Holder Gives Good Advice to UVa Grads

Attorney Eric Holder spoke at Virginia's commencement yesterday:

He asked of the audience, "I hope in the spirit of Robert Kennedy your most famous predecessor and mine, that you will dare greatly. That you will question what is accepted, and that you will change what is objectionable and that you will weed out injustice in all it's [sic] forms and that you will always remember the truth of his enduring words - 'The future is not a gift, it is an achievement'."

Absolutely.

I'm all for "weed[ing] out injustice in all its forms." Not that it's the most pressing form of injustice, but I certainly wouldn't object if they started with the law schools themselves.

On a related, here is the University of Virginia's "Facts and Statistics" page, where you can see that they're clinging to the '07, and '08 numbers:

More than 96% of the Class of 2008 reported employment at graduation

More than 99% of the Class of 2008 reported employment nine months after graduation.

Presence in Top Law Firms, Classes of 2007-09

• 73% with firms in American Lawyer's top 100 by gross revenue
• 11% with firms ranked between 100 and 200
• 16% with smaller firms

*Rankings according to American Lawyer 2008 survey

Public Interest Jobs, Classes of 2007-09

• 31 public interest groups
• 22 federal government
• 14 state and local government
• 16 military

Clerkships, Classes of 2007-09

• 9 U.S. Supreme Court (alumni clerkships, 2006-08)
• 44 U.S. Circuit Court of Appeals
• 93 U.S. District Courts and other federal courts
• 12 state courts
• 1 international court

It's now 2011. With a school the size of Virginia (>350 students per graduating class), there's no reason to lump classes together aside from rigging the statistics to allow the 2007 numbers to balance out the 2009 numbers. And you have to wonder why the 2010 graduates aren't mentioned at all.

Meanwhile, employment is so "99% guaranteed" amongst Virginia 3Ls that someone actually saw fit to publish this piece as an April fool's joke.

As its US News and World Report entry states, the salary discrepancy between public service employees and private sector employees (i.e. BigLaw) is over $100,000. But as this article states, the class of 2010 had a record number of people entering the public sector. Of course, the school tries to play it as a "we're committed to service" type of thing, but it can't be an accident that Virginia had a record number go into the government and public sectors in 2010 while the law school still finds it necessary to include 2006-2008 numbers in its employment and placement presentations, can it? Hmm....

April Fools, UVA Students, No Jobs for You, Either

You know the employment situation is dreadful when a supposed top law school's newspaper runs an article claiming the law school will found a firm for unemployed graduates called "MMMJK (named after some of Virginia's Deans and Professors):"

“We’re very serious about MMMJK,” said Dean Paul Mahoney. “Because they will be full equity partners in this groundbreaking venture, the faculty will be incentivized to teach actual law and practical skills rather than meaningless abstraction. More importantly, we’ll be able to leverage faculty expertise and our unusually strong clinical programs in order to hit the ground running in terms of our junior associates’ workload.” In light of this strategy, the firm is expected to have especially strong practices in the areas of Supreme Court litigation, feminist legal theory, and international human rights law.

Well done.

What isn't as funny is that Sen. Barbara Boxer is now calling on the ABA for change. I hope other members of Congress follow suit and start investigating the ABA's practices and not only how we got into this mess, but what kind of negligent mismanagement led us here.

State Budget Cuts "Hurting" Arizona State

From the National Jurist:

As state governments struggle, many have slashed their high-education allocations. . . At Arizona State University Sandra Day O'Connor College of Law . . . Dean Paul Schiff Berman has suggested a five-year plan where tuition will rise between 5 to 10 percent and student enrollment with increase from about 195 to 225 per class.

Other schools facing "significant shortfalls" mentioned in the article include Minnesota, Michigan, and Virginia.

But what strikes me about the article is that their definition of "significant shortfall" seems to be slightly different than mine, especially as it applies to Arizona State. To wit:

"The University has asked us to find a way to make us self-sufficient with regard to our operating expenses," [Berman] said. "That requires us to generate about $6.5 million more than we currently generate over the next five years."

