ABA President Zack: Law School Transparency Needed to Clarify Attorney Salary Misperceptions

The ABA’s media relations arm has released a YouTube video (full transcript below) in which the ABA President, Steve Zack, speaks about the need to get better information into the hands of prospective law students.

It’s great to see the President of the ABA weighing in on this issue again. Back in October, Mr. Zack emphasized the need for law schools to provide cost and employment information to applicants.

But this time around he focuses more on the causes of uninformed decisions. He rightfully identifies the disconnect between the legal market and what prospective law students believe about the economic realities for new lawyers. This disconnect often provides some foundation for the decision to attend law school.

Uninformed decisions (which, to be fair, do turn out just fine for some people) ultimately start with available information of all types. Opaque job information would be less troubling if applicants did not already think that lawyer starting salaries justified debt-financing their education at any cost. But this and other information perpetuate presumptions about the legal profession, and these presumptions are largely caused by how the market for law students has been conditioned.

Recently, I spoke with a college sophomore about her desire to go to law school. We discussed what she wanted out of a J.D., particularly the “lawyer salary.” The desire to make a good living is not bad on its face, and economic security can coincide with other motivations. But she has yet to think about what it would cost to attend the schools on her shortlist and she was shocked to learn that all lawyers don’t make a ton of money right after law school. Sure, this misperception is correctable with a little research, but these presumptions exist before applicants try to understand school-specific job prospects.

Market conditioning ultimately provides the greatest challenge to informed decisions, and reconditioning requires time for better graduate employment information to penetrate the market. As Mr. Zack points out, some misperceptions stem from popular culture and other stories of huge salaries, despite efforts from NALP, LST, and others to shed light on what salaries really look like for recent graduates. (To this point, the ABA has not collected recent graduate salary information from law schools because it does not currently consider it to be “basic consumer information.”) The attractive “lawyer” status, especially among many proud family members and friends, feeds optimism and indebtedness. Law schools understand that their applicants relish the rosey attitudes and figures that, while technically true, mislead the wide-eyed prospective lawyer because they do not paint the correct picture. This is what Mr. Zack is talking about when he says there is a need to clarify.

Mr. Zack also emphasizes that the cost of attendance should play an integral role in an applicant’s calculus. However, his examples miss the point. He calls for information about “hourly credit cost” and the “standard of living in [the schools’] given areas . . . over a three year period.” The ABA already collects and distributes this information, and all schools provide it on their websites. School projections might serve some function, but they generally do not have any knowledge of or control over rising tuition. Mandating projections would be a waste of time and money because it’s something applicants can already do within a reasonable degree of specificity.

Mentioning cost transparency is an easy public relations win for Mr. Zack, but it has no substance as presently conveyed. To be fair, he does cite these suggestions as examples for how schools can share “what the real cost of their legal education will be.” But the real problem isn’t with understanding how much the degree costs. The difficulty is trying to comprehend what $200,000 looks like over the life of repayment, including interest. Requiring that debt service schedules accompany every law school application and acceptance letter might help, though this would be information that is already available via an internet search.

What would be of more use is fair disclosure of scholarship requirements and statistics on how difficult the scholarship is to keep. This knowledge affects the expected value of the scholarship over three years, and with it the school’s affordability. In some of the most egregious cases, schools furnish a scholarship to a percentage of the class in excess of the amount that can possibly keep it. For example, imagine that keeping your scholarship is conditioned upon finishing your first year in the top 15%, and that 35% of the class received scholarships with the same condition. This situation may be made worse by the disproportionate number of scholarship recipients in your 1L section. It may also be complicated by when class rank is calculated: Is it before or after top students transfer to other programs?

It is important to be realistic about the effect of better information on the decisions made by prospective law students. Some of the effects will be difficult to measure, as intelligent use of better information will cause a number of prospectives to choose a different school rather than no school at all. These decisions will be based on a clearer understanding of how certain schools best meet certain career objectives, rather than U.S. News rankings.

But even without this more-efficient allocation of students to schools, general consumer protection principles apply. In no other area of consumer protection do we question whether new information will be completely understood or heeded. We only ask that more, quality information be disclosed.

Video Transcript

We always need new lawyers. The question is, do the people going to law school really understand what the future of the practice holds in store for them? What are the real economics of the practice? Everybody watches L.A. Law and Boston Legal, and they see the newspaper reports about these massive salaries paid at Wall Street Firms – $160,000 starting salaries. But the truth of the matter is that the mean salaries of lawyers around the country is $62,000. And before there is a commitment to take loans in excess of $100,000, you have to understand what the real economics of the practice of law might be for you as an individual. We’re asking law schools to better inform potential applicants as to what the real cost of their legal education will be. For example, what their hourly credit cost is, and what the standard of living in their given areas will cost over a three year period so they can evaluate for themselves whether it’s worth it for them and what their liability and risks are when they graduate.

