The Law School Biz

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One of the necessary requirements for fundamental reform of a dysfunctional institution is self-reflection among the individuals within that institution. It is now quite obvious to knowledgeable spectators that the American system of higher education is desperately in need of fundamental reform. But this realization has yet to sink into the heads of most of the key players in that institution, the faculty and the administrators. This, I think, is mainly because they are not yet generally self-reflective.

One of the main impediments to self-reflection in the academic world is the tendency among its inhabitants to view higher education — indeed, all education — not as a business but as a kind of quasi-religious institution. Under this view, the key players (especially the faculty) are not agents delivering a service and subject to the same motivations as agents in any other business (chief among which is self-interest), but are instead disinterested and selfless individuals educating young minds as a noble calling.

That is why it is always useful to report data that demonstrate that in fact college is a business like any other, and the agents in it (the faculty, staff, and administrators) as well as the customers — the students — behave as agents and customers do in other businesses, i.e., as rational maximizers of their personal preferences. Recent data on the changing reality of law schools are very illustrative in this regard

Consider first the data on the market for law school graduates, as reported by Deborah Jones Merritt. If you look at the percentage of recent law school grads who land a full-time job requiring bar admission (as opposed to those who get any sort of full-time job, say, as a waiter or bus driver), you see a declining market. In 2001, only 75.9% found such jobs within the nine months after they graduated. In 2002, the figure dropped to 75.3%. In 2003, it was 73.7%; in 2004, it was 73.1%. In 2005, it ticked back up to 74.2%, in 2006, to 75.3%; in 2007, back down to 74.2%. But in 2008, it dropped to 71.2%; in 2009, to 65.2%; and in 2010 it slid to 62.3%. Now; in the 2011 figures, it has sunk to 59.8%. That is, over 40% of law school grads last year could not find full-time work for which their costly education was appropriate within nine months of graduation.

This means that during the past four years, nearly 74,000 law school grads could not find appropriate full-time work (again, requiring bar admission). This represents huge direct costs in terms of money spent to educate these students (and the wages they have forgone in law school) and in even greater opportunity costs. (Most people bright enough to get through law school could have gone instead into medical, business, or technical trades.)

Students have apparently heard about the declining chances of employment in the field. Law school applications are way down over the past two years, dropping by nearly 16% last year alone.

More interesting still, the biggest drop in applications is not among the least but among the most qualified applicants — at least as measured by the ubiquitous Law School Admissions Test (LSAT). Among those who scored at the highest level (175–180), applications were down by nearly 14%; at the next highest level (170–174), they were down a whopping 20%. But at the next to lowest level (140–144), applications were down only about 6%, and at the lowest level (140 and below), only about 4%.

This leads to an interesting conjecture, especially for those who can’t believe that law schools are just businesses like any other. If law schools were run as quasi-religious institutions, solely devoted to the public good, they would respond to the obvious oversupply of attorneys and the resultant decline in the quality of applicants by cutting back on the number of students admitted. But if they are like other businesses that face a declining customer base, they will do what they have to do to attract the same number of buyers.

Specifically, my guess is that at the top-tier schools (especially the top 14, admittance to which usually requires an LSAT score of at least 165), you will see not a reduction in the size of the entering class but simply a reduction in the quality of that class, reflected in lower mean LSAT scores for those students.

We’ll see.




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