Bill Henderson Is Burning Through His Reputational Capital

As the person who brought the bimodal salary distribution to the legal masses, Bill Henderson has earned a substantial amount of respect from academics, practicing attorneys, and law students.  His early warnings about the dire job market and its effect on law schools, students, and recent alums have proven correct.  His academic research on the future of law firms, the plight of junior associates, and the use of LSATs scores has moved the ball forward in these areas and has often challenged the conventional wisdom.  Henderson is not afraid of being a prophet, even when the people reject the prophecy.

This year, however, Henderson's tone has begun to change.  It started in January, with news of the unprecedented drop in law school applications.  In a New York Times article about the drop, Henderson and others reflected on its causes: a poor job market, big jumps in tuition, perhaps even pedagogical failures.  At the end of the article, however, came this fairly specific prediction from Henderson: "There are going to be massive layoffs in law schools this fall. We won’t have the bodies we need to meet the payroll.”  That line became the takeway message for the ABA Bar Journal and other blogs.

I want to leave to the side -- way to the side -- the normative question of whether law schools should be undergoing massive layoffs.  Henderson's was not a normative point -- it was a descriptive one.  For someone who made his bones as an empiricist, Henderson's claim seemed to come out of left field.  Yes, law school applications were down to historically low levels, and schools were (and still are) offering substantial tuition discounts in order to maintain an incoming class with the right qualifications.  But I have not seen anything about massive layoffs, other than the Vermont Law School story that was itself cited in the NYT article.  Hastings cut a significant number of staff positions, but that was spring 2012.  And yes, there is still plenty of time for Henderson's prediction to come true.  But one would have expected that, given that the writing is on the wall this point, some layoffs would have already started, if there were massive ones to come.  Professiorial hiring is certainly down significantly, but it is not non-existent.  As my own institution has experienced, good folks are still getting lateral offers.

Now it seems that Henderson has taken a "double-down" strategy to his predictions of institutional collapse.  In an op-ed published by the National Law Journal, he argues that massive layoffs would not be nearly enough -- instead, schools need to close.  Framing his piece as a "letter" to a hypothetical university president, Henderson essentially argues that law schools have two choices: close or adopt a radical new pedagogical agenda.   Here he is at length:

In summary, there is significant excess capacity in the legal education system. So the dilemma facing a large proportion of university presidents, such as yourself, is the need to choose one of two difficult paths. You can either tackle head-on the difficult restructuring issues facing your law school, or alternatively you can cut your losses today and close the law school rather than risk another devastating shortfall as your school edges toward open enrollment and disastrous future problems with bar passage.

One key factor to consider is the employment prospects of your current students. Since the American Bar Association began tracking more granular information, we learned that some regional law schools — such as Alabama, Kentucky, West Virginia and Louisiana State — enjoy relatively strong placement records (greater than 80 percent in full-time, long-term jobs that utilize the law degree) that are on par with the national law schools, albeit these legal jobs tend to be in Alabama, Kentucky, West Virginia and Louisiana, and few jobs pay six-figure salaries. In contrast, many law schools are feeding highly saturated regional markets. For example, for law schools located in California, the average rate of bar passage-required employment is 48.9 percent, with several schools below 30 percent. Law schools located in Michigan are in worse shape, placing only 42.3 percent of their graduates in bar passage-required jobs.

Because you are in one of several jurisdictions with [employment] numbers similar to California and Michigan, closure may be the best long-term course for the university. One step short of closure may be rolling the law school into the College of Arts and Sciences under a newly created law department that can service the undergraduate population. Faculty teaching loads and salaries can be rationalized accordingly. This would permit a dramatically pared down J.D. program that could one day be rehabilitated.

The one militating factor is your faculty's willingness to restructure its curriculum and mindset. . . . The first hurdle in restructuring is the faculty itself embracing the need for change. The second hurdle is your own willingness to expand the scope of academic productivity. The most successful law schools in the future will be closely engaged with employers seeking to adapt to a rapidly changing industry. These same schools will also need to effectively collaborate with professionals from other disciplines, including systems engineering, information technology, finance, marketing and project management. Law faculties locked into the traditional positional competition over published legal scholarship are going to be unable to meet these heightened job demands. As the university president, you need to provide the law faculty with the latitude to adapt.

Frankly, saving your law school is going to require courage and leadership. Brace yourself for vilification. Even if you are successful, your efforts and intentions will not be appreciated for years to come. I do not envy your choices. I certainly wish you the best of luck — you will need it.

