An ABA Standard on Employment Outcomes? Part 4.

As described in previous posts, ABA law schools have been consistently graduating many more students than there are available law jobs, and entry-level salaries have decreased or remained stagnant over the past 16 years. During the same period, the cost of the J.D. degree at most law schools has increased substantially. The graduate employment outcomes at most ABA-accredited law schools are robust. However, some schools have been consistently placing fewer than 40 or 50% of their graduates in law jobs at 9-10 months after graduation.

The current ABA standards on admissions and bar passage do not constrain law schools from pursuing admissions policies that minimize reductions in enrollments without regard to the impact on employment outcomes. Many of the schools with persistently weak employment outcomes have reduced admissions criteria as law school applications have declined steeply over the past six years. The predictable result is that bar passage rates have fallen, and the schools’ graduates’ employment prospects are further diminished.

In my last post, I laid out my case for adopting an ABA employment outcomes standard, contending that it will better ensure that law graduates realize the promise of the J.D. program, and cover the gap in the current standards that allows schools to pursue admissions policies that ignore graduate law job employment rates.

I can anticipate three key arguments against the idea.

1. An Employment Outcomes Standard is Paternalistic

It may be argued that the market of law school applicants, not an accrediting agency, is the most efficient regulator of law school enrollments. Indeed, the law school applicant market has responded to the decline in the legal employment market, as evidenced by the sharp decrease in applications over the past six years. The argument continues, if a law school provides a legal education of sufficient quality to prepare students for admission to the bar and the practice of law, it should be no concern of the accreditor whether graduates of the school can actually use the degree. As long as applicants have access to complete and accurate data on a law school’s graduate employment outcomes, they can make informed decisions on whether law school is a good investment. It would be paternalistic to make that decision for them no matter how remote the odds of obtaining legal employment with a degree from a given school.

To assert that the applicant market rather than the accreditor is the more efficient regulator of law school enrollments fails to recognize that the higher education applicant market is anything but normally functioning. The market is not efficient in the case of higher education because the transactions involved create large external costs. The vast majority of law school students borrow to attend. Schools receive payment of their students’ borrowed tuition dollars up front and without assuming any of the risk that any individual student will be unable to repay her debt. The federal government makes and students obtain Title IV loans to cover the full cost of tuition at an accredited school without regard to the risk of non-repayment. The availability of loans without underwriting feeds an optimism bias on the part of student borrowers, and artificially fuels enrollments that would not occur in a private student loan market. The dysfunction of the legal education marketplace seemingly is confirmed by the fact that students continue to enroll in and pay very high tuition amounts at schools with persistently very weak legal employment rates notwithstanding substantial transparency in law graduate employment outcomes. If anything, a school’s persistently weak legal employment rates indicate that the employment market lacks confidence in the quality of the law school’s program, whether it be the quality of the faculty, students, academic program, career services, or some combination of these or other factors. Also, the paternalism argument fails to acknowledge the interest of taxpayers and other student loan borrowers in graduate employment outcomes because they foot the costs of the unpaid student loans.

2. Revised ABA Admissions and Bar Passage Standards Will Effectively Address the Law Graduate Employment Problem

It may also be argued that the law graduate employment problem facing legal education, if there is one, is that the number of law school matriculants has not declined commensurate with the number of applicants. As a result, the conventional qualifications of the matriculant pool have declined substantially. The solution to this problem is stricter admissions and bar passage standards, not regulating law schools based on employment outcomes. In fact, the ABA has done exactly this by moving to tighten the admissions and bar passage standards. Perhaps the revised standards would significantly reduce enrollments and the number of law school graduates will more closely align with available law jobs, making an employment outcomes standard superfluous.

