Friday Quotes on Higher Education

From Bill Gross, Chairman of PIMCO:

“A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college? All of us who have been there know an undergraduate education is primarily a four-year vacation interrupted by periodic bouts of cramming or Google plagiarizing, but at least it used to serve a purpose. It weeded out underachievers and proved at a minimum that you could pass an SAT test.”

From Gil Weinrich at AdvisorOne:

The medical profession may be no better than law from a financial perspective, according to Boston University economist Laurence Kotlikoff. Crunching the data for Forbes, Kotlikoff found that a doctor comes out only slightly ahead of a plumber in terms of lifetime earnings once you factor in the physician’s many years learning instead of earning; tuition; loan interest; and taxes paid. For all his effort, the doctor comes out with just a $500 a year advantage over the plumber.

But...but...but... my guidance counselor had a chart that said I'd make way way more going to college! How could it be wrong?!?! It was laminated and colorful!

As far as I'm concerned, people who still claim blindly that one should go to college - even graduate school - to make more money in the future are little better than strict creationists, "no plane" conspiracy theorists, numerologists, UFO watchers, objectivists, trickle-down economists, the jackasses who try to "fix" homosexuals, the anti-vaccination crowd, etc.

What worked in 1980 clearly doesn't work today. Wake up, people.

Overpriced Education Is a Moral Issue

Inside Higher Ed has a respectable write-up of the small shrinkage in law school enrollments coming this fall to at least three campuses. This quote, from California law professor John Yoo (originally posted here back in March), struck me as rather naive:

The decision to reduce the size of a law school class has little to do with morality (though it may have a lot to do with moralizing) and everything to do with economics. Education is a product in the market, like any other. The producers (law schools) sell a service (a legal education) at a price (tuition) to consumers (students). If there is an oversupply of the product, or the demand falls, then the price should drop and eventually the quantity will fall until the market clears. I don't see anything so moral (or immoral) about it.

While his economic analysis is technically correct, education is absolutely not "like any other [product]." I probably should be baffled that a professor at a "top" university is grossly oversimplifying a situation to cleanse his own guilt, but I'm not.

When someone buys almost any other product or service, any liability created by the purchase can be removed by filing a bankruptcy petition. Providing normal credit is an example that would fit into his model. Because consumers can declare bankruptcy and erase the transaction from being a burden, there's nothing "moral" or "immoral" about a credit card company that raises or lowers rates, or creates new cards/marketing pitches to give the illusion of scarcity, etc. The bank retains some risk in the transaction, so economic principles can entirely guide their actions.

Conversely, some jackasses in Congress decided that student loan debt should be treated differently than all other debts. The schools - like Yoo's University of California - sell a product, often with gross exaggerations fueled by fantastical myth-making - with absolutely no risk on the credit side of things, either to the school or the bank.

Because student loan debt is non-dischargable with a standard bankruptcy petition, the risk of a education being a bad investment falls entirely on the students and their parents when they need to use credit (which 90+% do).

At that point, a school's decision to enroll students takes on a moral element. Unlike normal producers, who either have an incentive to sell to those who can pay or can only provide services to credit-worthy people, the schools' abilities to draw in any consumer and saddle them with debt-for-life gives the school a position of power divorced from economic reality. The fact that Yoo even suggests that the market can or will "clear" is perplexing; the market has been willfully prevented from "clearing" for decades by the ABA and the law schools, including his employer.

Plus, educational institutions often invite moral disapprobation by marketing themselves as leaders, subtly vilifying corporate America, justifying their high costs as "good" debt, holding themselves up as prestigious institutions and community-based institutions, etc., which gives them more culpability that Joe the Auto Mechanic, who's at least honest when he says he just wants to make a living.

My gut reaction to Yoo's comment is that he's too enmeshed in the system - and therefore a party to stockpiling some students with unsustainable debt loads - to see a moral issue and moral culpability where it's obvious. After all, if you admit that ruining innocent parties financially is a moral issue, a whole lot of people need to trudge their way to confession tomorrow. Can't have that, now, can we?

Almost every immoral event and practice can be explained in basic economic terms. Slavery's rise and fall, for example. Or teenage prostitution in Thailand. That doesn't make them non-moral issues. A professor of law should know better.

Comments On The Latest Troll

This morning, I found, perhaps, the dumbest comment I've ever received on this blog:

You are no better than the elite that run this country.

Let me get this straight, if you were queen of the world you would ONLY allow the uber-smart people attend law school? Does is stop with law school? Or is this a general application of all fields of studies? Practicing law is not as glamorous as you purport it to be.

Personally, I have much more respect for someone that can plumb a house than another who can properly apply the facts to the elements of manslaughter.

You blog is nothing more than pseudo-intellectual masturbation. sickening.

Disgusting. Really.

I don't even know where to start with this troll, but I feel the idiocy therein leads to a few talking points:

1. "Let me get this straight, if you were queen of the world you would ONLY allow the uber-smart people attend law school?" Absolutely not! As actual readers of the blog know, I have very little regard for the LSAT, even though I did well on it. If an institution can admit people with moderate intelligence and achieve a high bar passage rate with a real positive return on investment, I would welcome it. For example, I think the University of South Dakota is a good law school, all things considered, even with its low median LSAT; I would recommend an in-state student go there instead of any number of "higher ranked" schools.

The problem with LaVerne is that it's not performing up to par with peer institutions. If it could admit 148 LSATs and put out a bar passage rate equal to Loyola, UC-Davis, etc., then I'd have no problem with it. But they aren't doing that, so their continuance of accepting 148 LSATs should warrant skepticism.

2. "Does is stop with law school? Or is this a general application of all fields of studies?" I think all post-graduate education should be ultimately governed by economic principles. Law is only unique to the extent that the government continues to authorize the antitrust behavior of the ABA.

3. "Practicing law is not as glamorous as you purport it to be." I have never claimed law to be a "glamorous" field. I actually object to the way law schools perpetuate the myth. Dignity and glamor are two entirely different concepts.

4. "Personally, I have much more respect for someone that can plumb a house than another who can properly apply the facts to the elements of manslaughter." I would say both are fully competent in their chosen professions, and that there's not much more that can be said. I think many students today would be better off as plumbers than as lawyers, but that doesn't mean a lawyer's work is not valuable. It absolutely is, in most cases.

All I'm advocating is that some type of standards be put in place to protect consumers from the perils of a bubble that produces heaps of non-dischargable debt and lost opportunity costs. Or, rather, to prevent further damage. As far as I'm concerned, this can take one of two shapes:

1. Market-based regulation, where the ABA loses its monopoly, the federal government stops back-stopping loans, barriers to entry are removed, and schools can compete like actual businesses. The overall cost of a law license would drop dramatically as schools would no longer have to follow ABA guidelines, but instead could sell a glorified long-term bar preparation courses to whomever wanted to buy. Plus, rising tuition would be checked by the fact that schools could no longer rely on Uncle Sam's thriftless loan policies.

2. Profession-based regulation, where the ABA keeps its monopoly, but it and state bar associations enforce more rigorous training and accreditation standards, enforce transparency regulations to ensure schools are being honest with students, force schools to audit their recent employment information, etc. The gist here is that the ABA would take active steps to prevent the massive oversupply of young attorneys who are misled into poor investments and/or unsustainable debt loads by gaining a pigeonholed credential in an oversaturated field.

The two obviously aren't mutually-exclusive.

Delaware "Delaying" Law School; Hofstra Professor Rips on Merit Scholarship System

In case you haven't heard yet, the University of Delaware is delaying its plans for a new law school. At some point, cooler heads have to start prevailing. Let's hope we continue to see more articles like this and less articles like the ones where cray Alaskan representatives/candidates who spam my email think a law school in Fairbanks is a good idea.

In a mostly unrelated story, Hofstra Law professor Daniel Greenwood has written an article worth reading for the HuffPost on why merit scholarships are a market irrationally that should be regulated as price fixing.

"Merit" scholarships should more properly be called "US News & World Report Ranking Rebate Fees": schools give them because they need to maintain entering class GPA and LSATs in order avoid sinking in the rankings -- not because they believe recipients are likely to be better law students or happier, competent, just or successful lawyers.

This is a new angle, but one I like given my affinity for the "law schools act like for-profit businesses" viewpoint. I'm not sure it would fly legally (honestly, I don't know; my guess would be that non-profit businesses and those heavily backed by state policy are exempt from anticompetition statutes, but I'm not going to research anything), but I give him major props for creativity nonetheless.

Additionally, he has some dead-on-point remarks about the USNWR rankings scheme.

USNWR's rankings quickly become a self-fulfilling prophecy. Schools that learn how to play the rankings game attract the students, faculty and money necessary to make real improvements, while schools that don't -- don't. Any school that dares to ignore the USNWR rankings risks a death spiral of rapidly departing employers, students and faculty, leading to lower ranking and even more problems.

