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Sunday, December 9, 2012

Organ: Stealth Restructuring in Legal Education -- Revenues Are Down $200 Million in Two Years

The Legal Whiteboard:  Stealth Restructuring in Legal Education, by Jerry Organ (U. St. Thomas):

While the large firm legal marketplace was in turmoil in 2009 and 2010, law school enrollment and tuition continued to climb, even as law school graduates increasingly were having difficulty finding employment.  According to the LSAC Volume Summary, in the last two years, as prospective students have become increasingly aware of the challenging employment outlook for law school graduates, and the increasing cost of law school, the number of applicants to law schools has declined by over 20%, from 87,500 to roughly 68,000.  According to the ABA, the number of first-year students has declined by over 8000, a decline of 15%.  Assuming an average net tuition of $25,000 per student (a rough estimate of average sticker price tuition less a rough estimate of average scholarship) this decline of roughly 8000 in first-year enrollment means law schools probably are missing roughly $200 million in first-year revenue for the 2012-2013 academic year as compared to the 2010-2011 academic year. ...

For a hypothetical law school with an entering class of 200 students in 2010, a decline of 20% or more in first-year enrollment means a first-year enrollment in 2012 of 160 students or fewer.  Again, assuming $25,000 in net tuition per student, that decline of 40 or more first-year students translates to at least $1 million less in first-year revenue in 2012 than in 2010.  If the hypothetical law school has seen a decline of 30% or more, that would mean a decline of 60 or more first-year students that translates to at least $1.5 million less in first-year revenue in 2012 than in 2010.  If similarly smaller classes are enrolled in 2013 and 2014, this hypothetical law school will be receiving $3 million to $5 million less in revenue in 2014 than it received in 2010.

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Comments

Perhaps there should be a discussion of employment alternatives for laid-off law faculty.

Posted by: Nick Ossetian | Dec 9, 2012 7:33:11 PM

"Perhaps there should be a discussion of employment alternatives for laid-off law faculty."

If a law degree is as versatile as they say, just imagine how versatile the skiil set of a law professor must be.

Posted by: john | Dec 10, 2012 2:25:04 AM

It will be a joy to watch arrogant law professors realize how little the market values them.

Posted by: JA | Dec 10, 2012 10:45:16 AM

Let 'em crash and burn, the lying thieves.

Posted by: Lowellguy | Dec 10, 2012 11:11:03 AM

What about the laid-off law profs who aren't arrogant or lying thieves?
Most law professors from less prestigous schools have few options. Firms won't generally laterally hire them despite their expertise. I suspect that most will wind up having to start solo practices.

Posted by: Nick Ossetian | Dec 10, 2012 11:43:50 AM

Why haven't more of these "lawyers" sued the Law Schools and the administrators who have been lying to them for years about their job prospects and future income?

Seems like a Win-Win situation and a way to recoup the "ripoff" from the liars.

Posted by: JGreene New Jersey | Dec 10, 2012 12:00:41 PM

"What about the laid-off law profs who aren't arrogant or lying thieves?
Most law professors from less prestigous schools have few options. Firms won't generally laterally hire them despite their expertise. I suspect that most will wind up having to start solo practices."

Exactly what most of the students at these lower ranked schools have been doing for decades now. Karma.

Posted by: john | Dec 10, 2012 9:10:28 PM

Down 200 million?!? Geez, that's...insane. The money that gets wasted the past few years, I swear...

Posted by: Aiesha Smythe | Dec 18, 2012 5:41:31 PM