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Wednesday, October 3, 2012

Caron: The Law School Crisis: What Would Jimmy McMillan Do?

McMillanPaul L. Caron (Cincinnati), The Law School Crisis: What Would Jimmy McMillan Do?, 31 Pepperdine Law 14 (Fall 2012):

Several years ago, I co-wrote an article on applying the principles from Michael Lewis’s Moneyball book to legal education (What Law Schools Can Learn from Billy Beane and the Oakland Athletics (82 Texas L. Rev. 1483 (2004)). The article asked what Billy Beane would do as the dean of a law school to capitalize on the inefficiencies in legal education. 

Perhaps a better model for the crisis facing legal education today is Jimmy McMillan, who ran for New York Governor in 2010 with the slogan “the rent is too damn high.” Law school tuition is simply too damn high. Administrators and faculty need to ruthlessly examine law school budgets and cut areas that are not essential to the school’s mission. Law school is twice as expensive as it was twenty years ago (in inflation-adjusted dollars), yet no one would argue that legal education is twice as good today. ...

Our Moneyball article closed with these words:

Like Michael Lewis, we have told a story about a profession and people we love. We are proud of the work law schools and law professors do in teaching future lawyers and producing legal scholarship to the betterment of American law and society. As institutions and as individuals, we have nothing to fear from the accountability and transparency spotlight. Indeed, we do our best work in the light. We should welcome the opportunity to tell the world what we do and help them measure our performance as teachers and scholars. If we do not, the story will be told by others and it will no longer be our own.

Law schools need to take immediate action to confront today’s crisis. The current model – convincing 45,000 people each year to assume six-figure debt loads to chase 20,000 legal jobs (most of which do not pay enough to service the debt) – is simply unsustainable. Market and political forces are gathering steam. Law schools that embrace change will emerge stronger from the current storm.

For more, see A Law School Crisis Reader.

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"Law school tuition is simply too damn high. . . . Law school is twice as expensive as it was twenty years ago (in inflation-adjusted dollars), yet no one would argue that legal education is twice as good today."

A couple of points.

1) Law school tuition doubling doesn't mean that the cost paid by students has doubled. You have to look at *net tuition*, that is, tuition less all grants and scholarships.

Tuition can increase as schools admit more students from less privileged backgrounds, charge wealthier students more, and offer more need based and / or merit based aid.

Nor does debt doubling mean the cost of law school has doubled. Increases in average debt load can simply mean that law schools are admitting more students from less wealthy families who need to borrow more to finance their education.

If you want access to law school to be more widely available regardless of parental wealth, tuition and average debt will go up.

Not to mention the growth of debt forgiveness for public service, clinics, technical training in computerized research, and many other expensive but valuable programs that have developed over the years.

2) A law degree from a top school--the basic entry level requirement for becoming a law professor--might be twice as valuable outside academe as it was 20 years ago, given the meteoric rise in associate compensation and profits per partner at large corporate law firms, as well as the very high incomes available to those who work in finance or the upper echelons of the corporate world.

In fact, law degrees in general may be twice as valuable, in light of increasing wage dispersion, falling top marginal tax rates, and lower interest rates.

3) Even if 1 and 2 aren't true, it still doesn't logically follow that tuition is too high.

It may simply be that there is a wide range of possible levels for tuition, and that tuition 20 years ago was toward the low end of the range, i.e., law schools were underpricing their services.

Tuition can only be meaningfully evaluated relative to value, or relative to tuition for substitutes (i.e., tuition for other graduate school programs), not relative to tuition at another time when the world looked very different.

Posted by: Anon | Oct 3, 2012 4:45:18 AM

Anon @ 7:45:18--

Have you ever looked at the figures? They completely undercut all of your arguments. I would lay them out piece-by-piece here, but Paul Campos has already done that:

Summary: in 1985, 3 years of tuition at Harvard cost 57% of a first-year associate's starting salary. Today, it costs 95%.

This ignores the fact that most people coming out of law school today, and even a significant portion coming out of top schools, AREN'T GETTING ANY JOBS AT ALL.

Posted by: Anon 2 | Oct 3, 2012 8:19:04 AM

Paul L. Caron is my hero. Seriously.

Posted by: Lt. Dangle | Oct 3, 2012 9:11:52 AM

Anon draws a false conclusion from a partial truth. The truth is that scholarships have gone up along with tuition. The false conclusion is that debt has not gone up apace with tuition increases. According to figures published by the ABA, average tuition at private law schools in 2001 was $22,961; in 2011 it was $39,184 (note the stunning rise in just a decade). Average debt of private law school grads in 2011 was $70,147; in 2011 it was $124,950.

Anon's points 2 and 3 are magical thinking ("law degrees in general might be twice as valuable") and do not merit a response.

