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Thursday, May 15, 2014

Is Yours One of the 45 Law Schools to Which it is Worth Going: A Look at the Broken Market for Legal Education

As those of you who have read my earlier posts (and I hope you have) know everything I’m writing on legal education takes as a premise that the entire system of financing higher education is broken and that we, as a society, are borrowing against our future by making college, let alone graduate and professional schools, financially prohibitive to those who otherwise have the interest and ability to pursue it.     But as bad as the debt to employment ratio is for many law students right now it is made worse by a misperception of a uniform level of financial stress, a uniform kind of desirable job, and a uniform market for legal services.   These misperceptions are making the market for legal education inefficient  yet this inefficiency is supported by a social norm that higher must be better  (yes, Wikipedia--Prof. Ellickson don't rescind my property grade)--and as a result causing hardship for prospective law students and law schools alike.

 On Monday, fearless leader of the Law Professor blogs network, Professor Paul Caron, in our flagship, Taxprof Blog  highlighted this working paper by  Kelsey Webber who “does the math” and concludes that there are only 45 law schools worth attending at sticker price.    That may sound better than the critics who conclude that there are no law schools work attending, but it is based on the same flawed assumptions.

 Like all “works in progress” there’s lot to pick at—starting with the premise that any law student anywhere is paying “sticker price,” but over the next five days, or so, I’m not going to pick at the paper but rather am going to challenge the generalizations it reflects.    I’m going to focus on law’s status as a highly regionalized profession and on the differences that have always existed between schools that historically sent a big chunk of their students to large firms and schools that never did.   

 And I’m going to address a lurking elephant in the living room that is contributing to the misery—students pursuing legal educations often do so not out of a sense of vocation but rather as a hazy path to a good income.  Nothing wrong with that—but it interferes with an efficient, market in which law students would flock to regions not suffering from economic downturn and to law schools offering attractive combinations of low tuition/strong financial aid.   

 I’m not here to blame students for decisions they make at age 20 with limited available information.  I’m just pointing out that this idea of a universal hierarchy of law schools perpetuated by US News rankings has fueled the suffering and distress in the regions where there is little hope of getting a job that would make law school a sound investment.  I'm not blaming the messenger, I'm suggesting that they don't work in law the way they work for Clinical Psychology Programs, Engineering Schools or even Medical Schools where higher ranked programs (regardless of location) are closely linked to better job prospects.

 I’m also going to address some measurement issues that assume a “big law” view of the world.   So, for example, while lack of a big law job 9 months out of law schools is catastrophic because traditionally those were sewn up by the end of the second year summer or certainly by graduation, it means far less outside big law where students are seldom even considered until they have passed the bar-something that won’t happen until five or six months after graduation.   And in general, what it means in relation to whether law school was “worth it” depends entirely on the size and shape of the financial hole law school creates.  And that varies a lot.

At the other end, I’m going to dispute how safe a bet these 45 schools actually are for every student interested in becoming a lawyer.  These are all great schools.   The students attending them worked hard to get there, and have every right to enjoy the status they confer, but, again, law is highly regionalized and I plan to vigorously dispute the pernicious paradigm that all higher ranked law schools are better for all law students than all lower ranked law schools. 

 

To be continued.

Posted by Jennifer Bard on May 15, 2014 at 02:39 AM in Current Affairs, Life of Law Schools, Property, Teaching Law | Permalink

Comments

"Like all “works in progress” there’s lot to pick at—starting with the premise that any law student anywhere is paying “sticker price,” but over the next five days, or so, I’m not going to pick at the paper but rather am going to challenge the generalizations it reflects."

I am a law student paying sticker price.

Posted by: Linten | May 15, 2014 8:40:19 AM

> And in general, what it means in relation to whether law school was “worth it” depends entirely on the size and shape of the financial hole law school creates. And that varies a lot.

There's a floor on those costs. Living expenses and a bar prep course are unavoidable even if tuition were free. Something like $50,000 ($15k * 3 + $5000). Tuition and fees even in-state at a public law school in an inexpensive state is another $20,000 (see e.g. University of Arkansas School of Law).

That $70,000 in cash, if borrowed, will be at 5.41% interest with a 1.072% upfront fee and will accrue interest during law school -- so call it $72,000 after the bar exam. Under the standard repayment plan that implies monthly payments of around $778 (annual payments of around $9338). The federal government defines a partial financial hardship as loan payments of more than 10% of income after 150% of the poverty line. Assuming a single person (the number is even higher for couples or families) the income needed to avoid a partial financial hardship with those loan terms is more than $110,000 per year.

