Paul L. Caron
Dean




Thursday, December 1, 2016

Simkovic:  U.S. LL.M. Programs Probably Benefit International Students

LLM 2Michael Simkovic (Seton Hall; moving to USC), U.S. LLM Programs Probably Benefit International Students:

Part 1: Students Who Stay in the U.S.:

At a conference I recently attended, some law professors and administrators seemed willing to assume the worst about LLM and international JD programs.[fn 1] They seemed to think that LLM programs provide revenue to law schools but do little to help students. This stoked my curiosity about international law programs. It seems likely, as conference attendees suggested, that LLM admissions are less exclusive than JD admissions at comparable institutions. But lower selectivity does not imply that LLM programs fail to help their students.

Immigrants are generally at a disadvantage relative to those born in the United States because of language, culture, and legal issues. But comparing immigrants to U.S.-born individuals tells us nothing about the benefits of U.S. education for immigrants. Instead, we can either compare immigrants to those from their countries who stay home, or compare immigrants to each other by education level.

Decades of peer reviewed labor economics research indicates that additional education boosts earnings. Moreover, Immigration to the United States can often dramatically boost earnings for immigrants over the long term. Are foreign LLM programs or international JDs exceptions to widely observed trends regarding benefits of education and immigration?

While data is limited, the unsurprising answer appears to be: Probably not.

Using U.S. Census data (ACS), I found (in a very preliminarily, quick analysis intended primarily to satisfy my own curiosity) that an LLM might boost long term annual earnings by as much as $25,000 on average compared to a bachelor’s degree (depending on unobserved selection effects, the causal boost could be lower since these are cross-tabbed means by race sex and education level). The earnings boost from a JD for immigrants might be around two or two and a half times as high as the boost from an LLM.

[Fn. 1]:  At the conference, attendees saw data on international student market share and growth. The data suggested that a relatively small number of law schools attract the lion’s share of international LLMs and JDs. Attendees were also informed that U.S. News does not rank LLM programs, that the ABA does not collect much data about LLM programs, and that the ABA requires that LLM programs not adversely affect JD programs. Based on little more than ostensibly lighter regulation, some attendees enthusiastically speculated about competitor law schools’ nefarious activities. Some went further than speculation. One senior law school administrator compared LLMs and other non-JD programs to “Trump University”—a for-profit institution that critics allege used high-pressure sales tactics and unqualified faculty. A senior faculty member lambasted a local competitor for accepting many international students, while mentioning that his own institution had not “lowered its standards” in accepting international students.

Part 2: Students Who Return Home:

In part 1 of this 2 part post, I noted that U.S. LLM programs may provide substantial financial benefits to students who remain in the United States, even if they do not necessarily pass a U.S. bar exam. But what about the LLM graduates who return to their countries of origin?

While good data is hard to come by, it is easy to imagine how studying U.S. law might benefit lawyers working outside of the United States and hard to imagine how international programs could continue to attract applicants if returning lawyers did not speak favorably of their studies abroad. Indeed, some countries explicitly encourage students to study abroad and return home. U.S. higher educational institutions often have far better resources than those available in international students’ countries of origin. ...

Derek Muller recently noted evidence suggesting lower first-time bar passage rates for international students taking the bar exam compared to graduates of ABA approved 3-year JD programs [Muller: The Coming Reckoning For Non-JD Legal Education, As Enrollments Soar And Bar Passage Rates Hover At 30% For Foreign LLMs]. Although his headline is provocative, Muller is careful to avoid overstating the significance of this finding. Lower bar passage rates are expected, considering that for many LLMs, English is a second language, while for most ABA-approved-JD graduates, English is a first language. On the bar exam, LLMs compete without accommodation on a timed exam with a large essay component with students who either speak English as a first language or have had many more years to immerse themselves in the English language. It can take years for immigrants to become roughly substitutable for U.S.-born workers. ...

If educational programs that benefit foreign students genuinely cost those students more than the lifetime benefits the programs provide, then regulatory intervention may be in order. Even then, regulators would need to be mindful of the non-pecuniary benefits of study abroad and the wealth and sophistication of typical LLM students—generally, highly educated foreign elites from prosperous families. It seems unlikely that these sophisticates with a world of options would be easily fooled in a competitive global higher education market. Indeed, the Financial Times notes that, in the international legal education market, the New York Bar Exam “is seen as one of the toughest law exams in the world.”

Nevertheless, the FT reports that “We are seeing really savvy, internationally-minded students, for some of whom English is their second or third language, who want to take the [New York] bar exam” . . . “The globalisation of legal services and the number of European transatlantic mergers means if you want to work for a big commercial firm you have to compete in the global jobs market.”

Considering the labor economics literature on the benefits of education, concerns about fraud seem overblown. Any reputable scholar advancing such unorthodox views will be careful to first provide rigorous econometric evidence that can withstand peer review by professional labor economists.

https://taxprof.typepad.com/taxprof_blog/2016/12/llm-programs-probably-benefit-international-students.html

Legal Education | Permalink

Comments

I would like to offer the following anecdotal addition to the analyses. My two main points are:
(1) lower admission standards are adherent to the admission goal of having a diverse (diverse as in different nationalities) class.
(2) there are only very few instances where foreign students remain long-term in the US after having acquired an LLM.

These insights from within the foreign community at a law school (HYS) might prove helpful when interpreting the quantitative side.

