Paul L. Caron

Wednesday, July 31, 2013

Pasquale Responds to Tamanaha: A 'Torrent of Words' on the Value of Law School

Following up on this morning's post, Tamanaha Responds to Leiter (and Leiter Replies):  Frank Pasquale (Maryland), A "Torrent of Words" on the Value of Law School:

Professor Tamanaha (BT) complains that Simkovic and MacIntyre (SM) have unleashed a "torrent of words" in response to his criticism.  ... SM have responded to a fusillade of criticism, much of it ill-informed.  BT is welcome to dismiss their work, but as he does so, he should also be more cautious about his own claims.  If the "law school reform" movement simply cannot acknowledge a piece of "good news" about legal education, it risks looking like the more dubious branches of "tort reform," driven by motives far afield from its stated aim of helping consumers.

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July 31, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

6th Circuit Affirms Dismissal of Lawsuit by Thomas Cooley Graduates Over Placement Data

CooleyMacDonald v. Thomas M. Cooley Law School, Nos. 12-2066/2130 (6th Cir. July 30, 2013):

The plaintiffs, twelve graduates of the Thomas M. Cooley Law School, sued their alma mater in district court, alleging that the school disseminated false employment statistics which misled them into deciding to attend Cooley. The graduates relied on these statistics as assurances that they would obtain full-time attorney jobs after graduating. But the statistics portrayed their postgraduation employment prospects as far more sanguine than they turned out to be. After graduation, the Cooley graduates did not secure the kind of employment the statistics advertised—or in some cases any employment at all. They claimed that, had they known their true—dismal—employment prospects, they would not have attended Cooley—or would have paid less tuition. Because their Cooley degrees turned out not to be worth what Cooley advertised them to be, they have sought, among other relief, partial reimbursement of tuition, which they have estimated for the class would be $300,000,000. But because the Michigan Consumer Protection Act does not apply to this case’s facts, because the graduates’ complaint shows that one of the statistics on which they relied was objectively true, and because their reliance on the statistics was unreasonable, we AFFIRM the district court’s judgment dismissing their complaint for failure to state any claim upon which it could grant relief. ...

Most of the plaintiffs had difficulty finding full-time, paying jobs as lawyers after graduating. Anders Christensen graduated from Cooley Law in 2010, passed the Utah Bar, and worked as a law clerk for a Utah law firm, where he is currently an associate. Carrie Kalbfleisch, who graduated in 2010, passed the Kentucky Bar and started her own law firm in Kentucky. After graduating in 2010, John T. MacDonald, Jr. passed the Michigan Bar, but could not find full-time, permanent legal employment and so was forced to open up his own law firm which he still operates. Shawn Haff, who also graduated in 2010, could not find full-time, permanent legal employment, and so he took temporary, contract assignments reviewing documents to make ends meet. He now owns and operates his own law firm in Michigan, where he is licensed to practice law. Dimple Kumar, who graduated in 2009, passed the New York Bar, but tried unsuccessfully for over nine months to find full-time, permanent legal employment. He was forced to take temporary, contract assignments reviewing documents to make ends meet, until he found full-time employment practicing landlord-tenant law. He currently owns and operates his own law firm. Dan Guinn, who also graduated in 2009, passed the Ohio Bar, but was also forced to take temporary, contract assignments reviewing documents to make ends meet. He now owns and operates his own law firm. Similarly, Kevin Prince, after graduating in 2009, passed the Michigan Bar, but was forced to take temporary, contract assignments reviewing documents to make ends meet, until finding full-time, permanent employment, nearly a year after graduating from law school. Benjamin Forsgren, who graduated in 2008, passed the Utah Bar and began his current position as a contracts manager at a Utah company. Lastly, Chelsea A. Pejic, who graduated in 2006, could not find gainful legal employment despite circulating hundreds of resumes, and so was forced to endure a long period of unemployment. She passed the Illinois Bar, and operated her own law firm for a brief period while working as a volunteer staff attorney and a temporary contract attorney.

Others have not been able to find any legal employment. Shane Hobbs, who lives in Pennsylvania, graduated in 2010. He failed to secure any type of legal employment and has worked as a substitute teacher and day laborer at a golf course. Steven Baron, who graduated in 2008, lives in Los Angeles, California. He is currently unemployed and has failed to get any kind of job, despite circulating hundreds of resumes. Danny Wakefield graduated from Cooley Law in 2007. Although he passed the Utah Bar, and used to be a member in good standing, he voluntarily assumed inactive status because he could not get any type of employment in the legal profession. He currently manages the deliveries of telephone books. ...

The graduates cannot prove that Cooley committed fraudulent misrepresentation based on the “percentage of graduates employed” because the graduates cannot prove that this statistic was false. The statistic does not say percentage of graduates “employed in full-time, permanent positions for which a law degree is required or preferred.” It only says percentage of graduates “employed.” The graduates might have thought that “employed” meant employed in a permanent position for which a law degree was required or preferred—but, again “[a] plaintiff’s subjective misunderstanding of information that is not objectively false or misleading cannot mean that a defendant has committed the tort of fraudulent misrepresentation.”

In its latest (2010) public tax return, Thomas Cooley reported $123.2 million in revenues and 13 administrators and faculty with total compensation in excess of $200,000, led by Dean LeDuc ($605,507, although he reports that he works 60 hours per week; former Dean Brennan reports working 5 hours per week for his $375,185 compensation).

July 31, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

President Obama Renominates Tax Court Judge L. Paige Marvel

MarvelPresident Obama yesterday nominated L. Paige Marvel to serve another term as a Judge on the U.S. Tax Court:

 “Paige has demonstrated unwavering integrity and a firm commitment to public service throughout her career,” said President Obama. “I am proud to nominate her to serve for another term on the United States Tax Court.”

L. Paige Marvel currently serves as a Judge of the United States Tax Court, a position she has held since April 1998. From 1988 to 1998, she worked as a Partner with Venable, Baetjer & Howard. Previously, from 1986 to 1988, she was a Shareholder with Melnicove, Kaufman, Weiner, Smouse & Garbis. Judge Marvel was an Associate with Garbis & Schwait from 1974 to 1976, and Shareholder from 1976 to 1986. She received a B.A. from the College of Notre Dame of Maryland and J.D. from the University of Maryland School of Law.

July 31, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

The $1 Million Value of a Law Degree and the Limits of Empirical Studies

The Legal Watchdog:  The Limits of Empirical Studies, by Michael D. Cicchini:

[A]s a rule, I’m not a fan of empirical studies, and the recent “value of a law degree” debate shows why. ...

The bigger picture, however, is this: the words “empirical study” give the impression (at least to me) that the authors will “prove” something. Therefore, empirical studies should be more reliable than anecdotes, and should be more useful than other tools such as logic, analogies, and even economic-based reasoning.  And I think that in some cases, they are. ...

But in other instances, such as the “value of a law degree” debate, empirical studies prove little, and merely result in near-endless back-and-forth where each side of the debate preaches to their respective choir. No one will be persuaded. No one will switch camps. Everyone will cite the study, or the criticisms of the study, in support of the conclusion they’ve already reached. ...

Not that any of this is bad. It's just that, even though we tend to perceive them as more, empirical studies are often just arguments that cloud the underlying issue with statistical complexity and the illusion of certainty, thereby creating dozens of sub-debates and detracting from the real issue. ...

Further, for purposes of argument, these empirical studies can actually be far less persuasive than other tools, including the simple anecdote. But, admittedly, anecdotes, analogies, economic reasoning, and even logic aren’t always ideal for every type of debate. And I just haven’t figured out when empirical studies are helpful and when they’re worse than useless. Does it depend on the topic? On the empirical study’s level of complexity? On the number of assumptions built into the model? I just don’t know.