Unfortunately, rankings are a zero sum game: if everyone learns to game them, no one can get a competitive advantage.

He goes on to articulate fully how everyone loses under the current system.

Throughout the article, he makes it crystal clear that what exists in legal education is not the result of a pure free market, but rather a distorted market, of capitalism gone wrong, in stark contrast to the stances taken by many industry apologists. However, the solution he believes would fix the problems would violate current antitrust laws, he claims.

Overall, I'm not entirely sure I agree with Professor Greenwood's solution of more stringent regulation, but the article's analysis of the problems is spot-on and a welcomed look from the inside of the legal academy.

If Ranking Rebates were illegal, many schools could immediately cut their tuition by a quarter or a third. Admissions officers could focus on the qualities that actually predict success in the law, instead of the ones that are easily measured in numerical rankings. Law students would be better able to focus on education, group learning and building relationships with their peers and professors, instead of competitive grade grubbing to keep their grant or transfer to a higher ranked school. And scholarship money could go to those who would best make use of it, instead of those who make schools look better on USNWR's arbitrary rankings.

It's hard to disagree with that, unless you've drunk from the bin of kool-aid that actually makes you believe LSAT scores are the end-all-be-all of a student and school's worth.

I encourage others to read the article, as there's more good in it than what I could reasonably exploit here.

On The Scholarship Game

Many of you have probably already seen the New York Times article where David Segal discussed the law school scholarship game. I think others covered it fairly well, I just wanted to add a few points of my own.

My over-arching reaction to this piece is simple: What the **** did you expect?

Here's the thing about humans. If you set up a system where parties are perversely incentivized. They're going to act perversely. It doesn't matter if its Catholic pardoners or law school deans. Law schools aren't necessarily more immoral than the next exploitable institution, but the law school system is so warped, it's practically a given that this would happen.

What you have in law is a situation where the US News and World Report rankings became such an obsession in a field where many students fight for a small number of cushy positions. Schools, naturally, want to move up in the rankings. The rankings, it turns out, are so flawed that they look only at incoming classes (and not who's still there at the end of 3L year) and disproportionately weigh the LSAT and undergraduate GPA even though they have very little relevance on how good the actual school is, unless, of course, you make some ridiculous assumptions (e.g., that if a good student goes there, it's automatically a better school regardless of what happens to him while he's there).

The natural response for schools is not to increase the quality of their curriculum, but rather to increase the quality of their matriculant pool and then forget them after the first year. And so it was and is.

Of course, there are two obvious ways to stop this. The ABA could have stepped in and regulated the offering and retention of scholarships as an accreditation metric. After all, if a law school has to have a tenured faculty and a full-blown library, I don't think it's unreasonable to suggest they only offer scholarships under reasonable conditions, such that everyone has a chance to retain their scholarship if they do well with the first-year material (which is not currently the case). At the very least, they could protect students by preventing schools from stacking all the full-ride kids in the same section and by taking other tactics designed to increase the first-year scholarship pool.

The second filter could have been (or be) Bob Morse at US News and World Reports. On one hand, I feel sorry for Mr. Morse in that it's not his fault his magazine's ridiculous and stupid rankings gained such regard among administrators desperate for something good to tell their bosses/student bodies. On the other, however, every time Bob Morse opens his mouth, he sounds dumber and dumber.

Why is merit scholarship retention not part of the U.S. News data haul? “The main reason is that we haven’t thought about it,” said Robert Morse, who oversees the rankings. “It’s not a great answer, but it’s an honest answer.”

Then Mr. Morse thought about it.

“This isn’t meant to be sarcastic,” he said, “but these students are going to law school and they need to learn to read the fine print.”

Except, as the article points out, often there is not any fine print!

And how do you not think about it? The whole point of these rankings is to find the best law school, at least ostensibly. You should be trying to prevent schools from gaming the system through shifty means. You haven't even thought about it? That's the kiss of death for when an American system is in disarray. Some jackass didn't even bother thinking about the fact that his decisions and actions actually have consequences for those working in the system. That's why our primary schools are so decayed. Bob Morse's blindness to how schools act in reliance on his publication's rankings is impressive, the type of journalistic insight one surely develops while staring at a wall and banging bricks against his head for dozens of years.

How can you possibly have any integrity in ranking these places when you have no idea what actually goes on at them? Could you imagine the health bureau saying "we haven't really thought about it" when asked why they didn't check a restaurant's air ducts for mold? Evaluating law schools is this man's business and he admits he hasn't even thought about how they act and how it may jeopardize the authenticity of his rankings. What a clown!

Another major problem I have with the situation is that the law school deans are trying to push theory and technicality over practicality. For example, check out this excerpt about Golden Gate:

[I]n recent years, only the top third of students at Golden Gate wound up with a 3.0 or better, according to Ms. Ramey, the dean....

Ms. Ramey says it is statistically possible for 70 percent of first-year students to maintain a 3.0. She also maintains that Golden Gate 1L’s are well informed about the odds they face in keeping scholarships.

“Students who have done well in college assume they will do well in law school,” she said. They would know better “if they read our materials, if they listen to anything we told them in our admission process, or read our course catalog."

There are two major problems here.

First, the dean knows very well that 70% of the 1L class cannot wind up with a 3.0 or higher. If I'm not mistaken, for that number to happen, the same students who get As would have to get a few B-s. In other words, you can't have the same people set the curve in every class (otherwise, they push more people below the median, which makes it impossible for the below-the-line people to have a 3.0 or higher). Never, in the history of law schools, has there been an entirely different set of people set the curve in each 1L class. Given that reality, focusing on what is technically possible is grossly misleading and makes it sound much easier than it actually is to get a 3.0. It's technically possible I'll wake up in the Playboy mansion with a girl in each arm or that an asteroid will crash into Earth tomorrow at 6:17 am. In most areas of the law, including, so far as I know, consumer law, we focus on what is reasonable rather than on what is possible. It just isn't reasonable to tell kids that up to 70% of them can retain their scholarships knowing full well it'll never happen in a million years.

Second, how in the **** can Dean Ramey claim their materials would apprise someone of the risks of law school?!?! The admissions process is a sales pitch, not a risk factors section of a 10-K filing. In fact, let's check out Golden Gate's JD Prospectus on page 22:

Golden Gate Law awards both
full-tuition Dean’s Scholarships and
partial-tuition Faculty Scholarships
to qualified entering students. All
entering scholarships are awarded
on a three-year basis for full-time
students and four-year basis for parttime
students. There is no separate
application for entering student
scholarships as all students are
considered for scholarships at the
time they are admitted to the JD
program. Entering scholarships are
typically awarded to students whose
application materials demonstrate
outstanding achievement in one or
more of the following areas: academic
record, LSAT scores, writing ability,
professional experience, volunteer
service, or community leadership.
...

Is this a change, or are they being dishonest? The date on the PDF is 2010. According to the New York Times, these scholarships are contingent on a GPA requirement, but, as Dean Raney says, their admissions department makes the odds of retaining clear. You think if they had changed their policy, she would have let David Segal know.

Going to the Student Handbook helps answer these questions, on page 123:

The Law School Admissions Office awards merit scholarships to eligible entering students during the admissions process. Scholarships awarded prior to matriculation are awarded on a three (3) year basis for full-time or on a four (4) year basis for part-time students. The scholarship amount is stated in the student’s admission letter. To maintain eligibility for a scholarship as a continuing student, a student must earn a minimum 3.0 cumulative required course GPA at the end of each evaluation period. [emphasis mine]

Okay - so they consider them 3-year scholarships with a continuing maintenance requirement. Here's my question for Dean Raney: Why is that not in your JD Prospectus? (second question: what 1L actually looks at a course catalog, when a 1Ls classes are predetermined?).

Do you see, Bob Morse, that there WAS NO FINE PRINT on the JD Prospectus? That's how they roll. Golden Gate is effectively selling their entrance scholarships as a 3-year deal when it's actually a 1-year deal with a reevaluation period.

In the ordinary state consumer protection law context, that's fraud with very few questions asked. (I actually think it's borderline fraud to even sell them as opportunities for a 2L scholarship when there's more chances offered than spots available).

Overall, this is a situation that developed from a flawed system where - again - transparency and regulation would help, or at least we could hope.

Consider what happens at Chicago-Kent, the school that offers students less scholarship money ($9,000) if they want it guaranteed, and more ($15,000) if they can clear the 3.25 G.P.A. hurdle. Ninety percent opt for the larger and riskier sum, according to school officials. A “significant” number later lose their scholarships, says the school’s dean, Harold J. Krent.

“The real issue is that students don’t think about this decision in the sophisticated way that you’d like them to,” he added.

