Breaking: Class Action Suit Filed Against Thomas Jefferson School of Law

Update: Follow the latest on Alaburda v. TJSL here.

At least one graduate has chosen to seek judicial relief from her alma mater in a class action that could include over 2,300 graduates of Thomas Jefferson School of Law in San Diego, California. Sara Randazzo broke the news (subscription required) at midnight PDT in the Daily Journal. The story will be available in print Friday morning.

The complaint (see the case summary below) alleges that Thomas Jefferson School of Law (TJSL) has engaged in “fraudulent and deceptive business practices,” including “a practice of misrepresenting its post-graduation employment statistics,” and that “the disservice TJSL is doing to its students and society generally is readily apparent.” The complaint cites a number of news articles over the last few years, and quotes from law school faculty and administrators to demonstrate the widespread consensus that schools are engaged in unfair and misleading practices. You can check out the complaint for yourself here. The complaint was filed by lead plaintiff Anna Alaburda, a 2008 honors graduate of TJSL. Additional court documents are attached to this post.

This lawsuit is of historical significance. It is the latest example of the breaking trust relationship between law schools and their students, their graduates, and the profession. Law schools have a duty to be honest and ethical in their reporting and presentation of employment data. This lawsuit shows that at least some members of the profession believe these duties are legal requirements, in addition to being merely professional or educational in nature. Perhaps importantly for some critics, Ms. Alaburda decided to attend law school before the legal market collapsed and before stories of misleading information were widespread.

Current Employment Information

As of today, TJSL is still providing misleading employment information (the “TJSL Report”) on its website for the Class of 2009. Compounding the problem, TJSL has thus far declined to report any Class of 2010 information on its website, despite already collecting sufficient employment data about the class when they reported to NALP back in March of this year. Almost every law school could do a much better job educating prospective students about the nature of the jobs obtained by their graduates; TJSL is no different. The most serious fault we find with the TJSL Report is how the school misrepresents starting salaries.

The underlying data match for the TJSL Report and U.S. News-provided information

The TJSL Report claims that the school collected at least some data from 86% of graduates (respectable, though still putting them in the bottom 5% of all law schools), and that of those graduates 84.7% were employed. This means that 72.8% of Class of 2009 graduates were known to be employed, which is the same as what the career services office reported to U.S. News. Likewise, both sources indicate that 80% of the graduates known to be employed were employed in the private sector, i.e. working for law firms or in business & industry in some (any) capacity. This data match makes it possible for us to examine TJSL’s advertised placement success with the more detailed reporting rates submitted to U.S. News.

TJSL Salaries

Based on our calculations from the data submitted to U.S. News, only 17% of those working full time in the private sector reported a salary. This means that at most 22 graduates reported salary data for full-time, private-sector jobs to TJSL. (This puts TJSL in the bottom 10% of law schools by percentage reporting.)

We say “at most” because the U.S. News salary figures only include full-time jobs. Only about half of TJSL graduates had full-time jobs for the Class of 2009. Some of these were likely with law firms and in business, but probably not all of them. The only thing we gain from the information provided on the TJSL Report is that at least five salaries underly the average salary figures for law firm practice ($62,443) and for Business jobs ($90,267). Based on the other data, the average figures probably each only use data for a few more graduates than the minimum five. As such, the $90,267 and $62,443 average salaries are each based on data for between 2-8% of the entire class (for a total not to exceed 10%).

The substance of these salary averages is not apparent from TJSL’s Report or website. In fact, the picture which the published averages present is of a magnitude far more appealing than reality. The business salary average is significantly higher than the California mean salary, $83,977, for the business category according to NALP.

For law firm jobs, the problem is a little different. While the national mean salary for law firms is $115,254, that average is misleading on its face because 40% of the salaries used to calculate the average were $160,000 and 5% were $145,000. If we factor these salaries – the salaries most likely to be reported – out of the average, the average reduces to $80,007.