Introduction to the ABA’s Initiatives on Law School Transparency

The American Bar Association (“ABA”) is a very large professional organization, with over 400,000 members (predominately practicing lawyers and law students). Among other services, the ABA provides law school accreditation and continuing legal education (CLE’s), educates its members and others about the law, assists lawyers and judges in their work, and actively seeks to improve the legal system and legal profession. Among the ABA’s goals, servings its members and improving the profession rub right against the responsibility law schools have to their prospective and current students as a gatekeeper to the profession.

Recently, the ABA reentered the ongoing discussion about law school transparency, particularly with respect to historical post-graduation employment outcomes. This reentry is highly appropriate because the ABA exerts considerable regulatory power over law schools. The ABA’s Section of Legal Education and Admissions to the Bar (“Section of Legal Education”) has official certification as a law school accrediting agency from the Department of Education. While most of the news coverage regarding the ABA and law school transparency has only come about fairly recently, the ABA has from time to time initiated various reforms.

Prior ABA Initiatives

The MacCrate Report

Robert MacCrate

In 1992, the MacCrate Report—the product of an ABA-commissioned task force for improving legal education—underscored “the need for informed choice.” The MacCrate Report discusses “the perceived lack of adequate information” and that “prospective law students generally are not knowledgeable about the profession, [including] . . . different paths for entry into the profession.” It prescribes responsibility to the ABA and individual law schools. As a result of the MacCrate Report, the ABA set forth disclosure requirements (Standard 509) in an attempt to cure the information asymmetry between law schools and prospective law students.

Standard 509

In 1996, ABA Standard 509 was born:

A law school shall publish basic consumer information. The information shall be published in a fair and accurate manner reflective of actual practice.

Through ABA Standard 509, the ABA recognizes law schools’ obligation to provide “basic consumer information” to prospective law students. It does not matter to whom the law schools report this information; any reported information must be both “fair and accurate.” The Interpretations which follow Standard 509 contain a list of what consumer information the ABA considers “basic.” From the list, two components (bar passage rate and percent employed after graduation) are the only ones that describe post-graduation outcomes. While neither Standard 509 nor the Interpretations define the term “consumer,” it is reasonable and important to assume “consumer” refers to prospective law students and not just accepted or current law students. The MacCrate Report nicely captured why it’s important to recognize prospective law students as consumers (emphasis added):

The decision to pursue a career in the law should be a considered choice reached with a full awareness of its implications. . . .There are three critical stages of decision-making en route to becoming a lawyer: 1) Perhaps the most significant, whether to enter the legal profession at all: 2) which law school to choose; and 3) what career path to enter after law school. Each occasion should be a time for careful reflection and self-assessment based upon sufficient information to make an informed choice . . . .Timely and accurate information about the legal profession and the function of law schools as the gateway to the profession helps prepare prospective applicants for a future in law and may help prevent some from becoming locked into a career from which they draw no real satisfaction, for which they are poorly suited and in which they perform marginally. Such individuals need access to comprehensive and objective information;. . . Prospective law students generally are not knowledgeable about the profession: what certain jobs entail; what different paths for entry into the profession may be; how students should prepare for their careers; and how law schools may differ in the preparation they offer. Law students tend to be passive consumers of legal education: they simply assume that the law school experience adequately prepares them for practice.

Nearly twenty years later, the ABA has chosen to revisit the issue of consumer rights, taking a closer look at the need for reform and proposing a number of initiatives. We examine each of these in turn.

New ABA Initiatives

What are they?

David Wolfe

(1) Young Lawyers Division (YLD), “Truth in Law School Education”

YLD is chaired by David Wolfe, a New Jersey attorney. Little is known currently about the YLD’s initiative because it is reportedly still in the planning stages. Early considerations according to the National Law Journal include “requiring law schools to disclose cost and employment statistics to all accepted law school applicants.” ABA President Steve Zack told a gathering of law school deans and faculty that he hopes the YLD will consider the “Truth in Law School Education” resolution in February.