Well, Dean Krent, that's nice in theory, but it's hard for them to think about it in a "sophisticated" way with (a) limited information and (b) an assumption, which the law schools prey on, that getting a 3.0/3.2/whatever is easy in law school, since it was easy in undergrad for 90% of law school applicants and its easy in other graduate settings.

What really galls me is that the administrations, ABA, and Morse all seem to have a "the consumer should do his homework/caveat emptor" attitude.

Historically, when we have a system where unsophisticated players get screwed by repeat players who know the rules in and out, we put a filter on the system to ensure a fairer process. We've done it countless times in the business/financial sector, and individual states have all sorts of laws governing industries like used cars, pawn shops, antiques, etc.

What's truly sad is that in an industry designed to teach rational argumentation, fair process, and, hopefully, justice, it took so long for people to wake up to the reality of the system and that those in power still have the attitude that nothing really needs to be changed. People are getting screwed by these type of deals and for the Dean Raneys and Bob Morses of the world to just throw up their hands is unfortunate, at best.

Elie Mystal Gives Terrible Advice

It's easy to pile on Elie Mystal, who must give nightmares for Harvard Law School's marketing department by being a public intellectual lightweight. But gosh darn it, it's kind of fun.

So today Elie - in contrast to his self-proclaimed skepticism about law school - has decided to tell a disgruntled 1L who wrote in that he should stay at his "elite" law school. What a shocker, eh?

Here's the kid's basic info:

• At an unidentified "top 10" school
• At the bottom of his class despite "working really hard"
• Lost motivation and is pessimistic about his future in the law
• No great pre-law work experience
• Liberal arts major
• "Significant financial help" from parents.

Now here are Elie's reasons for staying in law school:

(a) He picked the right parents.
(b) He got into the right school.
(c) He doesn’t have any other burning passion in his life.
(d) The worst part of law school is over.

Why wouldn’t this guy finish law school? Here is a situation where there is almost no downside. Assuming he’s going to be in a position to graduate debt-free or nearly debt-free, with a degree from an elite institution, what’s the harm? He can do anything he wants after it’s over. No, idiot law school marketers, not because you can do anything with a law degree. But because you can do anything with financially supportive parents.

This is retardation at work. Let's take these in order.

(a) "Rich parents" are not a valid reason to continue in law school. Elie claims that the kid is graduating "debt-free" if mom and dad pay for the whole thing. Furthermore, he claims that this guy can go to law school for "free."

That's an outright lie. Just because he's burning mom and dad's money instead of the federal government's doesn't mean that it's now "free." If anything, I'd feel guiltier about hoodwinking my parents into paying 50k a year instead of getting the government-banking complex to pay 50k a year. Furthermore, our concepts of "debt" and "free" should be broader than whether some 3rd-tier financial institution sends you a bill after graduation. The kid is sacrificing two more years of his life, plus taking the limitations of having a J.D. on his resume. Lost opportunities are a major downside, especially for someone in their early-to-mid 20s.

And if "you can do anything with financially supportive parents," that actually counsels against staying in law school doesn't it? Or it's a neutral at best? Your parents can help you start a business, travel the world, pursue other passions. There's plenty of investment alternatives here, so even with rich parents, you have to defeat the alternatives and prove law is a strong enough investment to keep that capital invested in it.

(b) There's no such thing as the "right school" for someone who finishes at the bottom of the class. Elie the elitist called it a "top 10" school, so I'm guessing it's somewhere like Penn or Northwestern or NYU and not Harvard or Yale. Given the continuing BigLaw and government cut-backs, I would not gamble on being a bottom-quartile graduate at Northwestern or Penn. Georgetown has already been caught fudging its graduate employment numbers, and Duke had to set up a program to ensure all its graduates landed jobs.

Never mind that to be an attorney, one actually has to pass the bar exam. Depending on what "bottom of the class" means to this kid, he might find the bar exam a very difficult challenge. For example, according to Law School Numbers, at NYU 6% of bar takers don't pass on the first try. For Michigan, 8% of in-state bar exam takers did not pass in 2007. For Cal-Berkeley, 6-16% fail the"notoriously hard" California bar exam the first time around.

I can guarantee you some of this kid's classmates didn't work that hard at all. If he put in a top effort and wound up near the bottom, he's probably going to have a difficult time with the bar. At which point in time, his "top school" doesn't matter at all. Investing all that time only to find the bar exam an insurmountable hurdle (like >2% of the class often does, even from "elite" schools) is a major downside; you cannot ignore this possibility.

So the bottom line is that even at a top school, this kid needs to have the right attitude to be paying the not-so-free full sticker price.

(c) The question is not whether he has some other burning passion, it's whether he actually has a burning passion for the law. This person seems very pessimistic and burnt out. He has no motivation by his own words. If he has no motivation at the end of 1L (before spring exams, when he might have a chance to redeem his fall performance), how is he going to feel answering interrogatories at 9 pm? How is he going to do well in the next two years? How is he going to have to drive to do top work for his clients and/or his firm? How is he going to be gung-ho about finding work opportunities in his 2L and 3L years?

This student seems to have gone to law school because he had nothing better to do. That's not a good reason to stay in law school when he has no strong desire to actually practice law.

(d) The worst part of law school is not necessarily over. People like to talk up 1L year like it's some sort of boot camp, but at least in my experience, parts of 2L are worse depending on your array of classes. And at least during 1L year, any thoughts of unemployment and debt repayment are far in the distance. Try talking to a generic 3L right now and the fog of unemployment and taking the bar exam plagues them worse than even 1L exams. 1L is time-consuming and stressful, but it's a time-limited stress; once mid-May hits there's no more 1L Socratic method or harsh-curve exams. That doesn't work with debt default.

All in all, this person needs to think long and hard about the law, and if they have no honest drive to be a lawyer, they need to get out after this semester. The connections are, for the most part, already made. With "financially supportive" parents, the life reorganization won't be that bad, and new experiences can quickly wipe away the tarnish of a bad year in law school.

The loss of time and money is a major harm, Elie. To spend significant amounts of both, the student should have a positive, compelling reason for staying in law school. This student does not.

Would you personally spend $100,000 and two years of your life on something you had no enthusiasm for that had no guarantee of paying any kind of a reward down the road? Of course not, and if this didn't involve an "elite" law school, I can't believe even Elie Mystal would be so dumb as to suggest otherwise.

Update on Rakofsky Story

This is from three days ago, but I think most commenters missed it and I didn't see it until late last night, but the Washington Post did a follow-up on the Joseph Rakofsky story (the recent Touro grad who decided to defend one charged with homicide in a different state). The Post found the defendant's grandmother, and her explanation of how he wound up to be her grandson's attorney is - well - completely unsurprising:

Watson, 71, said she told Rakofsky that she wasn’t interested in hiring him even for the murder case because the family couldn’t afford the $25,000 to $30,000 normally charged in such cases.

But Rakofsky, 33, called her, Watson said. And again. She said he told her that he had worked on criminal cases before. And he told her that he would charge $10,000. Watson decided to “give him a chance,” she said, impressed with his tenacity and his willingness to work on her grandson’s case, especially for such a low fee.

Note there's multiple dynamics at work here. Race-to-the-bottom fees? Check. High-pressure sales tactics? Check. Exaggerated representations to clients to get them to hire a desperate soul? Check.

And remember all that verbiage deans spit out about how more lawyers equals lower fees for poor people? Isn't that exactly what happened here? Isn't this the ABA's wet-dream: a family priced out of the homicide defense market can now buy the product because Touro - God bless them - keeps spitting out attorneys so desperate for work they'll do it for 50-75% off. Poor people can finally afford representation - hallelujah!

But, like settling for a cut-rate prostitute, it had its consequences. Of course, the fact that I just compared cut-rate attorneys to $25 prostitutes should signal that something's wrong, even if it's mildly funny-'cause-its-true.

Web sites and bar licenses don’t provide enough information, said Saul Singer, senior legal ethics counsel for the D.C. Bar. Potential clients need to get references and check out a lawyer’s reputation, Singer said.

Yeah, that sort-of kills the whole idea of this being a well-regulated "profession," doesn't it?

And to complete the hucksterism:

During a two-hour phone conversation, Watson said, Rakofsky declined to refund her money.

I don't know if I can say this enough, but a 15k attorney surplus each year leads to more Lionel Hutzes on the market, so this should not be seen as a one-time story. Because many students are swamped with debt and pigeonholed as lawyers, they will not easily exit the market. Many 2009 and 2010 graduates of varying quality are still looking for jobs. The desperation level will rise along with the ethical tensions as young lawyers try to price themselves competitively.

For better or worse, this is the system our elites have created. The true tragedy here is that their response is not to fix the system, but to circle the wagons and place the blame entirely on the Rakofsky's of the world. As I've said before Rakofsky is an idiot worthy of blame. But he's got a big-time accomplice in a system that fails at multiple points.