Final approval of the proposed revised bar passage standard is up in the air. Even if it is implemented and leads some schools to reduce enrollments, it likely will not remedy the gap in the current standards that allows schools to admit students without regard to employment outcomes. As under the current standards, as long as a school is in compliance with the bar passage standard, it has wide latitude to admit applicants without regard to their employment prospects. Indeed, an effective employment outcomes standard may obviate the need for a bar passage standard, and the ABA should consider eliminating the bar passage standard with the adoption of an employment outcomes standard. Bar passage is a necessary (but not sufficient) prerequisite to most legal employment. While a school can meet a bar passage standard without regard to placing graduates in law jobs, graduates cannot obtain most law jobs without passing a bar exam.

The change to the admissions standard, which became effective in February 2017, is the addition of a new Interpretation of the Standard. It provides that “[a] law school having a non-transfer attrition rate above 20% percent bears the burden of proving that it is in compliance with the Standard.” The import of the new interpretation is that it sets 20% in non-transfer attrition as the threshold at which a school is presumptively out of compliance with the Standard’s requirement that a school “admit only applicants who appear capable of satisfactorily completing its program of legal education and being admitted to the bar.”

Again, this change appears unlikely to effectively constrain schools from pursuing admissions policies that minimize reduction in class size without regard to employment outcomes. There are about 20 schools that reported non-transfer attrition rates greater than 20% for the 2015 entering class. A sizable portion – 8, or half – of the 16 schools that have reported persistently very weak employment outcomes are schools that reported non-transfer attrition rates greater than 20% in 2016 (for the entering class of 2015). Thus, while the new Interpretation may catch many of the schools with persistently very weak employment outcomes, it will miss just as many.

3. An Employment Outcomes Standard Will Reduce Access to the Profession

Last, some may argue that a graduate employment outcomes standard will reduce access to the profession, and at the margin disproportionately negatively impact lower income and minority students. This is a leading argument against the proposed revised bar passage standard.

The profession gains no diversity where minority law graduates do not obtain law jobs. Moreover, the available data indicate that an employment outcomes standard is especially needed to help ensure that minority students realize the promise of the J.D. degree. Minority law students on the whole pay more for law school than non-minority students. At the same time, bar passage rates, employment rates, income levels, and debt levels tend to be worse for minority law school graduates. An employment standard would be another encouragement for alumni to hire minority graduates. Employment (in contrast to bar passage) is something that alumni can directly influence. Further, there is substantial capacity in the system to increase enrollment even if some schools were to close; there is no reason to fear that closing schools in a down cycle might result in too few seats going forward. At least for the foreseeable future, more students could be accommodated in fewer schools.

Comments

[Anon]

More mythology: lawyer employment and incomes have grown steadily over two decades. The recent disconnect is not between legal education and employment but between demand for legal education and law school supply.

[ML]

"The dysfunction of the legal education marketplace seemingly is confirmed by the fact that students continue to enroll in and pay very high tuition amounts at schools with persistently very weak legal employment rates notwithstanding substantial transparency in law graduate employment outcomes. If anything, a school’s persistently weak legal employment rates indicate that the employment market lacks confidence in the quality of the law school’s program, whether it be the quality of the faculty, students, academic program, career services, or some combination of these or other factors."

On the other hand, the schools with weak legal employment rates have experienced significant shrinkge, to a much greater extent than other schools- indication of a functional marketplace. I guess it depends on whether you see the glass as half-empty or half-full.
s.

[anon]

Anon

So, how should this "disconnect" be resolved?

YOu seem to say that there are too many law schools seats for too few students seeking those seats.

Fair enough. So, in your infallible opinion, should bottom feeders find a way to enroll more students, despite dismal prospects of finding employment, or, should more law schools that are poorly performing, and for which there is insufficient demand, close? Or, perhaps, you believe that federal support for failing law schools (by way of student indebtedness, the only means for these law schools to survive) should continue without any standards?

Or, perhaps you have the solution to the problem of substandard, bottom feeding institutions functioning in a way to support the greed of the faculty and operators? Or, perhaps, this isn't a problem that you care to think about or acknowledge.

Or, perhaps you are just into being condescending? To what "mythology" are you referring?