mean the traditional categories--NYU goes out of its way to pick up libertarians and conservatives, as if a professor being a fan of Ayn Rand is going to help the students learn about law or business. Some of their corporate faculty openly boast about how they have no idea what actually goes on in practice and can only teach theory.

If you look at the NLJ stats (far more reliable than the ABA stats):
http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?interactive=true&id=1202543436520&slreturn=1

A clear pattern emerges.

(1) Schools in the Northeast do better
(2) Schools with strong Business law faculty with actual law firm or corporate experience do better
(3) Schools with high SSRN download ranks (i.e., lots of strong business law faculty) do better

http://hq.ssrn.com/rankings/Ranking_Display.cfm?TMY_gID=2&TRN_gID=13
http://hq.ssrn.com/rankings/Ranking_Display.cfm?TMY_gID=2&TRN_gID=6

If I were a the Dean of a law school trying to help my students, I'd be poaching business law faculty from lower ranked schools like a madman.

And you can see from the NLJ and SSRN lists, there are some lower ranked schools in urban areas that do much better than their U.S. News ranking suggests.

Posted by: Money Law | Jun 23, 2012 10:47:47 AM

Money Law,

Are you serious?

The strength of the faculty is number 593 on things biglaw firms look at when hiring. First, students are hired for biglaw jobs after their first-year, when they haven't taken specialty courses. They have no control on the coursework you take and don't really care as long as you maintain a respectable GPA. Second, firms hire primarily from the top schools because the top schools have the "best" raw material. You only have to look at Yale, where the curriculum is fluff, to know that firms don't really care what the students are taught. They care about their grades and school rank.

It doesn't matter how many distinguished profs a lower-ranked school buys. They will never have the placement power of top schools. Any increase in their placement power will come indirectly, if their efforts result in a higher USNWR ranking, which results in higher credentialed applicants. If schools hired away a bunch of law and bisexual Asian studies professors, and their USNWR ranking rose, firms would hire from there.

Meanwhile, schools are jacking up tuition faster and faster to pay salaries. Applicant numbers are plummeting. How many more thousands of dollars do you think you can tack on to astronomical tuition bills before most students start saying "no thanks." Right now, I would not advise someone to attend a school ranked 14-10 in USNWR at sticker price. All in, that is about 250K of total debt, with only a 50% shot at biglaw out of OCI. Not worth it. Next year, that advice might hold true for schools ranked 6-10, and then 3-6, then finally 1-3.

"U.C. Berkeley cut faculty salaries 11% across the board and lost their Bankruptcy Prof. to Harvard and their Patents prof to Stanford. Their corporate faculty are fleeing in droves to schools that will actually pay a living wage."

Here are the top paid faculty members at UC Berkeley Law

Daniel Farber $360,463.
Robert P. Bartlett $348,765
Andrew T Guzman $329,348.34
Eric L. Talley $322,803.60
Suzanne Scotchmer $316,663.87
Daniel L Rubinfeld $314,704.00
Mark P. Gergen $307,866.72
Robert C Berring $298,812.48
Victoria C. Plaut $296,632.48
John Choon Yoo $290,950.57
Paul M. Schwartz $290,480.94

http://www.sacbee.com/statepay/

Now try and tell an unemployed UC Berkeley student who just ponied up $150,000 in tuition over three years (in-state) that these fine academics are UNDERPAID. What rock do you live under? Tuition needs to be halved at 95% of American law schools and if that means faculty salaries go down, so be it.

Of course lower-ranked schools in urban areas are going to have better placement power than low-ranked schools in rural areas. There are more jobs in cities, and more jobs at big firms. Why you think this has any correlation to how many Corporations professors that school has is baffling.

Posted by: BoredJD | Jun 23, 2012 2:11:43 PM

I graduated a good second-tier law school six years ago where the tuition was under 9 grand and now I pay $356 a month in student loans. I laugh at those fools that pony up ridiculously high tution and take out sick loans to attend joke schools like New York Law School and California Western. And I really laugh at those that think it's BigLaw or bust. In the end, what really needs to happen is that half the law schools in this country need to be shut down.

Posted by: Vinny B. | Jun 24, 2012 5:37:54 AM

No, what really needs to happen is for bar admission to be restricted to people who know my favorite flavor of ice cream (and I'm not telling.)