Rutgers-Camden Draws Faulty Conclusions, Case Western Students Show Some Fight, and Reminder Re: Program on April 7

For all those of you who may think rankings and lists are benign tools, I give you this nauseating press release from Rutgers-Camden:

In the midst of a challenging economic climate, the Rutgers School of Law–Camden is emerging as a smart investment for strong career preparation.

What is their proof for this high-flown, completely contrary statement that spending $200k in real cost on a legal education is a "smart investment" when it may yield only a negligible increase in earning power for the majority of graduates?

Oh yes - surveys! First, they cite the flawed US News and World survey I've already discussed (even if the survey were accurate, it wouldn't necessary mean that Rutgers-Camden is a "smart investment" given that there's no discussion of alternatives). Second, they cite some meaningless Forbes survey ("The Best Law Schools for Getting Rich;" no, I did not make that up) that tracked mid-career earnings of people a generation or two above the current class of applicants as proof that Rutgers-Camden will bring the current class the same piles of lucre.

Folks, if that logic worked, people should forget law school and invest every dime in IBM, GE, and Microsoft. After all, if it worked for people in 1980, surely it'll work for today's kids.

Given how ridiculous such a proposition is for ordinary investing, it's preposterous that (a) anyone serious argues that because going to law school [x] made some 45-year-old rich, it'll do the same for today's 22-year-olds; and (b) anyone actually believes it.

But don't worry, Rutgers-Camden is obviously a very special institution that is clearly different than its peers on multiple levels:

“The true measure of the Rutgers School of Law–Camden is in the success of our students and graduates, the excellent scholarship of our faculty, the friendly service delivered by our staff, and our ability to help the citizens of New Jersey through our highly effective pro bono and clinical programs. Rutgers–Camden excels in each of these important areas.”

Additionally, the Rutgers–Camden law school is included in the 2011 Princeton Review Best 172 Law Schools.

Whoa, can I still transfer to this magical, unique place? I'm convinced I'll be rich in 10 years.

In other news, Case-Western has been without a real dean for a while, and now one of the finalists, former FEC Chairman Bradley Smith, is coming under fire as some of the Case-Western community has launched a website opposing him:

"CaseAgainstSmith.com seeks to inform members of the Case Western Reserve University community about Smith's radical views and history," says an unsigned press release on the web site. "Smith has been described as the intellectual powerhouse behind efforts to roll back Watergate-era campaign finance reforms. . . . We are concerned that the appointment of a radical such as Smith to Dean of the Law School could distract from the many strengths of Case Western Reserve University."

You can view the actual website here. Basically, Smith was amicus curae for the very unpopular side of Citizens United, has connections to the Koch Brothers, and has a murky ethical history when it comes to corporate-political-judicial entanglements. Frankly, I understand the concerns. It's simply impossible to separate some people from their politics when their views are so radical and antithetical that it detracts from their ability to lead a large organization, especially one like a law school that is (supposedly) committed to educating students in ethics, fairness, collegiality, and all the traits that should make the profession and its social function worth a damn; they may fail much of the time, but that's the ideal. And if students have no respect for the people running the system, the school's mission is undermined (which is another reason why schools' misleading of students is so nefarious, but I digress).

In addition to claiming the Supreme Court's adoption of his views relieves him of being a radical (need I remind him that the S.C. once adopted pro-slavery views?), Smith has responded that "One doesn't seek a deanship to advance a political agenda, and the school isn't choosing a political leader." I find that highly disingenuous and an absurdly narrow view of what "political" means, or what a deanship symbolizes to a school.

In a final piece of news, I'd like to promote the upcoming panel "JDs in the New Economy." It's going to be this Thursday April 7, 2011, at 12 eastern/11 central. Third Tier Reality's Nando will be participating along with a number of esteemed people (including Dean Closius of Baltimore, whose contradictory statements in the NYT article I discussed back in January). The group will specifically discuss the value of a law degree and law school curriculum. Unfortunately, I won't be able to listen in but it looks to be fun, it's free and I encourage my readers to do so if they're available.

NC State Cuts Pre-Law Advising; Silly Responses Abound

So N.C. State has decided to cut its pre-law advising service, which - to me - is perfectly understandable given that (1) there's no real need for a separate pre-law advising department aside from normal advisers and (2) almost every state in the union has to slash public expenditures. I genuinely feel sorry for the long-term adviser who will lose her job, but I have to say some of the responses in the article are downright absurd.

The first one isn't that bad:

"When I found out [pre-law services] were getting cut, I was pretty shocked about it. They have done so much for me," [senior Erin] Walker said. . . ."I didn't know what I needed to do to get ready to go to law school. I was completely lost," Walker said.

Did pre-law services take your LSAT for you? Did they get you a high GPA? No? Then, despite appearances to the contrary, they really haven't done that much for you. But it's understandable that one would think that. After all, law school is a long, glorified disabusing process. You start a doe-eyed undergraduate with one slate of perceptions and when you're through the meat grinder you realize a variety of truths, including that there are very few things that actually matter when it comes to getting into law school. Furthermore, if you're "completely lost" in dealing with schools' websites and LSAC, which are straightforward about a simple process, you're going to be even more lost when you try to figure out what the governing law is on some issues.

And then we have this:

Melanie Nutt, director of admissions and financial aid at the Wake Forest University School of Law, said she wants her name added to the letter to the Provost. She reinforced the impact of losing Tetro and pre-law services on N.C. State.

"Losing Mary [Tetro] would be a real blow to the students and to the law schools as well," Nutt said. "[Tetro] has just been a phenomenal resource."

No kidding. You're losing an inside sales person at the state's 2nd-biggest public school. Already, one should note a theme in the article: no one is actually articulating what pre-law services actually did that was so indispensable for N.C. State students. Instead, they merely dish out platitudes like "it was so valuable" and "losing this sucks." Seriously, are N.C. State students so utterly dumb they can't figure this stuff out? Do none of N.C. State's other advisers have an hour to read up on law school?

I did not have pre-law services in undergrad, so I honestly have no idea what they do for you and - again - I see no pressing need to have one. But apparently others do - even if they can't articulate why:

"Cutting something in a big college, like engineering, would be more efficient, because they have so many resources," [senior Harrison] Do said. "If you cut this small, little thing that helps so many students, that to me isn't being very efficient."

Efficient? Efficiency is about resource maximization and waste reduction. I don't care how many programs there are in the engineering college, they're probably all a better use of resources than a pre-law department. Again, I'm sorry a dedicated educator is losing her job, but a pre-law advising service is basically $350k down the sinkhole. Every second a student spends in there would be better spent figuring out LSAT tricks, studying for higher undergraduate grades, or chatting it up with bored professors to get better letters of recommendation.

One of the biggest problems in education - legal and otherwise - is that when someone says "we really need [x]," too few people stand up and say "bullshit." Guaranteed government-driven revenues have never encouraged thrift, and so now we have bloated university structures with all sorts of useless centers and services that are economic deadweights but - oh no! - we can't cut them because we actually hired nice people to fill those positions.

Well, if schools had any interest in teaching their students about the real world, they'd be far more aggressive in shedding excess baggage when budget cuts proved necessary, and they'd be far more hostile to people who try to tell them otherwise. No one in the private sector ever had his job saved because he was a good person or even good at his job in isolation. The fact that we treat public/non-profit university employees differently when many states are flat broke is absurd.

When BigLaw Fails: Howrey

You might have missed it, but last week, but Howrey, the 50th largest law firm in the United States and a major player in Washington D.C. litigation, voted to dissolve.

Steven Pearlstein of the Washignton Post has a nice postmortem that hypothesizes what went wrong:

Howrey expanded too much too fast, its overhead expenses growing even faster than its revenue....

Fixed costs are a challenge for all law firms, but particularly so for litigation firms such as Howrey that can’t count on a relatively steady flow of work from corporate clients — leases to review, mergers to handle, securities filings to make. Revenue in the litigation business tends to be lumpy. You get paid only when there is a case to be tried and then often only after the trial is over. Howrey, in particular, had come to rely increasingly on revenue from such contingency fee cases, which rose to $35 million in 2008 and then fell to $2 million a year later.

Pearlstein also notes that Howrey ran into conflicts of interests problems as it grew, as well as a weak partnership in general that was not as committed to the firm itself as the partners were committed to themselves. This paragraph in particular struck me as interesting:

For me, it is of symbolic and substantive importance that law firms are no longer partnerships in the strict legal sense. Most, like Howrey, had transformed themselves into “limited liability corporations” or “limited liability partnerships,” a new hybrid form of business organization. Unlike old-fashioned partners, those in an LLC or LLP are shielded from individual responsibility for the liabilities of the firm. That means that they are apt to be less careful in making decisions about what risks and expenses to take on, knowing they do not face the prospect of losing all of their net worth.

