Thoughts on the Thomas Jefferson Law School Class Action

As many of you likely know, Thomas Jefferson College of Law, brand new campus and all, has been sued in a class action lawsuit:

According to the complaint, plaintiff Anna Alaburda graduated with honors from the San Diego law school in 2008 and passed the California bar examination, but has been unable to secure full-time employment as an attorney. She sent more than 150 resumes to law firms and received only one job offer that was "less favorable than non-law related jobs that were available to her."

...

She accrued more than $150,000 in student loans during her law school years, the complaint says.
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Beth Kransberger, associate dean for student affairs at Thomas Jefferson, said that the school does not misrepresent its employment statistics.

"The school has always followed the guidelines established by the ABA. We've always been accurate in what we report, and we've always followed the system given to us by the ABA," Kransberger said. "This lawsuit is very much about a larger debate. This is part of the debate about whether it's practical to pursue a graduate degree in these difficult economic times."

Others have already covered this fairly well (see First Tier Toilet, PresTTTigious, and SubprimeJD) and I have skimmed the complaint and I don't wish to go on a point-by-point review of the merits, suffice to say that: (a) I'm happy that someone finally did this; and (b) it will be very interesting to see if the fraud claims can get past a motion for summary judgment. My opinion, devoid of any knowledge of California law and not exactly experienced in fraud, is that there are a few hurdles that might prove tricky to clear (e.g., reasonable reliance). It will also be very interesting to see if the USNWR or the ABA become involved somehow.

But I would like to point out a few things from the National Law Journal's write-up.

First, this student attended TJLS from 2005-2008, when the cost of attendance was around 43k (LSN currently lists the 2006-2007 number at $42,948). Her $150,000 in debt may seem obscene, but consider that in the 3-6 years since she's been in law school, tuition alone has risen to over 40k per year. The TJLS website does not list a total cost of attendance with this figure, but it has to be around 60k. As bad as the complaint looks with respect to Ms. Alaburda, students entering in the fall of 2011 are going to significantly worse off.

Second, Beth Kransberger is.... well, wrong. That's about the nicest way I can put it.

As far as I know, compliance with standards established by one's own industry almost never can completely relieve an industry participant of liability when they're dealing with an outside party; at an absolute minimum, it shouldn't. For example, if every participant in the automotive industry uses the same style of brake pads because the brake pads are endorsed by the safety committee of the industry's trade association, the automotive manufacturers may (and should) still be possibly liable in tort for brake pad failures. Why? Because it's possible that the entire industry has the standards wrong, for whatever reason.

Another example of this is in accounting and securities fraud. If I'm not mistaken, a company can comply 100% with standards set by FASB in its financial reports and still be liable for misrepresentation under various fraud provisions. Compliance with the existing standard is positive evidence for the company, but it's not dispositive because the standard itself may not completely align with the other area of law (here, fraud).

There's no perfect alignment between the ABA's reporting metrics and the California fraud statutes, and I doubt that the California legislature has ever endorsed compliance with ABA rules as a safe harbor against fraud claims. Fraud ultimately isn't about forcing companies to comply with their own industry's practices. It's about forcing companies to be honest with the public at large. So TJLS' compliance with the ABA's guidelines should have very little to do with whether their admissions presentations were deceptive to the average consumer.

Furthermore, this idea that this action is merely part of a "debate about whether it's practical to pursue a graduate degree in these difficult economic times" is laughable. This has nothing to do with "difficult economic times" and nothing do with general graduate degrees.

Am I skeptical of graduate school - and higher education - in general? Yes. But not all graduate degrees are cut from the same cloth. Medical school and dental school live by their own rules. Liberal arts PhD programs often have an intrinsic, non-economic value, and the market in those areas has been tight dating back decades (and has relatively little to do with the economic cycle). Advanced degrees in the sciences and engineering are more dependent on the economic cycle, but are generally still in demand (or so people say).

