Does the Economics of Law Practice Matter to Law Schools?

I return to the mysteries of law-firm economics after a hiatus to attend to three speaking engagements and complete the academic term (in other words, as an excuse to interrupt grading my Contracts exams).  A belated shout-out to my colleagues Anne Klinefelter and Andrew Chin, and to the editorial board and staff of the North Carolina Law Review, for an exceptionally well conceived and executed Symposium on Social Media (which was one of those speaking engagements)--watch for the Symposium issue of the NC L. Rev. coming this spring for some refreshingly novel and interesting takes on what is elsewhere becoming an overworked topic.  (You won't see a paper from me in that issue.  My topic at the conference, legal ethics in the social media environment, has already been admirably well explored in print and online by others.)

I want to stress how much these issues of practice economics actually matter to legal educators.  Virtually all of our students attend law school with the general aim of practicing law.  A great many end up in private law firms, large or small, or (usually a bit later in their careers) in corporate law departments.  The demand for lawyers in such positions (that is, for individual and corporate legal services) fundamentally affects our students' prospects for gainful employment. 

A bit more specifically, the overall demand for such services affects the overall availability of legal employment, and the distribution of that demand across different categories of work affects the availability of different kinds of legal jobs.  Thus when, as now, there is a significant contraction in at least one portion of the private sector--and here I'm referring to the large number of BigLaw layoffs in 2009 and 2010, and the contemporaneous and continuing substantial reduction in the rates of new hiring at larger firms--recent graduates with strong conventional qualifications who previously filled those BigLaw positions are now competing, and vigorously, for positions in smaller firms and government for which there was previously less such competition.

Put somewhat differently, there are fewer law jobs for recent graduates, and appreciably fewer such jobs at the higher end of the pay scale.  It's hardly rocket science to suggest that this affects the economic value of a law degree:  From behind the proverbial veil of ignorance, a student's chances of securing a job that supports the cost of three years' tuition, living expenses and forgone income and work experience are substantially less today than they were five years ago. 

This is by no means the whole story, of course.  Some prospective law students have far brighter economic prospects ex ante than others.  And economics is certainly not the only reason why people consider law school (though we have empirical data confirming the common-sense apprehension that a substantial number do weigh it as a substantial factor in their decision). 

But if the economic value of a law degree is falling overall (and I suggest to you that it is irresponsible to imagine otherwise), in a rational market you can expect fewer people to pay the rising cost to obtain it.  It is far too early to say "I told you so," but there have been double-digit decreases in law-school applications across the board this year over last (though we must bear in mind that last year saw record increases in law-school applications and LSAT administrations as college seniors confronted a horrific job market with an effort to settle into a three-year holding pattern). 

This is having some obvious effects on the legal academy.  The ability of law schools to continue to charge high tuitions--and continue to pay their faculties salaries far higher than those typical in the arts and sciences--depends on making the end product (the law degree) worth it.  Since many universities share in their law schools' economic surpluses, the universities care too.  Legal employers have been complaining  about the utility of the education with which their entry-level employees arrive for well over a generation, but for the first time in memory it would be fair to say that many law schools are listening, and questioning their mission.

One thing I am NOT suggesting is that legal employers know exactly what they need, and how we could be supplying it.  I'll try to explore in future posts why things are nowhere near this simple.  But that leaves everything up for grabs:  What questions should we be asking, and how should we be seeking the answers?  This is an obviously difficult inquiry, and I will try to suggest in future posts that it's even harder than it seems.  But make no mistake:  we are near the front end of a period that I believe will prove to be the most fraught with rapid change that the American legal profession has ever seen.

What a great time to be a part of things!

--Bernie

Comments

[Bill Henderson]

Bernie, you are making a lot of sense. I agree that legal employers don't know what they need ... and as you suggest, what they need is hard to sort out and then produce. Law schools best chance at thriving ten years from know is focusing on that question.

By the way, who is paying for legal education, students or the federal government? With Income-Based Repayment, the government (taxpayers) stands to pay for bad decisions in how young people educate themselves. This may be part of the reasons that change is slow (or at least not faster) in legal education.

Look forward to your ideas on this front. Bill H.

[Top Film Schools]

Very realistic article.Looks fantastic.Congratulations.

[Doug Richmond]

I don't think that law schools as a whole are questioning the current model at all. A handful of vocal faculty are raising questions, but that's it (and I don't mean the lunatic fringe "law school scam" crowd). Even as they are deluged with complaints about the lack of practical experience on their faculties, with the rarest of rare exceptions law schools continue to hire as they always have, except now they are hiring more Ph.D./JD combos with even less or no practical experience. On the other hand, I received a traditional law school education, had a relatively long and very successful career in a large, regional law firm, and am now experiencing success inside a corporation. I expected to have to teach the young lawyers who worked for me in my firm the practical skills they needed to succeed. The bar cannot expect law schools to do everything--especially not in this age of rapidly declining state support for public universities. Long story short, I am not sure what questions to ask, or where necessarily to look for answers. The issues in legal education that need to be tackled are extraordinarily difficult, as you suggest. But I am willing to bet that neither the right questions nor the right answers will come from inside law schools, nor will they come from the ABA.

[Bernie Burk]

Bill, I'm quite gratified that we're on the same page given my extremely high regard for, and indebtedness in my scholarship to, your work (though I suppose that given this it may not be altogether surprising that we find ourselves pointing in the same general direction). I look forward to a continuing dialogue, and expect to post sometime soon about your very interesting and provocative venture assisting private firms in discerning what they need.