This seems to be yet another instance where the respective bar associations rubber-stamped fundamental changes to the legal profession without fully digesting the consequences. When state legislatures started adopting the LLC and LLP business formats, law firms were some of the first on the boat (at least on the latter), and I wonder if anyone actually voiced opposition, claiming there was intangible value in the general or limited partnership structure (I'm not sure about this, nor am sure how law firms that operate as corporations play into it - will have to research in the future). But I will say that it's clear many intangible values in the legal system got left on the side of the road as excess baggage on the speedy voyage to multinational, 1000-firm behemoths.

But what about the future of the BigLaw model? As the Howrey example suggests, large firms dependent on big-money litigation to see profits have a volatile existence. It also seems to me that such firms are going to be more dependent on ace litigators who may have incentives to use the firm's resources to build their reputation and then spin off on their own when their own value exceeds that of their peers.

This seems, to me, like a problem stemming from law firms trying to run themselves like normal businesses. Law is analogous to sales in that your rainmakers rake in clients that the entire firm benefits from. However, a routine salesman has little power to leave because his future success is tied to continuing to sell the product, which is ultimately company property. Law doesn't work that way; the "product," the rainmaker's loyal and devoted service, is not really unique property of the firm. Thus, such a model fails. The cynic in me thinks that people realized this a long, long time ago and that's why law firms went towards partnership structures (liability for each others' debts promotes cooperation; tighter controls on people leaving) while other businesses incorporated as a matter of course, but I digress...

But what about transactional law firms? Surely, there's a BigLaw future for the white shoe operations that handle securities filings, mergers, etc., isn't there? For the most complex scenarios, yes. But my hunch is that transactional business profits will dwindle in the coming years as automation becomes an even greater force in the legal profession. If places like legalzoom can offer wills now, what's to say Fortune 500 companies won't figure out how to simplify all the transactional business they have to do? Securities filings are fairly standardized anyway. With more sophisticated electronics, I can't see 500+ attorney firms being a necessity for large companies in the future to do their routine transactional stuff. Heck, every company on the NYSE/Nasdaq/Amex would benefit if someone found a way to cut out the white shoe lawyers, and with increasingly-impressive computer technology, I'm sure someone will find the armies of Harvard and Columbia grads completely unnecessary.

Remember that most BigLaw have higher operating costs and overhead to even play the game, thus making them more susceptible to significant shifts in revenue. A solo P.I. attorney can feed his family on one or two juicy settlements. Not so at the top firms.

With it appearing that 2010 may have seen the peak of law school applications, perhaps it's time to ask if we're also seeing a peak in large law firms. I honestly don't know for sure, but given the confluence of certain events, it seems like a good possibility.

For further reading on this topic, I'd recommend a recent post over at the Legal Dollar citing the recent demise of several big firms and how to look for stability in a law firm.

The "Market" Does Not Drive Law Professor Salaries High

A few days ago, someone a level-headed, but misguided, anonymous comment on my post about the UNLV budget cuts:

(2) Law professors are indeed paid more than virtually any other professional/grad school instructors --- because the market provides that. Med School instructors earn a lot, too, for the same reason. They can go elsewhere or go into the profession itself (practice medicine, practice law) and be paid better than they are as professors. The world might well be a better place if the dedicated professor of whatever stripe were paid the same, be that person a teacher of philosophy, art, literature, or law --- and if all those professors were paid the same as someone who practices as an attorney --- but the market isn't that way.

First, this is a straw man - I never advocated that all professors be paid equally, nor would I.

Second, and more importantly, the "market" is not what dictates that law professor salaries are some of the highest in the business. If normal market forces were actually applied to legal education, professor salaries would drop immediately. Why? Well, the system has been producing an excess of 10k+ people each year who are qualified to teach the subject matter. In some cases, the excess actually being more qualified in the particular subject matter because they've recently passed a stringent bar exam that actual law professors have not.

Law is not brain surgery. There are thousands of people, many of whom are unemployed and have otherwise-great credentials, who are perfectly qualified to teach torts, property, legal research, and anything other than the most sophisticated courses. In normal supply-and-demand terms, there is a massive oversupply and fairly low demand. The nation only needs about 650-800 people who can teach contracts or torts or civil procedure each year, but there are literally thousands upon thousands of qualified people who would gladly take those jobs.

And it's not like people don't want the job. Tenure, even at a fourth-tier toilet, is a career landmark. Elite-graduate BigLaw associates regularly run back to academia after 3-5 years, sometimes because they aren't working out and other times because they'd just rather work a relatively easier schedule for a very handsome wage than work a mind-breaking schedule for a slightly handsomer wage. Assuming it's true that law professors could make more in private practice, many of them would regularly turn down the lucre for allegedly-lower salaries teaching law school. But that is NOT a valid reason to keep law professor salaries high. If anything, it provides a reason why law professor salaries should be lower, namely that, apparently, there are job perks that compensate the attorney for the lower salary.

But we don't even have to address that logical fallacy because there's a bigger one before it: most law professors would not make what they make as faculty members in private practice. Many of them became law professors solely because they couldn't make bank in private practice. It's not uncommon to have law teachers who aren't even members of the state bar. And the option to be an adjunct professor seems to cut out any possibility that tenured law professors are regularly leaving large sums of money on the table. Honestly, human nature being what it is, no one is going to leave 500k+ on the table to take a law professor job for "only" 200k, especially when the professor could make the 500k+ and teach a class or two in order to meet their desire to educate the next generation. A lot of good teachers do just that, and for the most part those not affiliated with BigLaw aren't making it rich.

Above all, the schools' only actual task is to teach its students how to be lawyers. Law professors generally have no requirements beyond having a J.D., and very few law schools require that their professors were actually successful in practice. Nor did they have to take - or do well - in the class they now teach. As the market for legal services shrinks and the number of bar members increases, it's simply absurd to continue paying professors $150k+ for a job that would have no shortage of qualified applicants if it listed for $65k and benefits.

But as we all know, there are forces that distort the market at play. First is the tenure system, whose place is secured by the ABA and the AALS and ensures that certain members of the old guard will be back next year. Second, there's this absurd emphasis on "prestige" driven mostly by things like the US News and World Report rankings. There's no natural need for law professors to have studied at a T-14 and yet, for the most part, those are the people who wind up on the faculty rolls. This focus unduly narrows the labor pool, which is a factor is having higher salaries. This is, of course, ridiculous. No real business operates this way. If you need a plumber, you don't care who went to the best trade school. You care only who can fix the damn pipes. Teaching torts should be no different.

And yet it is. The schools can get away by being thriftless and overpaying people who have relatively cushy, low-stress jobs because they themselves are exempt from normal market forces. Specifically, demand becomes artificially inflated because loans are more or less guaranteed. Meanwhile, the law schools have a monopoly that limits supply only to those who agree to their principles regarding things like professor tenure. This allows the schools to raise prices and force consumers to essentially subsidize their professors' unduly high salaries.

Thus, it is only because there are significant market distortions that law professors are paid what they are. The market is not dictating anything; on the contrary, the powers that be prevent the market from actually functioning properly.

Third, I'd like to reiterate the problem with UNLV's budget proposal. Whereas the dental school decided to cut faculty salaries - even though there is a much lower supply of dentists than there is lawyers - not one law professor was going to have his salary decrease as a result of the cuts. Not one, even though an analogous professional trade school with stricter entrance requirements willingly cut faculty salaries. That is blatant fiscal irresponsibility by the university. It's also a disregard for their moral duties as educators and a slap in the face to any notion of "social justice."

If the UNLV law professors can make more money in private practice, they should quit immediately. But I don't believe that, and neither should anyone else. And even if it were true, it would be best for everyone if they went to private practice and let the university hire others at lower salaries.

After all, like I said, it isn't like there's a shortage of people who can do this work; this isn't quantum physics. Throw a rock on the strip and you'll probably hit an attorney who can teach legal writing. The fact that current law professors have set up a white collar union that has suckered people into believing they're worth the cost doesn't change that fact.

Is Reverse Auctioning Coming to Legal Profession?

It appears so-called "reverse auctions" are entering the legal field, where prospective clients can present their case and attorneys can bid to do the service for them.

This is from the ABA Journal:

[Robert Grant] Niznik’s graduation musings led him to contemplate the plight of indebted law students struggling to find a job in a bleak economic climate as well as the expensive and largely inaccessible nature of the legal profession. His answer to both issues is at once goofy and serious. The New York Law School student founded Shpoonkle, a playfully named website that allows attorneys and law firms to bid on legal requests submitted by clients. The service is free for now, but Niznik said attorneys may be charged membership fees in the future.

"Shpoonkle" is a horrible, horrible name, and I think there are numerous potential pitfalls that have to be overcome (e.g., the clients' incentives to lie seems higher than if they're in a one-on-one initial consultation, and if the lawyer's aren't allowed to ask questions before bidding, I could see the site becoming a platform for misrepresentation). However, the fact that people are developing such technologies should surprise no one, and I think this is a positive sign that the real dangers of lawyer oversupply may become present.

