The Tennesseean Questions the Value of College; Future Law Student Doesn't Want to Listen

This is a great article from the Tennessean about the dubiousness - and awakening consciousness of said dubiousness - of the four-year college degree in the current economic climate.

Just check out this gem of an excerpt:

Nicholas Holland, founder of Centresource, a Nashville Web design and development company, said he’ll pay a developer who has completed at least two Web projects $50,000 or more starting out, with or without a college degree. But a recent college graduate with less hands-on experience would get $35,000 a year at most.

College graduates “are typically worthless when it comes to programming and worthless when it comes to graphic design,” said Holland.
...
“They’ve spent 90 percent of their time learning stuff not relevant to their trade. And, in addition to all that, they are often taught by people who spent 90 percent of their time doing stuff not relevant to their trade. Show me a Ph.D. who knows how to program in any of the latest Web technologies.”

Sound familiar? There it is, in black and white, with elegant, yet brutal, simplicity: the guy will pay you $15k more if you know what you are doing, and he doesn't give a rat's ass if you go to college or not.

Just so we're all clear, I'm going to repeat the two pillars of my educational advice to 18-year-olds: 1) intellectual stimulation is a worthwhile endeavor, and highly recommended, but it is not synonymous with credentialing; and 2) you should only seek higher education if the expenditure of time and money will be worth it in terms of the benefit to your marketability as an individual.

Employers in the computer sciences have figured out that well-trained grads from the community colleges and technical schools may actually know more than their 4-year counterparts, and they often hire accordingly. (Obviously, the computer sciences need some sort of mandatory licensing mechanism to ensure that their four-year professors are taken care of).

In any event, I found myself nodding multiple times to this article, as it conforms everything I've read about how higher education actually interacts with the economy (rather than how it does in college brochures) and, in some cases, learned the hard way.

And then we get to a student who fights for the value of the degree. You'll never guess what she's studying and where she's planning to go.

Students at Vanderbilt University, which costs an estimated $59,248 a year to attend without financial aid —including $40,320 in tuition alone — said the expense and effort would be worthwhile.

Liesel Burks, a junior from Madison, Ala., said the bachelor’s degree in political science she plans to have on her résumé in 2013 will pay off in law school and beyond.

“It’s definitely worth it,” Burks said on her way to class Wednesday. “Just the education and experience you gain is so applicable to the future. In this economy, getting whatever edge you can is a really good thing.”

Thinking about having an "edge" is a great start (wish more would do that - I really didn't), but why in God's name does anyone think there's an edge in any kind of political science degree? Even from a school like Vanderbilt, the market is horribly oversaturated for employers who actually want to hire whatever skill set that education provides (which doesn't seem like much). And law school is no different.

In any event, the appearance of this article in a newspaper is yet another sign that the facade of educational prestige is crumbling, and that the free market is dictating that grads actually have applicable skills rather than some crap spewed at them by stuffy people who haven't done a truly economically-productive activity in decades. Again, law school is no different.

Another Sign that Change Will Come Whether the ABA Wants it or Not

This article is about Educating Tomorrow's Lawyers, an initiative that at least makes the attempt to change legal education from the nearly-useless Socratic model to a more pragmatic version where students actually get some skills that they may need after graduation.

Two comments:

1. This is hardly the only "reform" movement or initiative we'll see. As the bottleneck of new entrants becomes tighter and tighter, schools will continue to attempt ways to differentiate themselves from each other. Previously, they didn't have this same level of pressure, where most law schools could virtually guarantee some type of legal work for the median graduate, and everyone reported the same meaningless numbers as everyone else. Now that the truth about law school enrollment and lawyer need has become more mainstream, schools will push the envelope on how finding new ways to appeal to local hiring firms. It may (probably will) cause pressure from the bottom up as administrators at TTTs seek to ease the ABA's various restrictions, such as in-class required hours, tenured law faculty, etc.

It's clear at this point that the Socratic method and relying on firms to (1) hire and (2) train new attorneys in what they'll actually have to do is as dead as Ben Cardozo and Oliver Wendell Holmes. For law schools to preserve their own existence, they'll need to push initiatives like this (even if their actual success is debatable) and that necessarily means pushing the ABA and the state bar associations/state supreme courts/whomever to ease the restrictions.

2. As a corollary to the above, I find the list of schools adopting/paying into Educating Tomorrow's Lawyers telling: Cornell, Stanford, Vanderbilt, and USC are among the 15 schools. Two T-14s, one of the top law schools in the south, and a school that places quite well on the west coast. If schools at that level are willing to alter their methods, it's a sign of how deep these issues hit law schools. It's not just the schools at the bottom that have to change how they operate, it's schools like USC and Cornell as well. The bottleneck is so severe that mid-level graduates at those schools are being squeezed out.

In fact, the risk is very real that many hirers may pass over the median USC grad in favor of a polished, well-trained Pepperdine, San Diego, San Francisco, etc. grad. Of course this doesn't happen at the Latham and Watkinses of the world, but if you're running a small PI shop, would you prefer hiring a top 20% TTT grad who had a clinical legal education or a 60% grad from USC/UCLA/Cal/Stanford who studied Law and Socioeconomics for three years?

There's anecdotal evidence that many firms prefer the former. If schools like Stanford are buying into these sorts of reforms now, it's a sign that legal hiring may not be as rigid from the prestige standpoint as many think, and that the Tier 1s will change even if their above-median grads can rake in the big money by taking garbage Socratic courses.

