Legal Minds at Work, I Guess

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

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

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

[I]f you oppose high law professor salaries, do you also oppose high law firm salaries? Law firms can pay 25-year-olds $160,000 plus a bonus because they bill out their work at hundreds of dollars per hour. Is that also a scam, in your view? Or do you think lawyers are worth every penny?
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[I]t sounds to me like you're not concerned if lawyers scam clients, but you think it's outrageous if law students are misled into thinking that they can take part in the scam.

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

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

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

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

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

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

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

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

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

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

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

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

Misinformation Runs Rampant in this Business

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

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

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

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

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

And this:

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

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

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

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

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

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

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

Kurzon Strauss Files Suits Against Cooley and NYLS

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

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

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

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

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

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

Your Congres Hard at Work

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

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

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

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

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

A couple of extra points:

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

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

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

You Cannot Build a "New Kind" of Law School

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

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

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

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

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

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

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

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

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

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

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

On America's Credit Downgrade

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

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

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

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

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

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

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

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

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

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

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

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

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

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

St. Thomas (MN) Gives Money Away

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

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

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

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

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

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

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