By way of example, I'd like to discuss the sports card market's collapse in the early 90s. For example, in 1990-1993, a Ryne Sandberg 1993 Topps rookie card was "worth" approximately $35-40 in mint condition according to price guides that monitored the market. By the late '90s, the price had dropped dramatically (to $15 or so) and today - even after Sandberg has been inducted into the Hall of Fame - one can buy a Sandberg rookie card for about $4.00 on eBay. Sandberg's career trajectory cannot explain that by itself, as the same phenomenon can be witnessed in the value of other cards from the 70s, 80s, and 90s (e.g., this card once went for $100+). Factoring in inflation, that's a major collapse.

Why did it happen? The initial knee-jerk reaction might be that the strike of 1994 and the steroid era forever ruined baseball's popularity. But the same effect can be seen in other sports as well (see this, for example). Rather, what happened in the mid-90s was that the development of the internet (specifically eBay) destroyed the supply/demand illusion that previously dictated prices. See, prior to eBay, sports card values were set by price guides (like Beckett), who purported to monitor sales. People involved in private one-on-one transactions had no idea what the true supply of these cards was, and often the demand was overstated; such is very easy to do with there is limited information about the supply and demand of an object.

When eBay came around, it destroyed that market illusion by showing the market that the supply was much greater than anyone thought and the demand was actually much lower than anyone thought. It provided a superior means of determining supply and demand (ergo price), ultimately benefiting consumers at the expense of those who had been stockpiling sports cards on the false belief that these things would be valuable at some point in the future.

Now apply to law. What does good legal representation cost? Aside for the more "routine" services (simple chapter 7, llc drafting, basic real estate transactions, etc.), no one has a damned clue. Indeed, the ambiguity involved in legal representation - the fear that lawyer costs may skyrocket - inhibits a lot of people from seeking attorney aid. And when someone sits down with a lawyer in a one-on-one setting after a consultation, the potential client lacks any power to bargain if the lawyer says his services cost $200.00 an hour.

This set-up is a market illusion, just as the baseball card market was before eBay. The consumer (client) has no idea what the actual supply of legal services is. The lawyer is thus in a superior position to argue that his particular services are in high demand and short supply, even if they aren't.

If there were a reverse auction site set-up - not just this Shpoonkle thing, but also LawyerBid is in the game - prices for everything worth taking except the most complex litigation will drop. Why? Because lawyers are a competitive bunch and there are more licenses floating around than are necessary to service the current demand for legal services. People are, overall, cheapskates. If one barred lawyer can represent someone for half the price of another - and the individual can see the cost savings in black-and-white - that consumer isn't going to care who went to Harvard and who went to Cooley.

This is the nation of Wal-Mart and McDonalds. Prestige has nothing on cost savings, and not even Fortune 500 companies will turn down lower legal fees if they're clearly being overcharged. Right now, there's a market illusion that keeps people from seeing that they're being overcharged. If an auction site were set up, that illusion is gone.

This, of course, would be great for notions of "justice" and providing access to new parties, but, you see, the people at the high end are obviously worried. Or just ethically-minded attorneys in general. From Simple Justice:

By no means does the need for money make this a justifiable mechanism. It is anathema to what the legal profession is supposed to stand for, implicates a wide variety of unpleasant ethical considerations and reflects a further step, maybe giant step, away from excellence toward commodity. Yet my fear is that the lawyers who would sign up for this mutt couldn't care less.
...
I find it hard to blame some anonymous entrepreneurial law student from putting together this horrible idea. He's just trying to make a buck, and the creation of this new concept doesn't compel lawyers to sign up, lawyers to outbid each other to see how low they can go, lawyers to try to glom up cases in areas where they lack competency or lawyers to provide less than stellar services. It doesn't require that things go horribly wrong. But we all know they will.

That's my gut reaction as well, but let's face some facts. Law's professionalism went out the window a long time ago. The profession is now over saturated with 15k excess graduates every year in a market that is threatened to shrink by both outsourcing and technological advances.

And yet, attorneys at the top of the food chain still make a very good living, both the BigLaw partners and those working is solo firms at so-called "boutiques." There are absurd inefficiencies and market illusions harming consumers while the practitioners most burdened by the oversupply of attorneys is carrying a disproportionately heavy amount of non-dischargable debt acquired by entering the "profession."

Real professions don't set up situations such as that. Instead, they regulate who can enter the profession in order to ensure that there are few licensed professionals who struggle to make a living or pay off the costs of join the profession. The legal profession discarded that principle when it opened law school to any Joe and Betty with a 150 LSAT and a federal loan application. It cannot now hide behind professionalism as a shield to keep normal business conditions for penetrating every inch of the "profession" in a veiled attempt to keep billable hour rates unduly high.

At some point, something has to give.

I don't think this site will be a success. Indeed, as Simple Justice points out, other sites like this have failed previously, and I see too many ethical hurdles that may kill this site, especially if bar associations start looking after their interests and prohibit participation in these sites to maintain illusive values.

But people can't live in the dark forever, and you can't keep pumping out attorneys (i.e. supply) without prices, and therefore salaries, collapsing at some point. Maybe reverse auctions won't do it, but something will accelerate the race to the bottom that can already been seen in some areas.

Massive UNLV Budget Cuts, Law School Will Jack Tuition; No Law Faculty Harmed

The University of Nevada-Las Vegas is facing severe budget cuts:

To meet proposed budget cuts, UNLV would eliminate 33 degree programs with more than 2,000 students in them, killing 315 jobs, UNLV President Neal Smatresk told school employees and students Tuesday.
...
Philosophy, Women's Studies and Social Work would go under Smatresk's proposal, which would ultimately require approval from the higher education system's Board of Regents.

When you have a university willing to sacrifice entire disciplines at the altar of "fiscal responsibility," you know something has gone terribly, terribly wrong. Philosophy is an essential subject, indeed the foundation of many other subjects (putting the "Ph" in PhD"), including law. (side note: it's nice to see UNLV will continue its mid-major athletic existence even while sacrificing its ****ing low-cost philosophy department; I'm a huge sports fan, but c'mon!).

Of course, given such drastic measures, these cuts will go down to the The Boyd School of Law, which is ranked 78th according to the latest and greatest USNWR rankings. And the President is concerned, according to Legal Skills Prof Blog (also cited on the faculty alliance page, below):

These additional increases [in tuition] will undermine the Law School's successful formula and render it a mediocre institution.

"Mediocre, n., Moderate to inferior in quality; ordinary. See Synonyms at average."

What is the Boyd School now, if not mediocre? This is not Boston U. we're talking about. Of course, it's also not Thomas Cooley. But UNLV frankly can't drop that far. It's the only law school in Nevada, meaning it has a virtual monopoly over the students who most want to go there. And it's not like Nevada is unique in its severe budget troubles and the desperate need for cuts or tax increases no one wants.

And furthermore, what is the law school going to do, faced with these budget cuts?

From their Faculty Alliance blog:

Tuition increases will be used to cover the cuts. This will bring tuition increase totals more than triple the cost of just three years ago.

Yikes. In an age when law school demand is dropping, these counter-revolutionaries are going to raise tuition even further, as if students continuing to come are a foregone conclusion.

And according to this, despite this perilous situation, they're not cutting a single dollar of law professor salaries.

Look at this salary list from 2008:

Douglas Grant, Prof. of Law: $176,910.48
Joan Howarth, Prof. of Law: $170,468.67
Jeff Stempel, Prof. of Law: $169,206.54
John White, Prof. of Law and Dean: $167,423.65
Elaine Shoben, Prof. of Law: $164,341.98
Christopher Blakesley: Prof. of Law: $163,068.00

And so on. By the way, the cost of living in Las Vegas, Nevada is about 50-60% of what it is in New York. A salary of $160k in Nevada is similar to a salary of about $288k in New York.

Yet, with the state budget in peril and the flagship University possibly dumping its philosophy department, the school of law has chosen to drastically increase tuition rather than cut faculty positions. Tenured professors are going to get the unceremonious axe and these charlatans - in a class of people who often espouse this drivel about "public service" and "social justice" - won't take a pay-cut or see one of their own go, instead choosing to saddle the burden on students who they know will probably come to UNLV anyway.

This is absolutely deplorable, immoral decision-making. The dental school is cutting $1.3 million in salaries, but the law school can't spare a buck and would rather send tuition skyrocketing, which will inevitably put students who are actually dedicated to legal study deeper in debt.

Christ, the a public university is going to completely wipe out important programs (if you're a state institution, you should have a social work department), sending numerous professors into unemployment and the entire law faculty will continue living as comfortably as they did yesterday. They're like gluttons who eat a fourth meal while people starve next door, and if this proposal goes through, the law faculty who went along with it have no standing to tell anyone about "justice."

