The Current Employment Information Reported to the ABA

This is the first of a series of posts where we contemplate the 509 Subcommittee’s proposal and the facts needed to understand how it would advance transparency at ABA-approved law schools. This post begins this process by describing the current employment information that schools report to the ABA according to Standard 509 and the annual questionnaire. Later we provide three criteria to judge the ABA’s actions and then will evaluate the new proposal with those criteria in mind.
  
Law schools must report “basic consumer information” about their programs to the ABA, including information about the employment outcomes of their graduates. Currently, the ABA requires that schools report employment rates nine months after graduation, as well as basic bar passage statistics. The annual questionnaire requires that schools report these placement rates for the second-most-recent class, roughly 16 months after most of the graduates earned their degree. It takes about 2 years from graduation for the ABA to publish the information for public consumption.
 
These employment rates include the employment status of all graduates, as well as the type of employer, type of job, and geographic location of all employed graduates. For all of these categories, “a job is a job.”

The employment status includes five exhaustive categories: employed, unemployed—seeking, unemployed—not seeking, pursuing an advanced degree, and unknown. Although exhaustive, the total number of graduates in each category inexplicably does not always add up to the total number of graduates. As one of many examples in the most recent Official Guide, New York Law School does not account for eight graduates while reporting according to these exhaustive categories. The ABA disclaims any warranty as to the accuracy of the information submitted by law schools, so it is unlikely that anybody will correct even basic errors.
 
The employer type rate only considers what business the employer engages in, rather than the type of job the graduate works for that employer. Accordingly, the percentage of graduates “employed in law firms” includes lawyers, paralegals, and administrative assistants. Likewise, “employed in business and industry” includes everyone from an in-house lawyer to a short-order cook. The job-type rate aims to shed some light on these logical disconnects.

NALP’s annual reports on the entry-level hiring market indicate that the disconnect is not merely theoretical, as a sizeable percentage of graduates take these non-law jobs at law firms and in business each year. That graduates take these jobs is not necessarily a problem. The problems are that it is unclear to readers that there exists a disconnect and that, once realized, readers cannot determine what types of non-law jobs these graduates take. Perhaps, originally, all that mattered was the bar-passage-required rate versus the not-required rate. But when a school advertises the versatility of a J.D., unassuming consumers are likely to think many of these graduates are doing something with their degree other than becoming a paralegal or short-order cook. The reality is that just about every graduate needs to find some way to earn money because most of them used student loans to pay for their education.

The current ABA employment reporting standard is seriously limited by its form and substance. This standard aggregates employment outcomes and makes it difficult for prospectives to understand the various employment opportunities for new J.D.’s. Quite differently from problems with the standards, schools’ individualized reporting policies often package information in ways that are not only difficult to compare, but oftentimes misleading. While arguably violative of Standard 509, the “fair and accurate manner reflective of actual practice” portion of the standard has yet to be enforced.
 
What follows is that prospective law students rarely make informed decisions about whether, and where, to attend law school. The ability to make an informed decision directly relates to prospective law students’ ability to access quality information, and the available resources are inadequate for prospectives who strive to take a detailed, holistic look at the diverse employment opportunities at different law schools.

Because prospectives usually do not have enough information about employment outcomes to make an informed decision, they often look to other resources to facilitate comparisons among schools. Most famously, U.S. News provides a yearly law school ranking that prospectives often use as a proxy for schools’ job placement opportunities. While the U.S. News ranking drives down transaction costs for prospectives seeking to acquire and explain information, it also causes prospectives to make decisions based on minute, arguably arbitrary rankings disparities. U.S. News’s decision to rank the former-third tier will only exacerbate this problem.
 
These problems have existed for quite some time, and are divorced from schools’ current struggle to help their graduates find gainful employment. That said, the economic climate is creating ever-larger implications for the legal profession. Law school in the U.S. is now an extremely costly proposition in terms of both positive attendance costs and opportunity costs. Tuition continues to rise, debt is not dischargeable in bankruptcy, and the expected value of all outcomes is less than it was just a few years ago. The result is more graduates for whom uninformed decisions will adversely affect their well-being. Caveat emptor may be an attractive quip when consumers choose to buy inherently dangerous goods, but it is not applicable when even the most informed prospectives really have no idea what kind of return follows from investing in a particular J.D.

This post is derived from our white paper. Many of these comments were also presented by LST’s Executive Director at the ABA Questionnaire Committee hearing in December, 2010.