Who wants to go to law school so they can suffer a partial financial hardship for many years afterwords?

This doesn't even get into opportunity costs.

Posted by: brad | May 15, 2014 10:08:09 AM

Brad,

Everyone should consider attending a less well-ranked school if doing so will come with scholarship money. Years before anyone could have predicted the downturn, that's the route I took (plus working constantly, including two jobs my first summer and working for a bar review company for the free bar review course). The fact that I went to School Y for free (plus some scholarship money to help with expenses) versus School X for sticker hasn't affected my career path at all.

Linten,

Maybe you had the option to attend a lower ranked school with a scholarship or a public school for cheaper but chose not to. If your only choice was a lower ranked school at full-sticker, that's too bad but, presumably, was your choice. Just as a student getting C's in high school should carefully consider whether to attend vocational school, community college, a liberal arts college or a research university, a middling college student should consider whether law school is right for him. And, for obvious reasons, I have a lot more sympathy for the middling high school student who chooses wrong than I do for the middling college student who chooses wrong. A few years ago I was sympathetic to the notion that students were being deceived by inflated job placement numbers and misleading "average salaries." But, at this point, the internet being what it is, every potential law student out there knows the deal even better than the maligned professorial class does.

Posted by: sympathy running out | May 15, 2014 10:37:38 AM

I'm not complaining at all. I'm one of the winners at my school: clerkship, big firm job, etc. I chose to go here for a great deal of money knowing that it was better than going a school with wretched outcomes like, say, Texas Tech Law. But Bard's suggestion that no one pays sticker price is absurd. The scholarship game is built on the backs of students who pay sticker, who then cross-subsidize their classmates. About half my school receives some scholarship and about half does not.

Posted by: Linten | May 15, 2014 11:47:05 AM

You don't need to guess or assume whether there are students paying sticker. This report which your own school is required to prepare will tell you:

http://www.law.ttu.edu/prospective/admissions/consumerinfo/Std509InfoReport-147-147-12-12-2013%2016-40-50.pdf

Out of 688 students (640 JD's), 380 (55%) received any grant at all. As you should know, outside scholarships for law students are extremely limited.

Or you could, you know, actually try talking to some students and find out what's really going on. Or maybe just taking a critical look at your own enterprise and wondering who really funds the school.

Posted by: BoredJD | May 15, 2014 12:06:59 PM

sympathy running out:
Do you subscribe to caveat emptor in other areas of life as well? Or it it just in defense of the academia status quo?

The fact of the matter is that if everyone took your wonderful advice to only go to law school if a school pays you to go, there'd be no law schools. If that's the optimal end game, why not just go there directly and remove the attractive nuisance?

As for it not affecting your career path, that's highly idiosyncratic. What percentage of students from school Y versus school X got BigLaw jobs? Federal clerkships? Tenure track teaching positions?

Posted by: brad | May 15, 2014 12:25:42 PM

Another thing you might want to explore is exactly what students envision this "hazy path to a good income" looks like. If you sampled 1Ls about what salary they think they'll be making after law school, you'll probably get something in the 80-110K range, the mythical "midlaw." I do not know if many law students understand how little those jobs at the 1-10 person firms pay, or have considered that they might have to make 40K or less for the first few years of practice.

And that's without getting into their conception of the type of work they'll be doing or clients they will represent. What percentage of students go to law school expecting to represent middle-income individuals in areas like estate law, personal injury, low-level felonies or misdemeanors, or administrative hearings?

Posted by: BoredJD | May 15, 2014 3:53:17 PM

Things are not going to change for the better until law schools start hiring faculty and administrators who have spent significant time outside of academia and who know what students need in order to succeed in the legal market.

Posted by: anon | May 16, 2014 7:09:50 AM

Jennifer,

In your post http://prawfsblawg.blogs.com/prawfsblawg/2014/05/how-us-news-rankings-have-obscured-the-highly-regional-nature-of-the-legal-market-yesterday-i-probably-gave-more-attention-t.html

You made the following statements.

"a) All law students are always better off going to a higher ranked school than a lower one (false)"

I have never heard that. I have repeatedly heard that it's almost always better (and I've read a lot). Do you have a source for this statement?

"b) Every region has identical job markets—with equal opportunities and challenges for all students; (false)"

I have precisely the opposite, quite frequently, especially that NYC, DC and California are rough markets, and that thinly popuplate and poor areas are also rough markets. Do you have a source for this statement?