Pure Speculation on Robo-Lawyering and the Future

So the New York Times published an article yesterday on E-discovery/document review software that has the potential to reduce the need for "armies" of attorneys. Other blogs (see JJD and LSTB) have covered this already and I really don't want to discuss the article so much as just share some non-expert thoughts on the long-term future.

Basically, although I see this as a tool that will sharply decrease entry-level and document review work in the near-term future, in the long-run I see this type of technology as a major threat to the current legal order, specifically to the "BigLaw" business model.

Let me start with a wider lens. I'm no Marxist in the political sense, but sometimes it's difficult to discard Karl Marx's material way of viewing the world, at least its basic sociological principles. For example, it's hard to completely discredit his focus on materialism as a historical determinant, e.g.:

In acquiring new productive forces men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations. The hand-mill gives you society with the feudal lord; the steam-mill, society with the industrial capitalist.

The same men who establish their social relations in conformity with the material productivity, produce also principles, ideas, and categories, in conformity with their social relations.

Thus the ideas, these categories, are as little eternal as the relations they express. They are historical and transitory products. There is a continual movement of growth in productive forces, of destruction in social relations, of formation in ideas; the only immutable thing is the abstraction of movement – mors immortalis.

It's a gross over-simplification of complex society, but at the core there's some truth to it. Look no further than a basic and hackneyed evaluation of how people gained wealth and power over time. In the feudal ages in Europe, land ownership determined virtually everything. It was the one singular avenue to wealth. You either had land or, in one way or another, you leached off someone who did. But over time, technology brought other avenues of wealth. Security and improved transportation allowed a genuine merchant class to develop. With it came the roots of modern banking, whose centers sprang up along the most common routes of commerce. Then came the industrial revolution and suddenly there were at least four major ways to get to the top of the economic pyramid: land, commerce, production, and banking. And of course, the lawyer class developed along side all of this in order to sort out the quagmires that developed in post-feudal society.

Fast-forward to the 20th century and the possible routes to wealth increased exponentially. Advances in financial markets allowed people to earn entirely derivative wealth. The basic recording of audiovisual performances made what was once a temporal experience into intellectual property that made entire industries. Suddenly, knowledge, too, in the form biochemical reactions or software processes, became a billion-dollar, wealth-creating business.

I say all this only to suggest the following: technology, historically, has increased possible avenues to wealth, not taken them away, which is why it should not necessarily be feared here. Land still makes one money; it just doesn't give one the proportionate power it did 800 years ago; heck, ask the farmers who still somehow own their own land, it doesn't even give the power it did 100 years ago.

So, moving back to the topic at the outset, let's look at why BigLaw is the way it is today. A cursory view of the last fifty years or so suggests to me that BigLaw largely developed in response to ever-increasingly multinational corporations who preferred working with law firms who had offices in multiple major metropolitan areas. Large, multinational corporations more or less needed large, multinational law firms. The prestigious ones that got the choice corporate accounts merged when feasible to reduce economies of scale and - voila! - you had firms with hundreds of attorneys who raked in the top business and could charge prime rates precisely because there weren't many places that could offer the manpower of elite graduates, places like Jones Day or Skadden Arps or Winstron & Strawn.

There are, of course, other reasons the major corporations consistently go to the larger firms, prestige and experience being at the top of the list. But to Fortune 500 companies, cutting expenses to free up cash and improve profitability is a religion. I've heard from multiple sources that BigLaw has been under increased pressure the last few years to cut billing hours. I have no reason to doubt that.

And these corporations - with knowledgeable in-house counsel, many of whom sit on their boards and in their executive committee - will certainly have knowledge of this technology's existence. And since more than one company is currently developing this technology, there's no reason to think it won't be priced competitively, which will allow a broader range of firms access to the technology. Will Joe Schuck operating a sole proprietorship out of his basement be able to get it? Probably not, but firms with 25+ attorneys would find it advantageous to streamline their discovery process.

If the software can reduce what used to be done by 100 attorneys into manageable work for 2-3, the manpower advantages of the BigLaw model are dead on arrival. Because of the software, smaller firms can take on cases that resource restrictions would have prevented them from taking previously. Things like class actions can be handled by smaller and smaller firms.

Because the range of activities firms can take on will increase, real competition for legal business will increase with new entrants into the market. The result should be more robust price competition.

Of course, BigLaw will still have two key advantages, as noted above: its history of experience with large corporate matters and its prestige of being armored with "cream of the crop" lawyers. And of course, they can continue to charge more as a result of both of these competitive advantages, but the status quo cannot continue. Fortune 500 companies will simply not pay exorbitant rates if another lawyer down the street has the exact same technology and is charging a fraction of the hourly rate. Much of the prestige difference comes from the illusion of paying elite associates and staff attorneys to do the grunt work; if a computer is doing that grunt work, why would anyone pay the extra?

And with a reduction in resource costs, many BigLaw attorneys will be less likely to stick around. If a BigLaw partner has a great relationship with two or three key clients, that partner is far more likely to splinter off and set up a new firm and take his clients with him if there is software that can reduce the manpower advantage of bigger firms.

I'll admit I'm no expert, but it just seems to me that with technology like this, an extra key to wealth has been created by allowing a whole new class of firm into the market for bigger and bigger clients. If they can offer similar services at half the cost, most companies will go with the discount provider. At the very least, the price pressures should end escalating relative salaries and bonuses because the pseudo-oligopoly over high-end legal services will be broken. If I were a BigLaw partner, I'd be concerned that more firms and attorneys could do what I do, that an army of elite attorneys may become as worthless and unnecessary as an army of elite barber college graduates, and that America's successful corporations will start shopping around if I don't slice rates, and my take-home profit.

Of course, thousands of young attorneys will suffer from a collapsing marketplace for their services. That's a major problem. But transformative technology doesn't just hit the lowly; it also opens up new avenues for others to achieve wealth. It shakes the top of the pyramid, too, and if more firms can take on complex litigation, it'll help them jump into higher levels of law and in the end it's better for all of us by increasing competition and cutting litigation costs for large American companies.

Eric Holder Takes the Bullcrap Express to Montana

From The Missoulian:

U.S. Attorney General Eric Holder suggested that students at University of Montana's School of Law opt for careers in public service, urging them to consider "what we owe to our community, to our country and our fellow citizens."

"Today I call on each of you to choose action, to choose compassion," Holder said Wednesday.

What a load of schlocky crap.

First of all, although I've heard this weary refrain spouted from God knows how many self-righteous judges and professors, I've never once heard any sound justification for it beyond assuming the conclusion (i.e., that lawyers just "owe" non-attorneys and should bless them with public service).

Second, paid public service jobs are in incredibly high demand. Government and public service organizations turn away people who really want to work in public service all the time, so there's really no reason to "call" on people to work there, unless, of course, he expects people to work for free.

The legal profession "owes" absolutely nothing to the community, or the country, or our fellow citizens. In fact, many attorneys wouldn't be able to represent their clients well if they felt any kind of debt to society. Because law school is not a public service training ground. It is a professional service training ground. If you happen to represent the government, then your interests coincide. If you represent BP or a health insurance company, they probably do not.

But why do people like Holder (and, unfortunately, the people who run bar associations) continually think that lawyers should, as a normative value, give away their service for nothing? Why do lawyers owe more of a duty to the pubic than doctors, dentists, plumbers, grocers, farmers, auto repairmen, electricians, or any one else with specialized knowledge? Lawyers are no better suited for non-judge/AG public service than successful businessmen. Why are they especially "called?" Because the elites just decided that we collectively have this duty that they don't have the time to do themselves? Because it gives a feeling of elitism to be able to give your service away for free while 1/3 of your recent professional entrants have no work? Because elite lawyers want to believe - falsely - that they control access to justice?

I'm lost as to why people like Holder find it even remotely appropriate to tell trainees with 50k+ in debt and no jobs lined up that they have a duty to give back what they don't even yet (and may never) have, especially when it's to their collective economic disadvantage.

But that wasn't all for Holder.

Holder's talk marked the kickoff of the law school's centennial year, and he used it to highlight another anniversary, the swearing-in a half-century ago of Robert F. Kennedy as U.S. attorney general at the age of 35.

"I have been thinking a great deal about that moment and the extraordinary years of ballot drives, freedom rides, free schools and civil rights breakthroughs that soon followed it," he said.

Such activism, he said, "may be America's oldest - and perhaps finest - tradition. Since our nation's earliest days, young people - and, specifically, young lawyers - have been using their knowledge and training to stand up for justice."

