TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Sunday, January 13, 2013

New England Law Dean's $867,000 Salary Draws Scrutiny Amidst Soaring Tuition, Bleak Job Prospects for Grads

Boston Globe:  New England Law Head Draws Scrutiny For His Pay:  A Princely Paycheck For Dean of Unheralded School:

New England Law, Boston O'Brienhas operated in the shadows of the ­region’s more prestigious law schools for decades, trailing so far behind in some measures of excellence that US News & World ­Report does not include the downtown campus in its widely read ranking of 145 better law schools in the nation. [New England is ranked #154 in academic reputation.]

Yet the school’s longtime dean, John F. O’Brien, may be the highest paid law school dean in America, pocketing more than $867,000 a year in salary and benefits, includ­ing a [$650,000] “forgivable loan” that he used to buy a Florida condominium.

“It’s a remarkable sum to pay a dean of a law school, never mind the dean of a bottom-ranked law school,” said Brian Z. Tamanaha, a law professor and the author of Failing Law Schools, a 2012 book critical of the nation’s legal education system.

TuitionO’Brien is paid about as much as the president of Harvard University and more than three times the median salary of law school deans nationally, says a study by the College and University ­Professional Association for Human Resources. Indeed, New England Law could not name a single law school dean in the country who makes more than O’Brien.

But O’Brien’s story is more than the tale of a richly compensated school administrator. It is also the story of a professor who vaulted, just a few years into his academic career, to the top job at a lower-tier law school in large part through shrewd networking, sheer persistence, and a close relationship with the school’s board of trustees, many of whom have served on the board for most or all of O’Brien’s 25-year tenure as dean.

It is also the story of a law school that has hiked tuition by more than 80% in just a few years while doubling the percentage of applicants it accepts, generating the funds for increased student aid but also for the big salaries paid to O’Brien and other top administrators even as the demand for law school graduates dries up. ...

But, away from the glitz, O’Brien’s salary is drawing private criticism from some within the school and public barbs from outside observers who question whether the school is really worth the $40,000 ­tuition it charges students. “There’s no relationship ­between cost and benefit,” said Paul F. Campos, a University of Colorado Law School professor and the author of the blog ­“Inside the Law School Scam.” ...

[S]ome indicators suggest that O’Brien’s impact on New England Law’s performance has been limited. US News & World Report, in its listing of 199 law schools, includes New England Law among the bottom 50 or so schools that it does not publicly rank because they fall “below the US News cutoff.”

SalaryIn addition, only 34 percent of students in New England Law’s 2011 graduating class were able to land jobs requiring a law degree within nine months of graduating, according to the American Bar Association, compared with 68 percent at Boston College Law School, and 90 percent at ­Harvard Law. ...

Yet, students at New ­England Law pay almost as much in tuition as students attend­ing law schools where graduates generally have more success finding meaningful employment. Boston College law students, for instance, pay only about $1,000 a year more than New England Law students.

But New England Law’s escal­ating tuition has been a boon to its bottom line. The school — a tax-exempt, charitable organization, like most other colleges and universities in the region — reported that revenues exceeded expenses by $10 million in the 2011 fiscal year, which would represent a profit of roughly 30 percent if it were a for-profit company.

O’Brien said the school’s ­robust finances have allowed New England Law to triple ­financial aid, noting that 60 percent of students receive some form of scholarship from the school. The school’s budget surplus translates into roughly $9,000 for every student at New ­England Law, suggesting that officials could significantly ­reduce tuition and still not lose money for the year. ...

A native of Staten Island, he had graduated from Manhattan College, a Catholic school in the Bronx, before graduating first in the class of 1977 at what was then New England School of Law. For the next seven years, O’Brien labored as an attorney for the IRS before returning to New England Law as a professor of constitutional law and personal income taxation and, later, associate dean. In 1988, when he was still only in his late 30s, he was handed the reins of a school known for offer­ing students of lesser means or less than sterling credentials a chance for legal training.

http://taxprof.typepad.com/taxprof_blog/2013/01/boston-globe-.html

Legal Education | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef017ee755ce4c970d

Listed below are links to weblogs that reference New England Law Dean's $867,000 Salary Draws Scrutiny Amidst Soaring Tuition, Bleak Job Prospects for Grads:

Comments

Of course graduates of New England don't do as well financially as graduates of Harvard or Boston College. The students at Harvard and Boston College typically bring a lot more to the table in terms of intellectual ability, and law schools can only improve from where students start.