Selections from Cooley's President

So you're a law school president whose school has been sued for manipulative data. Wouldn't think it's a good idea to avoid making any comments in the media that might admit the case has some kind of merit? Apparently Don Deluc thinks otherwise.

About the school's new Florida campus:

The economy in Michigan is worse than elsewhere, so we were looking at a way to take our program to a location where students are, rather than try to entice students to come to Michigan where the economy is below par.

If the economy in Michigan is that bad - so bad that you're following Ave Maria's lead in high-tailing it to Florida - why was Thomas Cooley advertising promising salaries for its incoming graduates? If the local economy is "below par," can a law school really justify sucking in prospectives by the hundreds?

I realize the connection is not direct (and that it's indisputable that Michigan's economy sucks), but if I were representing Cooley, I would not be happy that the president is on record as saying the local economy is below par, especially when one of its recent studies shows relatively low unemployment for lawyers nationwide. If I'm trying to defend the accuracy of Cooley's representations to prospective students, I do not want the dean on record as saying the local economy was "below par" during a recession, especially when Cooley's representations looked surprisingly like its peers in non-"below par" states.

LJ: There are 11 ABA-accredited law schools in Florida. Is this really an underserved market?

D.L.: Florida is probably average for law school enrollment based on its population. It's 80% bigger than Michigan, but it doesn't have 80% more law school seats....

What we have here is, in my opinion, an admission that the "underserved market" - from Cooley's point of view - is not the amount of lawyers in practice or the amount of law school graduates looking for jobs, but rather the amount of people looking to go to law school. And he compares it not by looking at surveys of underserved populations, but rather by arguing that there are less proportional seats in Florida than in Michigan (of course there are, Cooley makes Michigan one of the most saturated law school states in the country).

One of the chief allegations of the suit, it seems to me, is that Cooley advertises an output (employment prospects of students) that is significantly rosier than it is. And here, the President of the school responds to a rather ambiguous question with the proportional input (government-backed demand for legal education) instead of even thinking that the "market" might be that of graduates' employability.

On the Kurzon Strauss lawsuit:

In effect, without commenting on the merits overall of what they said, they could have said what they said about the practices undertaken by any law school in the United States.
...
Without going into the details, because we haven't filed an answer to this yet, what we will be saying is that we are doing exactly what everybody else does.

Isn't lesson 8 or 9 in a course on negligence that this argument does not work because an entire industry could be out-of-compliance? Why would it be different for fraud? And why the hell would your defense be that "we're doing what everyone else does" when your defense should be "we're doing what's right," shouldn't it?

For that matter, could Kurzon Strauss really have filed a suit against Yale? Seriously? Cooley is no different than a T-14 or a solid state school like Texas or UCLA or Florida or Iowa?

Sometimes I think the arguments seem surprisingly childish. "Caveat emptor," "everyone else does it, so why can't we?", and my new personal favorite courtesy of the lawprof debacle "anonymous speech is cowardly and has no merit." None of these ideas has much serious legal heft anymore, and yet they get trotted out by parties that should have a sophisticated legal awareness and, often, bought wholesale by the same class of people.

How can Cooley defend a liability lawsuit on the grounds of 'all the kids are doing it" while (hopefully) telling their students that that argument hasn't flown since the century before last?

I'm not saying any of these statements will have legal relevance, but if I'm Cooley's attorney, I wouldn't be exactly delighted that my client's CEO is making comments that may bolster the opposition's points on some level.

One School, One Class, One Hundred Million in Debt Alone...for a 2-year degree

From Fortune/CNN Money:

In all likelihood, [the Wharton School of Business incoming class] will be the first MBA class in history to pay more than $100 million in loans and interest payments for the privilege of gaining the degree. In fact, if the class of 2013 continues to borrow at rates similar to their predecessors, it will take on a staggering $112.4 million in debt, loan origination fees, and interest payments. That heart-stopping sum includes interest payments of about $33.5 million. All this, for just a single class of MBAs, one in four of which is likely to incur no debt at all

.
Emphasis mine. Do you think the 1-in-4 who incur no debt will have any problem finding a remunerative job?

In other places, the article states that there are 845 students in the class. So 634 are going to carry $100+ million between them. $157k per person.

You might argue the job prospects for Wharton grads are outstanding, but the article points out that median salaries were only at around $110,000 last year. And I can tell you that there are a lot of MBAs from even elite programs floating around working at jobs that simply don't require such credentials.

Sound familiar? Wait, there's more!

As one incoming student puts it, "The tuition is a big number when you look at it. But I think an MBA or an education in general is a long-term investment. When you graduate from a program, you might get a salary, which is not all that great. But that's a short-term phenomenon. At the end of the day, you take a calculated risk. There's a lot more that I'll gain from the program, and if I have to repay the loan over a longer time, that's okay."

Jesus Hardtack Christ, you really think this is a long-term investment that will pay off when there are a gazillion other MBAs out there, and thousands more coming through the pipeline?

Oh yes, they have saturation, too:

For the Harvard Class of 1949, of course, the rich life was easy. They ascended the ranks of business in the Go-Go years as the U.S. bestrode the world as an economic colossus. When they graduated, there were only 2,300 other students getting MBAs that year -- and only 50,000 living MBAs in the entire U.S. Today, roughly 250,000 people in the U.S. alone are enrolled in MBA programs, which pump out more than 100,000 MBAs a year. There are some 40,000 living Wharton MBAs alone.

Years from now, I wonder how historians will write about our hysteria for severely overpriced education, and how sharply history will frown on the cheerleaders who talk about education being great at any cost.