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July 31, 2013 in Legal Education | Permalink | Comments (4) | TrackBack (0)

Lipshaw: 'Retire and Teach' Amidst the Great Law School Retrenchment

Jeffrey M. Lipshaw (Suffolk), "Retire and Teach" Six Years On:

This is a follow up to a 2007 essay I wrote about what it might take for a well-seasoned practitioner to join a law school faculty as a tenure track professor. Having now wended my way up (or down) that track for six years plus, my intended audience this time includes the original one, those seasoned veterans of the law practice trenches who may think but should never utter out loud the words “I would like to retire and teach,” but now also my colleagues in academia who are facing what looks to be the greatest reshuffling of the system in our generation. Much of what I said in the earlier essay still holds. This essay, however, includes (a) a more nuanced look at the strange hybrid creature that is the scholarly output of academic lawyers; (b) a more respectful appreciation of what it takes to become a good teacher, with some notes about what worked for me, and (c) an attempt to reconcile the interests in scholarship and the interest in teaching after the “Great Retrenchment” of the legal profession and legal education, with some brief thoughts about the opportunities that may bring for the aging but not ossifying academic aspirant.

July 31, 2013 in Legal Education, Scholarship | Permalink | Comments (1) | TrackBack (0)

Welcome to TaxProf Blog 2.0

After nine years of operation, I am proud to unveil the new TaxProf Blog, the first step in a re-design of the Law Professor Blogs Network of forty legal blogs edited by leading scholars and educators who are committed to providing the web destination for law professors, practitioners, government and nonprofit lawyers, legal information professionals, and students in their respective fields.  The re-design is intended to provide the premier legal blogging platform to our editors by (1) optimizing each blog for viewing across a variety of platforms (desktop, laptop, tablet, and smart phone); (2) empowering editors with additional tools in managing their blogs, including fuller integration of social media; (3) providing more robust analytics with richer and more accurate readership data; and (4) strengthening our partnership with Wolters Kluwer Law & Business/Aspen Publishers and providing additional avenues for monetization.

I welcome your comments on the re-design as I strive to make TaxProf Blog and the Law Professor Blogs Network even more useful in your professional life.  Once we work out any remaining kinks, my tech team will roll out the re-design across the entire network. For anyone interested, I posted the PowerPoint slides from the talk I gave on Law Professor Blogs Network 2.0: Faculty, IT and Vendor Collaboration in June at the 23rd Annual Conference for Law School Computing at Chicago-Kent College of Law (video here).

July 31, 2013 in Legal Education, Tax | Permalink | Comments (4) | TrackBack (0)

Tamanaha Responds to Leiter (and Leiter Replies)

Following up on yesterday's post, Leiter's Reflections on The Economic Value of a Law Degree:

S&M have issued a torrent of words in response to my various criticisms, but what they have not justified is their earnings comparison between the bottom 25th percentile law grads and the bottom 25th percentile bachelor’s holders. This flies in the face of their finding that law grads are above average in GPA’s and test scores, in wealth, in quality of undergraduate college, etc. If we believe that 25th percentile law grads, had they not gone to law school, would likely have been as successful as median bachelor’s holders, their conclusion fundamentally changes. …

When stripped to its core, S&M’s argument is that the past generation of law grads (who entered law school in the 1970s, 1980s, and 1990s) reaped an earnings premium of “hundreds of thousands of dollars” at the 25th percentile, and therefore, current law students will reap the same. If we don’t know whether this pattern will hold, however, then how can they (and Leiter) express such confidence that people who chose to forgo law school today are making a terrible mistake?

Leiter weakly papers this over by saying S&M “adduce some evidence” that the pattern will continue. But we must not forget that their study omits the dismal results suffered by law grads from 2009, 2010, 2011, 2012, 2013, and counting. (That’s about 200,000 new law grads not captured in their study.) And lots of people, including managing partners of law firms, have expressed the view that the legal job market is undergoing a fundamental transition. The bottom line is that we don’t know. So how can Leiter condemn me for being wrong when the ultimate answer turns on this unresolved question?

Predictably, Brian Tamanaha was not happy with the preceding, but I'll try to be succinct: ... (4) anyone who reviews Tamanaha's postings can see how utterly ludicrous it is for him now to pretend that he acknowledged the evidence that Simkovic & McIntyre adduced in support of the proposition that the current recession in the legal market is well within the parameters of past economic cycles in the legal profession; (5) I am agnostic on Tamanaha's motives, and do not think my correspondent meant "profitable enterprise" literally. I do think his work, in both legal theory and on legal education, exemplifies a pattern of careless scholarship, which is why I noted my one discussion of the former by way of evidence.

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July 31, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Bergin: Saving Private IRS

Tax Analysts Christopher E. Bergin (President and Publisher, Tax Analysts), Saving Private IRS, 140 Tax Notes 503 (July 29, 2013):

Bergin uses Mortimer Caplin's 97th birthday as an occasion to highlight the former IRS commissioner as an example of the hardworking and dedicated people who work at the nation's tax collection agency, and he calls on congressional critics of the IRS to take a more reasonable approach to funding and supporting tax administration.

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July 31, 2013 in Tax, Tax Analysts | Permalink | Comments (1) | TrackBack (0)

The IRS Scandal, Day 83

Joint Economic Committee Holds Hearing Today on Lessons From Reagan: How Tax Reform Can Boost Economic Growth

JECThe Joint Economic Committee holds a hearing today on Lessons from Reagan: How Tax Reform Can Boost Economic Growth:

  • James S. Gilmore III (President & CEO, Free Congress Foundation; 68th Governor of Virginia)
  • Laura D’Andrea (Professor, UC-Berkeley Haas School of Business)
  • Kevin Hassett (Senior Fellow, American Enterprise Institute)
  • Jane Gravelle (Senior Specialist, Congressional Research Service)

July 31, 2013 in Congressional News, Tax | Permalink | Comments (0) | TrackBack (0)

Tuesday, July 30, 2013

Obama Offers GOP a 'Grand Bargain' on Corporate Tax Reform

WHite HousePresident Obama today unveiled a so-called "Grand Bargain" tax reform proposal, which would reduce the corporate tax rate from 35% to 28% (25% for manufacturers) but raise revenue overall to fund various jobs initiatives.

July 30, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Leiter's Reflections on The Economic Value of a Law Degree

Brian Leiter (Chicago), Reflections on "The Economic Value of a Law Degree" and the Response to It:

Here's what I think we know and don't know after the first serious scholarly intervention in the debate about an economic value of a law degree:

  1. The vast majority of those who got a JD over the last two decades are better off, financially, than similar individuals who stopped with the BA.
  2. We don't know if other post-graduate degrees are more worthwhile, financially, than the JD; Simkovic & McIntyre did not attempt to address that systematically.
  3. We don't know if the economic pattern for JD-holders will hold for the future, though Simkovic & McIntyre adduce some evidence that it will.

And that, I think, is a fair summary of where we are. The critics of law schools, it turns out, simply do not understand the basic math behind valuation--net present value. They think law school is a bad value because they apparently don't know how to value anything that pays off over time.

Prior TaxProf Blog coverage:

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July 30, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

Campos on The Economic Value of a Law Degree: The Problem With Back in the Day

Paul Campos (Colorado), The Problem With Back in the Day:

I keep getting emails from people regarding the much-discussed Simkovic/McIntyre paper, so I thought it would be worth reiterating a few basic points: ...

(1) Over the time period covered by the authors’ study, their data indicate that earnings for all law degree holders have remained flat, while the cost of law school has risen sharply. This means that, per their analysis, the value of a law degree has declined significantly in absolute terms during the time period covered by their study, even if one assumes that recent graduates will not suffer any decline in their career earnings relative to older graduates (This latter assumption, again, is simply a methodological axiom the authors adopt, rather than a conclusion supported by any data).