The problem with anonymity, as we see again and again, is that the lack of accountability it provides allows people to offer baseless and poorly reasoned assertions that they would not make if their credibility was at stake.

Posted by: Brian Tamanaha | Oct 3, 2012 9:13:41 AM

Looks like you've failed to persuade Caron, anon. I'm sure you'll keep trying.

Posted by: Steven | Oct 3, 2012 9:35:33 AM

The above anon misses the main point. The main point is that even a start salary of a BigLaw associate, most of which will NOT make partner, barely justifies the cost of debt-financing a law degree.

Of the 50% of legal graduates lucky to get full-time attorney positions, most will be making 35K to 50K.

Tuition is too damn high. While tuition has doubled in twenty years median household income, also adjusted for inflation, has barely budged.

Finally, one of your main premises is flawed.

"If you want access to law school to be more widely available regardless of parental wealth, tuition and average debt will go up."

Twenty to thirty years ago tuition+CoL at law schools was perhaps 1/4-1/3 of median household income. It is now well over 100% of median household income, which has barely budged.

A more accurate reading of your point would be replacing "regardless of parental wealth" with "regardless of ability and job prospects."

Food for thought.

Posted by: Anon | Oct 3, 2012 9:47:20 AM

From Anon: "If you want access to law school to be more widely available regardless of parental wealth, tuition and average debt will go up."

So, it's the access to law school for all that is causing tuition to rise, Anon? Last time I checked, the unwealthy students are financing their own legal education through student loans. In fact, that's kind of why the average law student graduates now with $124,000 worth of debt for his or her education. Certainly such high figures ought to tell you that such students aren't getting their educations financed by increased tuition.

At my law school, in the last 4 years, a $10 million dollar purchase was made to buy a baseball stadium so the school could proudly say it helped support the local baseball team. (Definitely at the top of all prospective students' lists when choosing a law school, no?) The local law school here within the last 3 years moved into a newly renovated building which of course, was essential to students getting their legal education. None of that could have an effect on rising tuition, could it, Anon?

In the meantime, while everyone is bickering over the causes of increased tuition that is making it impossible for lower income students to attend law school since they can no longer get jobs to pay off their student loan debt, the legal education model in the United States is imploding and hundreds of thousands of individuals, if not millions, are being left out of our justice system because anything legal - legal representation or legal education - has just gotten too darn expensive. With that in mind, it really doesn't matter what the reasons are. It is just too expensive, and so many people left out of our legal system are paying the price.

Posted by: M | Oct 3, 2012 10:51:47 AM

First Anon here again.

Anon 12:47:20 PM has the facts wrong.

Over 85 percent of graduates were employed shortly after graduation (9 mos.) according to NALP and ABA data, and this compares very favorably to recent graduates of undergraduate liberal arts programs in the same year, and to overall workforce participation for people in the same age group as recent law grads.

Although they weren't all employed in full time legal jobs, their pay was high enough that the median starting salary (including the non-law jobs) was $60K and the average (mean) starting salary was $70-$80K. And that was the worst year in recent history, during the fallout from a horrific financial crisis and recession.

If they had stopped their education at college, their liberal arts degree would have earned them a median salary from around $30K at graduation to around $40 to $50K at midlife.

With a law degree, the median salary starts around $60K and moves upward to around $100K (including those who don't practice law) at midlife, or substantially higher if we only look at those who choose to practice law.

A little simple math tells us the wage premium starts around $30K and goes up to around $50K.

So is their debt service affordable? Absolutely.

If we assume wages remain constant in real terms (i.e., rise at the same rate as inflation over the long term).

The real interest rate on student loans is around 4.5% (7.5% less 3% inflation).

At this rate, the annual payment on their loans over a 30 year time period is just over $3K for every $50K they borrow. So a student with $150K in debt need only pay $9.2K a year in debt service.

Thanks to the law degree, they're earning $30K to $50K more per year than they would have with only a college degree.

If you can pay $3K per year for something worth $30 to $50K per year, it's pretty great investment and you can afford to pay your debts.

And the low student loan default rates for law school graduates relative to grads of other programs prove it.

Posted by: Anon | Oct 3, 2012 2:52:14 PM

Law school should be a two year major in a liberal arts program leading to an LLB. Requiring 4 years of education instead of 7 would lead to major savings.

Posted by: Walter Sobchak | Oct 3, 2012 8:20:56 PM

Dear Anon - Please look up the definition of the phrase "bimodal distribution" and then read your post about the "median" salaries again.If you want, you could also check Bill Henderson's excellent work on the subject. He has completely disproved your points.

Thank you.

Posted by: Liz | Oct 3, 2012 9:51:10 PM

Also, first Anon, perhaps you should familiarize yourself with where NALP gets its information. For 2011, NALP showed only 55% of graduates got legal jobs. What about the remaining 45%? How much did they earn? We don't know, because law school surveys typically don't ask and don't want to know your salary if you didn't get a law job.