Roughly 30% of the University of Pennsylvania's graduates are having trouble paying back their student loans, according to government statistics.

This is one of the top 20 universities in the country.

Higher education has become little more than a lottery, where the winners apparently get to break even on their investment.

The Free Market Approach, Summed Up

From openmarket.org, I bring you a recommended piece on how taking the free market approach to law school reform can improve the present situation. Included are comments on some questionable comments on deregulation in general, some excellent comments on law school price competition and practicality, and some arguments about standardizing court procedures:

To stimulate the economy, and make it cheaper to obtain justice, Congress should require the abolition of local federal court rules that differ from one trial court to another, and one appeals court to another, making a uniform set of rules for each for civil trial and appeal by supplementing the existing Federal Rules of Civil Procedure and Appellate Procedure. It should also consider conditioning federal funding to states (some of which ends up funding state judiciaries or participants in the state court system like prosecutors, police departments, and state child-support agencies) on their adopting simpler court rules for their own state courts. For example, it could require each state to adopt procedural rules in civil cases that are uniform across each state, and are organized to correspond where possible with the Federal Rules of Civil Procedure.

Good luck with that one. No one way in hell are the reigning baby boomer niche lawyers going to make it easier for people to compete across county and state lines.

As I've pointed out previously, there are solutions where law becomes more regulated, and I think the results could be similar. But it's clear that there are a lot of things that could be done to fix a variety of problems that aren't being seriously considered.

And that brings me to another point. It seems that in the wake of LawProf beginning his blog, a lot of law professors have started talking more seriously about legal reform. This actually concerns me for two reasons: first, I worry that innovative voices (such as the author of the piece I linked to) may be effectively shut out of the debate by the entrenched parties, beliefs, and interests, which, let's face it, law professors represent; second, and I mean no offense towards law professors, these issues are too important to be left to academics.

1194% Incrase in Student Loan Debt over 15 Years; Why has this not been front-page news?

From the Rochester Democrat and Chronicle:

Shannon Chaudhry knows what it's like to be saddled with student debt.

The Victor native, who graduated from Rochester Institute of Technology with a degree in business administration, limited her undergraduate debt to about $16,000, but borrowed another $166,000 to earn a degree from Albany Law School.

"I'm hardly putting a dent in what I owe," said Chaudhry, 30, who now practices law in Washington, D.C., and uses a sizable chunk of her income — $921 a month — for payments, most on a 20-year plan.

A 30-year-old lawyer has a whopping 11k in annual take-home pay in one of the most expensive metro areas in the country. It should be earth-shattering given TV- and film-fueled perceptions, where even the grubby lawyers wear $500 suits. How are folks still blind to what is going on out there?

Nationwide, student borrowing is estimated to have mushroomed to $931 billion — for the first time eclipsing the estimated $798 billion in credit card debt.

"We are going to hit the $1 trillion mark this year," said Mark Kantrowitz, who publishes two websites focusing on financial assistance for college students.

Total student debt 15 years ago was about $72 billion, according to Kantrowitz's estimates.

Student loan borrowing has increased 1194% in 15 years. Our media has ignored this to the point of irresponsibility.

When borrowing suddenly increases that much, it's a signal that something is terribly, terribly wrong.

After the housing crisis, people look in hindsight with scorn at those lower-middle class people who borrowed six figures to houseflip in mid-level suburbs and upstart exurbs, and give even greater scorn to the people who approved the loans with no inquiry into payback.

And yet, we have an even greater problem going on right now in the student loan industry, and very few people want to acknowledge that it's a potentially bigger problem than the housing bubble. I realize the two, and that housing is about ten times greater in raw number, but because of our "go get it" attitude towards higher education, an entire generation of lower- and middle-class students are being saddled with non-dischargable debt at levels that will delay or prevent them from contributing to the economy.

Mortgage debt doesn't really do that, at least not at the same level. Generally, mortgage debt only comes into existence for those above certain income thresholds. It also can be discharged if there's a housing price fall and the property value plummets. Parties have ways of protecting their income and wiping their hands clean.

Student loan debt does not work that way. It's given out like candy to students on the pure hope - unsupported by any type of empirical proof - that they'll have the income to cover the debt later.

There could be a few "checks" on the situation that would ensure more reasonable lending standards. Private lenders could have to bear the risks as they would with other unsecured debt, like credit cards; yet, our spendthrift stupidity has the federal government back-stopping these economically foolish trainwrecks. The students' payback prospects could be more carefully scrutinized, but yet schools are allowed to spread marketing myths that would get a private company hauled into court immediately. Those schools with their hands on the faucets could be more tightly regulated to ensure that they're not abusing their power, but yet they admit sub-par students and ensure that socially-worthless professors make six figures.

A 1194% increase in student loan debt in fifteen suggests that none of these things are properly happening. And because student loan debt is non-dischargable, an entire class is going to be disabled in purchasing homes, having children, spending discretionary income, etc.

Although people complain more about credit card debt, student loan debt is a far bigger problem, and potentially as big as mortgage debt. It's happening right now.

Another Worthless Ranking

A few days ago Rose linked to an article that ran on Philly.com that talks about some survey that apparently showed Philadelphia's law schools outproduce their peers in terms of BigLaw placement:
The study counted the graduates from the last 25 years who are now partners in one of the nation's top 100 law firms.

The results, which the study claims are the first ever to measure such a statistic, rank Temple Law 26th in the nation, with 160 partners placed in law firms over the last quarter-century.
...
In contrast, Temple Law ranks 61st in the controversial U.S. News and World Report's graduate-school rankings, which weigh everything from a school's student-teacher ratio to its LSAT scores.
...
In top-law-firm placement, Villanova Law ranked 35th in the nation. It placed 84th overall in the U.S. News list.

