View William D. Henderson and Rachel M. Zahorsky's original article here. Posted by Patrick Lynch on December 29, 2011.

Excerpt:

In 2010, 85 percent of law graduates from ABA-accredited schools boasted an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report. At 29 schools, that amount exceeded $120,000. In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after commencement. Less than 51 percent found employment in private law firms….

Heavy loans now threaten to consume the future earnings and livelihood of the nation’s young lawyers. … Very few critics, however, have examined the part played by the federal government through its student loan policies in creating a law school bubble that may be on the verge of bursting—one strikingly similar to the mortgage crisis that cratered the economy in 2008. Direct federal loans have become the lifeblood of graduate education, and they shelter law schools financially from the structural changes affecting the profession. The bills are now coming due for many young lawyers, and their inability to pay will likely bring the scrutiny of lawmakers already moaning about government spending.

As student groups continue to lobby the federal government for increased transparency, the lawmakers are bound to ask a very simple question: Why should the U.S. government, through the Department of Education direct-lending program, continue to make billions of dollars of loans to law students when structural changes in the legal market suggest that a large portion will lack the earning power to repay those loans?

The answer to this question has potentially grave implications for legal education. Law schools—many for the first time ever—will become vulnerable to significant cuts in the amount of money available to students as Congress tries to hold the line on additional deficit spending. …

The U.S. legal profession is in the midst of a broad structural transformation. Meeting the challenge to compete in a global economy requires a higher-education policy that honestly addresses issues of access, cost containment and national interest.

Legal education may soon provide an object lesson of what happens when we do nothing: Bad things happen when lawyers and law professors stick their heads in the sand. The republic may be in need of some world-class lawyerly judgment. And maybe soon.

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's Take:

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.

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View Kim Krawiec's original article here. Posted by Kyle McEntee on December 23, 2011.

Excerpt:

The Texas kerfuffle has raised many questions, some of which have already been discussed at length on other law blogs. But for me, the news brings up a larger question that I’ve been thinking about for a while now: should law school compensation be transparent, at least to other faculty members? …

[T]here appears to be a great deal of variation, even among schools operating under some sort of transparency mandate. For example, I have seen schools that interpret the requirement to make salaries publicly available to mean that they are in a file in the central library, such that one has to make an affirmative effort to discover them. I have seen others distribute salary information in a yearly memo to faculty, such that everyone is confronted with everyone else’s salary, whether you want that information or not. And I have seen some schools following what appears to be the Texas model, under which the reported salary numbers give little useful information about total compensation, because so much compensation comes in the form of benefits that are not required to be reported – children’s tuition, housing, loans, foundation grants and fellowships, etc.

But what I want to address is a different question: assuming flexibility in the matter of whether faculty compensation is transparent to other faculty members, should it be? I’m going to answer that question with a tentative “no” despite the admitted costs of secrecy in compensation information. …

Let me begin with some assumptions about the ideal academic salary system. First, it should be meritocratic, meaning that faculty members are rewarded for excellence in the pursuit of shared institutional goals – for example, scholarship and teaching. Second, it should be fair, in the sense that faculty are neither rewarded nor penalized for traits, behaviors, and the like, unrelated to those goals. For example, the system should show no race or gender bias, “squeaky wheels” should not be able to increase their compensation beyond their due through constant complaints to the dean’s office, nor should more unassuming faculty be passed over for deserved compensation. Third, it should be transparent, in that each faculty member is aware of the total compensation of other faculty members. This transparency enables verification of features one and two – i.e. that the system is meritocratic and fair. …

Now, before someone extols the virtues of lock-step systems (long the norm at many law firms, but increasingly under pressure), I agree that there are some arguments in its favor: the reduction of internal conflict and competition and the fostering of a collective sense of purpose. But law schools are not law firms. The lesser mobility of academics, the reduced ability to fire non-performers, and the lack of the big “carrot” of partnership profits at the end of the day render the two environments too different to map one compensation system onto the other.

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's Take:

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.

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Related Stories:

• Texas Tribune: UT President Asks Law School Dean to Resign Immediately (December 8, 2011)

We can now report that we’ve made great progress towards securing a hearing on law schools’ presentation of employment information in their recruiting materials, in the ABA Official Guide, and in U.S. News. It became apparent that additional involvement was necessary after the ABA Section of Legal Education’s questionnaire committee failed to ask questions pertaining to the legal employment rate on the 2011 questionnaire, despite pleas to the contrary.

