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Monday, February 4, 2013

Deborah Jones Merritt: The Application Carnage and the Cost of Law School

Deborah Jones Merritt (Ohio State), The Twenty-Year Drop:

There was a lot of press last week about this year's dramatic fall in law school applicants. LawProf and I noted the carnage a few weeks ago: Law schools are about to hit a 30-year low in the number of applicants. ... From a peak of 100,000 applicants, reached in both 1991 and 2003, applicants this year will drop below 60,000--and almost certainly below 55,000. ...

As the number of college graduates increased, the tally of law school applicants should have increased or at least remained steady. Instead, when measured as a percentage of college graduates, law school applicants have declined significantly over the last twenty years:

... [T]he drop in law school applicants is not cyclical; it's not related to the recession and jobless recovery; it's not even based solely on the most recent contraction in the legal market. College graduates have been losing interest in law school--compared to other graduate programs or workplace opportunities--for the last twenty years.

What accounts for that decline? During those same two decades, law school tuition has risen extravagantly:

... With poor placement rates, increased transparency about job outcomes, and ongoing shifts in legal practice, it will be very difficult for law schools to reverse this twenty-year trend. If we hope to do so, we have to look candidly at the roots of our long-term slide. One of those roots surely is the price of legal education. Rising cost, falling demand. Simple market economics.

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Comments

I'm worried about the participation rates of women. I've seen data suggesting that women are now less than half of the entering 1L class, but I believe that they're clearly over half of all the undergrads who earn a degree.

Does anyone know if the declining percentage of BA's who apply to law school reflects a greater decline in applications among women-BA's as compared to men-BA's? Does anyone know where we'd find data to see if that's true?

Posted by: John Steele | Feb 4, 2013 3:39:44 PM

Let's see:

Law school applications go up and down, while tuition keeps going up.

This doesn't look like much of a causal relationship. In fact, it looks like cyclicality with some "New York Times" effect thrown in.

Unless DJM has done some regressions controlling for other factors that might drive law school applications, I don't see how she can claim with a straight face that tuition is driving the decline in law school applications.

And of course, people have done regressions, and published actual "research" on what drives law school applications.

But please DJM--don't let anything like economics, statistics, or a literature review deter you from your conclusion that law school tuition is too high.

I'm sure you heard it from a very reliable source--perhaps a burning bush, or a talking grasshopper, or plain old voices in your head, which are no doubt your powers of prophecy coming into full bloom.

Posted by: Anon | Feb 4, 2013 4:49:14 PM

DJM,

If you're going to use long term data, you should check for a break in the time series.

From your source at LSAC:

"Due to significant changes in data collection methods, data collected prior to fall 2000 are not comparable to data collected after fall 2000."

http://www.lsac.org/lsacresources/data/lsac-volume-summary.asp

Posted by: Anon | Feb 4, 2013 5:15:29 PM

John, I think that's a very valid concern about women. They currently make up 57.2% of college graduates, but just 46.1% of law students. The drop-off doesn't occur because women disproportionately shun graduate work: they earn more MA's and PhD's than men. But after hitting almost 50% of law school applicants in 2001, the percentage of women JD applicants has declined. I posted some further thoughts on this last month: http://insidethelawschoolscam.blogspot.com/2013/01/what-about-women.html

Posted by: Deborah J Merritt | Feb 4, 2013 8:02:09 PM

Thank you for your work on this subject. I have little doubt that tuition is too high. Graduates are typically leaving law school with loans in tow of over $130,000. If you land an associate position in a top market, you can pay that off rather fast. But there are not nearly enough of those jobs to sustain the applicant levels we saw over the last twenty years.

But what sustained the number - even over the course of that time you may ask? Well, it is actually simple and I am surprised that I have not read very much about it. Armies of document review attorneys in the largest markets were pulling in six figure salaries and paying back their loans. So why should that not continue? Two reasons: 1) The process is becoming automated so first level relevance review is being processed by computers; 2) the jobs are being outsourced. The second factor is a larger contributor to the decline of document review positions than you would imagine.

I worked in the industry in 2006 when law firms and corporations were just being educated about the option. Now, the trend is in full force. This dramatic shift has occured all within the last 6 years. Legal Process Outsourcing (LPO) is the term for outsourcing document review and the leader is Pangea3 http://www.pangea3.com/. Attorneys in India are doing the document review work that hundreds of U.S. graduates used to bank on if they were ever going to repay their debt in a reasonable time.

There are still document review jobs in the U.S., but those opportunities are fewer and fewer. The trend will continue and the jobs are never coming back as long as Indian attorneys will review documents for $6 an hour versus the $35 - $50 a U.S. attorney commands. I recommend that someone with the time look deeper into this. But there, you will find the answer as to why the applicant contraction is permanent. Applicants now know that there is little reasonable chance that they can pay back their loans, start a family, save for retirement, etc. There simply are not enough associate or document review jobs in large markets and there never will be again (on these shores). With tuition rates as they are, it increasingly makes less and less economic sense to go to law school.

Posted by: Jon | Feb 5, 2013 6:30:36 AM

I think in this case it makes sense that the anecdotes are the reality. For at least a decade every lawyer I know has been telling non-lawyers not to go to law school and if they must, not to go unless they can get into a good state school and borrow as little as possible.

As for women, the practice of law is impossible for any woman that wants to have a family and be the primary or even equal caregiver of her children. I'm not talking about leaving the workforce, I'm talking about finding enough good child care to physically work the number of hours you have to work unless your husband is a stay at home dad. Maybe women are figuring that out. It works for women with au pairs or live in nannies but that's it. If those aren't options (or not how you want to raise your kids) then you have no future in law. Period. If you start out well, get in a lot of really good years at a great firm, maybe you can get a senior counsel job in-house somewhere and THEN have kids but seriously - how many of those jobs are out there? It's ridiculous and despite all the ink that's been spilled it's not changing, and will never change because it's too profitable a model.

Posted by: CB | Feb 5, 2013 7:54:02 AM

On the subject of women in law - as one - I know a number with children who are practicing and making money - but not happily, with healthy families, in the biggest firms. In smaller firms, corporations, government jobs, not so much of a problem. The ones who are qualified and connected (and highly experienced) and have gone solo or started small firms are fine. I know a lot of women in the 12-15 year range who have taken clients and connections and started their own boutique practices or firms, are happy with the time and money coming in (it is not $500,000, but you don't "need" that either), and see their families.

It is NOT impossible to be a woman and a lawyer. It IS impossible for either gender to have a happy, healthy family (that you see, so they actually know who you are) and mental and physical health in a large firm. The big law system just plain sucks. Someone might have told them that the 13th Amendment abolished slavery, but they didn't hear it.

Posted by: MJ | Feb 5, 2013 10:11:06 AM

I'm a latecomer to this discussion so maybe this question has been dealt with, but why should someone who does not have a vested interest in the market for lawyers care about the decline in law school applications? Do we have a good reason to think that we know what the "right" number of applications to law school so that we should, from a social welfare perspective, be concerned? Is it 3% of BAs? 9%? Or is the real issue distributional, concern about the share of women or low income applicants?

Posted by: ath | Feb 5, 2013 1:13:00 PM