" c) Any law student without a job 9 months after graduation will never find one sufficient to pay her debts; (false)"

I have never heard this. Do you have a source for this statement?
And even if some 'anon' said that, that means squat. Please address the actual argument made, which is that the outcomes as of none months are horrible, and schools do not have 2 year or 5 year data made public.
This is combined with the estimate that if students have failed in on-campus interviewing and several months of searching on their own, they are extremely unlikely to get a job as good as the already-placed are, plus the fact that the statistics for the already-placed grads are abysmal, compared to the cost of law school.

"d) Every student has borrowed every penny of the tuition sticker price plus living expenses and therefore has equal criteria for a job that makes it worthwhile to have gone to law school; (false)

I have never heard this. Do you have a source for this statement?
Also, whether or not the money is borrowed, the money is spent. As for sticker price, I have never seen a law school offer a breakdown (probably due to the rage it'd generate among their students). When the law schools are coy with the data, don't blame us.

" e) That there was a golden past where most law students nailed down six figure jobs by the end of their second year summer—and never had to worry about employment or financial security again. (false)"

I have never heard this statement. Do you have a source for this statement?

Posted by: Barry | May 16, 2014 11:48:03 AM

My school, University of Georgia, is one of those listed. I paid full sticker price in state for the years 1994-97. Borrowed every penny I could, tuition, living loans, bar loan etc. I graduated with a 3.0 average so maybe top half (frankly I don't remember my rank). It took me 6 years to pay off my loans (paid monthly and then hit on a big case and wrote a check for rest) while working at small firms. I think UGA was a bargain, but I do wish that I had paid the interest while in school on those "this is not a bill" letters! Maybe the market was better when I matriculated and maybe in-state tuition was slightly less, but as stated above, in my personal experience, UGA certainly was "worth it."

Posted by: Kendall | May 16, 2014 3:24:03 PM

Kendall, the current estimated cost of attendance is $35,140 (given in-state status). That's probably close to $140K given interest[1]

I don't think that anybody is going to pay that off in six years barring either they get a BigLaw job or win a big case - and both of those are unusual occurrences.

UGA runs 187/234 = 80% with full-time, permanent jobs (or unemployed and not seeking). So there's a 20% chance of bad stuff happening right out of the gate (Jennifer, by that I mean that their mean salaries are going to be lower than the employed grads' salaries) . Note that 37 or those jobs were with law firms with from 2-10 lawyers; a certain fraction of those are two or three new grads setting up a 'practice' together.

They did have an impressive bar passage rate for 2011, though, so that's a good sign.

I couldn't find salary data on their site, but according to USN&WR, they had 2012 median salaries of $63K for private sector (the majority), and $50K for public service. However, this was only for the full-time, permanent positions for which bar passage was required or 'a JD degree was an advantage'.

Altogether, not too bad, but still not great.

Kendall, what was tuition when you went there? Half?


[1] Yes, Jennifer, there are discounts, but (a) this discussion was based on full sticker and (b) I've never heard of any law schools posting their discount rates and percentages (however, I'd be glad if you would inform me).

Posted by: Barry | May 16, 2014 4:15:40 PM

I'd be surprised if there are lots of prospective law students so ill-informed as not to know that, outside the top 30 or law schools, you should not go to a law school outside the area where you want to work and live. Put another way, I'd be amazed if there are any students applying to Quinnipiac AND John Marshall AND USF. New England students with lesser credentials apply to Quinnipiac and Suffolk, in NoCal they apply to USF and Golden Gate, etc., and they then look for jobs in their local market. So the revelation that the legal marketplace is highly regionalized is less than earth-shattering.

The students who don't know that are also the students who don't know any law schools of their area, so they do the right thing anyway. An aimless UConn graduate in the middle of the class may apply to Western New England, but he isn't going to trot off to Whittier.

Posted by: y81 | May 16, 2014 4:43:53 PM

Jennifer, "Comments are Off:

Note—before I was a law professor I was a whistleblower attorney and still believe strongly how important it is for people with unique access to information of public concern to have a way of anonymously bringing that information forward. But having unique access to facts is not the same thing as wanting to express anonymous opinions without verifiable factual allegations. I’d be happy to correspond with anyone who wants to contact me directly with their real name and situation—and to offer you the same help and advice I give every day to my own students who are looking for jobs."

I'm sorry, but perhaps you should live up to this standard also - please have justification for any factual allegations which you make.

Posted by: Barry | May 16, 2014 4:49:01 PM

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