Reasons to Be Gloomy About Legal Education

I agree with much in Dean Andrew Morriss’ Liberty Forum essay. And I endorse his hope that, in the future, legal academia will have greater differentiation. Yet my take on legal education’s prospects is much gloomier. Dean Morriss writes mostly about what should occur going forward, whereas I am watching what is happening right now. What I see gives me little reason for cheer.

The greatest force for reform in legal education is the stunning decline in law-school applicants, falling to lows not seen in decades. The good news, as Morriss says, is that law schools compete for students through heavy discounting, in the form of higher scholarships deeper into the class. A dozen or so law schools have announced rollbacks in tuition. These price reductions should bring debt levels down for many future graduates, as long as pricing competition continues.

The other good news is that the decline in enrollment promises to reduce the oversupply of law graduates that has flooded the market in the past decade. The percentage of graduates who land full-time jobs as lawyers—about 55 percent nationwide for the last three graduating classes—should rise significantly in coming years.

That is the silver lining. Now let us look at the dark clouds.

Tuition at many law schools continues to rise. Annual tuition now tops $60,000 at Columbia Law School, and another dozen law schools will pass this mark in the next few years. Including living expenses, the out-of-pocket cost of a law degree now approaches $250,000 at these schools. While it is true that many students receive scholarships, about half of students at most law schools pay full tuition. Furthermore, even with discounting, the cost of law school is still exorbitant at many law schools across the country, especially private law schools.

Debt levels for many law graduates remain extraordinarily high. If only students at law schools with excellent job prospects carried high debt, this would be less of a concern. Unfortunately, many law schools with poor employment results saddle their graduates with high debt. Here is a sampling of such schools, listing the average debt for their 2014 graduates followed by the percentage of the class that secured full time, long term jobs within nine months of graduation:

Arizona Summit: $187,792 (45 percent)

Thomas Jefferson: $172,445 (29 percent)

New York Law School: $166,622 (44.5 percent)

Florida Coastal: $162,785 (30.8 percent)

American: $159,316 (45.6 percent)

Vermont: $156,713 (54.5 percent)

Touro: $154,855 (53 percent)

San Francisco: $154,321 (36 percent)

Whittier: $151,602 (26.7 percent)

The actual situation is worse than these figures indicate because they omit interest accrued on debt while in law school and undergraduate debt. Also many graduates who land lawyer jobs from these law schools are employed in small law firms with salaries in the $50,000 range, far below what is necessary to manage debt this high. More law schools can be added to this list.

Many are admitting students who should not be in law school. A decade ago, about half of applicants nationwide received admission to law school somewhere; this past year, about 80 percent of applicants were admitted. A decade ago, only a handful of law schools admitted more than 50 percent of their applicants; this past year, 119 law schools admitted more than half of their applicants, including 34 law schools that admitted more than 70 percent of their applicants.

As law schools reach deeper into their applicant pool, they admit weaker students who would have been rejected as unqualified in prior years. According to figures compiled by Professor Jerry Organ, five years ago, only nine law schools had median LSATs between 145 and 149, and no law school had a median below 145. For the entering class of 2014, in contrast, 29 law schools had medians between 145 and 149, and seven law schools had medians below 145.

A 149 LSAT score converts to the 40th percentile among test-takers, and 145 converts to the 26th percentile. Accordingly, three dozen law schools filled at least half their 2014 entering class with students who performed well below average on the LSAT.

At 11 law schools, the LSAT bottom quartile point was 142 or lower, which means a quarter of the class had scored below 20 percent among test-takers.

Moreover, 10 law schools reported median GPAs below 3.00.

These are unacceptably weak credentials. Law school used to be fairly difficult to get into, reserved for smart, hard workers who did reasonably well in college and on the LSAT, but that is no longer the case. Shockingly, two law schools reported bottom quartile LSATs in the 130s, enrolling a quarter of the class with scores at or below 11 percent among test takers. While many very talented people still attend law school and will go on to become excellent lawyers, there is no doubt that the overall pool of people currently in law school is less capable than in prior years, and it is getting progressively worse.

Bar pass rates will continue to decline in coming years. A nationwide decline in pass rates for the July 2014 bar exam prompted a letter to the National Conference of Bar Examiners signed by nearly 80 law deans seeking an explanation. The conference’s president, Erica Moeser, attributed the decline to “less able” students. Law deans scoffed at this explanation. After closely examining the underlying numbers, however, Professor Derek Muller (who earlier agreed with the deans that the conference was to blame), concluded that weaker student quality in the bottom quarter of law school classes was indeed the likely explanation for the decline in bar pass rates.

But that is not the worst news. Each entering class in the last five years has had significantly weaker credentials than the class before, particularly in the bottom quartile. As Muller observes, “the decline in bar pass rates this year is only the beginning of probably still-steep declines in the next couple of years.” This decline—already baked into the numbers—can be avoided only if large numbers of current law students on the bottom end drop out, fail out, or choose not to take the bar. Not surprisingly, some law deans are now questioning whether the bar exam should exist at all.

These are very serious problems, particularly the collapse in admissions standards. That is why I do not share Dean Morriss’ cheerful take on the future of legal education. He is aware of these issues, of course, and his more positive view is premised on looking beyond when the current crisis shakes out. Even if we stretch the time period out a full decade, however, I don’t see the future he projects.

At least three formidable obstacles stand in the way: legal educators, the American Bar Association’s accreditation standards, and parent universities.

