A Labor Day Laugh from Fox News

In this article, entitled "Internet to Bring Down the Sky-High Cost of Higher Ed, Experts Say," Blake Snow ignores reality in a way I think Fox News is only capable of.

Similar to how media began “supplementing” printed newspapers in the 90s with free online editions -- which transformed business models and made the news largely “free” on the web for consumers -- free online courses might (perhaps unintentionally) ultimately force tuition closer to zero.

Exhibit A is Stanford's new "Introduction to Artificial Intelligence” class. It’s entirely online. It’s free. And it even promises student feedback, in addition to an unaccredited but still résumé-worthy “Statement of Accomplishment.”

Resume-worthy? Uh...sure.

Does anyone in their right mind think that the private university system is going to move to low-cost model where current costs would have to be slashed? The analogy to the newspaper industry is dumb; newspapers are all genuinely for-profit, and the sole purpose of reading a newspaper was to learn what happened in the world. There's a prestige in reading The New York Times, I suppose, but it's not something you put on a resume and you get the exact same pseudo-intellectual cred by reading the online version.

In contrast, people don't take college classes to learn whatever is being taught. If that were the case, non-profit education would be dying simultaneously with the newspapers (if not sooner given the prevalence of libraries). But they're not. That's because people don't really go to college to learn. They go to be credentialed. You can learn whatever it is they teach in the Stanford English or Political Science departments for a very, very, very low cost. Yet people still pay tens of thousands so they can tell everyone they went to Stanford, that Stanford accepted them, and that Stanford put its silver sword on the student's shoulder.

That is the commodity, and until that is offered for free, there's no revolution forthcoming, and students will pay ever-more-insane prices for their "top-tier" degrees. It won't matter if hundreds of other colleges go to cheap online models and teach the same thing. If the only way to get the stamp is to attend the school (and there's no incentive for the elites to do otherwise), people will attend the school and pay out there nose, alternatives to the same practical end be damned.

The article seems to realize that these sorts of free online courses are nothing more than cheap marketing, and yet it retains this optimistic tone that soon our educational costs will be drastically cut by the internets. Bullshit. If that could change the current model, it would have changed 10 years ago. Places still offer actual credit classes online for identical tuition as their brick-and-mortar stuff. Why? Because they can, and no misreading of the economics at work will stop them.

Specifically to the case of law schools, all it takes is an accrediting organization to say "no" and any cost reduction by internet technology would be instantly nipped in the bud. Don't you think the same protectionist measures will surface the second any serious movement happens that threatens professor and administrator livelihood?

Egpytian Grads Should Just, Like, Network More

From Al-Masry Al-Youm, the leading independent newspaper of Egypt:

Dozens of law school graduates protested on Saturday at the Supreme Court demanding equality with chancellors' and judges' sons who have been appointed to the State Council and prosecution service. They called for putting an end to the practice of inheriting judicial posts.
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“I received my bachelor degree with a ‘very good’ grade. Although my colleague got a pass grade, he was appointed at the State Council for being the son of a chancellor at the council,” said Ahmed Abdel Rahman...."

You mean people actually protest nepotist systems that expose the ruse of the meritocracy?

In America, these people would be called whiners with a sense of entitlement. Instead of complaining about an unjust system that screws the unconnected, they would be told to network better, so that they could be connected, so that someone else (preferably someone docile) could be screwed. Either that or they should "hang a shingle."

But I guess protesting at the Supreme Court is what happens is such a vulgar place where people actually complain about social injustice and absent-minded leadership. Thank goodness we respect civil democracy here.

Flooding the Market Will Not Lower Prices

Previously, I've advocated that there are benefits to taking a "free market" approach to legal education, i.e. reducing entry barriers and letting anyone practice law. And there are: the risk of a mis-allocation of labor and capital reduces significantly, people who might be excellent lawyers who would otherwise not go to law school might be enticed to practice, etc. etc.

But drastically reducing the cost of legal education and eradicating entry barriers will not reduce the high costs of sustained litigation, high-caliber representation, and other examples of lawyers costing oodles and oodles of money.