Although this average still likely skews high, the effect of large firm salaries on the adapted average is apparent. Those with higher salaries are far more likely to report. These salaries are also usually publicly known, thus the graduates do not need to report their salary to be included in these averages since schools can report any salaries they have reason to believe are accurate. This adjustment is not only common at law schools, but encouraged by NALP. As the TJSL Report states, “Our annual employment statistics are compiled in accordance with the [sic] NALP’s Employment Report and Salary Survey.”

The main point here is that the average salary reported in the TJSL Report skews high without context: no salary ranges, percentiles, or observational data besides the five-graduate floor has been provided. TJSL could, if it wanted, provide the following chart as specific context. This information, specific to graduates from all NALP-reporting graduates working in California, comes from NALP’s Class of 2009 Jobs & JDs. TJSL receives a copy of this report, since it is an active participant in NALP’s research. Our example uses all California salary information because 83% of TJSL’s graduates known to be employed were employed in California.

TJSL Data California Salary Data (All Grads)
Firm Type # Grads 25th Median 75th Middle 90% Avg.
2-10 Attys. 36 $52,000 $62,400 $72,000 $36,000 – $100,000 $63,526
11-25 Attys. 2 $60,000 $70,000 $80,000 $45,000 – $135,000 $77,096
26-50 Attys. 3 $70,000 $78,000 $95,000 $50,000 – $130,000 $83,152
51-100 Attys. 4 $79,000 $90,000 $135,000 $62,500 – $160,000 $105,449
101-250 Attys. 2 $100,000 $145,000 $160,000 $85,000 – $160,000 $135,171
251+ Attys. 7 $160,000 $160,000 $160,000 $140,000 – $160,000 $156,904

The total number of TJSL graduates in each category indicates that the salaries TJSL used to calulate its published average firm salary skews even higher than normal. If between 5 and 17 graduates reported a law firm salary, at least some were from jobs paying six figures. But it’s difficult to know how many of those were six-figure jobs because the employer category includes non-attorneys making significantly less than attorneys with the same employer. Of course, prospective law students could know all of this if the school had decided to tell them.

Overall, it is easy to see why a prospective TJSL student today would be misled into thinking that a $200,000 investment in the TJSL degree is worth it. It remains to be seen whether our analysis holds for previous years, as well as whether what we consider misleading is sufficiently fraudulent, misrepresentative, or unfair according to a Cali state court.

TJSL is not alone

Countless other law schools across the country engage in similarly misleading practices, making them equally at risk of facing a class action. Every law school has the opportunity to provide better information and better context for that information. Some schools are proactively reforming how they present employment data, but many more have not yet felt compelled to change their behavior. Lawsuits like this will make law schools quickly rethink how they promote their programs.
See a summary of the complaint after the jump »»

NYLS’s Deceptive Practices

We recently learned of an email sent to accepted students by William D. Perez, Assistant Dean of Admissions and Financial Aid for New York Law School. The email is a response to what Dean Perez considers to be misinformation about law schools in the media. In an effort to convince accepted students to reconsider NYLS, his email tries to balance out the discussion by sharing some positive facts about NYLS. You can view the entire email here (will appear in a lightbox).

Our issue is not that Dean Perez wants to allay fears about law school in general and NYLS in particular. Any school, especially one where the average debt for 2009 graduates borrowing was $119,437, should believe that its opportunities justify the cost of attendance and should share information that materially affects a prospective’s cost-benefit analysis. Our issue is that NYLS has not provided nearly enough information, either in Dean Perez’s email or in its publications, to support some of the claims made in this effort to recruit next year’s class. Next week, we will submit our concerns to Dean Perez and Dean Richard Matasar in the hopes they will act responsibly to resolve what is possibly a violation of accreditation Standard 509.