Widener Law, which has campuses in Wilmington and Harrisburg, is unranked in the U.S. News standings, but 70th in law-firm placement.

The article later notes that UPenn somehow did worse than its U.S. News placement.

I bring this ridiculous study up only to show the intellectual vapidity at work in research/propaganda about the legal field.

And here it is:

The study ignores that some schools have larger student bodies than others, Seto wrote.

"If employers cared solely about per-capita outcomes, they would all interview at Yale. They don't. For employers attempting to allocate scarce recruiting resources, aggregate numbers matter."

This should raise a question: who, exactly, is the professor doing this for? Employers trying to allocate those resources, or - you know - objective truth? As a so-called legal scholar, he doesn't exist to serve as a free consultant to his old buddies in BigLaw, does he?

But I digress again. The real problem I see here is that this ranking is even more useless than the U.S. News rankings, and yes, I think those are fairly useless.

Who the hell cares what school produced the most BigLaw partners from the last 25 years? For one, partnership is generally something attained like 7 years down the road, so you're looking at who made partner from the group of people who graduated law school between 1986 and 2004 or so.

Since we're not factoring in enrollment sizes, we're basically rewarding schools for cranking out the most students between said years. And obviously, schools located in large metro areas are going to be at an advantage, as they would have a better chance at their mid-level graduates later lateralling into BigLaw partnerships. (You can see the list here and see the schools that out-perform their "other" ranks are almost all in large urban areas).

How the hell such a limited and non-proportional study is supposed to show anything of relevance for prospective students now is beyond me. Temple Law enrolls 1000. Many "better" law schools enroll far less.

This is the same type of screwy, illogical accounting error that allows Cooley to rank itself second in the country. And there it is being published by a law professor and appearing on a major newspaper's website.

Never mind the fact that population shifts and the fortunes of large law firms affect these sorts of things. And never mind that becoming a partner almost always features variables that have little to do with one's legal education aside from the prestige of the name on the degree.

This list would lead one to believe John Marshall and NYLS are better options that Alabama or Colorado, or that Georgetown is a superior school to U. of Chicago or Yale by virtue of its size.

In other words, AWAC (as worthless as Cooley's). Of course, Elie Mystal calls them "rankings worth paying attention to."

Of Course Salaries Matter at These Tuition Levels

New York defense attorney Nathaniel Burney has a scathing post ripping the recent fraud complaints filed against Cooley and NYLS. Like I've stated before, I'm skeptical that these suits will go to trial, but I still think the suits have strong value in illuminating fundamental problems with the current legal education model.

Burney, apparently, doesn't see things that way.

Nobody forced you to go to that particular school; it was your own choice. Nobody forced you to take on more debt than you could reasonably afford; it was your own choice....

The school did not “saddle” you with debt. You did it to yourself. And now you regret it. Frantically trying to blame anybody besides yourself for your own foolish decisions only makes you look… well… foolish, at best. At worst, it’s almost like the girl who regrets her drunken orgy and accuses her fellow partiers of gang rape. Either way, you certainly don’t come off as someone with the requisite judgment and brainpower to make it as a lawyer...

It's a classic caveat emptor-style approach. Thoroughly unsustainable as an economic behavioral model, but hey, it sounds nice.

The biggest problem [with these suits] is that, if you really were defrauded, then you had to be basing your decision on whether to go to this particular law school based in large part on how much money its graduates make....If that is true, then you have no business being a lawyer in the first place. You’re in it for the money, and don’t belong here. You selected this law school not because you thought it would help prepare you for a life of service, but because you thought you’d be able to get “a job” and make “good money.” Those are the wrong reasons, entirely.

Did you catch that? If you base your decision on whether to buy a product on what you materially get of the product, you shouldn't buy the product. Regardless of what you might pay for law school, it's "wrong" to go in order to make "good money."

Really?

Sure, law is a service profession. I'll concede that. But it's also a business in most iterations (even the public defender and government employee is "in business for himself"), and a business that runs on cost/benefit principles like any other. You never file a lawsuit that will cost $10,000 to recover $5,000 from empty pockets. You don't take a job where getting there and coming home at night burns 50% of your paycheck, and you don't pay for training that costs twice what your lifetime increased earnings would be.

There is a lot of noble service qualities to social work, art history, and the ministry, but no one in their right mind would pay a non-dischargable $150,000 at 8% interest to enter any those fields. I'm confident that they wouldn't do so even if the entry barriers were what they are for law. Why? Because those professions generally don't make money, i.e., they don't offer a solid return on investment or a benefit that would justify the cost. Law is different precisely because the sellers propagate the myth that the cost is justified by high entry-level salaries.

Virtually every decision that humans make has some sort of cost (including risk)/benefit analysis involved, and I would want no one to make a long-term commitment (including kids, marriage, etc.) without heavily weighing the benefit against the cost. And yet Burney claims that anyone who went to law school "basing [his] decision on whether to go to this particular law school based in large part on how much money its graduates make" has no business making that decision.

This makes no sense. If anything, the world needs more people who fully appreciate the costs and benefits of something, rather than the people who jump headfirst into something they want to do without considering the high costs. The latter has been Congress' strategy for the last few decades; look where it's gotten us?