Posted by: FC | Jun 24, 2012 8:16:08 AM

"It's a buyers' market right now, and the numbers have never been better."

Ah, yes, the Real Estate Agent's Creed.

Posted by: cas127 | Jun 24, 2012 12:12:03 PM

@Money Law: You write of "Commercial Law" as if that's a common and distinct legal education specialty that BigLaw firms use as a basis for choosing among competing job applicants. It's just not, and I don't know where you got that fantasy.

You don't tell us the source of your information. I'm not trying to get into a competitive e-preening session, but here's mine: I was a BigLaw partner at two different top 100 firms and an associate at another for, all told, more than 15 years. At all three of those firms, and ever since I voluntarily stepped off the BigLaw treadmill, I did litigation exclusively, and the overwhelming majority of that was commercial litigation. (Even the personal injury defense I did was for business clients, and it inevitably involved "commercial law" relating to insurance, indemnifications, risk management, and the like. And at all three BigLaw firms I practiced at, I was heavily involved in law school recruiting -- and in two instances as the local head of the respective firms' litigation/trial departments, and thus made all the temporary (summer) and permanent hiring decisions for those departments.

Not once in all of the recruiting trips I ever took did we go to a law school campus looking for someone who'd specialized in "Commercial Law." Not once did I ever see a candidate rejected, or preferred over or below another, because he or she had or had not taken classes in "Commercial Law."

If one looks at the law school catalogs of most law schools, courses with the word "commercial" in their title tend to be about one or more articles of the Uniform Commercial Code, typically focusing on particular types of "commercial paper" or "secured transactions" as a follow-up to the basic first-year course in contracts. But that would only scratch the surface. Besides basic contract law and the UCC (article 2 of which, on sales, is typically taught as part of contracts) and basic property law, a well-rounded law school graduate who wants to regularly represent business clients ought also be studying business associations (sometimes called "Corporations" at some schools), securities regulation, antitrust, administrative law, labor law, environmental law, and perhaps a smattering of tax or intellectual property law too.

In fact, comparatively few law school courses -- e.g., those involving domestic relations, state or federal civil procedure, or (non-business) criminal law -- would NOT qualify as relating to the practice of "commercial law," either as a business litigator or a deal/office practice lawyer.

I also don't have any idea which of those two real (but very different) legal practice specialties you're advising students to shoot for. Business litigators and deal lawyers often work for the same sorts of clients and from a common knowledge base -- but their actual practices are wildly, dramatically different on a day-to-day basis.

So forgive me if I can't imagine that your advice is very helpful. With due respect, I don't think it corresponds to the real world very well.

Last point: The regional bigotry in your conclusions is appalling. When quality of life, costs of living, and partnership considerations are included, those who graduate from good schools outside of the Northeast, and who choose to practice outside the Northeast, may do as well or better than those who choose schools or practices in the Northeast. There's more to life than starting salary.

Posted by: Beldar | Jun 24, 2012 1:43:23 PM

"There's more to life than starting salary."

Quite true - and cost of living considerations can have a significant impact on *net* salaries.

But...

There is a *major* concentration of NLJ 250 firms in places like NYC and SF - and these NLJ 250 firms are more-or-less the best proxy we have (any other candidate directories, anyone? Bueller? Bueller?) for the BigLaw firms whose *gross* salaries come closest to justifying the insane levels that tuitions have reached.

Alas, if only more law school candidates knew that a mere 100k or so lawyers work for NLJ 250 firms - total.

Out of about about 1.4 *million* lawyers. The overwhelming majority of whom make nowhere *near* the salaries of the NLJ 250/Biglaw 7%.

If law school candidates really knew they were playing financial Russian roulette with the odds 14 to 1 against (okay, say 10 to 1 against, to account for those non-NLJ 250 lawyers who have done pretty well financially) then the legal oversupply problem would solve itself as applications would collapse (far, far beyond the recent moderate declines).

But law schools (incubators of evil, infernos of blind self-interest that they really have become) expend a fortunate in both lucre and energy to obscure the newly emerging truth.

Your average law professor's six-hours-per-week-in-a-class-two-thirds-of-a-year lifestyle is built upon the financial ruin of 60% to 80% of their students.

But, hey, it also subsidizes the "liberal" bromides of 90% of legal academia.

Posted by: cas127 | Jun 24, 2012 3:53:05 PM