Paul L. Caron

Monday, April 24, 2017

Anderson:  Whittier Law School Closing Is Another Sad Story Of Generational Wealth Shifting, With Millennial Students Incurring Huge Debts To Subsidize Baby Boomer Faculty Sinecures

WhittierFollowing up on my previous posts (links below):  Robert Anderson (Pepperdine), Generational Wealth Shifting and the Unnecessary Whittier Law School Story:

[G]iven the performance of Whittier's grads on the bar exam in recent years as well as the drop in applications, closing Whittier is probably the right decision.

The unfortunate truth of this story is that none of this needed to happen. ... When the contraction began, law schools should have reduced class sizes to maintain their traditional standards for admission. ... Of course, reducing class size would entail a decrease in revenues that would require a reduction in expenses. Normally, such a reduction would be hard to find.

But law schools had a unique opportunity during this contraction, which many of them squandered. The number of retirement-age faculty was (and is) enormous, likely larger than it has ever been. If faculties had looked beyond their own personal financial self interest they could have easily contracted to meet the market demand and avoided the disastrous effects that have afflicted law students and now law schools.

Sadly, the very faculty members whose institution provided them an outrageously rewarding career over many decades seemed the least likely to "pay it forward" by helping to reduce expenses. Indeed, many decided to foist all the sacrifice of layoffs on junior faculty or staff, who truly had the most to lose from losing their jobs.

Thus, the story of Whittier is a story of generational wealth shifting that is seen throughout tuition dependent law schools, and indeed throughout our country. The Millennial generation is expected to go deeply into debt to subsidize a population that is already (comparatively) wealthy. Because the Millennials do not yet, for the most part, have the clout to stop this, it is up to the rest of us to develop a conscience and start making hard decisions to provide our students with a plausible financial future.

Prior TaxProf Blog coverage:

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Very insightful point by Rob Anderson in response to Seto. As Anderson states, the point is to cut costs and become smaller. That solves revenue and academic problems. Expanding revenue may solve the financial problems but exacerbates graduate outcome problems.

Posted by: JM | Apr 29, 2017 7:56:50 AM

Ted, your work ethic and the choices you make are exemplary and commendable, but they appear to be choices, not compulsory. That's the whole point. You could dial it back at your leisure, that's the luxury, and unfortunately, many bask in that luxury.

We out here in the real world cannot dial it back at our leisure (as you know, you were a partner at a large law firm). With all the partner layoffs going on, it's gotten even worse since you were out here. But thank you for what you do, it is wonderful.

Posted by: Anon | Apr 25, 2017 11:42:37 AM

"Unless something truly extraordinary has happened to non-cyclical demand, a degrees-awarded-per-capita analysis suggests that beginning in fall 2015 and intensifying into 2016 employers are likely to experience an undersupply of law grads, provided that the economic recovery continues."

Still waiting for your addendum to this, Ted. Here we are in 2017 and the employment situation for law school graduates is nigh identical to what it was in 2013. So you must now believe there are "truly extraordinary" "non-cyclical" changes afoot in the legal profession, yeah? Otherwise you will be blatantly contradicting yourself.

Posted by: Unemployed Northeastern | Apr 25, 2017 9:48:11 AM

Theodore Seto, if you are the sine qua non of programs that pay for your salary "many times over," then it should be clear that you are not part of this particular problem. So I'm not sure why you'd chime in other than to grandstand about your personal achievements, which you apparently think are pretty impressive. It should be obvious that I am not calling for the retirement of each and every eligible faculty member, even if they cost nothing.

However, your comment about how much you "cost" is unintentionally revealing about the way you think about who should bear the cost of legal education. Assuming these "revenue-generating programs" that you have developed generate revenue through tuition, the fact that you have devised a way to entice law students to cover your salary with additional student debt is hardly something to trumpet in the current environment. This is, however, the standard way of thinking about the cost of legal education in the group I'm talking about, so you're hardly alone.

Posted by: Rob Anderson | Apr 25, 2017 9:35:32 AM

Not clear that blaming senior faculty is constructive. Like Jack, I work hard. I’m currently on sabbatical, but for the preceding five years, I averaged 20 units of teaching per year, twice what our junior faculty members are asked to teach, while maintaining some of the best teaching evaluations at a school with excellent average evaluations. During that same period, I wrote a first and second edition of a casebook, with accompanying 500-page teacher’s manual, and published numerous articles. I also designed and implemented several new revenue-generating programs for the school, the net revenues of which pay for my salary many times over. When our school went on a faculty-slimming program with buy-out offers, no one offered me a buy-out. I wonder why. (I wouldn’t have accepted in any event; I love what I do.) Sorry to seem self-promoting, but we more experienced faculty members sometimes need to defend ourselves.

Posted by: Theodore Seto | Apr 25, 2017 12:06:16 AM

I was moved by Michael Perry's comments and looked into the situation. Here is an excerpt about the event involving a law prof and some very brave students.