(2) The ABA Questionnaire Committee

The Questionnaire Committee is chaired by Art Gaudio, dean of Western New England College School of Law. Dean Gaudio appears to have a clear understanding of the problem prospective law students face, and we are optimistic about the proposals his Committee may suggest. From a letter LST received from Dean Gaudio in his role as committee chair:

As you know, the situation for law school graduates who are seeking gainful employment in law firms or otherwise in the legal profession is problematic (to understate the matter). Furthermore, law school applicants are [sic] have difficulty understanding or are simply unable to obtain the information they need to make informed decisions when applying to law schools. As I’m sure you are aware, many assertions have been made about reported placement data – that it’s incomplete, that it’s difficult to understand, that it’s not uniformly reported, that it’s inaccurate, and even that it’s misleading. There have been requests that placement data supplied by law schools about their graduates be more complete, be more informative, be more uniformly reported, and perhaps even be audited. In response, concerns have been raised regarding the confidentiality of graduates and their data, the inability of getting all graduates to respond to requests for data, and that other law schools are not reporting their data as requested. This is not a complete list of the issues, and that is also part of the problem.

The Questionnaire Committee is doing something about the problem and actively seeking input from interested parties like LST (see more below).

Art Gaudio, dean of Western
New England College School of Law

This year we have before us a special task – to review and revise where appropriate the reporting of placement data by law schools. . . . Our task is no small one and we are seeking your input and help.

The committee’s hearing reflects only early-stage activity. It is not clear what modifications will eventually make it through the entire Questionnaire Committee’s process. But LST will follow the progress closely and encourage readers to get involved.

(3) The ABA Standards Review Committee

Donald Polden, dean of
Santa Clara Law

The Standards Review Committee is chaired by Donald Polden, dean of Santa Clara Law. Dean Polden has established a subcommittee to review the ABA’s employment reporting standard (Standard 509). He has appointed David Yellen, dean of Loyola University Chicago School of Law, to chair the Standard 509 Subcommittee. Dean Polden has asked Dean Yellen to prepare a recommendation for modifying Standard 509 to better serve prospective law students as consumers.

Like the Questionnaire Committee, this subcommittee is in its early stages. Back in June, Dean Polden requested that Dean Yellen and his fellow subcommittee members read our white paper to serve as a baseline for why the present level of information fails prospective law students.

In addition to this show of good faith by the Standards Review Committee, Dean Yellen is already leading by example when it comes to meaningful disclosure of employment information. His law school is among the best when it comes to disclosing post-graduation employment outcomes. Loyola University Chicago School of Law (“LUC”) not only exceeds the current employment reporting standards, but does so meaningfully.

David Yellen, dean of
Loyala University Chicago
School of Law

LUC meaningfully exceeds the current reporting standards in a few ways. First, LUC currently provides the state-by-state breakdowns of where 276 graduates in the Class of 2009 work. Until data on the Class of 2010 is collected next February, this is the most recent available data on post-graduation employment. Second, LUC provides a more nuanced breakdown of the employer types of employed graduates. Third, LUC provides salary ranges for multiple categories, and tells the reader the number of graduates included in these ranges.

Additionally, LUC provides a list of 2009 graduates’ employers, similar to the lists that inspired LST. But LUC’s list is not without fault. For instance, LUC provides no law firm locations and does not list whether more than one graduate worked for a particular employer. We suspect that this accounts for at least a few of the graduates missing from this list. It includes 185 employers, thus at least 185 graduates, out of 307 graduates (Source: LUC’s Assistant Dean Marianne Deagle). Nevertheless, accounting for the actual employer for about 60% of the entire class is a big step in the right direction. Reporting information in this manner gives a much more robust picture of the job prospects coming from a particular school. It also gives prospective law students the means to research employers in the entry-level market to help inform them about what the MacCrate Report called “the nature of the legal job market.” Dean Yellen’s school will serve as a good baseline for the 509 Subcommittee to start.

What should you make of these initiatives?

Let us be clear: The ABA is headed in the right direction, and the media is doing its job of paying attention so that these initiatives don’t fall by the wayside. LST will continue our work to make the process as transparent as possible given its importance to the legal profession. We will also make sure that the proposals do not fall short of their goals as time goes on.

There is a need for people to pay attention and get involved in these discussions. Some have voiced concerns (to us and to the media) that the ABA is a captured organization incapable of producing adequate reform on their own. To quiet these doubts, we hope that the ABA appointees continue to encourage involvement from across the profession. LST is also weighing in on one of the initiatives: we have been asked to present at the ABA Questionnaire Committee’s hearing on December 13, 2010 in Ft. Lauderdale, FL. We will also be involved with the Standard 509 Subcommittee as its initiatives continue developing throughout next year. Visit the Section of Legal Education’s calender to see when the ABA Questionnaire Committee and Standards Review Committee plan to meet.

