Balkinization  

Wednesday, October 27, 2010

An Unlikely Champion of Reform in Legal Academia--Dean Matasar

Brian Tamanaha

Dean Richard Matasar of New York Law School published a remarkably dire essay on the future of law schools in the October issue of the New York State Bar Journal, entitled, “Does the Current Economic Model of Legal Education Work for Law Schools, Law Firms (or Anyone Else)?” He delivers a resounding “No” to this question, closing with a warning: “The years ahead suggest that law schools…must change or die.”

Dear Matasar has been out front on the need for reform for several years now. At the January 2009 AALS conference Matasar accused law schools of “exploiting” prospective law students, trading on their delusion that they are buying a ticket to a lucrative career. For many law students, the odds of obtaining a high paying law firm job are akin to a lottery. Matasar castigated legal academics, suggesting that we

"should be ashamed of ourselves….We own our students' outcomes. We took them. We took their money. We live on their money....And if they don't have a good outcome in life, we're exploiting them. It's our responsibility to own the outcomes of our institutions. If they're not doing well ... it's gotta be fixed. Or we should shut the damn place down. And that's a moral responsibility that we bear in the academy."

His recent article details the challenges faced by law schools. Foremost among these challenges is the mismatch between the high cost of attending law school and the poor employment prospects of many graduates. Matasar observes that many law graduates get temporary jobs, and many do not get legal jobs at all.

Matasar spreads the blame for the situation across the board: law schools have gotten fat; law professors want high salaries and low teaching responsibilities (and they don’t retire!); the ABA imposes high costs on law schools (tenure, large physical plant, etc.); the federal government recklessly approves loans to law students who are unlikely to earn enough to service the loan; and law students recklessly choose to attend law school—taking on mountainous debt—thinking they will be the lucky lottery winners.

What does the future hold? “The demand for legal education will decline at high-priced schools whose graduates are having difficulty repaying their loans,” Matasar predicts. The federal government might restrict credit to students at such schools. The Department of Education might issue regulations “requiring schools to reduce their costs, justify their price increases, or otherwise alter their model.” Schools that are not well positioned for the new reality will close.

Dean Matasar should be applauded for raising these issues.

But he is an unlikely champion of reform. Upon his arrival at New York Law School a decade ago, Dean Matasar embarked on an ambitious program to improve the institution. A central component of his strategy was to build the faculty, which proved successful. NYLS now has a sizable faculty with a bevy of truly impressive scholars.

The downside of this strategy, however, is that it creates a large cost component in the budget that is tough to trim (wages and benefits of tenured faculty, and faculty with long term contracts). One way to help manage this cost is to increase the endowment through donations. But inevitably a substantial bulk of the cost must be paid for by tuition.

New York Law School’s annual tuition is $46,460—among the highest in the country. The school projects the yearly cost of attendance (including living expenses) at $69,358. Three years of law school thus costs around $200,000 out of pocket (plus opportunity costs). Even students with substantial scholarships still pay a hefty sum for a NYLS degree. New York Law School graduates rank second highest in the country in average indebtedness: $129,410 (87% of the 2009 class).

In addition to charging an exorbitant tuition, NYLS takes in a large number of students. In 2010 (in the midst of a deep recession in the legal market), NYLS enrolled 653 incoming 1st year JD students—among the highest in the country.

Graduates of NYLS face a tough job market in ordinary times. Many competitive law schools are located in and around New York City (Columbia, NYU, Fordham, Cardozo, St. John’s, Brooklyn, Seton Hall, Rutgers, Hofstra); and many graduates from top law schools in Boston and Philadelphia also seek employment in the New York market. In bad times, like the present, it must be a formidable challenge for NYLS graduates to obtain gainful legal employment of any kind (although the employment statistics published by the school paint a surprisingly rosy picture).

It is difficult to escape the impression that when Dean Matasar warns about the survival of “high-priced schools whose graduates are having difficulty repaying their loans,” he sadly knows of what he speaks. Matasar presides over a school of modest standing that is extraordinarily expensive to attend and admits an unusually large class made up of students with moderate economic resources who graduate to limited employment prospects. The broken economic model Matasar describes appears to be his own template (shared by many other law schools). Are his increasingly vocal criticisms of legal academia an unspoken mea culpa?

Dean Matasar has been lauded as “one of the truly great deans of our generation.” He has been a successful dean at several institutions. But it might turn out that Dean Matasar adopted an unsustainable, expensive model of institution building which imprudently assumed that flush times in legal academia would continue to roll. Tuition at NYLS was already high in 2001—now it is astronomical. This could not go on.

In fairness to Dean Matasar, it must be emphasized that many law schools followed the same model, so he should not be singled out for blame. (And the problem is not limited to non-elite schools; Columbia has a huge faculty, with tuition about to pass $50,000, and its students graduate with the third highest debt, a bit less than NYLS.) Matasar is standing at the forefront of the law school crowd, with full view of the economic precipice, warning other law schools to turn around, to choose a different path. It might be too late for many.


Comments:

Since Professor Pasquale suggests, in the preceding post, that Medicare seek "more objective" ways of determining reimbursement rates for medical services, maybe we should apply this insight to legal education as well. Perhaps a board of legal scholars to determine what a legal education is worth? No, that would be a conflict of interest. How about a board of doctors to make that determination? Hmm, do you think that they would choose $1.75, reflecting the true societal value of a lawyer, or $1 billion, reflecting their desire to avoid making any more?
 

Brian, I agree with you that a day of reckoning is coming. What is moderately surprising is that more law schools aren't have serious discussions on how to lower the cost of tuition going forward. That will involve some very difficult trade-offs, which, of course, is why it has not happened. Miguel
 

Maybe there would be more legal jobs if the lawyers that were employed refused to work 100 hour weeks.

Maybe there would be a lot lower demand for legal education if law schools weren't allowed to lie about employment statistics.
 

Perhaps the practice of law will become a commodity. Technology has dumbed-down many jobs. Perhaps the legal profession is next. Creative destructionism may impact mega-law firms, eliminating the "brass ring" that law school students wish to grab.
 

I think Brian makes a good point but perhaps backward. I think Columbia and the other "elite" schools set the model which places like NYLS feel compelled to follow. With no change or even an acceleration of the high cost/high tuition model by the elite schools--witness Stanford's drive to "overtake" Yale and Harvard in the ratings--it seems unlikely the remaining schools will do much differently unless or until they are forced to.
 

At $129,410 you are looking at roughly 50% Stafford loans (fixed at 6.2%) and 50% PLUS loans (fixed at 8.2%). The interest alone of that is $9,245.89. If you use the governments income based repayment plan - 15% after the deducting 150% of the poverty line - and have no dependents, you need to make more $77,000 a year just to come out ahead of the income. It looks like about 7% of NYLS graduates make that (The BigLaw associates are certainly among the 20% who reported salary information).

Now it is true that Dean Matasar has no fiduciary duty to students or potential students, but as a self regulating profession shouldn't law deans (and for that matter law professors) have at least a duty of good faith and fair dealing?

Is the tuition contract, if not procedurally, at least substantively unconscionable?
 

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