That means that all the fancy salaries you are quoting don't apply to 45% of the graduates graduating from law school today, Anon. And since we are talking about such a large portion (45%), you should really familiarize yourself with THEIR salaries, since NALP and their law schools don't.

While I haven't conducted any 'official' survey, I have remained in contact with many of my school's and other's schools graduates from the last five years, and most that did not get law jobs ended up working in either retail or in jobs that paid less than $10 an hour (such as being a security guard, working at Home Depot, working in the university computer lab, etc.) Given that so many graduates ended up taking this route, I think you might be surprised, then, that the job figures quoted by NALP mean little, since so many graduates today fail to have the privilege of working as an attorney.

Posted by: M | Oct 4, 2012 9:57:20 AM

I should clarify: if NALP has data on graduates that are not working in the legal profession, this data is incorrect. My school's income survey did NOT ask for my salary, unless I was working in the legal profession. I have heard that at least one other school did the same thing and if it is supposed that this is not unusual, then NALP's figures for non-practicing graduates, if they post any, cannot be considered correct, since they are not incorporating a large portion of the data.

Again, this should be bothersome to many, considering that according to NALP's own data for 2011, only 55% of individuals graduating from law school in 2011 got full-time legal jobs that required bar passage.

Food for thought...

Posted by: M | Oct 4, 2012 10:00:51 AM


I'm familiar with Professor Henderson's research. It does not contradict or disprove anything I've said.

Are you familiar with the definition of "median", "mean" and "mode"?

The median is always the 50th percentile--i.e., the number that divides the sample into two even halves. 50 percent of recent graduates have above median salaries. 50 percent have below median salaries.

The mean is the statistical average, calculated by summing the entire sample and dividing by n (the number of observations in the sample). Mean can be higher than median if you have a right skewed distribution, as is typically the case in income distributions in the U.S. (in both law and almost everything else).

The mode is simply the number that appears most frequently in the sample. It is not a measure of central tendency for quantitative data--it's a curio with little importance, unless you are using parametric statistical techniques that require the assumption of a normal (bell curve) distribution.

Modes are useful if you're working with non-quantitative data, such as first and last names, and want to know which names are the most frequent.

They are not very useful for working with quantitative data such as salaries.

Posted by: Anon | Oct 5, 2012 4:58:54 AM


There are plenty of great jobs available to law graduates that are not "legal" jobs, including jobs in finance, consulting, business, government, politics, and the nonprofit world.

Total employment is almost 90 percent, and only 2% of grads were employed in non-professional (i.e., blue collar) jobs.

The question isn't whether the job is a law job or not.

The question is, how likely are law grads to find jobs, how much do those jobs pay (both initially and over time), and how do these figures compare to the outcomes law grads could have expected if they had never attended law school?

And the answer is, law school boosts the chances of finding a job and doubles pre-tax salary.

Posted by: Anon | Oct 5, 2012 5:04:16 AM

NALP's data includes non-law jobs.

Posted by: Anon | Oct 5, 2012 5:11:08 AM

The anonymous law professor here is so eager to defend his own (indefensible) privileges that he blithely disregards the tremendous evidence that a large proportion of law grads -- not all, and maybe not even most, but certainly a substantial share -- stand a fair chance of being financially ruined by law school. The problem is most severe at the worst law schools -- and this prof's severe defensiveness is a clue that he probably teaches at one. He pulls out every discredited trick and slight-of-hand to cover up what his unfortunate students have finally figured out: the prof's pleasant lifestyle, low teaching-load, and high salary are earned on the backs of the students he's supposed to be helping. No wonder he tries so hard to rationalize the indefensible: of he fessed up th
I the true situation, it'd be awfully hard to sleep at night.

Posted by: I find this pitiful | Oct 5, 2012 12:22:32 PM

Dear pitiful,

Just because a small number of people with law degrees don't have the luxurious life styles they expect, doesn't mean they have been financially ruined. Nor does it mean that law school caused their problems.

If you can't succeed with a law degree, heaven help you if you try to make it with just a liberal arts degree. A law degree is a big help, but it still matters what the student brings to the table, and life always involves some measure of risk. For those few, few people who truly suffer hardship, there is IBR or undue hardship discharge in bankruptcy.

Are you seriously going to tell me that your life is ruined because there is a small chance that your income might be reduced by 10 percent, but will on average likely double?

Posted by: Anon | Oct 5, 2012 1:18:43 PM

This isn't about a choice to charge more money, it's also about a cartelized and price-fixed industry. It's criminally illegal. The fraud the schools have engaged in should also be addressed, but it will not be. People speak about saving an industry - what a joke. I, like others who have been destroyed by this system, will commit suicide, because there is simply no way out.

Posted by: alur | Oct 12, 2012 10:01:23 PM