Monday, October 18, 2010
The Irresponsibility of Law Schools
While I would tend to agree with arguments that law school is overpriced and that it is not necessarily a good deal for students who are looking primarily at pecuniary rewards, I think the logic of this post is off.
Law schools, all things being equal, SHOULD admit more students during a recession. The opportunity cost of law school for students who would otherwise be unemployed is very low. It makes sense for people who, in normal economic times would have a job and thus face a higher cost to furthering their education, to go ahead and get more education during a recession.
If you want to argue that schools admit too many students (I disagree) or charge too much for tuition (I agree with this) given the pecuniary rewards accruing to lawyers, I think you need to make that argument assuming a "normal" economy.
Keep in mind when you are arguing against an increase in lawyers that overall lawyers are well compensated and we still have big problems with the affordability and availability of legal services for under-served communities.
Recessions, after all, are supposed to be temporary. Of course, after the Obama administrations failure to push for an adequate fiscal stimulus combined with the reckless opposition of Republicans to incremental additions, the current recession may in fact be more than temporary. But, I don't know that is something I would blame on law schools.
The decision of whether to go to law school is not just a function of opportunity cost. What also matters are the opportunities a student will have upon graduation and how much the student must past for those opportunities (compared to other alternatives).
That is why you cannot put the high tuition to the side. For many law students, the cost of law school (tuition and living expenses) exceeds $150,000. At some law schools it is closer to $200,000.
You are correct that many law graduates do well over their careers. But you are wrong to assert that "overall lawyers are well compensated." The legal market has developed a bi-modal distribution of pay, in which about a third or so of graduates are clustered around a starting income of $130,000, with the rest of the graduates clustered around $40,000 to $50,000.
For the latter students the wisdom of the decision to go to law school is less clear (it depends in part on their alternatives.).
Your assumption that we need more lawyers because there are under-served communities is also questionable. It is correct that there are under served communities--but there is little reason to think that adding more law graduates will fill this need. The under-served groups often have difficulty paying enough, so lawyers don't take the work. This will get worse as the cost of legal education rises. Law graduates will be hard pressed to make their $1000 monthly loan payments with the pay they earn at legal services.
You are right that the general question of whether there are too many lawyers should be asked in normal times. The concerns I raise hold even if we were not in the midst of a severe downturn in the legal market.
But the fact that we are in a serious downturn exacerbates all the the problems. First and foremost, a significant number of graduates are not obtaining ANY legal employment. The market has contracted. When law schools increase the number of graduates they put out, they are making the oversupply situation worse. That is why I label the increase in admissions "irresponsible."
It's not that existing law schools admitted more students, it's that the ABA accredited more law schools. The number of students being admitted (and graduating) who are qualified for well compensated positions hasn't changed much if at all.
Students need to properly assess their own career options, it is not the job of the law school to do that for them. In fact many of the new law schools were created because there are so many terrible students who, for some idiotic reason, want to to attend law school.
However, if you must blame someone for producing "too many" lawyers it should be the ABA.
I agree in part with both David and Prof. Tamanaha.
Part of the increase, I think, stems not from the schools, but from students motivated to attend law school because job prospects now are so poor, hoping that things will have improved during the three years in school. What responsibility the schools have to discourage this is a difficult question.
I generally agree with the other points raised by Prof. Tamanaha, and I suspect David does too (based on previous discussions at VC).
I will say this to anyone considering law school: the current legal job market is horrifically bad. Top students -- and I mean top 10% -- at top schools -- and I mean top 20 -- from the class of 2009 are without jobs. Consider your options.
Prof. Tamanaha should be applauded for once again bringing attention to a rather inconvenient problem for the legal academy, namely that salaries and research opportunities are being subsidized by high tuition costs that most law students cannot meet unless they are assured of securing lucrative employment after graduation. Obviously there are fewer such opportunities in the current market.
I tend to agree with David, however, that there is nothing untoward about law schools admitting more students during a recession, given the increase in demand from presumably qualified students. However, I would feel better about this practice if law schools were being more proactive about preparing their students for the realities of the current market whether it be by revamping career services departments or placing more of an emphasis on skill development.
In addition, it is unfortunate that loan forgiveness programs have not been expanded during the recession.