(2) Recent law graduates have in fact suffered a sharp decline in their earnings at the beginning of their careers, relative to the initial career earnings of older law graduates.

(3) Law schools continue to graduate two JD holders for every available legal job.

So law students are paying vastly higher prices to get much-lower paying jobs, assuming they get jobs at all (19% of the class of 2012 did not have reported employment of any kind nine months after graduation, and only slightly more than half the class has a legal job, loosely defined).

In response to these grim facts, Simkovic and McIntyre enhance their data with the methodological magic of synthetic work-life earnings, thereby suggesting strongly that, back in the day, law school was quite a bargain.

But the problem with back in the day is that it was back in the day.

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July 30, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Peter Buffett: Is Charity Nothing More Than 'Conscience Laundering'?

GuiltNew York Times op-ed:  The Charitable-Industrial Complex, by Peter Buffett:

I had spent much of my life writing music for commercials, film and television and knew little about the world of philanthropy as practiced by the very wealthy until what I call the big bang happened in 2006. That year, my father, Warren Buffett, made good on his commitment to give nearly all of his accumulated wealth back to society. In addition to making several large donations, he added generously to the three foundations that my parents had created years earlier, one for each of their children to run.

Early on in our philanthropic journey, my wife and I became aware of something I started to call Philanthropic Colonialism. I noticed that a donor had the urge to “save the day” in some fashion. People (including me) who had very little knowledge of a particular place would think that they could solve a local problem. Whether it involved farming methods, education practices, job training or business development, over and over I would hear people discuss transplanting what worked in one setting directly into another with little regard for culture, geography or societal norms.

Often the results of our decisions had unintended consequences; distributing condoms to stop the spread of AIDS in a brothel area ended up creating a higher price for unprotected sex.

But now I think something even more damaging is going on....

As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.

But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over. Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life....

Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.

July 30, 2013 in Tax | Permalink | Comments (3) | TrackBack (0)

Why Spending $150K on an MBA Is Probably a Dumb Idea

MBAForbes:  Why Spending $150K on an MBA Is Probably a Dumb Idea:

I feel conflicted about MBAs.  On one hand, I get that the conceptual and analytical tools that form the bulk of most MBA programs are very useful to someone who wants to operate a business.  On the other hand, I know way too many MBAs who can’t manage or lead their way out of a paper bag – and still think they’re the bomb because…well, because they have an MBA.

I just read an article on MBAs and their merits by a guy named Todd Tauber.  Todd is fan of MBAs, and basically argues that the current vogue for dissing MBAs among young entrepreneurs is misguided.  Interestingly, although he acknowledges  that MBAs may be outdated and less useful for the 21st century than they need to be, he also proposes that they’re being fixed even as we speak, that the B-Schools “get it,” and are in the process of making MBAs relevant.

Uh-huh. I’ve been hearing that for a long time, and I don’t have much confidence that it’s true. ...

[M]y experience of observing and working with people who have MBAs over the past 40 years leads me to believe that whether or not people have that degree doesn’t seem to have much to do with whether or not they’ll be able to create happy, successful lives for themselves. Having an MBA really just means that you paid your money, and you went to class and studied sufficiently to pass enough of your courses to graduate.  It doesn’t predict whether you’ll be able to apply what you’ve learned to the real world, and – most important – it seems to have very little bearing on whether or not you’ll be able to continue to learn, to keep acquiring the skills and knowledge you’ll need along the way.

I’m convinced that being a world-class learner is much more important to your success in business (and in life) than having any kind of advanced degree. In fact, I become more sure every day that the ability to learn quickly and deeply is the single most important skill for the 21st century. Someone who’s a great learner will take best and fullest advantage of time spent in business school – but he or she will also take best and fullest advantage of all the circumstances and resources available to him or her every day. The key is that ability to learn – it’s like a continuously revving engine of growth.  I actually wish there was another word for it – ‘learning’ has such boring, schoolroom-ish connotations as a word.  How about mastery? Maybe we should call such people masters of mastery.

July 30, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Revenues Up 8.5% at Large Law Firms, Down 8.1% at Small Law Firms

NLJNational Law Journal:  Revenues Up at Larger Law Firms, by Leigh Jones:

The revenue picture for law firms in 2012 was bright for large law firms — and bleak for smaller shops.

The Survey of Law Firm Economics, a joint project of The National Law Journal and ALM Legal Intelligence, shows that at law firms with more than 150 attorneys, revenue per lawyer (RPL) rose by 8.5 percent last year. But at law firms on the other end of the spectrum — those with one to nine attorneys — revenue plunged by 8.1 percent. The average per-lawyer gross receipts at larger firms were $499,518, compared with $302,818 at the small firms.

Overall, per-lawyer revenue inched up by 1.1 percent at law firms of all sizes during 2012 — welcome news compared with 2011, when it sank by 4.3 percent.

At the same time, profits per lawyer were up ever so slightly — by 0.3 percent — but that still represented an improvement over 2011's decline of 4.2 percent. A 2.6 percent increase in expenses per lawyer in 2012 contributed to the basically flat profits number, compared with a decrease in expenses by 4.4 percent during 2011.

July 30, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

The New Republic: Yes, Big Law Really Is Dying

TNRThe New Republic:  Yes, Big Law Really Is Dying:

My cover story in the current issue of The New Republic, about what it’s like to work in a large law firm during an age of austerity, has generated a lot of interest both inside and outside the legal profession. Among the outsiders, the response has generally been along the lines of, “Good God am I glad I never went to law school.” Among insiders, the reaction has been divided. Many current and former lawyers at big firms have told me the picture I’ve painted is distressingly accurate. Others—particularly those who work in the legal trade press—have complained that my thesis is overstated.

This group had three main objections to the piece, all related. The first was that my specific prediction for the speed and depth of Big Law’s coming collapse was too pessimistic. The second was that my piece was ignorant of history: I argued that the profession had been remarkably stable and cushy up until the last few years—up until last week, in one critic’s cartoonish retelling—at which point the whole industry abruptly gave out. But, these writers point out, Big Law has gone through tough times before. Finally, the critics argued that Big Law has always bounced back after these rough patches, and that the numbers show law firms recovering nicely this time too. I was wrong to see an existential crisis in what was simply a cyclical downturn—one that’s mostly behind us, moreover.

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July 30, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

IRS Chief Counsel Continues to Draw Critical Fire

IRS Office of Chief Counsel LogoCorporate Counsel, IRS Chief Counsel Continues to Draw Critical Fire:

The role of IRS Chief Counsel William Wilkins in the recent IRS Tea Party scandal is setting many blogs afire, at times even overshadowing New York City mayor candidate Anthony Weiner’s failure to keep on his big-boy pants.

Wilkins, you’ll recall, was named in congressional testimony as overseeing the improper targeting of conservative political groups, including those associated with the Tea Party, that were seeking tax-exempt status. It was reported that he met with President Barack Obama at the White House on April 23, 2012, just two days before Wilkins’s office sent out guidelines on considering Tea Party tax-exempt applications.

Professor Paul Caron of Pepperdine University School of Law helped stoke the flames when he posted on his TaxProf blog a note from an attorney who works in a federal agency’s general counsel office. ...

Although some commenters on the blog rehashed the allegations, a few disputed the attorney’s claim. ...

But other websites were not so kind to Wilkins. Blogger John Steele suggested on the Legal Ethics Forum, “I sure would like to see the attorney client privilege waived as to all conversations [in the White House] involving IRS counsel.” ...

“What did the President know and when did he know it?” asked the Mr. Conservative blog for the Texas newspaper the Lubbock Avalanche-Journal.

And on The Hill’s Pundits Blog, political analysts Dick Morris and Eileen McGann wrote a post titled, “William Wilkins: The G. Gordon Liddy of the IRS Scandal?” Morris and McGann were referring to one of President Nixon’s chief operatives behind the Watergate burglary. Liddy’s link to Nixon eventually helped lead to the President’s resignation. ...