But Burney apparently thinks that people really don't consider the possible benefits of a course of action, at least in selecting a law school:

It is hard to imagine that anyone would have thought [salary presentations] really were all that material. Would law schools really think their students are so mercenary that the main reason why they chose one school over another was the average alumnus salary? That’s absurd on its face.

Really? Then why does virtually every law school in the country openly advertise its recent grad salaries?! Why does US News publish data on it as a key element of a law school's worth?! Why would they do it otherwise? OF COURSE THEY'RE MATERIAL, especially when the people buying the product have to pay triple figures.

If law school A advertises 120k median salaries and law school B advertises 75k median salaries, and they're in the same rough geographic area, which one do you think will draw students, either directly or through the reporting/ranking of US News?

Maybe he and I just have different views of the world, but people do - and should - base almost every decision they make on the cost of the action versus the benefit to them, generally expressed in and reduced to base financial terms. Hell, Burney seems to admit that students should be doing such a thing:

Nobody forced you to take on more debt than you could reasonably afford; it was your own choice.

So one has to wonder how he can chide students for considering the reported salaries as material when that - and cost - are the two sole determinants that would make a debt "reasonable" or not from the prospective student's perspective.

Thus, in Burney's world, recent non-wealthy graduates are damned if they did, and damned if they didn't. If they considered the payoff at the end of the rainbow, they had no business being lawyers. If they didn't consider the payoff, it was their choice to take on more debt than was affordable.

That seems to be a common motif I see among the older generations (Burney is G'Town, '96), attorney or not. There seems to be an assumption that any type of complaint or gripe about higher education being a "fraud" emerges from greed, sloth, and/or stupidity. The inquiries never go beyond the shallow end of the pool, because they end once that conclusion can be sustained through the quickest means possible. As a general rule, the older generations seem to staunchly refuse to believe that hard-working, intelligent, bases-covering people are being fucked by the triple-team of escalating tuition, non-discharable debt, and a job market that is considerably weaker than the schools advertise (or as it was 15 years ago).

After reading Burney's post, he seems like a lawyer who cares about the profession, but I have to wonder if is he aware that prospective lawyers who want to devote their lives to monkish service in legal aids and public defender's offices now have to, in many cases, take on 100k in nondischargable debt to do it, even living frugally and working non-stop. Those are people who don't enter or stay "for the money," and yet the economics affect them just the same.

Trying to pay that debt back on $25k a year is rough; trying to do it on $15k working at the Gap - because getting those jobs at legal aids or the public defenders office is quite difficult right now - is even rougher. Many people who might have balked before embarking on this quest (and maybe turned to teaching or social work or the military) instead chose law on the assertions that the debts would be easier to pay off than they actually are.

At these tuition levels, often paid by non-dischargable debt, salaries have to be considered, and they have to be material in determining whether to go to law school and which school to attend, for everyone.

Because in the end, it's rarely about the kids who want to get the $160,000 salaries. Rarely. It's about the people who went and took out $100k in debt thinking that a $50k job would be easy to get, and likely the ground floor. It's the people who took out $50k in debt thinking it would be easily repayable with the salaries advertised. It's the people who took out $80k in debt because the school presented that as an "average" salary, and they "reasonably" borrowed on a 1-to-1 ratio as the federal government advises.

Those are the real, ground-level calculations that go on (and should go on!), and for anyone except the spoiled rich kids (who don't take out loans) and the most naive of law students, people actually consider the cost and benefit before enrolling.

If the schools were chronically boosting their numbers to show that the expected pay-off was much better than it was in reality, and thereby distorting those types of cost-benefit calculations, the school was committing a fraudulent act, in theory no different than a car company that ups its mpg by using selective data.

Why do people understand how fraud works in every other context, but when higher education is involved, their knees recoil and they suddenly proclaim caveat emptor and start spouting off on the greed and ignorance of the consumers?

Legal Minds at Work, I Guess

Something called "PrawfsBlawg" recently did a post on the alleged professor posting at Inside the Law School Scam. The article itself is a decent, honest response to the anonymous posts, albeit unreadably professorial in some places*.

The comments section features a bit of a spat between a few professors/professor supporters and people who support the usual "scamblogger" criticisms.

I was struck by an argument made by someone posting under the name Orin Kerr, directed at someone named "Tom:"

[I]f you oppose high law professor salaries, do you also oppose high law firm salaries? Law firms can pay 25-year-olds $160,000 plus a bonus because they bill out their work at hundreds of dollars per hour. Is that also a scam, in your view? Or do you think lawyers are worth every penny?
...
[next comment]

[I]t sounds to me like you're not concerned if lawyers scam clients, but you think it's outrageous if law students are misled into thinking that they can take part in the scam.

This argument is so facile and devoid of economic sense that I had a hard time believing anyone would make such a comparison.**

And yet there's an Orin Kerr who apparently is one of the most-cited legal scholars focusing on criminal law in the country. A Princeton grad in engineering. Master's from Stanford. J.D. from Harvard. Supreme Court clerk. Lots of titles and credentials that mean little to anyone outside the legal stratosphere.

If it is the real Orin Kerr, one has to wonder why he's spouting an argument so utterly braindead. Also, one has to wonder why a major legal scholar apparently doesn't understand what a "scam" is.

I don't expect professors and experts to be perfect; no one is, not even the best at their profession. But I'd expect something more than what a freshman economics student could debunk fairly easily after reading a few articles.

It seems to me that, inadvertently, Professor Kerr may have provided support for some of the anonymous professor's main points regarding law professors and legal scholarship.