So no one is going to question these graphs? What is the "total employees" graph measuring? Obviously not the total number of employees in the legal field (1,000 legal professionals in the USA?). So is it measuring the growth in legal professional positions? If so then the fact it stays in positive territory is encouraging. Hoever, your readers have no idea what you're presenting.
Good thing you're a lawyer and not someone to whom facts actually matter.
Mike, The graph clearly states that it is measuring in the thousands - so the graph shows around 1.1 million legal employees.
If law schools as a whole responded by reducing enrollment across the board, that would really help. But it would also probably lead to an antitrust lawsuit.
If individual law schools were to respond to this trend by reducing enrollment, they would have less money to support career services, etc. They would probably slip in USNWR rankings, too, both because of a reduction tuition revenue/per-student spending, and because schools use tuition dollars to "buy" students with high LSATs.
So there does not appear to be a solution.
Will someone please tell me if lawyers have a "professional organization?" You know, those things that restrict labor in order to drive up salaries? I hear from dentists, doctors, and effing interior designers that these "professional organizations" can alter entrance exams and whatnot to hold down the numbers of professionals in their ranks. Instead of opening up new law schools every five minutes, maybe lawyers should think about banding together to protect their profession?
This is a very, very *poor* display of data. You have blown up the scale on the graphs to emphasize differences. Plot both graphs from zero to maximum value, and you will find that your dramatic changes are but blips in the data, and not very significant at all. In fact, your argument disappears. Replot the data and see if your argument holds any water, or drowns in its own insignificance.
You need to learn something from Edward Tufte about displaying data.
What a lazy bunch of chart critics!
The charts clearly portray what Brian is discussing, and they will do so no matter how you rework them, because they portray different datasets.
The lines may not be as dramatic in your favored version, but that doesn't mean the values portrayed are necessarily "insignificant."
LAW.Com provides (10/19/10) a link to Karen Sloan's National Law Journal article "ABA May Join Push for Law School Transparency" that makes reference to the ABA's "The Truth in Law School Education" resolution.
The views of Lysander Spooner on who should be able to practice law are described in Steve J. Shone's "Lysander Spooner: American Anarchist" recently published, at pages 101-105. Spooner's comments back in 1835 might be of interest as he believed in the open door; keep in mind that back in those days, there were very few law schools and most attorneys had been trained, as had Spooner, in law office apprenticeships.
It appears I owe an apology to Brian Tamanaha (I seem to be making a lot of these lately). I had initially taken his differentiation among different levels of law schools as a form of snobbery. But it appears he is merely being honest about what is happening at American law schools (both "elite" and "nonelite") and I was wrong to be dismissive of this continuing effort.
Education is countercyclical; law school is no exception. During a severe recession, you would expect to see educational enrollment spike and jobs to decline. I don't really think those numbers are descriptive of what is happening in the legal market so much as it reflects broader economic conditions.
It is going to take a while for market forces to deal with the inefficiency this has created, but it will happen. In the meantime, what do you expect lawschools to do? There is a glut of applicants. Are they ethically obliged to refuse those students? I think these criticisms all fallaciously suggest that someone, other than the invisible hand, is in control of the legal labor supply. If the ABA wanted to control the supply of lawyers, could they? I don't think there is a simple answer to that.
So the question is, who is being irresponsible?
Put both charts on log scale on the y axis then you can see the relative change rather than absolute values.
Another way to deal with charts is to examine the absolute numbers. From 2002-2008 the number of admitted applicants held steady at about 46,000. In 2009 there was an increase of about 3,000 students. We assume in 3 years that means an extra 3,000 lawyers in the job market, over the year before. We also know that the job market is bad now. Do we know it will continue to be bad in three years?
The second chart shows that from 2008-2009, the same time frame in which the jump of law admissions occurred, there was a loss of about 40,000 jobs. Without knowing the ratio of lawyers to non-lawyers in that number, there is no way to really use the second chart in relation to the first chart. For example, the first chart indicates admissions stable from 2002-2008, the same period during which the bottom chart indicates a growth of about 60,000 jobs in the legal sector. Does that mean most of those jobs were non-lawyers? What are we seeing when we compare the net gain of 20,000 jobs in the period 2002-2009, with no increase in rate of lawyers entering the job market (remember the increase in admissions won't hit the market for another 3 years)? That comparison alone might lead one to conclude the net increase was of non-lawyers.