Arizona State, as a whole, received approximately $380.93 million in state appropriations for the 2010-11 fiscal year. If the law school only has to make about $6.5 million over a 5 year period to become de facto private, that means that, excluding interest considerations, its 2010 revenue from the state is about $1.3 million, or about 0.3% of Arizona State's total take from the state.

That is a paltry, token amount that few law schools wound have any serious trouble raising (or finding in the budget, if necessary). Arizona State tuition is current $21,598 for in-state residents. At that total, adding 30 in-state students would raise roughly half the yearly total instantly with almost no additional burden on the school as long as they have auditoriums that seat more. If alumni fundraising drives couldn't raise the other $650,000, across-the-board salary cuts of like 8% (or equivalent layoffs) would take care of the rest (this is a rough estimate looking at their number of staff and guessing an average salary of over $100k, which is reasonable given that it's a top-50 law school).

Even a modest tuition increase, like the one Berman proposes, isn't that bad (although I think staff and program cuts should come before tuition increases as a matter of ethics).

But I have a problem with Berman's general attitude towards the situation.

Berman said students will be minimally impacted by increases in tuition and class size. To that end, ASU is boosting its financial aid to qualified students, and it has created a post-graduate public interest fellowship program, designed to provide a stipend to students entering the public sector. And first-year students are looking at following the example of their 3L peers by creating a fund-raising effort to help fund new scholarships. (Emphasis mine)

Wow, what a business running a law school must be.

• Your consumers are "minimally impacted" by paying $9,000 (over 3 years) at 7.5% interest.
• Although your budget has a "significant shortfall," you can boost financial aid (discounts) to guaranteed customers (e.g., to boost offers to high LSAT kids) and give out stipends to boost your post-graduate employment numbers.
• Your current consumers are setting up voluntary, unpaid fundraising drives to help with your expenses.

And now you get the advantage of being free of the guesswork involved in state budgeting.

Bankruptcy: Financial AND Moral - All in One Post!

Every time student debt forgiveness or any variant of said idea comes up, critics emerge from the rotted woodwork like cockroaches and spout the same refrain: these kids should have to pay / you borrowed the money, you pay it / there's nothing securing these loans / etc. It comes about in various permutations, but the motif of refusing to let student borrowers file bankruptcy almost always comes back to either self-perceived personal slights ("I paid my student loan from 1986 off and lived like a pauper...") or systemic concerns ("No one would give an unsecured loan like that!")

Well, all of those idiots should read this article about elderly people filing for bankruptcy to escape crushing debts when their income isn't what they expected it to be.

[P]eople 65 and older are the fastest-growing segment of the population seeking bankruptcy protection. . . .

Of course, the big question most seniors have when it comes to bankruptcy is: Will they take all of my retirement savings and leave me penniless?

"No," Connolly said. "Social Security and retirement accounts (up to approximately $1.1 million) are exempt from creditors so seniors will continue to have that stream of income."

What's more, many states have "homestead exemption" laws, which protect home equity from creditors. In Massachusetts, for example, you're protected up to $500,000.

So let's say Gertie, Age 70, has $1,000,000 in her IRA. She owns a home outright that is worth $400k in market value. She was successful until recently retiring. She was extremely prudent and has no debt. As a retirement gift to herself, she decides to take her excellent credit and go to Europe for two weeks and spend 20k splurging on herself. She gets back and suffers a heart attack and winds up 230k in medical bills.

Gertie has the assets to pay this off entirely and fairly comfortably. Her simple net worth is over $1 million. She's not going to live for much more than 15 years after this, and barring a severe penalty on distribution (I don't know how IRA's work completely if you're that old), she'll still have 50k a year to live off of.

But Gertie - who has unsecured debts of 250k plus interest - decides she wants to "leave a little something for the kids" and so she files bankruptcy and screws the credit card companies and the medical facilities who enriched and saved her life, respectively, on entirely unsecured credit. The rest of us pay for it.