Dean Perez claims that “our graduates are getting jobs, earning money and able to repay their loans.” But available information demonstrates otherwise. At worst, Dean Perez has overstated this claim in a deceptive and irresponsible manner. At best, NYLS has failed to meaningfully portray the data he believes supports these propositions. We’ll begin by addressing the employment and salary information that NYLS provides to prospective law students, and then move on to discuss the (un)importance of loan default statistics.

Getting Jobs. Earning Money.

NYLS’s employment statistics webpage (“Statistics Page”) (source) is designed for prospective law students trying to answer questions about job opportunities at NYLS. But it takes specialized knowledge about the reporting process and access to third-party information to recognize that these numbers are misleading.

For starters, NYLS provides its nine-month employment rate (89.7%), the breakdown of its employed graduates (first table below), and some of their salaries (first and second tables below).

Salaries
Employer Type Percentage Range (Min-Max) Average
Private Practice 45.6% $28,000 – $160,000 $120,197
Coporate/Business 23.7% $50,000 – $96,000 $75,167
Government 8.2% $41,000 – $72,000 $56,054
Public Interest 16% n/a n/a
Judicial Clerkship 3.4% $42,000 – $58,200 $45,887
Academic 3.1% $40,000 – $45,000 $42,500

You might expect that this table reflects a breakdown of the 89.7% of its 440 graduates because this is the “employment rate for the Class of 2009″ as of February 15, 2010. This rate, although not unusual, is not what it seems. It’s actually an adjusted rate, which, until this year, U.S. News used for its rankings:

Employment Rate =
graduates known to be employed OR enrolled in FT degree program
+
25% of graduates whose employment status is unknown
total graduates – graduates who are unemployed and not seeking work

Based on Class of 2009 employment data submitted to U.S. News, we come to a rate of 89.6%. The result is off by .1% due to rounding error, but nevertheless confirms NYLS’s rate calculation. As such, the employer type breakdown reflects only 82.7% of the class, because those are the only graduates reporting an employer type.

Next we look at the salary information. Understanding the salary figures on this table requires understanding the size of the dataset. This is difficult based on what NYLS says about its size: “Approximately 20% of our 2009 graduates reported salary information.” There is no clarity about what the denominator is. It could be the entire graduating class (440), the number of graduates counted as employed using the adjusted rate (395, from the 89.7% rate), or the actual number of graduates with any job (364, from the 82.7% rate). We will assume that it uses 364 graduates as the denominator on the grounds that these are the only graduates who could be expected to report a salary.

From this, we know that the first table includes salaries for roughly 16% of the entire class (73 graduates). But we have no indication from the Statistics Page as to the distribution of graduates throughout employer types, other than knowing that zero graduates working public interest jobs reported a salary.

NYLS also breaks down the private practice employer type by the salaries attained. The below table breaks down the “Private Practice” row in the first table. Accordingly, this table reflects the job outcomes for 37.7% of the class, or 45.6% of the 82.7% of graduates who were employed.

Salaries
Law Firm Size Percentage Range (Min-Max) Average
501+ 20% $145,000 – $160,000 $159,500
251 – 500 6% $120,000 – $160,000 $155,000
101 – 250 4% $90,000 – $160,000 $136,667
51 – 100 4% $62,000 – $90,000 $81,750
26 – 50 3% $55,000 – $55,000 $55,000
11 – 25 11% $47,000 – $65,000 $57,000
2 – 10 51% $28,000 – $80,000 $54,583
Unknown 1% n/a n/a

The salaries are equally as problematic for this second table. Just as we cannot tell how many of those 73 graduates reporting a salary were in a particular employer type category, we cannot tell how many are working for law firms and represented in this table. Based on the distribution of salaries in the first table, at least 11 graduates were in categories other than private practice. This means that these salary figures by firm size represent at most 14% of the class when you combine all of the rows, though the number is assuredly smaller.