In all of these relatively larger numbers, of what significance is the size of the graduating class in 3 years? Or, of a relative increase of only 3,000 lawyers? There are, or were, about 300 cities in the US of 100,000 or more population (these are rough numbers from the mid-90s, last time i counted - they must still have some relevance). That means each of those communities would have to absorb on average only an additional 10 lawyers into their markets ... when those lawyers graduate. That does not seem like much of a stretch.
Better statistics are needed. These do not seem to do the work being asked of them.
(I did not take into account the increases in law graduates as a result of the 2001-2002 jump in admissions; to get a clear picture one would have to use data from admissions from the 90s as well, and the proportion of law to non-law hires.)
I was hoping the first chart's admissions data revealed a vitalized response to the knot of legal questions of the past fifteen years in the US.
Further, I had the impression medium scale firms had engaged in a restructuring among ancillary employees, which might skew the aggregated data in the second graphic.
The increase in enrollment is probably attributable to two factors. First, there are some new law schools that are growing rapidly (Charlotte Law is an example). Second, almost every law professor I have spoken with recently has reported that his/her school saw unanticipated yields each of the last two years. I know of several schools with record-size entering classes that they did not plan for and are having trouble dealing with. This wasn't an intentional push to take more students. It surprised the schools.
% Change Graphs. That is how you make both of these graphs FAIR and accurate. the point you are trying to make is that Schools are increasing enrollment while total number of jobs decreases. You can do this accurately without having terrible graphs (no offense - they're terrible), by showing % change graphs year over year instead of total absolute values. Then you can also put the lines on the SAME graph. Please use this method from now on.
Reasons why the graphs are bad:
- Y Axis should ALWAYS go through zero, or else you're using what we in the financial industry like to call "USA Today" graphs. They give the wrong impression, like employment is going up or down wildly, when actually the change is small if you use the correct axis.
- Axis should match between comparable graphs. You just can't compare them otherwise - that why % change works, because it matches the axis
- a 3rd alternative is putting a 2Y-axis graph together, with one data set on the left axis, and the other on the right. Either way, you need these axes to go through zero at the bottom to be correct comparisons.
Thanks for the helpful suggestions, everyone.
I agree with you that the second chart is problematic because we don't know precisely how many in the legal employment category are lawyers. I am making the assumption that there is a proportional drop in lawyers relative to non-lawyers--which seems plausible but might be wrong.
We know from other sources that a significant number of lawyers have been laid off during this period. The problem is that, as far as I know, there is no reliable count that isolates on lawyers. If you know of such numbers, I would be happy to report them. I suspect the picture will be the same.
As for whether legal employment will turn around in a couple of years, no one knows. There are signs of a structural contraction in the corporate law market (with greater reliance on temp lawyers and other forms of outsourcing), which suggests that the job situation will be difficult going forward even with a general improvement. Meanwhile, there are a lot of unemployed and underemployed recent graduates--that much we know for sure--who will be competing for jobs with each additional graduating class.
Kirg and Ben,
News law schools is perhaps a part of the explanation for the increase, but it seems unlikely to explain the full 5% jump from 2009 over 2008 (how many new schools came on line in that year?).
An increase in the yield is not the explanation, however, because the increased enrollment closely matched the increased acceptances. It was the increase in the latter that explains the jump.
Finally, in response to several commentators, although it is correct to say that the students are choosing to enroll, and they should have the right to make that decision (so we can't blame law schools for admitting more students), I would feel more comfortable with this rationale if law schools were honest and forthcoming employment numbers. That is not the case.
Many law schools continue to report that more than 90% of their recent graduates have obtained jobs. Those of us on the inside scoff at these numbers--but many prospective students, who lack the same information, might rely upon these numbers to conclude that law school is a relatively good option during a recession.
Law schools cannot put the responsibility on prospective students as long as we are not candid about their job prospects. This issue is finally getting a bit of traction--see http://www.law.com/jsp/article.jsp?id=1202473544557
But meanwhile our misleading practices continue. More students apply, we accept more, and more choose to enroll. Three years hence they will graduate to compete with a pool of other recent graduates scrambling to find suitable employment.