For a larger roundup of commentary on Wilkins and the IRS scandal, Professor Caron’s blog is keeping a running list of articles and links.

July 30, 2013 in IRS News, Tax | Permalink | Comments (1) | TrackBack (0)

The IRS Scandal, Day 82

IRS Logo 2

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July 30, 2013 in IRS News, Tax | Permalink | Comments (2) | TrackBack (0)

Simkovic Responds to Tamanaha (Part 4)

Michael Simkovic (Seton Hall), Brian Tamanaha’s Straw Men (Part 4): We Would Have to Be Off by 85 ercent For Our Basic Conclusion to be Incorrect:

Brian Tamanaha’s latest blog post has been hailed by Stephen Diamond and others as a major concession.  But in a comment below the post, Tamanaha explains to one of his followers:

 “I believe the doubts I raised about the study in my previous three posts have not been answered satisfactorily.”

We therefore continue our response to Tamanaha’s first three posts before addressing Tamanaha’s fourth post.

BT Claim 4:  Historical economic data tells us nothing about the future

"It is exeedingly rare to find reliably predictive 'historical norms' in the social sciences because social life is too complex and circumstances are constantly changing . . . S&M have produced a narrow, partial, time-bound study that has zero predictive relevance for anyone thinking about attending law school today." A proper study "may require data over several centuries."  

Response: We would have to be off by 85 percent for our basic conclusion to be incorrect.

Prior TaxProf Blog coverage:

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July 30, 2013 in Legal Education | Permalink | Comments (2) | TrackBack (0)

Monday, July 29, 2013

Rasmusen: The Economic Value of a Law Degree and the 'Typical' Law Student

RasmussenEric B. Rasmusen (Indiana University, Kelley School of Business), The Economic Value of a Law Degree and the 'Typical' Law Student:

At our law-and-econ lunch at Indiana University we talked about the Simkovic-McIntyre paper on the value of going to law school and the point that law students are a select bunch. My father, citing his experience in the Navy in 1945 and as a grand jury foreman in the 70's, liked to say that university people don't understand what ordinary people are like. So I looked up some facts, and here is my guess at what a typical law student is like.

He doesn’t go to Yale, or to Indiana. He goes to Albany Law School, a typical third-tier law school. Its 25th-75th LSAT scores are 149-155, a midpoint of 152. The bottom of the Top 100, the1st and 2nd tier, is William Mitchell, with 154. 152 is about the 52nd percentile of LSAT test takers.

I came across this conversion formula for SAT to LSAT (correlation):

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July 29, 2013 in Legal Education | Permalink | Comments (5) | TrackBack (0)


PhotoYet another example of how special our rescue dog Josie is:  One of my quiet joys is how Josie will sleep at my feet in our family room as I blog late into the night.  Last night, I noticed that Josie was not in her usual spot.  I investigated and found her asleep in the adjoining living room, which is next to the guest room and the front door.  Yesterday afternoon, a friend of a friend from church moved into our guest room for a few weeks as she recovers from surgery and looks for a new apartment.  One of the attributes of Josie's breed (Black Mouth Cur) is that she is "fiercely loyal to, and protective of, her pack."  So Josie expanded her zone of protection, choosing to sleep between me and our new pack member, ready to protect us from intruders. (Of course, any intruders would have faced only an exuberant volley of excited licking, but you get the idea.)

In my previous post written on Christmas Day 2009 when we adopted Josie for our then-high school senior daughter, I wrote that "our empty nest years will be more complicated, and fuller, now." I can state unequivocally that Josie indeed has made the past three years since our daughter left for college "more complicated, and fuller" (although I fear for the long-range health implications).

July 29, 2013 in Legal Education, Miscellaneous, Tax | Permalink | Comments (5) | TrackBack (0)

Tacha: No Law Student Left Behind

Deanell Tacha (Dean, Pepperdine), No Law Student Left Behind, 24 Stan. L. & Pol'y Rev. 353 (2013):

Dean Tacha examines legal education through the lens of the "no child left behind" discourse. Inspired by the controversy generated by this federal legislation focusing on elementary education standards, Dean Tacha evaluates legal education borrowing themes from the debate. She begins her analysis by acknowledging the critical role that lawyers play in modern society. Lawyers preserve the legacy of freedom and justice for all. A good legal education is an important component of protecting the rule of law for generations to come. Dean Tacha challenges legal professionals to come together in common cause to address the current models of legal education to better serve the profession, the nation, and the world for the future. As part of her analysis, Dean Tacha assesses the economic value of a legal education, the "teaching to the test" aspect of legal education, the need for legal education to prepare new lawyers for a rapidly changing legal environment while also instilling some of the age-old skills of the generalist lawyer, the role of the legal profession in shaping legal education, the role of lawyers in our nation and in the world, and how legal education can and should evolve to meet these challenges.

July 29, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Diamond Responds to Tamanaha

Following up on my previous post, Tamanaha:  Short Term Versus Long Term Perspective (July 27, 2013):  Stephen F. Diamond (Santa Clara), Brian Tamanaha to the Law School World: “Never Mind”:

Well so much for that, then. Brian Tamanaha has conceded that indeed Simkovic and McIntyre are right about the positive net present value of the lifetime earnings premium secured by holders of a JD.

He reached this conclusion only a few days after publicly proclaiming their work to be “faulty,” “misleading,” “not true,” having only “the external trappings of precision and rigor,” a “puffed up exaggeration,” a “brazen bluff,” “sloppy,” “slanted,” “ad hoc,” “compromised,” “chest-pounding,” “full of holes,” “dubious,” “hell bent on proving a law degree pays off,” “flawed,” “fudged,” “distorted,” with results that are “substantially overstated.”

But he has now suddenly proclaimed

"Their study has convinced me that I was wrong to exclusively focus on the short term–the long term return at the 25th percentile is better than I would have guessed (assuming the validity of their numbers).” And, “ignoring the long term was my error.”

Well, as Emily Litella would have put it, “Never mind.”

While Tamanaha seems to feel some regret at his unjustified and unprofessional remarks, he actually repeated the claim that the Simkovic and McIntyre paper was “sloppy” in the course of apologizing for it in comments at TaxProf. ...

Having held up a white flag, Tamanaha attempts to suggest now he really didn’t mean to call into question every law school and every law student only those at the “very bottom” who attend “risky law schools.” Well, no one in this debate has ever said the JD had positive NPV for every graduate of every law school no matter where they ended up in the class. So for Tamanaha to now say that he is in fact only concerned about a narrow “band” of law schools is more than a little disingenuous. He boldly proclaimed in his book’s very first pages that “law schools are failing abjectly in multiple ways….The economic model of law schools is broken.” His book was called “Failing Law Schools” not “Risky Law Schools” or “Very Bottom Law Schools.”

As I explained in an earlier post about the significance of the Simkovic and McIntyre paper, an institution that can produce graduates who achieve the kind of results they demonstrate is not, by any measure, a failing institution.

Prior TaxProf Blog coverage:

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July 29, 2013 in Legal Education | Permalink | Comments (3) | TrackBack (0)

CTJ: Reforming Individual Income Tax Expenditures

Citizens for Tax Justice, Reforming Individual Income Tax Expenditures: Congress Should End the Most Regressive Ones, Maintain the Progressive Ones, and Reform the Rest to Be More Progressive and Better Achieve Policy Goals:

To restore funding for public investments, Congress should enact a tax reform that reduces tax expenditures (subsidies provided through the tax code) to raise revenue. Some lawmakers have debated whether or not revenue saved from reducing tax expenditures should be used to reduce tax rates rather than finance needed public investments, an issue that has been addressed in previous CTJ reports. Less attention has been given to how Congress should prioritize which tax expenditures should be limited or reformed. This is particularly true of tax expenditures for individuals. (A future CTJ report will address tax expenditures for businesses.) 