What is spelled out in this complaint is unique to law and exists independently of the economic cycle. Indeed, the complaint itself mentions that TJLS supposedly increased its graduates' employability in the 2007-2010 years. If Beth Kransberger insists that this is really about a JD possibly diminishing in value solely from external economic forces, why was there no drop after the recession began in earnest?

The numbers cited in the complaint say that TJLS law graduates weren't terribly effected by the recession. Dean Kransberger suggests otherwise, that it might be "impractical" to get a JD because of the rough economy. Well, which is it? Either Kransberger is lying and it has little to do with the economy or - gasp - the numbers were misleading.

But this is a side issue about an administrator who apparently didn't think through her words. The real point is that this isn't an economic issue at all, but rather something that has gone on for years. The complaint itself goes back to the early 2000s and if the student enrolled in 2005, the recession was non-existent when she chose TJLS, which is the time point truly relevant to the fraud claim.

And as others have pointed out - including our favorite Emory speaker - the changes in the legal field are not temporary adjustments of scale to account for a revenue shortfall, but rather systemic changes that affect the number of laborers needed in the field. Law firms are continuing an ongoing change that drastically reduces the need for new law graduates. Kransberger and others use the recession as a salve, a sort-of "get out of jail free" card that can relieve them of their failure to adjust to the brave new world where menial tasks are sent to India, partner tracks are non-existent, and paid work for young attorneys generally evaporates.

We're at a very interesting point in the law school bubble with the commencement of this suit. Rumors are circulating about possible class actions in New York, California, and Michigan (please see the message on Nando's page if you attended law school in one of those states). I imagine someone, somewhere, is researching the Florida schools, the Massachusetts schools, and perhaps even the Illinois, Ohio, Virginia, or Texas schools. If this class action against TJLS is successful in any way whatsoever, about 180 lawsuits will be filed the very next day.

It's an interesting time period, and although I'm skeptical and not sure what will happen with this particular case, I'd be lying if I said I wasn't more optimistic for the future as a result. It's uncertain, and there are all sorts of hurdles and pitfalls and complications, but no one ever said undoing and correcting a lousy system was easy. The fact that there's now a professional, non-pro-se complaint written by a decently-sized Los Angeles firm filed against a law school is a huge step from where we were just a year ago.

Edit: I just found this article on Miller Barondess' website that makes Kransberger look like an even bigger fool than I thought she was. Choice quotes:

Kransberger said student debt involves complex class issues, since those without inherited family wealth will almost certainly have to take out loans. Thomas Jefferson’s students are 35 percent first-generation college students, 25 percent first¬generation U.S. citizens and 40 percent students of color, she said. The school is one of the least expensive in the state, with annual tuition at $40,100.

Yikes. If I was an attorney for TJLS, I'd put a muzzle on this woman and attach it with superglue. She basically admitted that the school targets poor minorities, who, one should note, are less likely to find legal work sufficient to pay off the debt than those who have preexisting connections. Sorry if I'm not being politically correct, but to be honest, the legal field isn't, either. Diverse law schools are only a good thing to academics concerned with what the working world sees as a frivolity. Surely the school knows this, since it's a training ground for the legal profession and all. Given that TJLS is alleged to be a bad investment engaging in deceptive practices, admitting that you were targeting an abnormally high number of minorities, poor people, and new arrivals (read: less-sophisticated parties) seems like a very ill-advised move. And the school being "one of the least expensive" is a tallest dwarf competition, or a purest hooker competition. You get the idea, even if Kransberger doesn't.

Kransberger said Thomas Jefferson doesn’t cater to the rankings and that she’s been appalled by reports of other schools’ misdeeds.

You mean like building a new campus while your honors graduates are unemployed or working as waiters?

“A law degree remains an amazingly versatile degree, and that continues to be what drives us.”

No, what "drives" you is abuse of federally-backed loans, you lying sack of garbage. Versatile, my ass. Does anyone believe that crap anymore? And note that she's countering a fraud allegation with a bald-faced lie. Stop and think about that for a second.