And yet three "economists" continue to spout the simplistic view that good ol' supply and demand will lower average attorney salaries and the cost of representation. From - of all places - the Economist:

In 2000 the average American law-firm lawyer made $191,000. Exactly comparable numbers are scarce, but the average salary for all lawyers in Canada in 2002 was just $64,000; in Australia in 2000 it was $90,000. American lawyers are clearly reaping some kind of premium, and the economists behind the Brookings study carefully control for a host of factors including long hours, areas of specialisation, and inherent talent. They reckon that of the $170 billion spent on lawyers every year in America, some $64 billion is a premium produced by market distortions....

I'd like to know how these "economists" factored in that they're comparing completely different legal systems - much less "inherent talent" - but in any event, they make some rather audacious claims:

[T]hose without the bar exam or law school under their belt could still, with training and experience, dispense routine guidance and offer legal services, such as drafting wills and arranging simple divorces, to poorer clients. Doing so today risks getting a false “lawyer” sent to prison.

What, exactly, does legalzoom do? What are legal aid facilities for? There are very, very few dirt-poor divorces and simple will needs going unmet, and flooding the market with new lawyers isn't going to lower the price of getting a simple will or a simple uncontested divorce. Why? Because there are tons of lawyers perfectly qualified to do this type of work who would probably do it for low flat fees who aren't running robust practices.

If there really were a demand for these sorts of services, there wouldn't be a 20k surplus of lawyers graduating every year. There would not be lawyers working at the Gap. There would not be lawyers toiling in doc review and taking part-time internships for free. Res ipsa fucking loquitur.

In any event, LSTB, as usual, has a much more detailed, statistically-based entry ripping these views to shreds. He, too, believes that there will be no substantial reduction in fees by flooding the market.

[F]irms are risk averse, valuing credentials over their cost. They’re cautious because their clients are. If clients believed they were overpaying for private school law grads, they’d demand firms hire from public schools, or they’d stop paying new associates’ exorbitant salaries. Oh wait, they’ve been claiming to do just that. If the legal labor market were this cartelized, no one would care about U.S. News’ rankings, and grads would have jobs at graduation, even in a period of high unemployment.
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The high costs of legal services are due less to ABA accreditation requirements and more to hourly billing practices, poor price signaling, and risk aversion by purchasers of legal services.

And the authors seem to concede that there is a major flaw in their basic reasoning:

The Brookings authors acknowledge that the most complex matters will still go to the best-educated and qualified lawyers.

I write separately - a concurring opinion, if you will - to underscore the flaw and place it in precise terms.

First, I'd like to reiterate that there is very little "simple" business floating around out there waiting to be sopped up or have prices driven downward by people who aren't concerned with going to the "best-educated and qualified lawyers." Criminal defendants, injury victims, insurance companies: these people aren't going to avoid the most qualified lawyers and bargain hunt. If you were injured in a car wreck, would you go with the experienced p.i. shop offering a 15% contingency cut or the newbie with no experience offering a 9% cut? Unless you're a moron, you go with the former. It's not complex litigated, but you can bet your bottom dollar that the most-qualified lawyers will still soak up the best business.

That, in a nutshell, is the giant pink elephant in the theory. The major problem with these feel-good libertarian screeds about restricted markets in the legal profession is that lawyers are not, and never have been, fungible goods. For supply and demand to work - to even apply in the first place - the product at issue has to be fungible, which means more or less that the consumer wouldn't differentiate between different producers on any basis other than price. Oil, for example. Or sugar or cheapo utilitarian furniture or standard grade screws or 20 lb white paper.

Attorneys are not on that list. A new graduate is not fungible with an experienced litigator. Thus, no matter how many new graduates you pump into the market, no matter how lax the entry barriers become, the experienced litigator - be it p.i., civil rights, housing, workman's comp, divorce, etc. - will not feel any price pressure. For him to lower prices or his share of the pie, there'd need to be a flood of experienced similar litigators. That's unlikely to happen; even if you continually pump thousands upon thousands of new graduates into the market, only a few will ever become experienced personal injury litigators. Thanks to it being a pyramid system, the additional operation of any supply and demand would be negligible.

This seems self-evident, but people who argue from a juvenile supply-and-demand perspective constantly overlook it. There's no guarantee that a million more law graduates would ever produce any sort of drop in legal prices. The consumers just don't buy it. Filling out a securities filing is a fairly straightforward matter as far as things go. And yet the business goes to white shoe firms. As LSTB notes, it's risk aversion. It also proves that no supply and demand analysis will work.