Tax expenditures can be evaluated based on three criteria: cost, progressivity and effectiveness in achieving non-tax policy goals. This report takes cost into account by focusing on the ten most costly tax expenditures for individuals, illustrated in the bar graph on the following page. This report evaluates these tax expenditures based on progressivity and effectiveness in achieving non-tax policy goals — which include subsidizing home ownership and encouraging charitable giving, increasing investment, encouraging work, and many other stated goals. Based on data from Congressional Budget Office (CBO) and from the Institute on Taxation and Economic Policy (ITEP), this report

  1. Tax expenditures that take the form of breaks for investment income (capital gains and stock dividends) are the most regressive and least effective in achieving their stated policy goals, and therefore should be repealed.
  2. Tax expenditures that take the form of refundable credits based on earnings, like the Earned Income Tax Credit (EITC) and the Child Tax Credit, are progressive and achieve their other main policy goal (encouraging work) and therefore should be preserved.
  3. Tax expenditures that take the form of itemized deductions are regressive and have mixed results in achieving their policy goals, and therefore should be reformed.
  4. Tax expenditures that take the form of exclusions for some forms of compensation from taxable income (like the exclusion of employer-provided health insurance and pension contributions) are not particularly regressive and have some success in achieving their policy goals, and therefore should be generally preserved.


This report draws partly on recent data from the Congressional Budget Office on the ten largest tax expenditures affecting individuals, which CBO concludes will cost more than $900 billion in 2013 and make up two-thirds of the cost of all federal tax expenditures. The graph above illustrates the revenue foregone in 2013 for each of the top ten tax expenditures for individuals in 2013.

These revenue amounts do not necessarily indicate how much would be raised by repealing one or more of these tax expenditures. (This is because people may respond to the repeal of one tax break by utilizing another more heavily or changing their behavior in other ways.) Nonetheless, these figures are useful for comparing the relative importance of tax expenditures.

July 29, 2013 in Tax, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Indiana Tech's Class of 24 1Ls Is 76% Below Target; On Plus Side, 2:1 Student/Faculty Ratio Will Be #1 in Country

IndyTech, Enrollment Lower Than First Anticipated for Indiana Tech Law School:

University officials at Indiana Tech are not worried about lower enrollment numbers at the new law school when it opens next month for the fall semester.

When the university announced it would add a law school, which cost around $15 million, the plan was to have 100 students enrolled in the inaugural class.

As of Friday night, 24 students had enrolled.

"The hundred number, I think, was more aspirational," Jessica Lynn Anderson, an assistant dean of admissions at Indiana Tech, said. ..."I really do think 30 is a more reasonable number and I think we are going to hit 30," she said. According to Anderson, the law school will employee about 25 people. Eleven of those employees are professors, which makes for a near 3-to-1 professor to student ratio this fall. "I think that's more beneficial to the students," David Felts, an incoming law student at the university, said. "I'm sure as the time goes by, more students will come."

Prior TaxProf Blog coverage:

July 29, 2013 in Legal Education | Permalink | Comments (12) | TrackBack (0)

Simkovic Responds to American Lawyer Op-Eds

American Lawyer LogoFollowing up on my posts on two recent op-eds in The American Lawyer by Steven J. Harper (Former Partner, Kirkland & Ellis; Adjunct Professor, Northwestern) and Matt LeichterMichael Simkovic (Seton Hall), Repetitive (and Avoidable) Mistakes:

At the American Lawyer, Matt Leichter repeats many misrepresentations of our research that originally appeared in the tabloid Above the Law, even after Above the Law posted corrections and after we refuted many of these misrepresentations.  He also refers to anonymous comments attacking our research from people who did not read it. ...

Steve Harper makes many of the same mistakes, and throws in a few disparaging remarks to boot. ...

We've already responded to many of these same misrepresentations of our research from Above the Law, Brian Tamanaha, and Paul Campos. Simple fact-checking, either by reading the article or by checking our blog posts, could have prevented these errors.

Hopefully the editors at the American Lawyer will promptly post corrections and have a serious discussion with Mr. Leichter and Mr. Harper about the differences between critiquing research on the merits and misrepresenting the contents of that research--and impugning the integrity of its authors--in a nationally distributed publication.

Prior TaxProf Blog coverage:


July 29, 2013 in Legal Education | Permalink | Comments (9) | TrackBack (0)

The IRS Scandal, Day 81

Denver Post: Many Law School Degrees 'Worse Than Worthless'

Denver PostDenver Post, Many Law School Degrees "Worse Than Worthless":

In a development that would have been unthinkable a few years ago, some law schools around the country are shrinking. A few are even laying off faculty. The cause, as The Wall Street Journal reported earlier this month, is fewer law school applications and declining overall enrollment.

To say that University of Colorado law professor Paul Campos saw this coming would be an understatement. He's been sounding the alarm for years about the financial risk of attending law school in a glutted legal market. He even wrote a book on the topic: Don't Go To Law School (Unless): A Law Professor's Inside Guide to Maximizing Opportunity and Minimizing Risk (CreateSpace Independent Publishing Platform, 2012).

Apparently such warnings are finally having an effect — although Campos would argue, as I learned when speaking to him recently, that many more prospective students still need to get the word.

Campos[The] median salary of people who graduated from law schools last year was around $45,000. There is absolutely no way it makes sense economically to incur $150,000 in debt and end up with a $45,000-a-year job. That's what economists call negative net present value in terms of the value of the degree. That means the degree is not worthless, but worse than worthless. ...

CamposLaw schools need to tremendously reduce their cost of operation and the number of people who are graduating from law school. We should be graduating about half as many people. Students should be paying at most half as much as they're paying now. To get there, there absolutely has to be reform at the level of federal educational loans. That's the original sin here. Anyone who is admitted to law school can borrow 100 percent of the total cost of attendance as calculated by the law school from the federal government, no questions asked. And that has had completely predictable effects in terms of the price structure of legal education.

July 29, 2013 in Legal Education | Permalink | Comments (5) | TrackBack (0)

TaxProf Blog Weekend Roundup

Sunday, July 28, 2013

Arkansas Dean: Law School Critics Are 'Flat-Out Wrong'

Bloomberg Law interviews Stephen M. Sheppard, Associate Dean for Research and Faculty Development, William H. Enfield Distinguished Professor of Law at the University of Arkansas School of Law:

[F]undamental tenets of the law school reform movement are flat-out wrong.

  • Reformers say there are too many law school graduates. Sheppard says America is producing fewer lawyers than we used to, compared to the total number of college graduates.
  • The cost of legal education isn't too high, because that's what the market will bear. "I reject the premise that American law students are too stupid to know the cost of their degree," he says.
  • It's not the fault of law schools that they produce more graduates than there are jobs. "The idea that we must have jobs for our students is not only a mistake, it's a dangerous mistake," he says.
  • Criticism of legal education has become a "self-fulfilling prophecy," scaring away prospective law students even though they could find good jobs as attorneys, he says.

July 28, 2013 in Legal Education | Permalink | Comments (4) | TrackBack (0)

Top 5 Tax Paper Downloads

SSRNThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is now #163 in all-time downloads among 9,325 tax papers:

1.  [893 Downloads]  Taxation, Tyranny, and Theocracy: A Biblical Response to Susan Hamill, by Gary North
2.  [352 Downloads]  Startup Ltd.: Tax Planning and Initial Incorporation Location, by Susan C. Morse (Texas)
3.  [259 Downloads]  Federal Income and Wealth Transfer Taxation: What Happened and What Might Happen Next, by Gerry W. Beyer (Texas Tech) & Robert L. Moshman
4.  [226 Downloads]  Value Added Tax and Financial Services, by John Prebble (Victoria University of Wellington, Faculty of Law) & Sybrand van Schalkwyk (Staples Rodeway, Wellington, NZ)
5.  [206 Downloads]  Territoriality: For and Against, by Reuven S. Avi-Yonah (Michigan)

July 28, 2013 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0) | TrackBack (0)

Harper, Diamond: The $1 Million Value of a Law Degree: Distraction, Astronomy, or Astrology?