*Actual sentence from the piece: "...the kind of honesty that anonymity allows can sometimes lack a deeper level of integrity: that is, it can pride itself on its brutal frankness without exhibiting the kind of humility, care, self-doubt, and acknowledgment that one might be wrong that comprises full honesty, the kind of honesty we are often constrained to engage in when we attach our reputations to what we say."

**For the completely unenlightened: Law professor salaries are determined by administrations whose operating budgets are determined by the demand as expressed by students (consumers) willing to pay increasing tuition amounts with federally-backed, non-dischargable guaranteed loan money versus a supply that's abnormally restricted by the presence of tenure. The consumer in this set-up has no say - and often no clue - what professors are paid; they have no discretion over whose salaries they pay. Finally, law professors are paid as part of "public service" institutions, almost all of which are officially not-for-profit/non-profit.

The salaries of BigLaw associates are determined by law firm management committees whose operating budgets are determined by the demand for high-end legal services on which they can bill junior-level associates against the supply of firms that can provide high-end legal services to large corporate clients. The revenues of biglaw are not boosted artificially by a guarantee that all bills will be paid. The consumer who pays these bills has discretion and, most importantly, bargaining power. They are usually directly billed for the labor expended, and can protest exorbitant bills, and/or request that work not be done by overpriced associates doing glorified paralegal work (which some companies have started to do). And these are for-profit corporations that make no serious claim to serving the broader public.

I'm not arguing that high salaries for 1st-year associates are entirely sane, but it's a completely different issue than professor salaries. The former presents no moral problem because we have for-profit parties contracting in a free marketplace, where the salaries are determined by market forces and are fully transparent to the ultimate consumer. Any risk of payment above market demand harms the paying company as well as the ultimate consumer, and no one is "stuck" with the risk of non-dischargable debt should the process lack economic efficiency. Said problem is also immediately correctable once revealed: the ultimate consumer can find a new law firm with lower billing rates, and quickly.

This is not how higher education works at all, and woe upon ye who can't tell the difference, or see the possible moral issue that develops when relatively posh professor/administrator lifestyles are propped up by ABA regulations, tenure, guaranteed payment, and non-dischargable student loans, which relatively unsophisticated consumers are going to be responsible for when they have no conception of what repayment will be like. Nor, in this set-up, do the lenders have any incentive to consider the possibility of repayment or default.

I see the professors, surely all hearty advocates of the First Amendment when it's convenient for them to believe in the principles of free speech, have closed the comments section after less than one day, and after people started showing up and calling them out for not understanding the issues.

The issue whether they're "worth" the salary; in that case, neither the law professor nor the young lawyer are. The issue is where the money comes from, and who and under what conditions the high salaries arise.

Misinformation Runs Rampant in this Business

It's kind of astonishing that, with all the articles and data and simple graphs out there, people still pop up on these blogs and say things like "any licensed attorney can land a job or hang a shingle!"

Um...yeah, and if you make toast and scrambled eggs, surely you can set up a diner somewhere. And surely if you can drive a car, you can just get a job driving a truck. Golly, unemployment would just be solved like that if people would just "hang a shingle" at whatever they're competent.

But I digress. 2011 has been a year of almost nothing but articles and studies confirming what the so-called "scambloggers" have alleged for some time now. And yet the misconceptions not only exist, but in many cases plague the dialogue.

I give you, for example, this column by Chris Mondics at the Philadelphia Inquirer. It's not a bad column; it highlights the need for employment transparency. But then I read lines like this:

...the high paying jobs at big firms that justified high tuitions...

And this:

The concern raised by Grassley and others is this: Law students have been taking on loans of $100,000 or more on the assumption that they will obtain lucrative employment once they graduate. And that was a reasonable assumption until 2008, when big firms in New York were starting first year lawyers at $160,000; the going rate in Philadelphia was $145,000.

Just to make sure readers don't continue these misconceptions after reading this post:

1. The high salaries never justified the rising tuition at the 150+ schools where less than 5% of the student body had any prayer at getting those jobs, which exist on a do-or-die basis thanks to the bimodal salary curve.

2. The concern raised by Grassley is not limited to those who go to law school on the assumption they'll get "lucrative employment," an assumption that was never reasonable at 180+ law schools. Grassley's concern - and that raised by these bloggers - is that law schools misrepresent their data to make law school seem like a much better investment than it is.

Columns like this inadvertently do exactly what the law schools want them to do: make it seem like prospective law students are greedy gamblers who only went for six-figure jobs.

In reality, the six-figure, top law school job market is a small potato. The bigger issue is that 95% of the schools out there lure students in with implied promises of a better life and white collar prestige in a profession where they'll get to help people and practice law, a reality that only 1/2-2/3 of their graduates see under the best-case scenarios.

Very few people go - or ever went - to fourth-tier schools expecting a big payday. Multitudes, however, go - and went - expecting a stable middle-class escape from Baristaland. The schools didn't just advertise the $160,000 jobs to pull in greedy people seeking those, they also used them to imply that making $60k as an attorney is really easy, and therefore worth a larger debt load.

Kurzon Strauss Files Suits Against Cooley and NYLS

Rounds two and three of the class actions against law schools have commenced as Kurzon Strauss has filed class actions on behalf of students from Thomas Cooley and NYLS. (AEM's take here).

I've read through part of the NYLS claim and while I wish the language was a bit more formal ("forking over?"), I love the overall tone of the introductory statement.

I have no idea if these will be dismissed, settled, or taken to a Perry Mason-esque trial (dibs on front row seats), but it's clearly a trend that many of us have seen coming for some time. I wonder what long-term defenders of the status quo think, those who believe (still!) so-called "scambloggers" are just disgruntled crazies in the internet wilderness? Those whose faith in caveat emptor has an antiquated, almost Ayn Randian level of silliness?