Now consider Gertie's granddaughter Gertrude. I think you all know where I'm going with this. Gertrude takes out 100k to get an undergraduate education. In four years, she graduates magna cum laude from the big state university with a degree in business. She scores a 165 on the LSAT and gets accepted to a top-30 private law school, say Notre Dame, which is her dream because she's a lifelong catholic and blah blah blah. She excels at Notre Dame, makes law review, gets a federal court internship, and graduates in the top 7 percent of her class. She takes out 50k a year and graduates with a total debt around 250k. All of this is quite normal, and she thinks it's a good bargain because with her credentials the top firms in Chicago and Indy will fight for her. And they do - she lands a BigLaw job. It's great until she has a horrible car accident; not an expensive recovery, but her once-beautiful face becomes mangled and scarred, and the partners find a way to weed her out after 2-3 years.

She has about 200k in debt and zero assets. But unlike her grandmother, she cannot file bankruptcy to protect her future, even though she doesn't have the blessing of an approaching natural life expectancy threshold.

To those who are opposed to student loans having bankruptcy protection, what's the difference between Gertie and Gertrude? Both acted reasonably and had circumstances outside their control affect their financial situation, and both wound up with unsecured debts over 200k. Why should the one who has the assets to pay creditors in full be eligible to file for bankruptcy protection but not the one who hasn't a dime? Why does our system let elderly people who won't be around in two decades wipe the slate clean and leave money to heirs while we saddle young people with non-dischargable debt?

Anyone who believes this system of debtor relief has any notion of justice - or even rationality - behind it is not thinking clearly. We're supposed to have consistent laws in this country. A millionaire being able to discharge catastrophic medical bills (often brought by a less-than-healthy lifestyle) while students are stuck with their form of unsecured debt is patently unjust. It would take the brand of circular logic available only to Congressmen and partisan apologists.

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In the moral bankruptcy category, today I give you Liberty University School of Law, which was recently spotlighted in their local rag.

Central to the law school’s mission is the belief that God created law, and law is properly understood through a Christian worldview, Staver said.

Law without a Christian standard, Staver asserts, can become a “cold instrument of force.” ...

Professor Rena Lindevaldsen, who has a background in commercial law and religious right advocacy, teaches “Foundations of Law,” a required course for first-year students. It emphasizes the importance of limited government and the Biblical roots of the law. It also advocates an originalist approach to the Constitution, one that upholds the original intention of the founders, rather than viewing it as a dynamic document that can evolve over time.

“When you look back at any area of law, whether its torts or contracts or pick a topic, you can see that the Bible actually has principles that apply to this. It’s nothing new that we had to invent,” said Lindevaldsen, who has taught at Liberty since 2005 and earned her law degree from Brooklyn Law School.

There's so much more in the article that pretty much damns this place as a serious law school. And in the spirit of Christian fellowship, this school costs over $46,000 per year to attend. It was recently accredited (last 10 years), and your odds of finding a remunerative job are slim. Washington and Lee (ranked in the top 40) is an hour away. University of Virginia (T14) is an hour and fifteen minutes away. University of Richmond (top 100) is 2 hours away. And then there's the megalaw D.C. metro area.

I at least have to credit them for being seemingly honest on their employment statistics. Check this out:

That's brutal. I understand the desire for an organized church to have Christian lawyer-soldiers, but surely there's a better way of going about it than charging kids 50k a year to attend a place where only 47% have a real job 12 months later (and that's what they're reporting...). Ever heard of a scholarship fund? Personally, if I were a legal employer, any resume I got from this place would go straight in the trashcan, as I'm skeptical a brand new, Christ-first school can really teach the skills necessary to excel in the law, especially when the school is little more than a transparent vehicle for right-wing thought. I'm sure they know this, and with that in mind, it seems like a shameless cash cow to feed the University.

If you really wanted good Christian lawyers, wouldn't you be helping young Christians afford places like William and Mary or Virginia, where they can really do damage with a legal career? Maybe sponsor church activities for students already at those schools?