American Lawyer LogoThe American Lawyer:  A Dangerous, Million-Dollar, Law School Distraction, by Steven J. Harper (Former Partner, Kirkland & Ellis; Adjunct Professor, Northwestern):

With their new study, “ The Economic Value of a Law Degree," a pair of university professors become the latest academics to try to defend this country's troubled model of legal education. This particular attempt is especially disheartening because co-author Michael Simkovic spent the year before he joined Seton Hall University School of Law in 2010 as an associate at Davis, Polk & Wardwell. At some level, Simkovic must be aware of the difficulties confronting so many young law graduates.

Nevertheless, he and his co-author, Rutgers Business School assistant professor of finance and economics Frank McIntyre, “reject the claim that law degrees are priced above their value” (p. 41) and “estimate the mean pre-tax lifetime value of a law degree as approximately $1,000,000 (p. 1).”

As the academic debate over data and methodology continues, some professors are already relying on the study to resist necessary change. That’s bad enough. But my concern is for the most vulnerable potential victims caught in the crosshairs of the—to use a term taken from the article's original title—“Million Dollar Law Degree” headlines: today’s prelaw students. If these young people rely on an incomplete understanding of the study’s limitations to reinforce their own confirmation bias in favor of pursuing a legal career primarily for financial reasons, they will be making a serious mistake.

The study targets respected academics (including Professors Herwig Schlunk, Bill Henderson, Jim Chen, Brian Tamanaha, and Paul Campos), along with “scambloggers” and anyone else arguing that legal education has become too expensive while failing to respond to a transformation of the profession that is reducing the value of young lawyers in particular. Professors Campos and Tamanaha have begun responses that are continuing. (Tamanaha's latest installment is here.) University of Chicago Law School Professor Brian Leiter’s blog, meanwhile, has become the vehicle for Simkovic’s answers.

One obvious problem with touting the $1 million average earnings figure is that, for the bimodal distribution of lawyer incomes, any average is meaningless. In a recent ebuttal to Campos that Simkovic endorsed, professor Stephen Diamond calculated the net lifetime premium at the median (midpoint) to be $330,000 over a 40-year career. That might be closer to reality. But a degree that returns, at most, a lifetime average of $687 a month in added value for half of the people who get it isn’t much of an attention-getter. As noted below, even that number depends on some questionable assumptions and, when you get down to the 25th percentile, the economic prospects are far bleaker. ...

It doesn’t take a multiple regression analysis to see the problems confronting the legal profession—but it can be used to obscure them.

Stephen F. Diamond (Santa Clara), Astronomy or Astrology: A reply to Steven Harper at American Lawyer:

Mr. Harper,

There are a number of problems with your response to the work of Professors Simkovic and McIntyre and I am sure the authors will reply as they see fit.

However, I should point out that your understanding of the implication of the valuation process is incorrect. A careful reading of my posts on this matter should help clarify the problems. In a nutshell, when faced with only two choices, it makes sense to choose the one with relatively higher positive net present value. The magnitude of the difference is irrelevant.

The challenge for an individual law student is to determine where they are likely to fall along the distribution. I don’t think the Simkovic/McIntyre paper was intended to be a calculator for prospective law students and so criticizing them for that issue is unfair. However, the paper does provide concrete evidence that such a distribution actually exists and that for most points on the distribution the present value of the earnings premium associated with a JD is positive. 

This is the difference between engaging in “astrology” and “astronomy” and it should and I think has shifted the debate away from amateur stargazers. ...

Prior TaxProf Blog coverage:


July 28, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

The IRS Scandal, Day 80

Saturday, July 27, 2013

Tamanaha: Short Term Versus Long Term Perspective

TamanahaBrian Tamanaha (Washington U.), Short Term Versus Long Term Perspective:

I fear my criticisms of Simkovic and McIntyre's million dollar law degree study, and their responses [links below], have produced more heat than light. No doubt I bear substantial responsibility for this because I have been in attack mode throughout. Perhaps I can bring this debate to a more useful level by indicating how my position can be reconciled with theirs.

We use different frameworks of analysis. My analysis in Failing Law Schools was avowedly short term (I said next 5 to 10 years) and focused on the financial risk of attending particular bands of law schools (especially expensive law schools with poor employment results). Their analysis is long term (looking at the return over an entire career) and covers the entire pool of law grads.

Their study has convinced me that I was wrong to exclusively focus on the short term--the long term return at the 25th percentile is better than I would have guessed (assuming the validity of their numbers for the sake of this discussion, although the doubts I raised remain). For two reasons, however, I continue to believe my short term analysis is more appropriate. First, the legal employment market remains very poor (even as the general economy has improved), and economists agree that people who enter job markets during down times suffer lower lifetime earnings. No one knows when the turn-around will happen and how strong the recovery will be--the people who entered law school in 2009 and 2010 betting that the job market would improve are now struggling. Second, as Simkovic and MacIntyre acknowledge, the risks differ by individual school. They suggest that IBR helps mitigates this risk for those grads who cannot manage the debt, and I agree; yet IBR cannot be considered entirely positive (20 years on a debt relief program with a potentially large tax hit at the end). Both considerations reduce the chance that students who enter particularly risky law schools today will achieve the lifetime earnings value found in their study at the 25th percentile (I care only about the bottom, where the risk of a negative return is greatest).

So perhaps our fundamental difference comes down to this question: When thinking about the risks and returns of attending law school today, is the short term or the long term perspective more illuminating? Of course both should be kept in mind (ignoring the long term was my error), but which one counts for more?

[Cross-posted at Balkinization.]  Prior TaxProf Blog coverage:


July 27, 2013 in Legal Education | Permalink | Comments (1) | TrackBack (0)

The IRS Scandal, Day 79

IRS Logo 2

Charred Chickens

Prior TaxProf Blog coverage:

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July 27, 2013 in IRS News, Tax | Permalink | Comments (1) | TrackBack (0)

Charleston Law School Signs Management Agreement With InfiLaw. Is Sale Next?

SignLess than a month after Ken Randall left the Alabama Deanship to join InfiLaw, the firm has entered into a Management Services Agreement with for-profit Charleston School of Law, becoming the fourth law school in InfiLaw's stable (joining Charlotte, Florida Coastal, and Phoenix).  Does InfiLaw have other kettles in the fire? Its website has gone black, saying only "Important Announcement Coming Soon! Please check back soon for an important announcement!"

Charleston Post & Courier, Charleston School of Law Graduates Talk About Fighting Possible Sale of School:

Graduates of the Charleston School of Law are so alarmed by the possible sale of the school to InfiLaw System that they are considering ways to stop it.

Current students grew more outraged Friday, when they couldn’t get answers to their questions on the school’s future from its leaders.

The law school released a statement Thursday evening, which said it had entered into a management services agreement with InfiLaw System, a group that owns three other for-profit law schools. Such arrangements sometimes are the first step in a sale. But law school leaders refused to respond Thursday and Friday to questions on whether the school will be sold.

July 27, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Stephen Colbert on MOOCs

Stephen Colbert:  Aren't you taking away some of the specialness of going to college? ...

Anant Agarwal (Professor, MIT; President, edX):  I think we should be very careful to distinguish campus from online. Campus education is different from on campus. ...[T]here is campus magic. ... On campus, students have things like ...

