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Monday, April 09, 2012

The Law School Crunch Is Here--Finances and Quality to Suffer

Brian Tamanaha

According to new numbers released by LSAC, 167 law schools are suffering a decline in applications for 2012 (H/T Caron). At nearly three-fourths of these down schools the decline ranges from large to potentially devastating: 76 schools with a decrease of 10% to 19%; 40 schools with a decrease of 20% to 29%; 17 schools with a decrease of 30% or greater. Keep in mind that this decrease follows on the heels of sizable decreases at many law schools in 2011.

The aggregate numbers show the seriousness of the crunch. Two years ago, first year enrollment at ABA accredited law schools was about 52,000. Last year it was around 47,000 to 48,000 (official numbers not out yet); if law schools reduce their enrollment by a comparable amount for the entering 2012 class, enrollment will fall to 43,000. Aggregate law school enrollment has not been this low since the late 1990s. There were 18 fewer law schools at the time, so now there are fewer available students per school. The reduction will not be distributed equally--some schools will take big hits (enrollment-revenue) and others will not.

The raw number of applicants this year will likely be between 66,000 and 67,000. Not since 1986-1987 have law schools seen total applicant numbers this low. Student quality will suffer as a result. For the purposes of quality, what matters is the excess of applicants over enrolled. This year law schools will enroll about 65% of the people who apply--a high percentage not seen since the mid-late 1980s. (Eight years ago only 50% of applicants were enrolled.) The decline in student quality will be even greater if the aggregate enrollment reduction does not go as low as 43,000. (It is quite possible that law schools collectively will not reduce enrollment in the same proportion as last year to match the current reduction in applications because the revenue loss will be too much for many individual schools to bear in two successive years.)

The fall in student quality will not just affect the lower ranked law schools--many of which will accept 65% to 75% or more of their applicants this year. There are large percentage drops in three of the four highest LSAT groups: the number of applicants with scores between 170-174 is down by 20.7%; 165-169 down by 18.5%; 160-164 down by 18.4%. With fewer high LSAT scores to go around, the LSAT profile at many top 100 law schools will decline.

The scary news: Many law schools will face severe financial difficulty this coming year, and if this decline continues some law schools will close.

The good news: Law students should get higher scholarship offers deeper into the class. After going up for decades, we may finally witness a decline in real tuition (the scholarship discounted rate).

The bad news: Law schools will still produce far more graduates than available jobs (BLS stats here). To get a closer match between supply and demand for new lawyers, law schools must enroll about 35,000 first years (still above openings, but attrition after 1st year will bring this down). The last time enrollment was that low was in the early 1970s, when there were 50 fewer accredited law schools.

Comments:

Any idea on how a lower number of applications will impact current law students looking to transfer to a higher ranked school?

I imagine those with decent LSAT scores and good 1L grades will have a higher likelihood of acceptance but I was curious for your take.
 

Peter,

The transfer market is already robust. Students who do well in 1L will be able to move.
 

Should we be more concerned about the sort of "creative destruction" taking place in the law-school industry than we are, say, in the textile or manufacturing industries?
 

Why is it scary news that some law schools may close? (Unless you attend or work for one of them, of course.) We don't have enough lawyers?
 

Jim and John,

The news will be "scary" for people who work at law schools that are facing a dramatic fall in applicants--not just professors but staff and everyone else who work in the building. Creative destruction might have positive social consequences--and I advocate a contraction in law schools--but it will be personally devastating for many when/if it happens.

Brian
 

I agree with Jim. What you term the "scary" news is in fact the greatest of all news. It's interesting that you focus on the "devastating" impact to professors and staff at those law schools. This "devastating" impact is the loss of a job. You know, the kind of thing that millions of far less fortunate individuals had to deal with over the past half of a decade. And I don't think anyone is all that worried about the professors with degrees from Harvard and Yale plus prestigious clerkships finally having to go out and get a job where they earn their salary rather than living the good life on the backs of students taking on debt they cannot possibly pay back and never getting a legal job, if any job at all, in the first place.

Bottom line: Your sensitivity to the privileged over the downtrodden is disturbing and illustrative of all that is wrong in academia today at law schools nationwide.
 

@Aybe, The accusation that Professor Tamanaha is more sensitive to the plight of faculty than to the plight of students is silly. He is one of the few professors loudly advocating for students. We need more professors to join the ranks, and not just do so quietly behind closed doors.

I think we are all in agreement that contraction in the number of law schools is a good thing. It may be scary for those who work there (including staffers, who don't have fancy Ivy pedegrees), but I think we all would like to see fewer law schools. I wouldn't read too far into the use of the term "scary." Same team, guys, same team.

In response to the article though, I am skeptical that we are going to see 1) lower tuition bills or 2) bigger scholarships. I think if schools are seeing a budget crunch, they may actually be inclined to increase tuition to make up the difference. If a student is foolish enough to spend $40,000 on a lower tier law degree, they'd be foolish enough to spend $45,000. On the other hand, students who are wise enough to avoid these types of schools aren't going to all of a sudden start attending because of a small tuition decrease.

What schools might do, however, is offer more small scholarships to the entire class, with brutal stipulations attached of course. For some reason, these little schollies cause prospectives to act irrationally. "Sticker" price might scare them, but a whopping $5,000-$10,000 scholarship makes them feel wanted and more likely to attend. "Hey look Mom and Dad, not only did I get admitted to Arizona Coastal State Tech, but I got a scholarship too! It'll only cost me $150,000 for this Tier 4 degree!" Financially this is just as irrational as going at sticker, but students still do it. And of course, that scholarship often evaporates when they can't finish in the top 1/3 or 1/2, and the student is then stuck with a full bill.

So while this decline in applications is a very welcome development, I don't think students are going to benefit quite yet, probably not until schools start closing. Law schools may still have some tricks up their sleeves to deal with the declining applications.
 

JA,

You are right that scholarships will be offered to more students. Tuition sticker price loses meaning when 90% to 100% of the class get scholarships. This is what I anticipate will happen, at least at some schools, and it would represent a drop in tuition. But I don't know how widespread this will be.

You are also right that this form of inducement--"Congratulations. You got a scholarship!"--appears to be highly effective.

One of the more interesting--and disturbing--facts in the LSAC report is that the percentages of applicants from the lowest LSAT score groups (those in the 140s) have fallen much less than applicants in the highest LSAT groups. I take from this that these people are determined to go to law school no matter how much information they may hear about the poor economic odds.
 

The news will be "scary" for people who work at law schools

Yes.

But I'd say Mr. Carlson's question applies.
 

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Brian:

I have followed your work since having you as a professor. Now, in the twilight of my law school career, I finally feel compelled to post a comment. As much as I would like to comment on what you have written in the past, I am under a time constraint and will focus on what turned me from a reader to a writer: the anonymous “be careful” comment.


We live in a nation, a world even, that is being held together by lies. But the edifice is cracking. Those who owe their well being to perpetuating mythology and falsehood are getting nervous. When their veneer shatters, they will have nothing but force to rely on.



But as you can see liars are not brave.




You are. And I believe that I am as well. Please continue to search for the truth. There can be no hope without truth and there can be no truth without courage. This is the key to a moral life and a lasting legacy.

I salute you.
I thank you.
I have your back.
 

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