But it's not the first time evangelical Christianity has jumped on the profit wagon, and I'm sure it won't be the last.

Rising Tuition: UVA as a Case Study

I found this chart on the University of Virginia website, which charts UVa Law tuition over the last 20 years:

This isn't news to anyone who pays attention to law school tuition figures, but I wanted to use it as a starting point to make a simple point: the nationwide rise in tuition rates has NOTHING to do with either (a) rising costs at the Universities or (b) a drop in funding, both of which are reasons I've seen advanced on websites defending higher tuition.

In adjusted 2010 dollars, Virginia's in-state tuition in 1990 would be about $7,700. Out-of-state tuition would be about $17,500. Consequently, the increase in law tuition independent of standard inflation is around 5.03 times for in-state and 4.34 times for out-of-state. Health care costs have simply not increased that much in the last 20 years (as an example, private insurer costs to cover cancer were "only" 137% higher in 2007 than they were in 1987).

More specifically, you can see the relative out-of-whackness of law school tuition if you look at the University of Virginia's budgets. Unfortunately, I cannot find a 1990 operating budget for UVA. But I did find the 2000 budget and the 2010 budget. Some brief comparisons are in order, I believe.

Overall Total Expenditures, 2000: 752 M (in 2010 dollars, 967 M)
Overall Total Expenditures, 2010: 1,326 M
Increase in 2010 dollars: 27%

Student Health Expenditures, 2000: 6.684 M (in 2010 dollars, 8.60 M)
Student Health Expenditures, 2010: 9.507 M
Increase in 2010 dollars: 10.5%

Expenditures on Direct Instruction, 2000: 213.40 M (in 2010 dollars, 274.59 M)
Expenditures on Direct Instruction, 2010: 335.33 M
Increase in 2010 dollars: 22.12%

Revenues from Law School Tuition, 2000: 20.5 M (in 2010 dollars, 26.37 M)
Revenues from Law School Tuition, 2010: 47.6 M
Increase in 2010 dollars: 80.5%

% of Academic Division Operating Funds From General Endowment, 2000: ~15%
% of Academic Division Operating Funds From General Endowment, 2010: ~10%

This last one becomes interesting when you consider that in 1990, the University of Virginia's endowment was $488 million ($844 million in 2010 dollars). In 2009, thanks to a two decades concerted effort (see previous link), Virginia's endowment had risen to $3.58 billion. That is a 324% increase in the real value of their endowment.

Granted, various endowment funds have strings attached, but it should be plainly obvious that there is no outside funding problem at the University of Virginia. Although funds from the state may be more restricted than they used to be, they haven't been decreased enough to require an 80% increase in tuition rates for law students, and one of the driving political motivations for cutting funding at rich public universities is because, well, they're rich. Only 8% of UVa's funding comes from the state.

I readily concede that the numbers herein may not be precise, or the mathematical ability behind their use sound (this should be obvious, as I chose law). I also concede that university budgets are ridiculously complex; I tried to be careful to pick things that would be comparable between the two budgets, but I recognize that might not always produce the best picture.

But even if I am wildly inaccurate on the figures, a few things are obvious to me from perusing the tuition rates and the various budgets:

• Law tuition revenues and rates at UVa have risen at a much higher rate than the university's expenditures.
• There has been no cataclysmic increase in the University's expenditures for health care, technology, or other things tuition defenders often throw out.
• The University's endowment has skyrocketed while the University's willingness to fund general academic projects from that endowment (or their reliance on that endowment) has dropped as the University has actively sought to grow its institutional wealth.

Far from Thomas Jefferson's ideals, the UVa appears more concerned with ballooning its endowment than providing a place for students to pursue knowledge. Its choice to raise law tuition rates 5-fold from 1990 had nothing to do with rising health benefit costs or any drop in funding. It is plainly obvious that places like UVa are no longer educational institutions, but instead complex businesses whose sole purpose is to put more coins in the piggy bank.

Inflation adjustments made using Tom's Inflation Calculator.