Colbert:  Homo-erotic frat-hazing. Online, no one is going to ask you to pass a greased 45 record from butt-cheek to butt-cheek before they'll call you 'brother'.

Agarwal:  For $40,000.

July 27, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

Friday, July 26, 2013

First Circuit: Private Equity Fund Is Engaged in a 'Trade or Business'

In a case of first impression with far reaching tax implications, the First Circuit on Wednesday held that a private equity fund is engaged in a trade or business for purposes of the multiemployer pension termination liability rulesf Sun Capital Partners v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312 (1st Cir. July 24, 2013).

July 26, 2013 | Permalink | Comments (1) | TrackBack (0)

Senate Unanimously Confirms Two Judges to U.S. Tax Court

Tax Court Logo 2The Senate Finance Committee yesterday unanimously confirmed President Obama's two nominees to the United States Tax Court:

Joseph W. Nega
Joseph W. Nega is a Senior Legislation Counsel to the Joint Committee on Taxation of the United States Congress, a position he has held since 2008.  His primary areas of responsibility are the individual income tax, tax exemption requirements for state and local bonds, tax credit bonds, and employment taxes.  Mr. Nega has served on the Joint Committee staff since 1985.  Prior to his current position, Mr. Nega served as a Legislation Counsel from 1989 to 2008, and as a Legislation Attorney from 1985 to 1989.  Mr. Nega received a B.S.C. in Accounting from DePaul University, a J.D. from DePaul University School of Law, and an M.L.T. (Taxation) from Georgetown University School of Law.

Judge Michael B. Thornton
Judge Michael B. Thornton currently serves as a Judge of the United States Tax Court, a position held since March 1998.  From June 2012 to March 2013 he served as Chief Judge of the Tax Court.  Previously, Judge Thornton served in the U.S. Department of the Treasury as Deputy Tax Legislative Counsel in the Office of Tax Policy from 1995 to 1998, first joining the Department  as an Attorney-Adviser in February 1995.  He served with the U.S. House Committee on Ways and Means as Chief Minority Tax Counsel in 1995, and as Tax Counsel from 1988 to 1994.  Judge Thornton was an Associate Attorney with Miller and Chevalier from 1985 to 1988 and Sutherland, Asbill, and Brennan from 1982 to 1983.  He was a Law Clerk to the Honorable Charles Clark, Chief Judge, U.S. Court of Appeals for the Fifth Circuit from 1983 to 1984.  Judge Thornton received a B.S. and M.S. from University of Southern Mississippi, an M.A. from University of Tennessee, and J.D. from Duke University School of Law.

July 26, 2013 in Congressional News, Tax | Permalink | Comments (1) | TrackBack (0)

Simkovic's Response to Tamanaha (Part 3)

Michael Simkovic (Seton Hall), Brian Tamanaha’s Straw Men (Part 3): We Use Better (and More) Data Than Studies Tamanaha Praised in His Book:

BT Claim 3:  16 years of data is not enough

“S&M’s bold assertion that their 16-year study establishes valid ‘historical norms’ on law degree earnings would be scoffed at by social scientists who take the notion of ‘historical norms’ seriously. That is more than enough time to confirm norms governing the mating behavior of fruit flies, but 16 years is laughably inadequate for predicting something as complex and subject to change as the lifetime earnings of future law grads.”

Response Part 1:  A fine idea for historical research

We will be delighted to read the results of similar work on earnings premia carried back into the distant past.  We certainly are not claiming to have uncovered hundreds of years of data on law school earnings premia.  But, ultimately, we are not sure how valuable such a retrospective would be for today's graduate. 

Response Part 2:  Professor Tamanaha and other critics of law school relied on—and praised—studies that use far less than 16 years of data

The literature has numerous studies using smaller data sets than ours (citations available), including several studies using only 3 years of data that were cited by Professor Tamanaha in Chapter 11 (starting on page 137-38) of his recent book, Failing Law Schools.  Professor Tamanaha cited these studies without comment or criticism regarding the number of years of data used (although he did criticize them on other grounds), so we find it odd that he views our study as somehow deficient on this ground.

Prior TaxProf Blog coverage:

July 26, 2013 | Permalink | Comments (0) | TrackBack (0)

Appel Joins New York Law School Tax Faculty

AppelAlan I. Appel has joined New York Law School as Professor of Law and director of a new international tax program, "an initiative that will build bridges to the practice of international tax law for the Law School’s J.D. and LL.M. students." From the press release:

Appel, who was formerly counsel at Bryan Cave, has been teaching at NYLS as an adjunct professor for several years. At Bryan Cave, his practice focused on international and domestic tax planning involving taxation of mergers and acquisitions, partnerships, joint ventures, and limited liability companies, as well as tax controversy matters. Going forward, he will be a consultant to the firm on international tax matters. Appel started at NYLS on July 1, 2013.

"I am just delighted that Alan Appel is joining our full-time tax faculty. He is an outstanding tax lawyer and a gifted teacher,” said Ann F. Thomas, Professor and Director of the NYLS Graduate Tax Program. “With the increasing number of global businesses and families and the renewed focus of the IRS on cross-border tax issues, international tax practice is expanding in both the private and public sectors in New York. The international tax program that Alan is creating will help our J.D. and LL.M. students build careers in this exciting field."

July 26, 2013 in Legal Education, Tax, Tax Prof Moves | Permalink | Comments (0) | TrackBack (0)

Is Estate Planning the Next Hot Practice Area for Small Firms?

Estate PlanningStrategist:  Estate Planning: The Next 'Growth' Practice Area for Small Firms?:

Way back in 2007, Sonnenschein Nath & Rosenthal cut its estate planning practice. Many industry-watchers speculated that other BigLaw firms would follow suit. Years later, it seems they were correct. Solo and Small Firm guru Carolyn Elefant predicted, both then and now, that solo and small forms stood to gain from the vacuum left behind. We couldn’t agree more.

BigLaw has left the game. Meanwhile, the baby boomer retirement wave is cresting. You know who cares most about estate planning? People with children and senior citizens with assets. Demand is rising just as the biggest firms are retreating.

July 26, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

Cohen: Does Swiss Bank Secrecy Violate International Human Rights?

Tax Analysts Stephen B. Cohen (Georgetown), Does Swiss Bank Secrecy Violate International Human Rights?, 140 Tax Notes 355 (July 22, 2013):

Prof. Cohen asks whether states like Switzerland, which provide bank secrecy for the offshore accounts of wealthy citizens of developing countries, violate internationally recognized human rights. The United Nations Covenant on Economic, Social, and Cultural Rights explicitly recognizes rights to adequate food, clothing, housing, health care, clean water, sanitation, and education. Bank secrecy has a significant human rights impact if it deprives developing countries of tax revenues needed to meet basic rights guaranteed by the Covenant. The annual tax gap for developing countries caused by bank secrecy is estimated to range from over $100 billion to several times that amount. Thus, it seems indisputable that bank secrecy impedes the ability of developing countries to fulfill internationally recognized human rights.

All Tax Analysts content is available through the LexisNexis® services.

July 26, 2013 in Scholarship, Tax | Permalink | Comments (2) | TrackBack (0)

The American Lawyer: Paper on Law Degree's Economic Value a Non-Sequitur

American Lawyer LogoThe American Lawyer:   Paper on Law Degree's Economic Value a Non-Sequitur, by Matt Leichter:

In their paper, Simkovic and McIntyre compare Census Bureau and National Education Longitudinal Study income data for law degree holders to the incomes of mere college graduates for the time period spanning 1996 to 2011. They calculate that law degrees add a median $32,300 in annual earnings and a median $420,000 in after-federal-income-tax lifetime earnings over college degrees. The authors conclude that these figures justify enrolling in law school, contradicting critics warning that law school is an "irrational" investment. But what really grabbed people's attention was the paper's magic, seven-digit number: A law degree's mean pretax net earnings bonus is a cool million dollars. ...