Lower admission standards
One can most definitely observe different admission standards, which are adherent to the system of having students from many different countries. LLM programs, in general, strive to have many different countries represented in each LLM class, however, the legal education is very different from country to country. Even without comparing the quality of the different legal education systems, one can see very clearly that a person that has completed at least 4.5 years of legal studies (e.g. a student from Germany), will have more legal knowledge than a person that has only completed 3 years (e.g. a student from the Netherlands). All other things being equal, law schools would be full of students from countries with longer legal education, however, this is not the case. From what I have seen, the admission process uses some kind of quota system: each country/ block of countries/ continent has a certain number of spots in the class. Applicants from each block are compared and the most qualified are selected. Thus, you have a large discrepancy in the quality of the students the most qualified student from country A might not be the most qualified students from the countries A, B and C. Again, this is not a critique of the respective legal educations, but merely a result of different lengths of education. Considering that a large percentage of students pursues an LLM right after finishing the legal education in their home country, additional educational components like apprenticeships etc. or work experience is of much less impact in the admission decision (most students have very limited).

Job perspectives
During the last few years, I have seen pretty much only four different paths after the LLM:
- Returning to the home country/ a different foreign country. In this case, the LLM is most often seen as a proxy for language skills, an international attitude, etc. For some big law gigs it is a pre-requisite. If a student aims for a career in big law, the investment definitely pays off. For the by far largest percentage of students, this will be the case after the conclusion of the LLM.
- Pursuing an SJD with the hopes of becoming a law professor in the US or abroad. Very few students will be accepted in the respective SJD programs of their LLM institutions. While this might be a smart move for some students from certain countries (e.g. countries where a foreign doctorate is higher ranked than a local one), for most students this will be a waste of money and time in the hopes of becoming a professor in the US. Students will be at a large disadvantage in their home countries as they did not make the necessary connections to be hired. In the US, if you look at the list of people that have been hired as law professors in recent years, there is almost no person with a foreign education. The very few people that have been hired with a foreign education and an SJD have spent extensive time in the US and have acquired more degrees in the US than abroad.
- Working in big law in the US for one year. For the students, who are going to stay in the US after finishing their LLM, this option will be the largest percentage. During the job fair, the students will receive an offer to work for a big law firm in their home countries and they can negotiate to work for one year in one of the US offices of the law firm (or a partner firm), which hired them. This is a one-year gig, with a pre-determined ending point and almost no option for extension.
- Working in big law in the US without time constraint. Look at the associates from the big law firms - there are almost none with a foreign degree and an LLM. The very few there are, are predominantly from South America. It has been explained to me, that these countries produce too few highly qualified graduates and offering students from these countries to work from a US office (on cases affecting their home jurisdictions) is the only way to hire enough associates.
There will be exceptions to the rules and some uber-qualified candidates will have more options, but for the very, very large percentage of students will return to their home country.

Posted by: AJ | Dec 2, 2016 10:17:52 AM

@Meh,

I agree that private lenders are chomping at the bit. The law schools own a private lender, for Pete's sake. But my figures are solid. Seton Hall stickers at $51k per year in tuition and has a COL budget in the low $20s. Times three plus tuition increases and $225k is conservative. That is hovering around a $3k per month student loan payment, and private loans are not eligible for any IBR plan. And per the school's NALP report, $50,707 is the median starting salary - or about $3250 per month after federal and NJ income taxes. Wage premium or not, the math simply does not work on these figures in a world where GradPLUS and IBR plans do not exist - and the is the world the Trump admin and GOP Congress wants to usher in.

Posted by: Unemployed Northeastern | Dec 2, 2016 7:02:21 AM

I think your debt estimates are pretty far off and you seem to be forgetting about the availability of 25 year repayment plans without debt forgiveness and private lenders chomping at the bit to undercut the federal government.

In any case, since , but since the value of a JD is conservatively estimated at >$700K at the median and around $1 million at the mean--assuming no income growth from productivity increases--I think its safe to say private lenders will be glad to pick up the business if the federal government is foolish enough to let profitable lending opportunities go.

Posted by: meh | Dec 1, 2016 9:34:59 PM

I suspect very few people care about how foreign students spend their own (or their families’) dollars on American LLMs, aside from hogging space in upper-level JD classes. They are not eligible for federal student loans and I believe most private lenders are very wary about extending funds to people who can move home beyond their reach and stiff them. My question is given that Trump and the GOP Congress will almost certainly repeal PSLF, PAYE (via the repeal of ACA), and curtail or repeal federal student lending, will our intrepid author stand defiant and tell 0L’s that borrowing $225,000 in private student loans to attend Seton Hall Law and face a nearly $3,000 per month after-tax student loan payment against a median salary of $50k – in other words, a monthly payment of $3,000 against a takehome of $3250/month – is a financially sound idea because of the debatable conclusions of his pre-recession analysis of a small number of lawyers (I believe the samples for the classes of 2007 and 2008 only number about two dozen)? Or conversely, if Congress just makes colleges responsible for repaying the federal loan money that their students cannot, as other voices are clamoring for, will he remain as bullish?

Also, given the skyrocketing number of law schools accepting 2 out 3 or 3 out of 4 applicants, it is difficult to imagine that LLM admissions are softer than JD admissions. Quite frankly, law schools en masse are getting awfully close to the 68% average acceptance rate of the nation’s roughly 3,000 four-year college programs. And the unemployment rate for new lawyers has remained stubbornly above the unemployment rate for new four-year college graduates for several years now.

Finally, “that an LLM might boost long term annual earnings by as much as $25,000 on average compared to a bachelor’s degree” is not all that impressive in light of “the wealth and sophistication of typical LLM students – generally, highly educated foreign elite from prosperous families.”

Posted by: Unemployed Northeastern | Dec 1, 2016 1:34:37 PM