I think your question about government funding is spot on. The violent reaction from (and millions spent on lobbyists by) for-profit law schools in response to recent legislative and regulatory efforts to tighten access to student lending and/or federal guarantees of private educational loans illustrates the concern. Brian Tamanaha commented poignantly on the same issue here (http://legaltimes.typepad.com/lawschoolreview/), and among many other thoughtful quantitative analyses are Matt Leichter's here (http://amlawdaily.typepad.com/amlawdaily/2011/11/law-school-debt-bubble.html) and here (http://amlawdaily.typepad.com/amlawdaily/2011/12/law-school-debt-bubble-part-ii-education-department-to-lend-543-billion-to-americas-law-schools-by-2.html).

And as soon as someone teaches me how to build hyperlinks into text in the comments, mine will get shorter and less colorful.

--Bernie

[Bernie Burk]

Doug, Thanks for your views. Your comments on my posts are unfailingly thoughtful and engaged, and I appreciate it. Folks like you who are steeped in the profession have a great deal to say about what we are doing well and badly. And having spent over 25 years in practice at a fancy West Coast firm before going into teaching, I have tremendous respect for the perspective your experience provides.

But you should take caution before assuming you have broad insight into what is happening in "the academy" right now. Turnabout being fair play, I appreciate that teaching at an excellent state university law school hardly makes me omniscient about what's going on in "the academy" either. But I do make ongoing efforts to gather information about developments in my own and other institutions in a way that I hope is broader and more nuanced than David Segal's simplistic overgeneralizations about law faculty hiring in the New York times to which it appears your comment refers.

I am certainly not suggesting that everyone is working to transform their curricula overnight. And I certainly am suggesting that there is a broad range of views about whether curricular reform is needed, as well as what kind and how fast. Law schools are every bit as conservative to innovation as the legal profession; and tenure, along with budget, inertia and a host of other forces, are powerful brakes on innovation--a phenomenon that I hasten to add is not necessarily an entirely bad thing.

But you would be wrong if you assumed that there are no serious conversations going on among law faculties all over the country about the fit between what they purvey and the needs of their students and alumni (i.e., the profession). And you would also be wrong if you assumed that a great many innovations, in many cases gradually and subtly, were not being seeded and taking root at many institutions as I write this.

What you can do as a senior in-house lawyer is tell us what kinds of things you'd like to see in your new hires' toolkits the day they come to work for you. I (and many others who worry about this kind of thing) desperately want to know. But be analytical and specific: When you talk about "skills," exactly what do you mean? More on this from me soon.

Please keep reading and commenting. Your input is essential.

--Bernie

[Doug Richmond]

Bernie:

Let's talk about innovations for a moment. When Harvard announced that it was revamping its first-year curriculum to focus more on international issues, all sorts of academics applauded. I groaned. I understand that we function in a global economy; heck, my crummy little job routinely takes me to London, Bermuda, Canada, and elsewhere. But to use a sports metaphor, I would favor a focus on blocking and tackling: required courses in administrative law, insurance law, and perhaps what my law school used to call "legal accounting." A colleague of mine graduated from a top law school without being required to take evidence. Wow. I know lawyers who did not take to take a basic courses in agency and partnership, or corporations. So curricular innovation driven solely by law faculties is a bit bothersome. I do not expect to dictate my alma mater's curriculum, nor do I want to do so. I appreciate faculty governance and I know that I don't have all the answers. But any curricular reforms being contemplated at law schools today that don't include insights and input from the practicing bar are no reforms at all. How many law schools will seek such input and how many will actually factor it into their decisions in meaningful ways? You probably have a better sense for that than do I.

As for skills, and by way of example, as a former trial and appellate lawyer, I think it would be swell if schools could offer deposition mini-courses modeled on NITA programs. But I recognize that various demands may prevent them from doing so. And as a law frm partner, I was content to teach associates deposition skills. I also recognize that there are all sorts of niche "skills" courses for which practitioners and others might lobby, but for which there is variable demand and limited resources to create. But I would be happy if law schools would teach writing skills. You think you do, but you don't. My former law firm hired great young lawyers who had been law review editors, legal writing TAs, and so on, and still their writing skills were deficient. How about adding to the existing legal writing curriculum mandatory 2L and 3L multi-day writing "boot camps" modeled on Bryan Garner-type seminars?

I know that there is much about academic life that I do not appreciate. I may be wrong on all sorts of issues, and I may overlook or be ignorant of others. But I worry that too many law schools are not engaging the practicing bar at at time when they need to be doing so, and, unlike you, I am not sure that we are even moving in that direction. I hope I am wrong, because many criticisms being leveled at legal education are misguided, as are the critics (e.g., Campos, Segal), and practicing lawyers are in most cases schools' strong allies.

[Anonymous]

Great post and discussion. Just wanted to make what I think is a correction to your article though. Your post states "though we must bear in mind that last year saw record increases in law-school applications and LSAT administrations" I don't believe this statement is accurate. According to www.lsac.org's member section (http://www.lsac.org/Members/Data/applications-by-region.asp), applicants were down 9.9% for the last year (August 2010 - August 2011). Applications were down by a similar percentage. This year applicants are running 16% below last year's already dismal numbers.

This data only supports your comments that candidates are reacting to the news by choosing not to apply to law school.

[Bernie Burk]

Anonymous, Thanks for keeping me honest. Your numbers are correct; I was off by a year. Specifically, this year's applications (for the class matriculating fall 2012) are down double digits from last year's (for the class matriculating fall 2011), which are down somewhat less, but down, from the year before. However, applications for the law school class matriculating fall 2010 were up around 7% across the board, and at a few institutions increased as much as 20-30% over the prior year. The generally accepted explanation was college seniors' temporary retreat from the disastrous 2009 job market outside the legal sector. See, e.g., http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=120
2463410108.

Thanks for the valuable stats. Please keep commenting!

--Bernie