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Saturday, April 27, 2013

Rapoport: U.S. News Rankings Management, Law Schools Gone Wild, and Enron

Doc1Nancy B. Rapoport (Interim Dean, UNLV), Managing U.S. News & World Report -- The Enron Way, 48 Gonz. L. Rev. 423 (2013):

This essay suggests that lying about the numbers that schools report to US News is no better than the lying that Enron did about its various methods of "earnings management." It also suggests that administrators -- being humans -- can talk themselves into lying about the numbers for all sorts of (very bad) reasons.

There have been a few big law school scandals that are either clear manipulations of data designed to game the U.S. News & World Report rankings or are reactions to the pressure of making the U.S. News “numbers” and filling a class. That yearly March-April collective decanal shudder or sigh of relief is much like how CEOs and CFOs must feel when they find out whether their quarterly earnings met, exceeded, or failed to meet their projected earnings. Make no mistake: the repercussions that accompany a school’s drop in the rankings (or when companies don’t meet their projected earnings) are ugly. That’s why schools spend so much time playing to the rankings and why companies can find themselves in hot—sometimes felonious—water with unsavory “earnings management” decisions that push a company into outright dishonesty. ...

With so many examples of “schools gone wild,” it’s difficult for law deans and law faculties to tell their students that lawyers shouldn’t lie. The law schools that have misstated their stats are sending the message that lawyers shouldn’t lie, unless: (1) lying will make their lives easier; (2) verifying the facts is too much trouble; or (3) the likelihood of getting caught—and punished—is low. That’s not the message that we should be sending. ... “Rankings management” just reminds me too much of the “earnings management” that I followed when I devoured every news article out there about the Enron scandal. ...

When schools focus on chasing the U.S. News rankings, they’re not doing so because they really believe that what U.S. News measures is what law schools should be doing. They’re doing so because higher rankings have positive ripple effects. Higher rankings mean getting applicants with better and better “numbers” each year, which in turn leads to yet even higher rankings. Higher rankings increase the odds that a graduate of that school will have better job opportunities. Higher rankings also increase the odds of a faculty member placing her article in a “better” law review. And, of course, higher rankings make the lives of deans, associate deans, assistant deans, and other administrators much easier. Those effects are nothing to sneeze at, and so people push as hard as they can to move up the ladder. 

But cheating at the rankings also imprints a school’s students and graduates. The same administration that is stressing adherence to an honor code and the importance of professionalism and ethics may be the one “construing” its answers and developing very delicate loopholes. Bad LSATs? Move those students to the part-time program! Part-time program LSATs now being counted in the rankings? Cut the entering class and admit lots of transfers! Placement low? Hire graduates as research assistants, unless they’re not good enough to do that type of work (in which case, hire them to do filing)!

Don’t think that deans aren’t aware of these options. We are. Then we wrestle with our “blush factor”: which decisions are legitimate “lawyering” decisions (what we’re teaching our students to do), and which ones are desperate attempts to keep from sliding a tier down? Everyone reaches a different blush-factor decision. I’ve made my peace with mine.

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Comments

What's the problem with law schools hiring their own graduates? If a law school doesn't think its own graduates are good enough to hire, isn't that an admission that the schools don't believe in their own program of education?

Harvard and Yale hire their own graduates all the time. Why shouldn't lower ranked schools do the same? The jobs are real, the graduates are making money and developing skills, and it's a lot easier to find a job when you have one. It seems like a win-win all around, so what's the problem?

As for going after transfer students--how is this unethical? Do law students sign a blood oath to finish law school at the same place they start?

Professors certainly don't sign an oath to stay at the same institution they start their careers at, and given recent developments with tenure, institutions don't make any real promises to professors either.

At the end of the day, transfers still need to pass the bar exam and get jobs, same as any other students. Nothing unethical there.

As for putting students into part time programs--again, what's the problem? If they're going to slow their classmates down, better to put them on a different track with a different pace.

One person's "ethical breach" is another person's sensible management strategy.


The issue with Enron is that they were miscategorizing debt as revenue. Nothing the law schools have been accused of comes remotely close.

But I guess being sensationalist does still attract eyeballs, and that's what it's really all about isn't it?

Or are we still traditional enough to believe that sensationalism is unethical?

Posted by: Anon | Apr 27, 2013 5:04:22 PM

Oh Anon, your commentary toward the motivations of law schools is cute. Your analysis surpasses my blush-factor. You could have made the Holocaust sound like "resource management". (How's that for sensationalism?!) Quick question, if your "sensible management strategy" enriches those in management to the tune of living in the top 5% of all income earners, and your product lands over half your customers unable to service the debt they incurred to pay for your product, so that taxpayers will eventually directly subsidize your top 5% lifestyle, and your product can only be sold because of that subsidization, does any of that matter in regard to whether your management strategy is "sensible"?

Posted by: Ryry | Apr 30, 2013 10:08:38 AM

Anon, the general thing that they're doing is hiring them for very temporary jobs which juuuuuuuuuuuuust happen to be during the time that their status is counted. It's rigging the numbers.

Posted by: Barry | Apr 30, 2013 11:33:46 AM