Median LSAT at Harvard: ~173
Median LSAT at BC: ~164
Median LSAT at New England: ~151

Are Harvard or B.C. adding more value than New England, or are they just benefiting from a more capable population of students and all adding an equal amount of value?

It's hard to say. We'd have to know how well everyone (New England, B.C., and Harvard Students) would have done if they'd never gone to law school.

It doesn't cost any less to educate a 151 LSAT student than a 173 LSAT student. In fact, it's probably a lot more difficult to educate the 151 student to the point where they can pass the bar exam.

Are Tamanaha and Campos just a couple of snobs who think only the intellectual elite deserve a quality legal education?

Do they have any evidence that New England students aren't better off having gone to law school than those same students would have been had they stopped with a bachelors?

Or are they just flinging mud and seeing what sticks?

Posted by: Anon | Jan 13, 2013 2:18:34 PM

Is this a $200,000 base salary + benefits + the forgivable loan? If so, shouldn't you amortize the loan over its term (assuming he would have to repay for each year he leaves short of the full term)? That would reduce annual compensation significantly.

Posted by: anon | Jan 13, 2013 2:21:24 PM

That is stunning. What a racket.

Posted by: Jake | Jan 13, 2013 2:49:21 PM

Anon 5:18, you kidding me?

Posted by: Oh Cmon | Jan 13, 2013 3:41:04 PM

Anon 1#: My comment was not about NESL students but about Dean's O'Brien's salary, which is far above the salary of other deans.

Anon 2#: Look at the bottom chart: these numbers show the rise in his annual salary (not $200,000 base) since 2004.

Posted by: Brian Tamanaha | Jan 13, 2013 6:10:52 PM

"Do they have any evidence that New England students aren't better off having gone to law school than those same students would have been had they stopped with a bachelors?"

New England grads, from lawschooltransparency.com --

Unemployed: 15.2%
Part-time: 13.3%
Solo: 4.9%

That's a third of the class right there, and those are all objectively worse outcomes than skipping the whole money and time suck that is New England and just signing up for unemployment, getting a part-time job, or starting your own business right out of undergrad.

Posted by: john | Jan 13, 2013 7:20:42 PM

Where does this salary data come from? Please provide sources.

Posted by: anon | Jan 13, 2013 7:41:38 PM

“There’s no relationship ­between cost and benefit,” said Paul F. Campos....

Here, a school makes a law degree possible for many students who were snubbed by elite colleges. Those students are grateful for the opportunity and are willing to pay the higher tuition just for a chance. No arm twisting. Such a formula serves the interests of both the school and the students. What's wrong with that? What value is it to applicants who are told to go to hell and given no chance by "sophisticates" who offer a "better relationship between cost and benefit?" I'll take a win-win situation over a lose-lose.

...revenues exceeded expenses by $10 million in the 2011 fiscal year, which would represent a profit of roughly 30 percent if it were a for-profit company.

Based upon what O'Brien appears to have added to the bottom line, the school is getting a deal.

Frankly, all of this smacks of professional envy.

Posted by: Woody | Jan 13, 2013 9:27:17 PM

Brian - Thanks for pointing that out, but it doesn't quite resolve the issue. The chart doesn't jibe with the text of the article. The $650,000 loan is reportedly included in the $867K figure. The chart establishes that it isn't a one-time loan inclusion on a 200K base, but if it's included it has to be amortized. Something is base and something is the loan, but you would want to know which is which and what are the terms of the loan to know what is really going on here. It could be a $360K base with the loan starting to appear in 2006, a base increase in 2009, and then stagnant base thereafter.

Posted by: anon | Jan 13, 2013 10:18:43 PM

The anon's who are pestering Tamanaha regarding the difference between Dean O'Brien's base salary and the amount from the forgivable loan could simply read the BG article that Caron linked, which includes "Then, in 2008, the board boosted O’Brien’s salary from $437,900 to nearly $615,000, a 40 percent increase in one year. Sweetening the deal further, the board included a $650,000 “forgivable loan,” ­under which O’Brien’s salary would include money to help repay the debt."

Given the chart shows the ~ 850K running from 2008, it would seem then that the forgivable loan is on the order of 250/year.

So no, there does not appear to be any way that it "could be a $360K base with the loan starting to appear in 2006".

