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Wednesday, April 17, 2013

Catholic University Imposes 20% Budget Cut Due to Declining Law School Enrollment

IndexThe Tower:  Law School Enrollment Dropoff Causes Departmental Budget Cuts:

Catholic University will cut operational expenditures by 20% under a proposal by the Provost, a move that is the result of a decline in revenue from law school enrollment.

Earlier this year, the Provost asked deans from the University to trim down their operational expenditures for the next fiscal year by 20%.  This decision has come following a decline in revenue from decreasing law school enrollment – a challenge that is being experienced by universities nationwide.

Lawyers, Guns & Money: Catholic University of America to Slash Overall Budget by 20%; Plunging Law Schools Apps to Blame:

The law school accounts for about 10% of the university’s overall enrollment, so the mind reels at the extent to which the rest of the university has been depending for its solvency on encouraging the law school to produce massively indebted graduates who are unable to get any sort of legal job in what is at present the worst place in the country to try to get a job as a lawyer (Washington DC).

This naturally raises the question of how many other universities depend on their law school’s graduates to cross-subsidize the rest of the campus to a similar extent. A friend who is in a position to know tells me that quite a few law schools are now actually running operating deficits, although university budgets are so byzantine in regard to cross-subsidization via the charging of “indirect expenses” and the like that it’s often very difficult to untangle the actual financial situation. We law faculty are of course encouraged by our administrative overlords not to worry our pretty little heads about these matters, not that most of us require much encouragement of that sort anyway.

Another friend makes a prediction:

My suspicion is that law schools will close when they appear to need long term subsidization. ... [W]hen you read most schools tenure guidelines as an implied contract, it starts to jump out that cost cutting would be extraordinarily hard in any department – with seniority rules, the need to show financial crisis etc. The easy out is actually to “pull the plug” on the whole department. That is why I think a few colleges could quite abruptly make the decision to simply close the law school.

I do find amusing the idea that some professors have that everyone will take a nice round 10% pay cut. You never can really sell an across the board pay cut – someone always has alimony, kids in school, impecunious parents, a big mortgage, and if it is hell to make it stick. Look how fast law firms push out partners having a bad year… The idea that senior faculty will take one for the team, or junior faculty, many of whom have big student loans – is not that realistic. The problem is that it does not look very easy to layoff tenured faculty and oddly, tenure seems to be one of the few areas in US law where the idea of constructive dismissal may actually apply (I did some research a while back.)

My own sense of the situation, which I have expressed before, is that when the first reputable college jumps and announces that its law school is closing there will be a rising wave of followers. The interesting question is how far are some schools from that point – if enrollment is way down in August/September it could start sooner than many people think.

I note your comment about lack of transparency. The late Dick Gordon told me, when he was Dean of Georgetown, that he took the decision to move to Capitol Hill so that he could segregate the finances better – that the murkiness was in overhead allocation for shared facilities – registration fees, campus upkeep, heating plant, you name it. Some departments pay essentially nothing for their use of campus facilities and office space, lecture halls, gyms, registration services, while law schools often pay inflated charges, and the law school Deans don’t necessarily know how inflated.

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Comments

I wonder about the accuracy of this story. Law schools make up a small percentage of a university's revenue and expenditures. How could decline in law school enrollment alone lead to such a massive across the board budget cut?

Posted by: David Yellen | Apr 17, 2013 6:57:27 AM

I know this isn't you, Paul, but this really jumped out at me:

"what is at present the worst place in the country to try to get a job as a lawyer (Washington DC)."

Washington is the worst place to try to get a lawyer job these days? How do you figure, sports fan? By almost any conventional metric (housing prices, unemployment rate), the Washington metro area is doing comparatively well. What statistics show that the legal job market in Washington is bucking these trends? From first- and second-hand experience I know the legal job market is still soft, but is Washington worse than *all other* markets? Is it really worse for lawyers seeking employment in Washington right now that in, say, Las Vegas or Detroit?

Posted by: Puzzled | Apr 17, 2013 7:25:46 AM

My oldest brother is a graduate of the lowest ranked law school in the country. He's been chronically unemployed and unable to maintain a solo practice. He's on an allowance for me.when I suggested he at least substitute teach to make a few bucks,he told our youngest brother,"I'm talented and educated. I'm not going to take some crap job."
PS.He has a special dislike of Catholics. I don't know why.And,he thinks minimim wage should be increased to $15/hr

Posted by: corwin | Apr 17, 2013 9:26:55 AM

Are tenure-track and/or tenured professors being let go?

Posted by: BA | Apr 17, 2013 10:50:18 AM

Washington DC disfavors the legal job seeker due to oversupply. As often reported by multiple sources, the DC area has more lawyers per capita than any other metropolitan area in the US.

That aside, it's a stretch to say that DC is the worst legal labor market in the country. By what statistics is this measured?

Posted by: Jake | Apr 17, 2013 5:30:44 PM