The way to do those charts would be as a single 'spread' chart (common in financial market analysis) recomputed to show percentage change since the absolute numbers are not otherwise comparable. Another such spread chart that would make for interesting viewing would be annual tuition of law school versus starting salary. A great starting point would be the numbers that can be found in Turow's One L: when he wrote that book the ratio of Harvard Law's tuition to an average Wall Street starting salary was roughly 1 to 10. It is not even close to that now and my guess is that on average for all law schools and legal jobs that such a ratio is approaching 1 to 1 and perhaps even inverting given the true number of job placements. The Legal Education Industry is going to get a lesson in law--the law of market forces--because the entire paradigm of a 3 year law school program and the money making, barrier to entry scam of the bar exam, simply will not be able to survive given that sort of trend. It is too bad there is not a Legal Education Industry ETF--it would be the best short out there.
David Welker is engaging in the fallacy of Pascal's Wager.
Blaise Pascal gave up a life of science, math and learning for one of faith. He reasoned that if one bets that there is a God, then one wins everything.
You see variations of this argument in legislative committees, i.e. "If we are wrong on this proposal, the state is only out $25 million. If we are right, then we can create a whole new lucrative industry."
David, you come across as a shameless shill of this industry. When people are unemployed, how the hell will they benefit from an additional $120K in student debt?!?! Please answer this question, and leave the forked tongue at home. Thank you.
Seems vastly different what I was told by recruiters when they said an undergraduate law degree was the road to the promised land. What can I say, I took their word at face value. My only hope is that in the remaining year or so of my studies things miraculously pick up and everything is okay. if not I suppose I'll just do what a lot of others seem to be doing in this situation: carry on studying, albeit part-time, and start paying off the mountain of debt I've incurred...
Nando, you are wrong. That's called risk taking. Every business does that calculation in every decision it makes. The reason that it is flawed for Pascal is because chosing to believe in God/live a life of faith based on a "well, I better do this because if I'm wrong I'll end up in hell" defeats the actual purpose of believing in God and having faith.
The graph showing legal jobs is more misleading than the simple disclaimer tends to state. Total number of legal jobs? That includes paralegals, law secretaries, etc. right? I didn't go to law school to be a secretary (which I could have done before law school). Same for being a paralegal.
We all know the number of jobs has decreased, and the admission rate has increased. But using those graphs is very very misleading. I'd get it kicked out under Rule 403.
The legal job market was not growing fast enough to absorb all of the law school graduates even before the recent recession. This was highlighted in a 2007 Wall Street Journal article. See "Hard Case: Job Market Wanes for U.S. Lawyers" at http://online.wsj.com/article/SB119040786780835602.html
The result of the increasing number of law schools and law graduates in the face of insufficient demand was the creation of the bimodal distribution of incomes for lawyers with those in the lower group actually seeing their incomes barely keep pace with inflation or decline over time. Even before the recent recession, some law school graduates were struggling to meet their debt burdens. The recent recession has only made the problem worse.
The blame cannot be laid solely on the influence of US News. Law schools are cash cows for their universities. As a result, the universities have an incentive to add law schools to their programs if they don't have one or to encourage their law schools to admit more students.
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Fun post, graph-axis-labeling-challenges notwithstanding. But, neoclassical-economist devil's advocate here. If the market in legal education were fully competitive, why wouldn't the marginal return of a law degree be driven down to zero? Isn't the fact that the value of a law degree has been so far above zero for so long just evidence of oligopoly pricing and output levels by a cartel of ABA-accredited law schools?
So, again, granting you the facts as you portray them, why is the normative conclusion that law schools are now being "irresponsible," instead of now engaging in slightly less oligopolistic behavior? Is this cause for condemnation, or applause?
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Shouldn't there be a three year lag to appropriately match the two sets of decisions?
Law schools aren't prescient, so they are never going to be able to match employment realities three years in advance.
But, the fact that there was a big downturn in legal employment makes it very likely that this market will have improved three years hence.
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The charts are an excellent start and reflect a very significant event (fall 2008), but I think they are just a start and don't present a full picture. If a chart like this is continued for a few more years, I think we'll gain a better understanding of the elasticity of the legal academia industry as events like (fall 2008) occur in the future.
Perhaps some charts that show enrollment as compared to employment during other significant social and economic events in the past couldn't hurt.
PS: We read "On the Rule of Law" in Jurisprudence last quarter--faaabuuuloouuuus! Totally slept on class for so many, but immensely important. Yoroshiku onegai shimaaasu.
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