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Thursday, October 10, 2013

Rankings versus Market Share

Brian Leiter has shared the news that U.S. News law rankings will to continue to collect information on school expenditures.  That, combined with the student-teacher ratio, means that U.S. News will continue to push schools smaller to improve their rankings.  When you factor in that reducing class size also improves LSAT scores and GPAs, likely improves bar passage rates, and makes it easier to place a higher percentage of grads in jobs, it's really a no-brainer that schools will want to keep getting smaller if they want to improve their ranking.

Of course, going smaller also means lost tuition.  So if LSAT takers continue to go down (hypothetically?), there will be different strategies at different schools -- some going smaller (if they can afford it) to maintain traditional entry requirements, and some going bigger or maintaining size to keep tuition dollars stable.  Two recent articles -- one on D.C. and one on New York -- provided in-depth data about how schools are managing their enrollments based on these competing forces.

I wanted to throw out one additional factor -- market share.  Here's the theory: let's say you are a higher-ranked school in a market with a number of lower-ranked competitors.  You can go smaller and keep your numbers up, or you can go big and take a ratings hit.  However, when you go bigger, that means there are fewer students for your competitors -- and they are already scrambling for students.  So their rankings will suffer too.  You may go down 5 or 10 slots, but they will go down 20 or 30 slots.  And if the schools on down the chain respond in kind, maybe one of them might even go out of business.  As a colleague, you may feel bad about that, but as a competitor, it makes your life easier.  You can grab a bigger and/or better share of the students in your market and worry less about competition.

I think the incentives for staying small and keeping a good student body will keep most schools from pursuing this strategy.  But in regions where the competition is fierce, I can see a school at least taking this into consideration.  Is this a plausible market strategy?  Or should law schools not be thinking about market strategies, particularly if they involve shuttering a competitor?

Posted by Matt Bodie on October 10, 2013 at 12:12 PM in Life of Law Schools | Permalink

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Comments

I'm skeptical, in part because it's relatively rare for a single city to have two equally-ranked schools, and I would guess there isn't much of a direct competition over students when there is a clear pecking order. But I don't know if Deans or admissions officers see the world that way.

Posted by: Orin Kerr | Oct 10, 2013 1:21:57 PM

Chicago is a good example where this might be possible, with three schools traditionally fighting for the same students: Kent, Loyola, and DePaul.

Posted by: anonyprofs | Oct 10, 2013 1:40:33 PM

There is a third way: the higher-ranked school admits a small 1L class to keep up the number, but makes up lost tuition by admitting many transfer students from lower-ranked local (and other) schools.

Posted by: The Market | Oct 10, 2013 1:47:39 PM

Orin: I don't think you need equally-ranked schools. If schools have completely separate applicants pools, then I agree there would not be much overlap, but I think at the very least merit scholarships have blurred the lines between a lot of schools.

The Market: I have heard of that strategy as well. It's not as immediately painful to the lower-ranked schools, because it allows them to keep their numbers up, too. And I have heard that USNWR has plans to factor in transfers, so this strategy may become more costly.

Posted by: Matt Bodie | Oct 10, 2013 2:33:17 PM

There's a good deal of circumstantial evidence that some law school administrations are very consciously pursing a strategy (via their scholarship and transfer policies) of trying to kill off certain competitor schools. Take a look at what's happening in DC and the Twin Cities . . .

Posted by: Paul Campos | Oct 10, 2013 4:10:42 PM

Desperate law schools are one step away from standing outside LSAT administration centers handing out flyers to prospective applicants, in the same manner that gentleman establishments hand out flyers to fans exiting sporting events.

Posted by: Cent Rieker | Oct 10, 2013 4:20:55 PM

I think the suggestion that schools are trying to kill off their competitors is probably not true. Schools are trying to save themselves. Where in the past they might have tried not to poach too many transfers from one school for collegiality reasons, now they are more desperate about their own situations and do not care as much how they are seen by their lower ranked competitors. The schools at the bottom of the food chain are going to suffer in this environment, but I do not think it is an intentional strategy to harm them.

Posted by: Justin | Oct 10, 2013 5:47:08 PM

I just want to observe that it is very strange to witness law faculty whining about the criteria by which a mass publication commercial periodical ranks schools.

Further, this profession really jumped the shark when law faculty began urging the American Bar Association's Task Force on the Future of American Legal Education regarding the criteria used by the same mass publication commercial periodical that is unrelated to the bar, to the ABA, to law schools, and really to anything.

Grow up. Fix your house, and stop whining about U.S. News.

Posted by: Anonymous | Oct 11, 2013 10:47:23 AM

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