Um...yeah. Okay, first of all, Robert Kennedy didn't have much to do with anything that actually happened in the 60s. Top-down civil rights initiatives, yes. Cuban Missile Crisis - yes, he more or less handled that. A great politician? Absolutely, but it's nothing more than mythmaking to give him credit for "the extraordinary years . . . that soon followed." Brown v. Board and Cooper v. Aaron were already done years before Kennedy was in the national spotlight. The foundations of the civil rights movements were in the 50s. And considering the politics of the time, I can't see an alternative Nixon administration and/or other A.G. doing a damn thing differently regarding the freedom riders or the other developments in the early 60s. And all of that would have happened with or without "young lawyers" who aren't particularly trained "to stand up for justice." (Who, except a vapid tool, has to be "trained" to stand up for justice, if that's their calling?)

It's such a blatantly egocentric view, i.e., "the guy in my shoes was a huge part of that," the implication being that Holder is something much more than he is.

But not everyone was trained to be so skeptical to see Holder's words as such blatant bullcrap.

First-year law student Dustin Leftridge of Missoula said he found Holder's message "incredibly inspirational."

"A call to service by the attorney general" dovetailed perfectly with his own idea of success in the legal profession, Leftridge said. "It's much more than somebody with a flashy Corvette and a nice suit."

Good God. I don't even know what to say.

Few Jobs at KU, but Legal Industry "Doing Just Fine"

From the Lawrence World-Journal:

After entering law school with designs on graduating to a job with a six-figure salary, Geri Hartley found the job market a bit more daunting....

She had designs on graduating with her J.D. and M.B.A. combination and becoming a general counsel for a large corporation. Instead, she was unemployed for awhile, and briefly took a position at H&R Block that didn’t require her to have passed the bar exam....

Many of her classmates are having a difficult time. Almost none has stayed on their original plans when they went to law school. One is working behind the cosmetics’ counter at Macy’s, she said. Another creates websites for a living.

A J.D. AND an M.B.A. and she wound up in a non-bar position.

And it's not like the University of Kansas is some 4th-tier obscure private school. It's the flagship public in a state of 2.5 million with two cities over 300k. There's only one other law school in the state and it's a semi-obscure, lowly-ranked private. UMKC, just across the river, lacks the prestige of KU.

In other words, if KU grads are doing this poorly, where a J.D./M.B.A. has to take a job in Paola after being unemployed for awhile and working at HR Block, how are Washburn grads doing?

Here's the kicker. Many people claim that once the legal industry "turns around" and the recession ends, hiring with fire right back up. Uh huh.

Bill Modrcin is a 1978 KU law graduate now working as an attorney in Overland Park. He’s worked for several large Kansas City-area firms, and he’s seen the drop-off in recent years.

On the whole, the industry is doing just fine, he said. Established lawyers in large firms are doing well. But entry-level positions are extremely hard to come by, he said.

If the "industry is doing just fine," why Earth would it go back to paying overpaying entry-level workers? Will the entire history of business management suddenly do a U-turn contrary to all empirical evidence?

A Rant/Calculation on Professor Salaries

Recently, I noticed someone had added a post on an old entry of TTR defending the salaries of law professors that are paid over $200,000. Their defense rested on two principal grounds: (1) the cost of living in the particular city (in this case, San Francisco) and (2) that they're exceptional teachers and "worth every penny."

It got me wondering what the actual "worth," in annual salary, of a law professor is. Considering what follows, I'd have to be convinced to pay one more than $100,000 given the current oversupply of qualified people for such positions and the fact that law schools are professional schools that exist for the public's benefit. And I'd only pay that much to retain someone who is outstanding and legitimately has other offers. To do otherwise, I think, is a disservice for institutions of "public benefit."

The hardest-working law professors I've come across teach two large lecture courses and a smaller seminar-level course over an academic year. Let's assume - to give the professors the benefit of the doubt - that they teach this schedule and that the large courses have 90 students and the smaller course has 20. That is 200 students total.

Let's assume that the two large lecture courses meet for 4 hours each week on average and that the smaller course meets for 3 hours a week. Assuming 15-week semesters, that's going to be around 165 hours a year of in-class instruction. Let's assume that the professor puts 3 hours of preparation into every hour of in-class instruction (considering their expertise and how the Socratic method works, this is probably excessive). Generous preparation time would add 495 hours.

There is also office hours. Let's assume the professor puts in 2 office hours each week for the entire year, which, from my experience, is fairly standard. That adds 60 hours. And then there's grading. To keep things simple, let's assume the teacher spends an hour grading each student's final exam or paper. That adds 200 hours of work for 200 students.

All tallied, that's 920 hours of work to teach three classes in an academic year. That may sound like a lot, but under normal labor conditions (40 hr/week), that's only 23 weeks. If you're a lawyer who works 60 hours a week, it takes you only need to work about 15 or so to get to 920.

At 920 hours, a professor that makes $200,000 is pulling in $217 an hour.

But wait! you may say. Professors also write articles and books! And they must attend faculty meets and are supposed to go to all sorts of events at the schools! Okay, sure, let's say there's two hours of meetings each week and that the professor spends six weeks each year writing things to build the college's reputation. That would add 344 hours and lower the per/hour taking to $158 an hour. In a world where some graduates make minimum wage selling t-shirts, I'm skeptical that complies with any definition of reasonableness.

A common claim made in defense of professor pay is that they could make more in the private sector. Well, even if that's true, so what? I'm sure there are lots of people who could make more doing something else. Most of our Congress could make more doing something else, but they all chose to do what they're doing. And it seems to me that being a law professor has numerous perks over private practice. I can't speak for everyone, but personally I'd sure as hell rather make $200k working 30 weeks a year in a fairly low-stress position than make twice as much working 60+ hours a week as an attorney.

You might argue that professors bring some level of expertise that is in short supply on the market. To me, this argument really only holds water for small, specialty areas of the law, like Military Law or Advanced Energy Law. I could legitimately see where certain areas like that are legitimately hard to find someone qualified to teach them. But for 90% of law courses, there's not really a shortage of "expertise." For first-year and some upper-level courses, there are literally tens of thousands of people produced every single year who are competent in the subject matter. There a slew of people with specialized knowledge in areas like copyright, environmental law, and constitutional law that are either unemployed or working outside of their area of "expertise." Explaining legal concepts isn't brain surgery (unless you try to do something stupid like reconcile the politicized Supreme Court's history into unified objective rules); that's why there are 10 gazillion study aides available for any given legal subject.

The only thing keeping the law schools from paying less and hiring the law school equivalent of SAT/LSAT tutors is that there remains a "prestige" in having Harvard graduates stock your faculty. Personally, since law school is professional training and not a philosophy-based institution, I think it's absurd that they run them the same way you would a liberal arts college, and were I in charge, I would definitely have a preference for hiring adjuncts who actually work, but that's just me.

All in all, I don't want to make a blanket claim that all professors are overpaid, but let's not pretend that most professors aren't benefiting gratuitously from an extremely fortuitous situation, where they're compensated at a favorable rate for doing a task where, in normal market conditions, there would be a significant oversupply of qualified applicants driving down wages. There is a reason professorial jobs are coveted like medieval salt; through devices like tenure and misplaced elitism they've basically rigged the labor market.

I would gladly teach Constitutional Law, Criminal Law, Evidence, and Professional Responsibility at a Fourth-tier law school for $40 an hour, even in San Francisco. I'm sure I'm not the only one. Peter Keane makes 4 times as much (per GG's tax return cited on TTR) - if not more - teaching those pedestrian, run-of-the-mill courses. Plus, he gets to fly around the country and reap the harvest of being a "dean emeritus." And he regularly makes TV appearances. Golden Gate pays him significantly more than market rate even though I can practically guarantee you that no one goes to Golden Gate University Law School because Peter Keane is there. To me, that's economic silliness and a waste of money, but I don't fault Keane for rigging a sweat deal; I fault the "public benefit, not-for-profit" institution that pays him.

As for the cost-of-living argument, I can't take that seriously when professors are paid significantly more than the local average and the schools they work for expect their students to live on a fraction of that amount.

Finally, one can't help but ignore the role of escalating professor salaries in contributing to ridiculous tuition increases. While, again, I can't fault the professors for capitalizing on absurd conditions that pay them quadruple what the market would likely bear, I would have moral difficulties cashing an inflated paycheck from somewhere like Golden Gate knowing that my salary increase was partially paid for by loans that fourth-tier graduates will have an increasingly hard time paying back, all because I conned someone into thinking that an education from me was something special and worth paying four or five times the market rate.

If certain, patently-overpaid professors had any kind of a moral conscience that trumped their financial motivation, it seems to me that they would take voluntary pay cuts to aid their universities in providing their "public benefit" at a reasonable cost. But alas, as the last two decades have taught us, the education sector no more believes in the true "public benefit" than Microsoft or Alcoa. Non-profit or for-profit alike, those at the head-table will resource-grab as much as they legally can. Again, I can't fault professors for being human and wanting to exploit the mine for as much gold as possible, but I sure as hell can and will fault the system for giving them bigger pick-axes and carts.