Posted by: concerned_citizen | Jan 14, 2013 7:37:24 AM

If Anon would bother to read the Globe story or better yet look up NESL's IRS 990 filing he/she would discover that O'Brien's base salary in 2010-11 was $609K and that he received $2llK in "other compensation," i.e., a portion of the "forgivable loan," which isn't really a loan, since he doesn't have to pay it back.

Posted by: Paul Campos | Jan 14, 2013 7:45:50 AM

According to the Boston Globe, only 68 percent of 2011 BC Law grads were employed at 9 months.

But according to BC Law's website, 89.5% were:

http://www.bc.edu/content/bc/schools/law/services/career/about_us/stats_full.html

I trust the Boston Globe and assume BC Law's lying. But does anyone know where the Globe got the 68% figure?

Posted by: BC Law Fraud? | Jan 14, 2013 8:47:40 AM

BTW, has there ever been an article with so many examples of chartjunk in one place? The Boston Globe should do better than that. "Admittance have begun to slide" shows standards falling off a cliff - a drop of two whole points with the Y-axis placed in an exceedingly misleading position. "O'Brien's annual salary also rose" is nearly as bad a chart - the >50% rise is outrageous, no doubt about it, so why not show it accurately?

(This is not to disparage the article at all - apparently New England is a money mint for its board and Dean while being a lifetime money trap for its clueless students - but those points could be made without exaggerated graphics.)

Posted by: David-2 | Jan 14, 2013 11:16:25 AM

Anon - forgivable loans are usually written so that they are forgiven over x-years and then there is a salary gross up to cover the imputed tax cost. So the loan is probably forgivable on a back of the envelope calculation in equal tranches over 5 years - with a gross up on his salary to cover the tax cost of the forgiveness - which comes out on my math to just about the $211k in other compensation. Hmm...

Posted by: MacK | Jan 14, 2013 12:55:13 PM

Inter alia - forgivable loans like this tend to be part of relocation packages - especially international where an executive is moving from low housing cost to high - they are typically grossed up and conditional on the exec staying for 3-5 years with accelerated forgiveness part of the severance package. A bit off for an employee who is in the same city for decades and secure in the job.

Posted by: MacK | Jan 14, 2013 1:00:36 PM

I go to NESL. I work 40hrs a week full time. I applied to two schools, Suffolk and NESL, because they are the only schools with night programs. My LSAT was a 158, I got a 20K a year scholarship to attend NESL, and got no money from Suffolk. Neither are top tier schools, so I went with NESL. Those who criticize NESL students as being less bright than others are making sweeping statements. I know plenty of idiots up the street at Suffolk.

Posted by: Dave | Jan 14, 2013 5:13:46 PM

Yes, Dave, but you're above the average for NESL. Most of your fellow students at NESL are dumber than you.

Posted by: Brian | Jan 14, 2013 6:04:59 PM

If a lawyer can't rob people blind with impunity, what's the point of being a lawyer? Sheesh, cut the guy some professional courtesy.

Posted by: John | Jan 14, 2013 6:32:38 PM

Well at least most of the students at NESL have a bit more class than you Brian.

Posted by: NESLAlumni | Jan 14, 2013 7:38:19 PM

In response to those who think O'Brien deserves his enormous paycheck, in light of the "profit" he has generated for NESL -- Bernie Madoff and his (early) investors used the same rationalization.

Get real, folks.

Posted by: Jake | Jan 15, 2013 5:02:15 PM

As a not-so-recent NESL/NELB Alumni, although the Dean's recent significant rise in salary is certainly a concern, more troubling to me is the increase in tuition vs. the school's net profit. NESL always offered a good legal education at a good price, and gave me great fundamentals that have allowed me to succeed at the highest levels, and I am grateful. But the dramatic rise in tuition changes that dynamic a bit. The debt students will graduate with will also make it more difficult for them to be able to fill many of the important prosecutorial and defender positions they have occupied. The rise in the acceptance percentage is also a concern, but applications to law school are down considerably nationwide, so that is one likely cause of some of it. I agree with the commenters above who state that the story is overly and inaccurately demeaning to the school and its students, and places an inordinate amount of emphasis on the US News and World report. It should also have put the numbers in context -- e.g., nationally - 15% of 2011 law grads were unemployed (http://insidethelawschoolscam.blogspot.com/2012/06/two-out-of-three-2011-law-school.html). The vast majority of NESL students are well educated and trained, and go onto successful legal careers, and other careers that are greatly enhanced by their NESL experience. It's too bad this fact was lost in the rush to sensationalize.

Posted by: D | Jan 25, 2013 11:22:34 PM