In Morriss’ account, elite law schools will continue to be academically oriented, enrolling students with high test scores and grades and sending many law graduates off to corporate law jobs. Fewer than two dozen law schools fit this category. Those that remain will be “mass-market schools” charging affordable tuition, with small full-time faculties bearing heavy teaching loads, supported by a large group of practicing lawyers teaching as adjuncts. There will also be “specialty schools” with expertise on an important area of law, with faculties engaged in significant research on that topic. And he sees “alternative legal services schools” that offer more limited training on matters like compliance or health-care regulations.

Let me address Morriss’ models in reverse order. Washington State’s recent approval of limited-license legal technicians is a significant step toward the alternative legal services model that he envisions. Non-lawyers already currently do a great deal of work like this for low-income people, like filling out and filing no-fault divorce forms. Much like the rise of nurse practitioners in medicine, this trend is likely to continue. But most of this training will be done in community colleges or other programs that currently train paralegals, expanding their offerings into areas like compliance, divorce, immigration filings, and so forth, supplemented by apprenticeships.

Law schools are too academic, not practice-based enough, and too expensive to serve this training market. As for specialty law schools, only a handful of institutions can fill this niche owing to the expertise required and the fact that it would only work for areas of practice remunerative enough to support specialization.

The bottom line is that the vast majority of law schools must become mass-market. And therein lies the rub.

Law educators will not go willingly. For the past two decades, the vast majority of law schools have built themselves on the academic model, with large faculties engaging in substantial research. Many law professors under 60 years of age were hired for their academic prowess and see themselves as scholars. They are accustomed to teaching no more than three or four courses per academic year, with substantial time and support to engage in research. Academically oriented professors are the bulk of law professors today and most will not retire or voluntarily depart in the coming decade. Any shift to the mass-market model will face stiff resistance from law faculties.

Accreditation standards for law schools established by the American Bar Association’s Section of Legal Education stand in the way of the mass-market model. This is a point that Morriss recognizes. A law school that approximates this model is Massachusetts School of Law, which has been denied accreditation. Accreditation standards (especially how they have been interpreted and applied) require tenure protection for professors; that the bulk of teaching be done by full-time professors; and that professors be accorded ample time to engage in research. These three requirements collectively prevent the mass-market model.

A year ago, the ABA’s Standards Committee proposed to delete the tenure requirement, replacing it with strong contractual protections of academic freedom. Six hundred law professors signed a petition opposing the proposal, which ultimately failed to pass. For most of its history, the Section of Legal Education has been controlled by legal educators and has largely acceded to their wishes.

Universities will be reluctant to embrace the mass-market model. This is so for two reasons: as academic institutions, they value academic activities and reputation, and they want law schools to be positive revenue-generators. If law schools are to be reconstituted as bare-bones operations focused on training students to be competent lawyers at a reasonable cost, as the mass-market model requires, they will not be academic in orientation and will not produce much revenue for their parent universities. Consequently, the latter will not embrace this model unless they are left with no other palatable option.

Given these obstacles, there is no clear path from the current problematic state of law schools to the future of legal education sketched out by Dean Morriss.

What, then, is its near- and medium-term future? A decade hence, it will, in all likelihood, be much as it is today. Perhaps a dozen law schools will close or merge, but not many more than that. Elite law schools will be the same. Most other law schools will undergo contraction, with smaller faculties and fewer students, but not by much.

Law professors will teach four courses and their salaries will remain attractive—earning more than other college professors and above the average salaried lawyer—although only at elite law schools will faculty pay be lucrative. Most law professors will still engage in research.

Tuition at most law schools will stabilize at current high levels (in inflation adjusted terms), though tuition at elite law schools will go even higher, opening up a much greater price difference with non-elite law schools. Across the board, a law education will remain costly, except for tuition at about two dozen public law schools that keep prices relatively low.

The number of applicants to law school will fluctuate at present levels, in a band between 50,000 and 70,000. Law schools at the bottom end will continue to admit students with unacceptably low entering credentials, with many dropping out, failing out, or failing the bar. The ABA will keep current rules regarding faculty in place, and will not take any serious action against law schools to enforce Rule 501(b), which reads, “A law school shall not admit an applicant who does not appear capable of satisfactorily completing its program of legal education and being admitted to the bar.”

The obstacles I mentioned earlier, reinforced by institutional inertia, will keep legal education roughly as it is now, scaled down a bit, muddling along without fundamental change. There is, however, one unpredictable and critically important factor that has the potential to radically alter the face of legal education: the federal student loan system. Two aspects of this system help perpetuate law schools in their current form.

First, the Graduate Plus loan program supplies the full cost of attendance (tuition plus living expenses) to law students with virtually no limit on the amounts they can borrow and no evaluation of the likelihood of economic return. Without this federal loan program, or had caps been set, tuition increases would have been much more restrained.

Second, the federal loan repayment program—IBR/PAYE—allows graduates in financial distress to make low monthly payments (based on 10 percent of their income above 150 percent of the poverty rate), with the remaining loan balance forgiven after 20 years. At current levels, a private law school graduate with average law school debt ($122,000, plus interest accrued) who earns the median salary ($65,000) would have great difficulty making the standard monthly loan payment.

Many recent law graduates rely on this program to keep from defaulting on their loans (which is good). One problem with how it is structured, however, is that the amount borrowed becomes irrelevant. Because monthly payments are determined solely by income, a person who owes $150,000 will pay back the same amount as someone with the same income who owes $250,000.  Law schools and law students thus have less reason to be concerned about rising tuition and rising debt.

Legal education in its current form is propped up by these two programs. Graduate Plus provides students with unlimited funding, and IBR/PAYE relieves concerns they might have about taking on large debt. Both of them—thankfully for legal educators like me—will keep a steady supply of students entering our doors who are able and willing to pay high prices.

If both programs were to be cut back substantially, restricting the flow of money, law schools would be forced to operate more efficiently. If that happened, things would change in fundamental ways.