For almost a decade, the Section of Legal Education has asked law schools the very basic question of, “how many of your students worked in a full-time legal job after graduation?” Despite having the answers, the section has never published this information. Whether intentional or careless, this is concerning. And with all eyes on the section’s reform efforts, failure to remedy this problem in a timely fashion appears to be worth an investigation.

If and when this hearing happens, we expect the discussion of law school transparency to broaden to questions about the law school cost structure. It is important to ask why and how the average law graduate’s debt (over $100,000) could reach such an extreme. To this end, structural transparency is crucial to understanding and fixing the broken law school model.

Some of the reason for the massive debt is that prospective law students, but not law schools, lack the information they need to make meaningful decisions. Some of it is that law school is an all-but necessary gateway to the legal profession. Additionally, there is a deeply entrenched view in the U.S. about law school being a magic ticket to financial security.

But the increase in law school costs go deeper than the reasons people choose to attend law school. It has much to do with how those who attend choose to finance their educations. Law schools run on essentially limitless student loans. With this constant stream of financing, law school budgets expand, often in the name of better quality. But is law school quality three times better than it was in the 1980s? Four times? While difficult to quantify, few would say it is.

Unfortunately, cost considerations have been absent from reform efforts because there are insufficient checks in place to keep costs down. It is time for the ABA Section of Legal Education, Congress, and law schools to explore how to change the law school model. The damage needs to be undone. The effects of this broken model are felt well beyond the individuals who choose to debt-finance their education. Good economy or bad economy, the issue is not going away.

To read more, check out the Wall Street Journal’s story.

[this post appears in the National Law Journal forum on legal education]

Dean Chemerinsky’s and Professor Jewel’s contributions both raise very important points about the challenges facing legal education reform. Personally, I’m in the camp of people who believe that the legal education model will change. However, it’s apparent to me that changes must come predominately from outside of schools and the ABA Section of Legal Education. Survival instincts may prohibit even well-respected, well-meaning faculty scholars from adequately assessing the scope of the problems with the current law school model. But the increasing interest from U.S. Senators should signal to the uninitiated that law schools cannot continue to operate in a bubble. Nor can this discussion continue if everyone ignores the crux of the problem: intolerably high costs and an unacceptable number of unprepared graduates.

What would internal reform even look like if the two core goals are slashing tuition and improving preparedness? Part of the reason internal reform may be difficult to imagine, as Dean Chemerinsky pointed out, is because law schools are governed by faculty, and because substantial changes to the legal education model will alter “what [faculty] have to teach and do.” That the Section of Legal Education is captured by similarly consumer-disoriented interests, despite overtures to the contrary, only aggravates the situation and observers. It bears repeating that the Standards Review Committee, Section of Legal Education, and Dean O’Brien in his posting do not once mention how important it is that the cost of obtaining a legal education drastically decline. Reducing costs cannot be the elephant in the room if this discussion is to carry any significance with the public.

Internal reform may also be difficult to imagine because increases in quality are typically tied at the hip to increases in costs. This attitude contributed to the current model and its explosive growth over at least the last 25 years. With little or no downward pressure on the cost of legal education, and a diversity of ideas about what it means to improve the student experience, law schools can introduce new features along with yearly tuition increases, knowing they will be rewarded for it in the U.S. News rankings.

On its face, the idea that costs can decrease while quality increases is fanciful. More to the point, there is substantial denial that there is a problem with the quality of education that law schools provide graduates. Such denial comes out in claims that the “law school crisis” is cyclical, not structural.

Like Dean Chemerinsky, I graduated (albeit this year) without being ready to practice law. Yet, not unlike many law school graduates, I still received a high quality education. This confirms Dean O’Brien’s thoughts on the current state of legal education:

Legal education itself has never been in better shape in terms of the preparation that we provide future lawyers. In recent years, our schools have responded to suggestions by the bar and have substantially upgraded legal writing programs and practical skills opportunities. The process currently in place ensures that graduating lawyers are well trained for a variety of roles.

