There has been a lot of press and discussion noting that Fall 2012 entering law school classes will be smaller than the year before. (See here and here and here) Given the dramatic decline in the number of law school applicants over the last two years, this is not surprising. In this coverage, however, I have not seen discussion of two points, though admittedly I may have missed it.
First, the decline in law school entering class sizes started last year, according to ABA data just posted on the LSAC website. That data shows that the ABA's count for the Fall 2011 entering class was 48,700, which is down 3,800 (or %7.2) from the Fall 2010 all-time high of 52,500. So shrinking entering classes will not be new for the Fall 2012 admissions process, just the press coverage. Also, with an even steeper decline in applications this year, one might expect an even larger percentage drop on the Fall 2012 class. If say 10% additional seats are shed from the entering class (I just picked this number as an illustration, and it is not an estimate or prediction), that would yield an entering class of about 43,900, which would put us at about the Fall 2000 class size when there were 183 law schools.
Second, I seem to recall, though I cannot put my finger on it now, discussion about how the decline in law school applicants would leave law schools in the bottom quarter of the rankings without students because higher ranked schools would have no incentive to shrink the sizes of their incoming classes. I always thought that that argument ignored the prisoner's dilemma-like situation in which all law schools find themselves due to the US News Rankings. Though it's a simplification, take the following case of a hypothetical law school trying to maintain its ranking somewhere in the top tier. That school's ranking will be sensitive to changes made by law schools ranked directly above and below it. As law school applications decline, and assuming that the decline is at all levels of LSAT scores (there is some evidence that the decrease has been disproportionately at the top of the LSAT scale), a law school has a choice: maintain its current enrollment size and face a possible decrease in median LSAT and UGPA, or decrease class size to maintain student credentials. A consequence of the former choice is to suffer a decrease in criteria weighted 22.5% in the US News formula, and a consequence of the latter choice is to forgo tuition revenue. Whether the drop in LSAT and UGPA will lead to a drop in US News ranking will depend, in turn, on the choice made by peer schools ranked just above and below our hypothetical law school:
1. If the law school sacrifices LSAT and UGPA for class size and its peers do so too, the law school's rankings should remain the same.
2. If the law school sacrifices LSAT and UGPA for class size and its peers do not, the law school risks falling in the rankings.
3. If the law school maintains LSAT and UGPA and shrinks class size while its peers do not, the law school could rise in the rankings.
4. If the law school maintains LSAT and UGPA and shrinks class size as its peers do too, the law school's ranking should remain the same.
So, which choice (or strategy, in the language of game theory) does our hypothetical law school make when it must act without knowing what its peers will do? In the prisoner's dilemma, the answer depends on the relative payoffs of the choices. For the hypothetical law school, my guess is that the outsize role of the US News rankings and the corresponding consequences of a drop in the rankings mean that scenario 4 is the most likely outcome. This is because shrinking the class will cause our hypothetical law school's ranking to either move up or stay the same, and the peer law schools will see that choice the same way. And as applications continue to fall, this strategy would remain dominant until the budget consequences of a decrease in class size makes that choice unacceptable.
The anecdotal evidence in the press is that this scenario is playing out, as we see reports of reduced entering class sizes by law schools throughout the rankings. (See here and here and here) I'll leave for another post the question of law school budgets, as well as how Chapter 10 of Professor Brian Tamanaha's recent book Failing Law Schools, which offers an interesting account of how law school tuition levels got where they are, bears on that important issue.