Kroner also points to one positive chapter in the whole terrible Triangle story, which involves a lesser-known connection to the university. At the time of the fire, NYU School of Law professor Frank N. Sommer was teaching in what is now Silver (then called the Main Building), and when he and his students realized what was happening, they rushed to the windows with ladders—which they extended over a divide to serve as planks to crawl across—helping around 50 Triangle workers escape to safety.
Here’s how he described the scene to the New York Tribune two days later:
“I was lecturing to a class of about fifty boys, when suddenly we heard the whistles and gongs of fire engines. I threw open the door of the lecture room and then the door of the law school faculty room, which opens on an areaway separating our building from the one in which the blaze started.
Some of the boys followed me, and we saw that the ten story building across the areaway was on fire. The open space between us and that building was filled with ascending smoke. There were ear-piercing shrieks and girls appeared at the windows of the shirt factory.
We hurried to the roof of our building, where two ladders had been left by painters, and the boys shoved the ladders across the areaway to windows on the opposite side. The lads worked like beavers, apparently never giving a thought to the possibility that their own building might catch fire from the flames that were leaping out into the open space.
How it was done I don’t know, but in a surprisingly short time about fifty girls were brought across to safety.”

Posted by: Bill Turnier | Apr 24, 2017 7:21:20 PM

Some of us old guys are working harder than we ever did, under pay freezes. When I finally let go, the kid who comes in behind me is going to work his or her tail off. Or maybe they'll have to hire two millennials, that sounds about right. Meanwhile, I'd love to see data on numbers, ages, and compensation of the myriad of administrative types (including deans) lurking in law school hallways since the crash. I'll bet those figures haven't declined much.

Posted by: Jack Bogdanski | Apr 24, 2017 7:20:53 PM

Steve, what happened to the 70 Santa Clara students who were completely unemployed after 10 months?

That's 32% of the graduating class (70/219).

I've asked this question before, but so far. . . crickets.

Posted by: terry malloy | Apr 24, 2017 1:46:36 PM

Mr. Perry:
Thanks for sharing that history, something I did not know. More below:

Posted by: Mike Petrik | Apr 24, 2017 11:45:48 AM

As smug as they often are, I feel certain that many law professors (and staff who are the first cuts) are terrified at the possibility of being cut loose. Contrary to the traditional rhetoric about the wonderful pay they could have received in law practice, there are no jobs waiting out there for them to move into. Nor do law faculty have any useful cachet with big firms and companies as name consultants if they are not in the elevated status of a law professor--preferably a chaired one. So aging law professors hired in the early 21st century and the 1980s and 1990s have no where to go for jobs. They will hold on against all odds as long as possible and as Jennifer Bard at Cincinnati has discovered, deny reality and fight like fiends to destroy anyone who threatens their pay and employment. I am writing a book at the moment on Artificial Intelligence, Robotics and massive and permanent job destruction that is coming on us faster than we can imagine. This is hitting universities, the legal profession generally and many other jobs and many analysts see it as "Non-Schumpeterian" and that the job loss is not a cycle of rebirth but a permanent reduction. What is happening at Whittier and Cincy is going to play out across the US and Western Europe and the picture is not pretty. The amount of anger, hostility, problems with governmental revenues, the inability of people to pay for education, etc. will increase and intensify. No one should feel good at the pain this is causing but, for God's sake, I wish law school faculties would recognize what is happening and try to help resolve the issues through budget cuts, mergers, and some closings. It is not going to stop.

Posted by: David | Apr 24, 2017 10:54:54 AM

More questions than results for those students...

Posted by: Ronique Y Breaux Jordan | Apr 24, 2017 8:50:29 AM

My understanding is that numerous faculty accepted buyouts at Whittier a few years ago - apparently under false pretenses (the College was sued for fraud and lost). And I think they were prepared to consider concessions again. But the College appears to have ignored their obligation to engage in shared governance. There is also the fact that they had just put 13 million dollars in the bank from a real estate sale. So the question now is whether they were pressured in some way to close? AALS deans and the ABA are keen to solve the "California" problem so that they can raise the bar passage rate accreditation requirement. Was Whittier their sacrificial lamb to this discrminatory policy? I have asked Dean Rodriguez (prominently involved in this question) that question but so far, crickets.

Posted by: Steve Diamond | Apr 24, 2017 8:15:50 AM

From time to time I have to remind myself of the Triangle shirtwaist factory fire in 1911, one of the worst industrial accidents in U.S. history. Some of the workers, mostly young immigrant women, fled to the roof, where they were trapped. The fire department had no ladders reaching that high.

An adjacent building included a law school library, so a law professor and students set up a series of ladder bridging the chasm. Falling from over ten stories up meant certain death, so some of those young women were afraid to cross. Law students went across on the ladders and guided them over, risking their own lives.

Not all law professors and students, I remind myself, are as bad as many today seem to be.

Posted by: Michael W. Perry | Apr 24, 2017 7:06:13 AM

If you open up the generational wealth transfer can of worms, you start to realize that, due to a myriad of cognitive biases, democracies easily turn into pyramid schemes of one kind or another.

However, boomers are particularly adept at the kind of magical thinking that puts their needs before that of their children.

Posted by: terry malloy | Apr 24, 2017 6:54:02 AM


Posted by: Dale Spradling | Apr 24, 2017 5:58:01 AM

I like sinecures.

Posted by: Anon | Apr 24, 2017 5:40:15 AM

To me, this line explains it all, "If faculties had looked beyond their own personal financial self interest..." It's usually unreasonable to expect that this will occur.

Posted by: Matthew Bruckner | Apr 24, 2017 5:23:59 AM