One thing to look out for is what enforcement mechanism the Young Lawyers Division plans to use to “require” disclosure. Only the Section of Legal Education and Admissions to the Bar has accreditation authority; other ABA divisions such as the YLD instead provide suggestions and best practices, which schools do not necessarily have to follow. One option is for the YLD to work out a proposal for the Standards Review Committee to consider, either for creating a new standard in Chapter 5 or a new interpretation of Standard 509 (perhaps a modification of Interpretation 509-2.) The YLD could also unofficially lobby the Standards Review Committee by making a recommendation for a change like the two mentioned above. Finally, the YLD could make recommendations directly to the ABA-approved law schools and allow public pressure to enforce the resolution.

Any of the possible routes have the potential to be transformative if implemented, but that depends on the level of information being requested. As ABA President Stephen Zack alludes to in the National Law Journal piece, the real question is one about the quality of the information, not the manner in which it is delivered to the consumer. As we detailed in our white paper, the most diligent prospective law students in all but a few cases cannot find enough meaningful information to make an informed decision. Simply putting the currently-available information in such a conspicuous place will not solve this problem.

Nonetheless, the YLD’s actions are essential. First, it demonstrates that young lawyers care about how law schools present employment information and are searching for constructive solutions. Second, it reveals another method for informing prospective law students (in this case, accepted applicants) about the outcomes they can expect and the positive costs they can expect to incur by attending law school. Third, it reflects the broader attitude that it is time for regulatory reform for America’s law schools.

However, the YLD has been criticized for looking at a solution that only releases information to accepted students. This criticism is misplaced. The YLD’s efforts would not replace the Official Guide as a source for employment information reported to the ABA by ABA law schools, nor would they be inaccessible to non-accepted students given the ability to post and share information online. As presently described, the YLD’s proposal looks to close the gap between accepted students who look at the available employment information and those who do not. If for some reason schools include new information in the acceptance letter (and only in acceptance letters), LST will ensure that this information reaches prospective students by publishing the letters and employment information for all to see.

These initiatives show that change is afoot, even if it will take years to implement some of those changes. During the process LST will help ensure that these groups operate in a manner that makes them accessible to public involvement. The likelihood of meaningful change will only increase as more prospectives (or consumers, or investors) get involved. Please send us your ideas or how you plan to participate in the process.

Potential Regulatory Reforms on the Horizon

I was excited to read ABA President Steve Zack’s comments in last week’s Law.com article from The National Law Journal’s Karen Sloan discussing the ABA’s renewed attention to law schools’ disclosure of employment data. The ABA Young Lawyers Division’s (YLD) “Truth in Law School Education” initiative might require law schools to provide accepted students with “cost and employment statistics” in a letter to their accepted students. This initiative, like the efforts of the ABA Questionnaire Committee and ABA Standard 509 Subcommittee, demonstrates that the ABA is willing to take steps to better help inform and protect prospective law students. (We plan to explain more of what we know about all three actions in an upcoming post.) Most of these efforts remain in the planning stages, however, and changes seem unlikely to materialize until 2011.

Mr. Zack’s statements were exciting because they signaled to me the spread of the sort of discussion LST has been working to develop regarding the nature of the employment data reporting problem and the steps necessary to resolve it. While LST is working towards a solution on multiple fronts, including encouraging schools to comply with our Standard, the furtherance of a discourse of transparency serves to advance our cause.

I found Mr. Zack’s comments heartening because they showed his recognition of the more nuanced aspects of this conversation. When it comes to prospective students, he said that “there’s a total lack of awareness” about earning potential and career options. He suggested that law schools have an incentive to present their employment data in the best possible light to attract applicants. (ABA Standard 509 is the reporting baseline that the ABA’s Standard 509 Subcommittee aims to fix.)

While YLD chair David Wolfe said he “want[s] people to go to law school with their eyes open” when it comes to “employment and cost information,” he and Mr. Zack appreciate the present reality that disclosing the information the ABA already collects in acceptance letters would fail to address the underlying issue that prospectives have an incomplete picture of law school job prospects. Contributing to this problem, Mr. Zack “think[s] some of the numbers are cooked. To play the U.S. News & World Report game, law schools are creating jobs for graduates so they can say they are employed when they really aren’t.”

As we have acknowledged from the beginning (see the LST White Paper at 9-45), it is difficult, under current reporting conditions, for prospective students to make informed law school choices. This difficulty may be part of the reason why many prospective students don’t do as much as they could to talk to law schools about post-graduation outcomes. Motivating prospectives’ participation is a necessary component of our mission, which is why I think it is so important that major ABA players are joining this discussion and recognizing some of its key conceptual features. LST’s primary, concrete efforts are happening in the short term, but in working towards broad, long-term success, we hope many people, including the main stakeholders, will continue to engage in this discourse.