There are two important disconnects here. First, how can I claim that I received a high quality education and also say that people are wrong to deny there’s a problem with the quality of education? Second, how can Professor Olivas claim that graduates are well trained for a variety of roles, despite the increasing reticence of clients to pay for junior associates? We can reconcile both sets of questions by examining how each claim uses a different metric to evaluate quality. The first claim in each set speaks to doing something well, but not necessarily producing graduates who are/feel ready to practice law.

This brings me back to the potential fantasy of reducing costs while improving quality. In our evolved-definition-of-quality world, we may find that the current pedagogy badly misses the mark. In this case, radical change may mean substantially changing the composition of legal educators, whose salaries and benefits make up a large chunk of law school operating costs. If faculty composition radically shifts to include more practitioners teaching as adjuncts in specific, practice-oriented classes, while tenured faculty must seek grants to continue their scholarly endeavors, we could see the costs of educating aspiring lawyers decline drastically.

The National Law Journal is hosting a discussion of the state of law schools, with contributions from the current Chair of the ABA Section on Legal Education, John F. O’Brien, the President of AALS, Michael Olivas, Dean Erwin Chemerinski (UC-Irvine), Bill Henderson (Indiana), Lucille Jewel (John Marshall – Atlanta), and Brian Tamanaha (Washington University in St. Louis). Here is my initial post:

We founded Law School Transparency in 2009 with a pretty basic goal: to spotlight and reform the presentation of law school employment information. In no trivial sense, law schools and the ABA Section of Legal Education were not fulfilling their responsibilities. Law schools were failing to adequately inform their future students. The Section of Legal Education was failing to adequately protect consumers with its accreditation standards, which law schools were more than happy to hide behind as accepted practice.

To a large extent, although strides have been made within the Section of Legal Education to protect consumers, these failings persist. (In a later post, I will explain how.) They signal, along with the fact that there were such significant failures prior to the national attention, much greater problems with law school operations. Law schools are simply not consumer oriented.

With this in mind, we are ready to announce the next phase of Law School Transparency: attempting to reimagine legal education. This has three core parts.

• Structural Transparency
• Identifying Opportunities for Improvement
• Unbreaking the Broken Model

Three common-sense goals color an undeniably difficult process. First, the cost of obtaining a legal education must be substantially reduced. Second, students must have the opportunity to make choices after graduation and must have economic mobility throughout their careers. Third, the education model must meet the needs of students, the legal profession, and clients.

Structural Transparency

This part focuses on understanding the cost structure of providing legal education in the United States. Reducing the cost of obtaining a law degree requires understanding the nuances of the law school model, where the money comes from, and where the money goes. Some of these facts may come from examining public documents like law schools’ Form 990s and recent reports on legal education, but additional transparency is needed. Law schools need to open their books, explain those books, and do so truthfully and in good faith.

Identifying Opportunities for Improvement

Once the facts are on the table, those who are interested in reducing the cost of legal education can identify opportunities for improving the law school model. This introduces a normative inquiry into what it means to provide value.

Like the Section of Legal Education Outcome Measures Committee, we believe that the focus must center on outcomes. Law school should add value in two related ways.

First, law schools should produce graduates who can do things they couldn’t do prior to law school. Learning outcomes must be scrutinized with due consideration to how well graduates serve employers and clients. It is one thing to teach something well, and another to teach something relevant. The report is a great start, though it will be important to generate the discussion among all stakeholders—something the committee admitted it had trouble sparking.

Second, law schools should produce graduates who successfully enter the workforce able to repay law school loans. Based on the report, this was not considered. The committee acknowledges that costs will likely rise after retooling the accreditation standards, but it does not demonstrate any concern for whether education is affordable. I am hopeful that participants in this forum will discuss how this crucial element could possibly have gone unaddressed.

Unbreaking the Broken Model

It’s important to synthesize old and new information about how law schools educate their students. Ultimately, the product of these efforts will help determine the most appropriate, substantive changes to the U.S. legal education model. There is very real pressure to do a better job for students and employers, both of whom can be viewed as consumers of legal education. In making these changes, it will be essential that access and quality are not sacrificed.

How best to achieve the goals outlined above will be a matter of important debate. But regardless of how we manage to eventually unbreak the law school model, it’s clear that change must come. Legal education reform requires a significant commitment by all stakeholders—not just those who currently spend time teaching—to consider why and how we need to reimagine legal education.