In any event, we now have pending class actions against three of the more notorious 3rd- and 4th-tier wonderkids. Surely, some intrepid members of the plaintiff's bar will see this trend and want to stake their claims, right? If any of the three currently pending suits is certified as a class and escapes a motion to dismiss (which I think is extremely likely, at least on the negligent misrepresentation counts), I think 3-5 more suits would be filed in very quick order, if not earlier.

Without knowing which states have the harshest fraud statutes, my best guess is that we see them in larger states attacking more 3rd- and 4th-tier privates, probably stand-alone schools. That means California would be rife to see another lawsuit, Florida is probably on someone's watchlist.

What a coincidence I would mention said latter state, as Thomas Cooley has just announced it will open a campus in Tampa Bay, and no, it doesn't seem to be an April Fool's joke. After all, kids who can't get into Stetson, FIU, FAMU, Barry, Ave Maria, St. Thomas, and Florida Coastal deserve a legal education, right? 700 students, by itself larger than many notable law schools.

Your Congres Hard at Work

So the nation's economic recovery is placed in jeopardy (if it ever left jeopardy). In a rational country, its highest representative bodies might roll up its sleeves and try to if the nation's fundamental economic problems.

In our crony elitist system, we don't fix problems, we witch-hunt people for their contrary opinions. Thus, when S&P gives its opinion on the United States' credit-worthiness, it's not an objective party performing a vital public function safeguarded by First Amendment principles, it's a totally irresponsible economic terrorist.

The Senate judiciary committee is collecting data for an Official Investigation. The House Oversight and Government Reform Committee is reviewing a letter from an irate Massachusetts congressman:

US Representative John F. Tierney called for hearings today on Standard & Poor’s downgrade of the US government’s long-term credit rating, saying the agency displayed a “flagrant disregard for the facts” in its decision.

One has to wonder what a Suffolk law graduate who specializes in health, labor, and education knows about ratings of governments' credit-worthiness, and why he seems to think his apparent three-day inquiry into the matter is superior to a company that does almost nothing but financial analysis. But hey, I guess he's entitled to his opinion unless, apparently, it goes against what the U.S. Congress wants.

A couple of extra points:

1. If a random in-debted jackass says that Experian had a "flagrant disregard for the facts" after it gave him a 410 credit score, unless they completely made stuff up (which, to be fair, some Nobel laureates have suggested), the person would look crazy, and generally the presumption for lower-class people is that the creditor/credit rating agency is right. Why should it be any different for governments?

2. Ratings agencies are pretty much damned either way. If they go along with the bankers, conservatively ratings things so that people have confidence in the system, they set themselves up for post-hoc blame for not doing their job (see, e.g., the inflated ratings in mid-2008). If they try to grade institutions realistically or pessimistically, they're accused as being in someone else's pocket, or being a political agent, as if S&P would risk its organization's existence for temporary political benefits.

Truth is, our Congress has better things to do, especially Rep. Tierney, who is on the higher education committee of the house that's supposed to listen to the "common people."

You Cannot Build a "New Kind" of Law School

Indiana Tech has put forth a lot of crappy reasons for opening a new fourth-tier law school, the most recent of which are outlined here and debunked - again - by Matt at LSTB here.

The one that's annoying the hell out of me today is this idea, often repeated by lower-tiered law schools, is this mantra that the schools will "distinguish" themselves by offering all sorts of novel bells and whistles. Here's Indiana Tech's version:

“We don’t need another law school,” Snyder said. “We need another kind of law school.”

The school, he said, will pair students with attorney mentors, place them in internships at local law firms, and draw on other local resources to ensure students are prepared to practice as attorneys immediately after graduation.

Once Snyder appoints a dean, which he hopes to do by September, he said he will have a better idea of how the school will distinguish itself.

Every single non-t14 first, second-, third- and fourth-tier institution in the country tries to tell itself and its consumers something similar.

Indiana Tech's prospective rival, Valparaiso, tries to set itself apart by requiring three years of legal research and writing, deliberately maintaining a smaller study body, offering clinics in sports law and other specialized fields with a variety of externships, etc.

What the law schools never admit is that no one who matters gives a shit, and nothing Indiana Tech can possibly do will "set itself apart." Because frankly, if there was a golden ticket to making one's graduates employable, every other third- and fourth-tier hole would be doing it as well; does Arthur Snyder, who decided to build a law school last year according to the article honestly think he can innovate a field with 200+ other participants, most of whom have been there for decades?

New businessman's arrogance. Thanks to some rather stringent ABA regulations, there's little any school can do to truly "set itself apart," and so regardless of what little gimmicks the school's push, the student's education and prospects virtually never change.

Reality of today: Employers hire on prestige, experience, and rank. The only real bypass is if you know someone on the inside. Indiana Tech can give its students all the mentors and legal writing classes and international law experience in the world. It won't mean a damn thing unless it can boost one of those categories (which relevant clinics can do, but again, almost every law school has clinics in areas like criminal law, domestic relations, etc.).

Thinking you can be a revolutionary while following 200 others marching with the empowered (i.e., ABA accreditation) is foolish. There simply is no such thing as "a different kind of law school" where current ABA accreditation is involved, no matter how hard the marketeers try to distinguish their beige Corolla from the off-white, light tan, latte, and sand-colored Corollas surrounding them.

