The Law School Bubble: How Long Will It Last if Law Grads Can’t Pay Bills?

Henderson and Zahorsky warn law schools of the danger in relying on a steady flow of federal student loans. Those familiar with Professor Henderson’s work recognize his ability to drive important issues to the forefront of academic discussion. As a journalist, Rachel Zahorsky has also covered legal education reform in the past. Their warning is designed to rally both the academy and the legal profession to take preemptive measures, calling for long-term planning and significant responses to permanent shifts in the legal market.

This poses an interesting question: how can the legal profession craft a model for educating new lawyers in a way that doesn’t require $4 billion of student loans per year? In other words, what model and pricing scheme can survive government scrutiny about whether graduates can actually meet the terms of their federal loans? And how many existing law schools can find the motivation and political will to change their cost structures and adapt to a more stable model before the so-called bubble bursts?

Henderson and Zahorsky’s warning about government action has more truth to it than many are comfortable admitting, and the numbers support their assertion. An educational model that sees students averaging $100,000 in debt to gamble for the right to enter the legal profession is not sustainable. Perhaps schools aren’t interested in normative justifications as to why they should aim to reduce the cost of legal education, but their interest in institutional self-preservation may be sufficient to get the ball rolling.

Should [Faculty] Compensation Be Transparent?

Professor Krawiec‘s interest in structural transparency has much more to do with a law school faculty’s culture than whether schools are using their money effectively. Still, her thoughts offer an interesting take on how varying levels of transparency affect the object of transparency. With any regime, whether regarding employment data or compensation, it’s critical to consider the consequences, positive and negative.

I also wanted to highlight an interesting comment responding to Professor Krawiec’s Faculty Lounge post:

In an ideal world, we would trust the deans to do their job right, and we would keep compensation info private. But remember what the theory of second best tells us. So long as the world is not ideal, and we cannot trust the deans, opacity of compensation is not necessarily a good idea. As the Texas blowout shows, some deans simply cannot be trusted. Larry Sager gave himself a $500K bonus without informing his own boss! He also set up a vast system of payouts to his friends, most of whom had no outside offers from higher-ranked schools and were not at any risk of leaving. Can you make sure this massive self-dealing is not happening elsewhere? If not, periodic sunlight might well be the best disinfectant.

Whether or not this allegation proves to be true, these are the concerns law schools now face. Insofar that self-dealing occurs to the detriment of students and taxpayers, inquiries into faculty compensation will be sure to make headlines in 2012.

Why Law Schools Should Report “Gainful Employment”

Two months ago, Aaron Taylor, a law professor at St. Louis University, published an irresponsible editorial in a prelaw magazine. In his article, Professor Taylor lamented the growing number of law school critics and flatly claimed that “Law school is still worth it.” His justifications were all either demonstrably false or incredibly misleading, much like the information many schools publish when recruiting new students. The editorial demonstrated one professor’s profound ability to bury his head in the sand. (In truth, there are signs that law school is not worth the price for many people.)

Professor Taylor said that “the facts belie the hype” when it comes to the national discussion over shady law school recruiting methods. His piece was designed to allay the fears of prospective law students. He actively encouraged them to attend law school, basing his argument on a handful of statistics, platitudes about the universal value of law degrees, and the privileged opportunity to debt-finance a chance at entering the legal profession. He wanted prospectives to know the time is right and the hype is wrong.

Part of Law School Transparency’s mission is to increase the amount and quality of consumer information so that those looking to invest in law school can make an informed decision. We take issue with unqualified–in both senses of the word–assertions that law school is worth it. Simply put, there is not enough information available to make a strong claim that “law school is still worth it.”

But it seems that Professor Taylor has finally begun to see things more clearly.

In his latest piece (excerpted above from The Lawyerist), he does an about-face and considers how we might devise a reporting standard that will indicate whether law school is worth it.

The suggestion is interesting and substantively getting somewhere. While the “gainful employment” term is strategically and politically problematic, the core of his basic proposal stems from prospective students’ need to have some idea of whether their decisions will significantly impair or improve their social and economic mobility. While Professor Taylor’s proposal is short on details, it is worth exploring further.

For Law Schools, a Price to Play the ABA’s Way

The latest piece in David Segal’s series on U.S. law school problems identifies the enormous effect that some of the ABA Standards, especially those that affect faculty composition, have on the cost of providing legal education. The dean of the new Duncan School of Law claims that he could charge substantially less (by half or two-thirds) if it were not for the standards. This is not the first time we’ve heard a dean clamor about how expensive the accreditation standards are; in fact, the dean of another new Tennessee law school, Belmont University College of Law, made a similar claim back in the summer of 2010.

Knowing this, we recently advised the ABA Section of Legal Education’s standards review committee to “create a subcommittee to review regulatory barriers preventing law schools from adapting low-cost models.” To date, neither the committee nor the section have not done so.

The profession needs radical change to the law school cost structure. If the answers do not come quickly from legal educators, such as those involved in the Section of Legal Education, the result will be that educators end up forfeiting their right to control the changes. And if the answers have to come from elsewhere, unbreaking the broken law school model will be as painful as it is necessary.