Although the criticisms offered by Mystal and others are well-founded, they miss the even more troubling problems embedded within "Economic Value": The paper's causal theory for explaining the law degree's income bonus is nonsense because it assumes law school pays off equally for non-lawyers, a notion that diminishes the relevance of the authors' findings. Even if its income calculations were applicable to the real world, they in no way call into question reformers' criticisms of legal education, so on that score the paper amounts to a non-sequitur. ...

Even if its findings were applicable to reality, academics and media outlets eagerly heralding "Economic Value" as fundamentally changing the debate over legal education will be disappointed to learn that the paper's findings support no such position. ...

Ultimately, anyone who believes "Economic Value" applies to the law school debate in any way fails to recognize that the debate is fundamentally distributional in character. It only concerns how much of the social surplus should go to law schools. One could agree with "Economic Values"'s numbers and still believe the above points are true.

Many people have pounded the drum for more longitudinal data on law graduate earnings outcomes, and "Economic Value" delivers them. Lamentably, the paper shortchanges both itself and the legal education debate by assuming that law degrees intrinsically increase earnings. Despite its detailed econometric methodology, "Economic Value" answers the questions it takes on much too broadly, and it certainly shouldn't convince anyone that there are too few law schools, that most aren't overpriced, that legal education can't benefit from substantial reforms, or that students will be able to repay their debts from their incomes.

Prior TaxProf Blog coverage:


July 26, 2013 in Legal Education | Permalink | Comments (11) | TrackBack (0)

IRS Is Pursuing 'Stateless Income' Tax Enforcement

Reuters:  IRS Pursuing 'Stateless Income' Tax Enforcement:

The IRS is pursuing tax enforcement cases against companies over the issue of "stateless income," a senior agency official said on Wednesday in a reference to corporate profits that are not taxed by any country.

Erik Corwin, an IRS deputy chief counsel, said there were international tax disputes with companies, "most involving consequences of complex restructurings designed either to create stateless income or to affect a tax efficient repatriation. So those are a family of cases that are in the pipeline and being looked at," he told tax lawyers in a speech in Washington.

Asked by reporters later to elaborate on any litigation, Corwin declined to comment. But tax lawyers said the references to stateless income and profits held offshore could signal a new enforcement approach by the IRS.

"I have not heard the IRS use the term before," Edward Kleinbard, who coined the "stateless income" phrase in a 2007 research paper [also here], said in a telephone interview. He is a former chief of staff to the congressional Joint Committee on Taxation and now a professor at the University of Southern California Gould School of Law.

July 26, 2013 in Tax | Permalink | Comments (0) | TrackBack (0)

The New Republic Doubles Down on The Last Days of Big Law

Following up on my previous posts on The Last Days of Big Law (links below):


Prior TaxProf Blog coverage:

July 26, 2013 in Legal Education | Permalink | Comments (0) | TrackBack (0)

The IRS Scandal, Day 78

Thursday, July 25, 2013

Farewell, San Diego!

Usd_photoAfter seven glorious weeks in San Diego, my wife and I are hitting the road today back to Malibu. This was my tenth summer teaching at the University of San Diego School of Law, and I am grateful to Dean Stephen Ferruolo and the kind folks at USD for having me back again. My 74 Tax I students were a joy, as they worked diligently in teams to answer 300 clicker questions over the 21 class sessions. My wife and I cherish our chance to spend seven weeks each year in "America's Finest City" and see our many friends there. It is a time of transition for the USD tax faculty, as Karen BurkeMark Hoose, and Grayson McCouch depart and Howard Abrams, Miranda Perry Fleischer, and Vic Fleischer join Jordan Barry and Bert Lazerow on the tax faculty.  It speaks volumes about USD's bright future that they are able to attract and retain such a talented crop of students and faculty, especially in this difficult environment for law schools.

July 25, 2013 in Legal Education, Miscellaneous, Tax | Permalink | Comments (1) | TrackBack (0)

Pasquale and Simkovic Respond to Tamanaha

Following up this morning's post, Tamanaha: Why the 'Million Dollar Law Degree' Study Fails (Final Post):

Professor Tamanaha's post today expresses deep skepticism about the predictive value of the article "The Economic Value of a Law Degree." Unfortunately, his caution about extrapolation is mainly reserved for academic work he disagrees with.  For Tamanaha, the prophets of lawyers' doom are far more credible than this empirical study. I don't think that's fair, for several reasons I'll give below. ...

  1. As far as I know, most of the "ReInventLaw"/Disruptive Innovation crowd does not share Tamanaha's views of the future of lawyers in the job market. ...
  2. However, I also try hard in my scholarship and popular writing to resist technological innovation that undermines the rule of law or otherwise disserves vulnerable populations. ... Before jumping on the "massive technological change is making lawyers obsolete" bandwagon, Tamanaha may want to think critically about the interests it is serving. ...
  3. Labor economist Mark Price has observed that it's always in employers' interest to characterize applicants as unqualified--it's just one more excuse not to pay. ... The narrative of constant, disruptive technological change fuels this attitude.  I would also hazard a guess that at least some of the "law is being disrupted" crowd have consultancies that profit, like McKinsey, from devising plans to cut the pay of average workers and further enrich those at the top (or the multinational corporation client).
  4. This is not to say that "all is well in BigLaw"--nothing could be further from the truth. ...
  5. All my points above are part of a broader challenge to Tamanaha: consider larger economic dynamics, not just the legal market. Mike Konczal at the Roosevelt Institute has often noted that, if we were really experiencing widespread structural unemployment, there would be much greater disparity in employment rates between occupations. But that's not developing: instead, "underemployment has risen due to a lack of aggregate demand, not a mismatch between workers’ skills and available jobs."...

What we're seeing here is less a law problem, than a capitalism problem.  Too much wealth is concentrated at the top, and has stopped flowing through the economy generally.  The answer here is to beef up programs like income-based repayment, funded by more progressive taxes on the lucky and successful in today's winner-take-all economy. That was part of the funding mechanism for the Affordable Care Act, and should apply in education as it has in health care.

For someone who thinks and writes only about law schools, every problem for law graduates may seem like a pathology of legal academics.  Take a broader view, and a more accurate picture emerges.

BT Claim 2:  Using more years of data would reduce the earnings premium

BT Quote: There is no doubt that including 1992 to 1995 in their study would measurabley reduce the 'earnings premium.'"  

Response:  Using more years of historical data is as likely to increase the earnings premium as to reduce it

We have doubts about the effect of more data, even if Professor Tamanaha does not.

Without seeing data that would enable us to calculate earnings premiums, we can’t know for sure if introducing more years of comparable data would increase our estimates of the earnings premium or reduce it.

The issue is not simply the state of the legal market or entry level legal hiring—we must also consider how our control group of bachelor’s degree holders (who appear to be similar to the law degree holders but for the law degree) were doing.   To measure the value of a law degree, we must measure earnings premiums, not absolute earnings levels. ...

There is nothing magical about 1992.  If good quality data were available, why not go back to the 1980s or beyond?   Stephen Diamond and others make this point. ...Our sample from 1996 to 2011 includes both good times and bad for law graduates and for the overall economy, and in every part of the cycle, law graduates appear to earn substantially more than similar individuals with only bachelor’s degrees.


This might be as good a place as any to affirm that we certainly did not pick 1996 for any nefarious purpose.  Having worked with the SIPP before and being aware of the change in design, we chose 1996 purely because of the benefits we described here.  Once again, should Professor Tamanaha or any other group wish to use the publicly available SIPP data to extend the series farther back, we'll be interested to see the results.

Prior TaxProf Blog coverage:


July 25, 2013 in Legal Education | Permalink | Comments (10) | TrackBack (0)