No matter how hard you try, you can't flood the market with high-caliber, prestigious law firms, or with experienced attorneys in subfield [x]. Prestige, experience, and expertise are valued (and reinforced by the court system in determining attorneys fees awards) across all fields. Thus, without a revolution in how consumers select attorneys or how attorney costs are approached by the courts, there is no possible way lower barriers of entry would really reduce the cost of 90% of legal representation. Other trends - increased efficiency or contracting business - might lower prices, but flooding the market with minimally-qualified participants will not.

Again, if it could happen this way, it would have already (as it has in areas like traffic ticket law). Three "economists" wasted a lot of time writing a book whose prime thesis can be killed on little effort.

US News Still Trying to Wash Its Hands

Want to see Bob Morse deflect whatever gets flung his way onto the ABA and cover the complete lack of a journalistic ethos at his organization?

Here you go.

The ABA's new placement questions are lagging on what is still needed, based on a July 27 ABA memo on Reporting Placement Data on Annual Questionnaire.

1. The ABA says it will not publish school specific salary data, but instead will publish salaries by state and region not linked to the performance of any school. These state and region results are not limited to the data from any particular law school. Prospective students want to know the average salaries [ed.: a "statistician" arguing for an average as a helpful indicator where there's a sharp bimodal distribution? Uh...okay...] of the graduates from each law school as part of being able to determine the economic viability of earning a J.D. degree from that school. The ABA should have the power to get law schools to report accurate salary data on a school-by-school basis and should trust law students to be able to understand the meaning and limits of such data.

2. In terms of employment data, the ABA is currently not asking law schools to report to them whether a graduate's job is full time or part time or whether a new J.D. graduate's job requires bar passage, whether a J.D. is preferred, or whether the job is a nonprofessional one. This is vital information that prospective students and current students need to be able to make a truly realistic assessment about the job prospects of graduates at each law school....

Emphasis mine. To be fair to Bob, he's right that more detailed information is better.

But therein we have a problem. For years, U.S. News has done little more than parrot the schools' numbers and serve as an advertising platform for flawed data. And even though Bob is clearly capable of reading a questionnaire and figuring out the deficiencies from the reader's perspective, his publication spent years (and may continue to spend years) obfuscating - not clarifying - the information available to the student by reprinting and reinforcing the schools' flawed data.

If information about whether a job is legal or nonprofessional is "vital" to making a "truly realistic assessment" among law schools, why was U.S. News so willing to ignore such niceties when republishing the schools' past employment rates during the past decade?

Here, Bob has basically admitted that the data published and implicitly endorsed by U.S. News in the past was flawed and failed to give students a helpful, realistic picture of their employment chances. Is there any other way of reading this? If student [x] can't make a "truly realistic assessment" without knowing a breakdown of legal/nonlegal jobs or more precise salaries, how could student [x] have possibly found previous editions of U.S. News helpful in forming a "truly realistic assessment" of whether law school makes a good investment?

Generally, when a journalistic enterprise screws something up bigtime, it issues a formal apology.

Has Morse/US News ever apologized? If not, when can the reading public expect it? And, better question, when can we expect Morse and US News to actually undertake some journalistic pursuit of the truth of law student graduate instead of merely profiting off a rankings-drunk public by blindly relaying whatever data the ABA (truly, an unbiased party) puts out?

In other news, California has just appointed a state supreme court justice who, as far as I can tell, has *zilcho* experience practicing in California. I get that Prof. Liu gets rave reviews from students and legal insiders, but in what way does that make one more qualified to interpret a state's rules, constitution, etc., than the numerous appellate judges and other legal figures already there? I suppose it's California's choice and not mine, but I suppose from my view, it's part of a general problem where we value pedigree, name, and legal scholarship over actual worthwhile experience that might prove necessary. It's not like this is a new phenomenon, but I think it's one that continues to be detrimental to the system on the aggregate.

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

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

Just check out this gem of an excerpt:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Two comments:

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

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

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

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

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

Selections from Cooley's President

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

About the school's new Florida campus:

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

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

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

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

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

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

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

On the Kurzon Strauss lawsuit:

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

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

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

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

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

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