These recommendations come at the end of Henderson's case that law schools are in really bad shape.  He frames his argument using emotional terms -- "brutal facts," tradeoffs that are "extraordinarily difficult and painful," and "million-dollar shortfalls" with "no end in sight."  In some respects, Henderson actually understates his case: he focuses only on declining enrollments and does not discuss the need to bring down tuition as well.  There are undoubtedly huge changes in applicant pools -- many would call them corrections -- and law schools and universities have to deal with these changes.  But why closure?

Henderson's analysis offers strikingly little insight into the actual market structure of law schools and universities.  The decision to close should not be based simply on whether one is in Alabama or California.  Law schools have far-ranging differences on a variety of axes: employment outcomes, tuition, applications, margin provided to university, fixed costs, marginal costs, endowments, etc.  To say that a law school should close because it is in California, Michigan, or a jurisdiction with "similar numbers" is frankly ridiculous. 

Looking at Henderson's hypothetical only adds to the confusion.  He does not limit the fictional "President Smith" to whom his letter is addressed to any particular type of university.  The only specification is that enrollment declined by 15% producing a $1.5 million shortfall.  Henderson doesn't explain those numbers, but let's assume that the school dropped about 40 students from a prior enrollment of 270 at a tuition just less than $40,000.  Why the drop in enrollment?  Is it because the school wants to preserve its incoming qualifications at traditionally strong levels, or because the school accepted 100% of its applicants and could take no more?  What is the margin that the law school has previously provided to the university?  What is the endowment, for both the law school and the university?  Is tuition too high?  And that's before considering the variety of cost cutting measures that could be implemented, including the aforementioned massive layoffs.  Henderson ignores all of those issues.  No, it's simply enough that the school cut 15% of its incoming class and is located in California, Michigan, or similar jurisdiction.  Illinois has a tough legal market -- goodbye, Northwestern Law?

Am I saying that law schools don't have to cut costs?  No!  In fact, back in the fall I wrote a whole series about how law schools could think about cutting costs (here, here, here, here, and here).   My point there, as here, is that these issues may be caused by national trends, but the local impacts and school responses are very context dependent.  Sure, it may in fact be a good idea for some schools to close, but I'm in no position to judge that.  And I think the number is smaller than Henderson seems to imply, because he says (in effect) that at least half the schools should close.  

Henderson doesn't seem to be interested in other solutions.  He instead is generating an idea--a meme--that the "rational" university response is to shut down law schools.  He doesn't discuss the underlying economics -- he's engendering panic.  Chaos is key to Henderson's ultimate goal, which is reshaping the pedagogy of legal education.  He talks about his proposal here -- it's an interesting one, and it has intuitive as well as empirical support.  But it is one model among many.  Henderson's problem is that in order for his reform to work, he needs massive buy-in from faculties who would be willing to convert to a new approach.  (Part of that buy-in, it should be noted, is throwing scholarship out the window: or, in his words: "Law faculties locked into the traditional positional competition over published legal scholarship are going to be unable to meet these heightened job demands.")  Given the difficulty of that task, Henderson is essentially pulling an end-run around faculties to other decison-makers.  In his "letter," Henderson appeals to those dismayed university presidents who are facing sharp declines in law school revenue.  According to Henderson, these presidents should give law faculties an ultimatum: adopt Bill's new approach or we'll shut you down.

This would be troubling enough if Henderson simply burned with the zeal of the converted.   But his interest in dramatic reform to legal education may not simply be academic.  Henderson is a principal and founder of the legal consulting firm Lawyer Metrics.  The firm specifically offers its services to law schools:

In a legal marketplace increasingly focused on results and value, the best law schools will be those that understand — and help solve — the challenges facing legal employers.

Lawyer Metrics offers a powerful tool to connect with legal employers, gather data, enhance curricula and measure outcomes. By tapping into the expertise of faculty, prominent alumni and recent law school graduates, we build a competency model that strengthens relationships and gains the buy-in of all stakeholders.

Is Lawyer Metrics looking to work with law schools on Henderson's pedagogical reforms, such as "closely engag[ing] with employers seeking to adapt to a rapidly changing industry"?  I don't know.  But it seems like Lawyer Metrics would be a natural place to start for university presidents seeking to reform their law schools in the ways that Henderson recommends.

Henderson, like other reformers ("rebels"), has a strong perspective not only on the problems faced by legal education but also on the proper solutions.  His solution to the law school crisis -- one that involves a substantial and largely unexplored change to legal pedagogy -- may be the answer to the field's longer-term problems.  But I fear that instead of reporting on the crisis, Henderson is now using it to try to leverage a few shocked university presidents into adopting his methods.  In the process of drumming up panic with wild-eyed claims and the specter of closures, Henderson risks squandering a pile of reputational capital that only a few legal academics have managed to achieve in the first place.