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Thursday, April 23, 2015

Law School Sustainability 2015

In late 2012, I put up a post entitled "Law School Sustainability."  I argued that law schools had to think seriously about making legal education sustainable by making it a worthwhile endeavor for graduates.  Two and a half years later, sustainability has become even more of an imperative than a choice.  It is not an exaggeration to say that some schools are struggling to stay in existence, and that most schools have had serious challenges to their operations.  This December 2014 NYT article provided not only an overview of this situation -- it also provided a source for law school deans in convincing university administrations (or, for stand-alones, their boards) that the problems at their particular law school were not unique.  "See?  Even Northwestern is having these issues!"

There are two blunt forces that are channeling the deluge of changes on law schools today: money and the U.S. News rankings.  Money is pretty straightforward: a school needs enough students to pay enough in tuition to cover the costs of operating the school.  Schools will have various abilities to cover shortfalls.  But a school at least needs to pay for itself to be sustainable.  So money is pushing schools to take more students at higher tuition rates -- or, to cut costs to make up the shortfall.  U.S. News, however, pushes in almost the opposite direction.  It puts pressure on schools to take fewer students, to pay more money per student in educational expenses, and to cut tuition to get better credentialed students.  (Ted Seto made this point yesterday, in discussing tuition sustainability.)  So schools have played the game of ping-ponging back and forth between these two forces, depending on their finances.

Many schools have gotten to the point where the U.S. News goals has become a luxury they cannot afford.  But as much as we want to disparage the crude and whimsical nature of the rankings, they do include measurements of important information: incoming credentials, bar passage rates, and employment statistics.  Schools that allow these benchmarks to degrade are hurting themselves in the long run.  Just as with finances, schools will have differing abilities to suffer through worse LSAT scores or lower bar passage rates in the short term.  However, a school whose graduates cannot pass the bar in significant percentages and do not find jobs that can cover their loans is not a sustainable endeavor.

So this is a small cheer for U.S. News, in that it provides an additional incentive for schools to keep up their incoming credentials, get their students to pass the bar, and then find them employment.  Word would get out eventually about schools that fail to mind these things.  But U.S. News gets the info out nationally, more quickly, and more systematically (if more crudely, and in ways more open to gaming).

One more quick point, to echo what Ted Seto said: U.S. News may incentivize lower costs, but it does so only for higher-credentialed incoming students.  Changes to the federal loan program may soon provide very strong incentives to keep tuition lower for everyone.  If that happens, then the ping-pong game will turn into this, and the sustainability window for law schools will get significantly narrower.

Posted by Matt Bodie on April 23, 2015 at 11:26 AM in 10th Anniversary, Life of Law Schools | Permalink

Comments

Can you say more about the possible changes to the federal loan program? I haven't seen anything about that.

Posted by: Brad | Apr 23, 2015 11:50:04 AM

I'd be impressed if some of the sub-par law schools concluded that their continued operation was not in the public interest and disbanded voluntarily.

Posted by: Dennis | Apr 25, 2015 5:13:05 PM

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