Monday, February 11, 2013
Jim Chen (Louisville), Measuring the Downside Risk of Law School Attendance:
Legal education has come under severe political pressure, both external and internal, for its perceived failure to deliver tangible economic benefits to law students. But legal education is not alone. The financial crisis of 2008 and the economic recession triggered by it have forced many other industries, to reevaluate their balance of costs and benefits. Many institutions, even entire industries, must now endure stress-testing in the form of debt-to-income or debt-to-capital ratios. This document focuses on student welfare, especially the core economic question of whether law school attendance delivers a valuable return on students’ investment. It also describe the tools, drawn from quantitative finance and econometrics, that it uses to evaluate downside risk and inequality within any cohort of law school graduates.
Just how much do new law grads need to earn? Jim Chen, a professor and former dean at the University of Louisville’s Louis D. Brandeis School of Law, told the task force he has crunched the numbers. Law graduates need an annual salary equal to two thirds of their law school debt to make law school viable, he said. The problem could be solved, he said, by eliminating the third year of school, or by requiring law professors to take a one-third pay cut or give up job security. But change won’t happen without outside pressure, he said.
He suggested that state supreme courts, either alone or in concert with bar examiners, should reduce the number of subjects tested on the bar exam so that only two years of legal education would suffice. He also suggested following the lead of the medical profession by creating the legal equivalent of a nurse practitioner. Law schools could still offer a third year of education, he said, perhaps by offering clinical experience, subject matter specialties, or a BigLaw and academic track.