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June 18, 2019

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Andrew Perlman

Great post, Steve. I agree with much of what you say, especially your point that a reduction in student debt will not result in more legal aid lawyers. I make a similar point in this short article in Daedalus (which was part of a larger issue focused on access to justice): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3311752

My one quibble is that I think that a reduction in student debt might help to improve the public's access to legal services and information in ways that are unrelated to the supply of legal aid jobs. For example, as I argue in the Daedalus piece, lawyers in private practice might be able to reduce the cost of their services in a financially sustainable way if they have less debt. To be sure, there are other and more effective ways for law schools to improve access to legal services (I highlight some ideas in the piece), but student debt is part of the answer, albeit not in the way that most people assume.

Steve L.

Thanks, Andy. I liked your article. It is not obvious, though, that lawyers would reduce their fees if they carried less debt. For lawyers already in private practice, it seems more likely that they would just keep what amount to the extra money.

I don't think lawyers lower their fees when the stock market goes up (that is, when they have more disposable income, as would also happen with less indebtedness).

Services are usually (though not always) marketed at the highest rate buyers are willing to pay, which would not change if law grads carried less debt. Maybe there would be some slight amount of fee lowering, but I have to doubt whether it would be enough to significantly reduce the cost of legal services.

Andrew M Perlman

Thanks, Steve. I agree that lawyers are likely to pocket most of the cost savings from lower student debt, and I make a similar point in my piece. Having said that, I do think lower student debt would make a difference on the margins in terms of prices and affordability (e.g., a willingness to offer more pro bono or low bono work). To be sure, the effect is unlikely to be large. My only point is that I don't think we can say that student debt has no effect on the profession's ability to provide more affordable access to legal services and information.

Greg Crespi

Here is a follow-up SSRN article on the 99% denial rate that should be of interest to many readers of this post:

Crespi, Gregory S., Why Are 99% of the Applications for Debt Discharge under the Public Service Loan Forgiveness Program Being Denied, and Will This Change? (June 17, 2019). Available at SSRN: https://ssrn.com/abstract=3397656 or http://dx.doi.org/10.2139/ssrn.3397656

Joan Howarth

Yes to much of this. But I do not agree that the clients of public interest agencies have no interest in which lawyers have the financial ability to take, for example, legal services and public defender positions. You say there's no relationship between indebtedness and quality. I suspect we do not know how to measure quality sufficiently to address that question. But, as Aaron Taylor shows, law school debt is not racially neutral. One of the many reasons law schools should work to lower their graduates' debt is that low-income clients deserve a broader range of attorneys representing them, not just those who managed, sometimes because of greater resources, to graduate with less debt.

Steve L.

Joan Howarth: Your are right; thanks for pointing that out.

Jennifer Brobst

While I agree that public interest positions are in demand in more populous regions, if you head to more rural regions where quite a few law schools are situated, you will see a different picture in my experience, which is in the South and the Midwest. Here, there are public interest positions, including traditional legal aid positions, for which recruitment is a struggle for employers. State government legal positions in the criminal justice system appear to receive a somewhat steady flow of interest, but nothing like what is described in the blogpost. I do know many students with serious student debt who also have family obligations and cannot afford lower attorney salaries. There is living lean and there is impossible. Even if they could, many graduating law students, even those with close family ties to lower income, geographically isolated regions in the country, do not intend to remain and serve their communities. I am quite sure that if they could be more financially successful closer to "home" they would remain.
Despite these struggles with hiring, the quality of public interest legal services remains high in rural areas because those who do remain are so dedicated and stay until retirement. I speak only from experience, but the author also relied on experience, so it seemed appropriate to weigh in.

Greg Crespi

Think about this PSLF point: a typical law student with $150,000 in combined undergrad and law school debt who takes a typical public service job covered by the PSLF program will have, after 10 years of negative amortization under the PAYE repayment plan, about $200,000 of debt that is forgiven, tax-free. That's essentially an extra $20,000/year in after-tax income, which is like another $25,000/year before taxes! That wonderful deal now makes an interesting and satisfying $50,000/year public service job a possible option for many people who could otherwise not afford to take it. Which, unfortunately, is making the rather fixed and limited number of such public service legal positions highly competitive. Our SMU grads are now literally swamping the local DA's offices with applications, more than they can hire. The PSLF program badly needs part two now: serious increases in federal and state support for public interest legal services like legal aid clinics, public defender offices, asylum clinics, etc., etc. I guess that I am still living in the late-1960's.

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