What does all of this mean? Although the Statistics Page includes a cautionary statement that only about 20% of graduates reported salaries, the information provided is still deceptive. It took numerous calculations and data from a third party to figure out how few graduates actually underlie these figures. Yet, when you read these tables, an unknowing prospective who is contacted by Dean Perez and told that “[NYLS] graduates are getting jobs, earning money and able to repay their loans” will see large salaries that can reasonably be taken as evidence of this advertised, short-term solvency. The method NYLS employs to present salary statistics can be persuasive to the unknowing applicant, but it clearly does not reflect reality when, for example, the advertised $159,500 salary average for graduates employed at 501+ attorney law firms reflects the average for, at most, 7.5% of the class.

Dean Perez claims that graduates are earning money, even though the school only reports what one-fifth of the Class of 2009 was earning. If his office has information on the other four-fifths, it would be a good idea to share it when making such claims, rather than lead prospectives to think that the salary information provided is reflective of actual practice. And if NYLS does not possess salary data for the other 80% of the class, then the administration needs to review its recruiting policies and determine whether these statements are designed to mislead and/or have the effect of misleading the consumer. We think they do. When only 62% of the entire class is working in a bar-required position, there’s ample room to be skeptical of the claims made by Dean Perez.

Dean Perez also claims that New York Law School had more favorable or comparable employment statistics than [Hofstra, Buffalo, Touro, Albany, CUNY, Pace, Syracuse, Fordham, Cardozo, Saint John’s, and Brooklyn]. These are important claims that require adequate evidence, regardless of the economic climate and media attention. In the context of the email, this claim is especially troublesome because it seeks to sway applicants by stating that, despite all of the criticism, this particular law school really is a worthwhile investment. That may be true (and we will not make that call), but the school cannot simply prove its value by comparing itself to the other New York schools. No school can prove its value this way without first having sufficient transparency about the post-graduation employment outcomes of its own graduates.

[See our data clearinghouse to see if you agree that NYLS has “more favorable or comparable statistics” compared to these other New York schools: NYLS, Hofstra, Buffalo, Touro, Albany, CUNY, Pace, Syracuse, Fordham, Cardozo, Saint John’s, Brooklyn.]

Paying Back Loans

Loan default rates, contrary to Dean Perez’s assumption, do not indicate the value of a program. With the federal Income Based Repayment and Income Contingent Repayment plans, no individual with federal student loans should default. Defaults merely suggest poor advice by financial aid offices and/or poor self-discipline. A graduate can make minimum wage and have significantly-reduced monthly loan payments, thanks to these programs. Both programs have their downsides: interest accumulates and can cause debts to balloon over the life of the payment plan, and in certain scenarios the debtor will be taxed on the forgiven debt at the end of the repayment period. But they are programs designed to make sure that people don’t default. If the default rates are low, the school should be applauded for providing sound financial advice, but it is hardly evidence that NYLS graduates are by-and-large doing well, particularly when we only know the salaries for 20% of the class.

Misleading The Consumer

Selective presentation is deceptive. The manner in which NYLS portrays salaries and job outcomes, while not outright lying, deceives the reader into thinking she is more informed about the employment opportunities at NYLS than she really is. Despite NYLS possessing better information (and even reporting some of that information to U.S. News), the school has declined to share information on the Statistics Page that it knows would be valuable, such as the fact that 58.4% of all 2009 NYLS graduates were employed full-time, while 45.2% were working full-time, bar-required jobs. Omission of such important, value-adding information is so obvious that it suggests NYLS actually intends to deceive. Such a perception has enormous ramifications for how people view legal education in this country. This behavior is precisely why we are prompting reform.

Law schools are sophisticated suppliers of a service; they understand what consumers want to believe as truth, particularly consumers facing full tuition costs and six figures of debt. With no incentive to do otherwise, schools hide or otherwise misrepresent the data that might scare applicants away. And when the applicants get wind of it through exposure in the media, we see responses like that of Dean Perez. Absent tougher regulations that require improved disclosure while prohibiting claims like these from being made without factual support, some law schools in the United States will continue undermining the educational purpose they are supposed to serve.