TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, March 8, 2013

NY Times: To Place Graduates, Law Schools Are Opening Firms

New York Times:  To Place Graduates, Law Schools Are Opening Firms:

Arizona State is setting up [a nonprofit law firm] this summer for some of its graduates. Over the next few years, 30 graduates will work under seasoned lawyers and be paid for a wide range of services provided at relatively low cost to the people of Phoenix.

The plan is one of a dozen efforts across the country to address two acute — and seemingly contradictory — problems: heavily indebted law graduates with no clients and a vast number of Americans unable to afford a lawyer.

This paradox, fed by the growth of Internet-based legal research and services, is at the heart of a crisis looming over the legal profession after decades of relentless growth and accumulated wealth. It is evident in the sharp drop in law school applications and the increasing numbers of Americans showing up in court without a lawyer....

A dozen law schools, including City University of New York and Thomas Jefferson School of Law in San Diego, have set up incubators to train future solo practitioners in their first year out of school, offering office space and mentors. ...

[T]he incoming president of the ABA, James R. Silkenat, of New York, said his top priority next fall would be to establish a “legal job corps” to match lawyers who need jobs with clients who need legal assistance. “We have these two issues running in opposite directions,” Mr. Silkenat said in an interview. “There are unmet legal needs because of money and geography that seem to be growing, and the question of how to make use of unemployed recent graduates.”

All law schools, including the elites, are increasing skills training by adding clinics and externships. ...

Critics [of Arizona State's program] say that $125 an hour is too high to serve those in need and too low to break even. Others say that Phoenix, a city of intense growth and few law students, could support such an operation but that others could not and that local law firms would resent the competition. “We charge $50 an hour, and I don’t take any pay,” said Dennis A. Gladwell, who runs a smaller firm at the University of Utah with a staff of five graduates started 16 months ago. “If you are going to charge $125, you are not going to serve an underserved population.” Mr. Gladwell, who retired as a partner from the big firm of Gibson Dunn & Crutcher, also said that despite having asked top local firms to send along cases they considered too small for themselves, none responded.


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If US News refused to count these "jobs" for rankings, I have little doubt that the programs would disappear overnight. That about sums up this latest trick.

If 1 school gets away with this, then 200 will feel compelled to follow. What a waste.

Posted by: Kevin Outterson | Mar 8, 2013 5:04:23 AM

The bit about the need for legislation to accommodate tax exemption, doesn't Rev. Proc. 92-59 address such exemption? Or is the ASU model too out of step with the guidelines? I think that may be the case. Can someone more knowledgeable please comment?

Posted by: HTA | Mar 8, 2013 7:24:26 AM

For a dean open to ideas, this is a golden age. How about returning to the articling system, in disguise? You get into law school, the law school works you at boring but increasingly difficult jobs for 3 years, also providing you with wisdom and with time to read lawbooks, and paying you $10,000/year, and then you take the bar exam and become a lawyer yourself. And the law school ends up with a profit.

Posted by: Eric Rasmusen | Mar 8, 2013 7:57:45 AM

It's hard not to be cynical: I question the motiviations of the lawschools (i.e., rankings) given schools' track records.

These motivations will become clear if schools that used "brideg to practice" type temporary employment programs suddenly abandon them in correspondence with this year's U.S. News ranking methodology change with respect to counting these folks as unemployed, in favor of these "law firm" type programs that will allow schools to claim large numbers of students as employed in permanent jobs that require a law degree.

It'll also be funny to go back and look at schools' justifications regarding the bridge to practice programs (i.e., as being in the interest of students, not the schools' statistics for ranking purposes).

Posted by: Anon | Mar 8, 2013 12:29:19 PM

While it's easy to make fun, these law school are at least addressing the issue of how to do practical training without sacrificing academic standards. The question, I suppose, is whether one needs to pay full tuition in order to accomplish this. This will be answered in time.

Posted by: michael livingston | Mar 10, 2013 3:48:49 AM