On America's Credit Downgrade

All the talk this weekend has been about S&P, but first I'd like to give you Moody's, whose analytics divisoin put out this damning report about student loans.

My "favorite" is probably the charts and graphs at the bottom of page 58 and page 59. For all the fist-shaking our policy leaders do at the for-profit schools, this is clearly a systemic problem that includes non-profit public and private schools. My only complaint about this report is that it's written in the tone of an article that should have been written a decade (if not more) ago:

[M]any students may be getting their loans for the wrong reasons, or that borrowers—
and lenders—have unrealistic expectations of borrowers’ future earnings. Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place.

Of course, one problem is that you often pick an in-demand degree that is not in-demand 4-7 years later when you emerge onto the job market. Our politicians and ratings agencies can't project 4-7 months into the future, and yet 18-year olds are supposed to have some crystal ball that helps them know what job will be hot and hiring in 5 years lest they be saddled with non-dischargable debt. That's why bankruptcy reform is so essential, and why it almost certainly won't be lead by people tied to the mast of the current model.

And that brings me to the financial shipwreck known as the United States of America.

I'd like to note that many of the libertarian/right-wingers are being disingenuous in proclaiming America's spending the big problem. You can shoot this argument dead merely by looking at the list of other nations with sterling credit. Canada, France, Sweden, Norway, Denmark, the UK: it's like a who's who of so-called socialist republics.

It isn't the spending. It's the spending in conjunction with the refusal to raise the funding necessary to support the spending in addition to slowed economic growth. As S&P said, it's the politics.

And the politics didn't start yesterday. One on the central reasons the U.S. runs a budget deficit is that the American public has been suckered into thinking that income taxes are evil, and has passively sat by as the rich have gotten richer - and the middle class driven into non-existence and poverty - as income taxes for the wealthy have fallen like a rock.

In the 1960s, the top .01% of the population paid 60+% of their income to taxes. Today that same group pays well under 40%, and in the last decade, that same group has seen its wealth dramatically expand while the middle- and lower-classes suffer comparatively. Yet, if anyone in Congress so much as suggests a tax hike for the wealthiest of Americans - let's face it, the best tool our government has for immediately raising revenue - you get a whole bunch of yay-hoos screaming about taxing "our most productive citizens" and how you have to work until June to pay Uncle Sam. Of course, these idiots never realize that disproportional drops/loopholes for the superwealthy damage them far more than paying a higher income tax. And they can never explain how states like Germany and Sweden can maintain strong economies - complete with recognizable domestic manufacturing - paying a higher tax rate than the U.S.

All its served to do is handcuff Congress. That's fine if spending is kept to a minimum, but jackwagons on both sides of the aisle have no problem demanding that the government spend when it's convenient to their cause. Bank bailouts? Military spending? Go for it!

S&P hit the nail on the head that this is a political failure. A mere decade ago, America ran a budget surplus and loss of its credit rating would be laughable. In the in-between days, we've had two horrendously bad administrations who've watched spending balloon without any rational plan to increase revenue, who've guided an economy that has drained jobs to overseas countries and seen real unemployment skyrocket, has seen its economy become more dependent on bubbles, and watched as middle class life becomes more and more elusive for a majority of Americans.

Real leaders would have addressed these issues long ago - or at least tried - instead of hand-wringing over [random stupid faux controversy while the wealthy elite got rich at the expense of everyone else]. Instead, we vote in the same putzes year who find new ways to give their cronies and their funders a bigger share of the pie.

I should note that the treasury department is disputing S&P's opinion, claiming S&P made a $2 trillion dollar mistake and that there is "no rational reason" to downgrade America's credit rating. Right, which is why China's leading ratings agency downgraded the U.S. last November.

It's all the more scarier when you realize that the people who will be charged with getting us out of this mess (the fact that we ever left recession status should have economists reassessing the definition) will almost certainly be hand-picked and anointed by the people who steered us right into the iceberg, and I wouldn't expect the credit ratings agencies to look any favorably on American public debt unless Washington suddenly grows some balls and stands up to the wealthy elite.

St. Thomas (MN) Gives Money Away

It's been hard to not post more on the Rakofsky case with everything that has gone on: the release of transcript excerpts, the attorney withdrawal, the federal wiretapping allegation, etc., on and on.

Yesterday I found out that the University of St. Thomas (Minnesota version) has settled with Rakofsky for his "nominal" request of $5,000. Apparently, St. Thomas' insurance carrier chose to pay this amount rather than fight what everyone thinks is a frivolous lawsuit.

With all the hoopla universities and their professors make about academic freedom, you'd think one would actually fight for its faculty's right to speak out. But while the for-profit corporations and lawyers pulled out swords and shields, the University of St. Thomas and its insurance carrier ceded a small patch of territory rather than risk an additional dime defending what should be its institutional principles.

It's one thing to balance the costs of legitimate litigation and decide settling is superior to the risk. It's another to just give away thousands to someone who sues you in what many people think is a baseless SLAPP suit.

So, kids, if you need a hot new moneymaking scheme to pay off the loans, get a law school to talk about you negatively. Sue the shit out of them for libel. Profit. Don't mess around with the Washington Post, just go after the loan-backed educational institutions.

What if each of the ~40 real defendants paid Rakofsky his settlement figure of $5,000? He'd make a nice profit off the whole ordeal, right? Is this really the lesson St. Thomas wants to be teaching its students, even if it is its insurer's act?

God, if I was a current or former student, I'd be pissed. A fraction of my tuition and fees would have gone to an insurance policy that's so weak in basic principles that it paid this guy for a strike suit.