Money for nothing

Via Paul Caron comes this article (free registration required), detailing the grotesque and amusing spectacle in Austin, where former dean of the law school Larry Sager got fired recently for paying himself $500,000 not to quit his job. (This is unfair. It would be more accurate to say that he got fired for failing to pay off enough faculty to keep the fact that he was paying himself a half million bucks to remain “loyal” to his institution sufficiently on the down low to avoid a public scandal).

There’s a lot here, as litigators say, and I’ll try to touch on some of it without losing what at this hour is still a hypothetical breakfast.

(1) The sums involved are rather startling. One nice thing about lawsuits is that they can reveal all sorts of fascinating pieces of information. According to the available public records, the salaries of the 25 highest-paid members of the UT law faculty last year ran from $272K to $217K. This turns out to be a significant understatement: per the documentation that emerged as a consequence of Linda Mullenix’s suit and the subsequent Sager imbroglio, the actual compensation for this group ran from $352K to $281K. And it’s unclear whether these fairly stupendous figures include the pro-rated annual share of the 22 “forgivable loans” totaling $4.65 million handed out by Sager to himself and others between 2007 and 2010 (A university-wide salary freeze was implemented at UT smack in the middle of this frenzy, but as many a baseball free agent has reminded us over the years, a man’s got to feed his family). So it’s quite possible that the real figures here actually go north of $400K. Update: I have been reliably informed by someone who has seen the reference documents that the quoted figures represent only base salary and summer grant money, and do not include the “forgivable loans” — meaning that UT Law is effectively paying much of its senior faculty between $320K and $410K per year.

I imagine what’s going on here is that the law school manages to hide a large piece of its faculty compensation from public scrutiny by jamming it into “research stipends” and whatnot, in addition to these remarkably generous forgivable loans. Speaking of which . . .

(2) I can’t imagine what purpose “forgivable loans” have other than hiding actual levels of compensation from (a) faculty who aren’t getting them; and (b) the ever-inquisitive public at large. Such loans are taxable as ordinary income, and, as a legal matter, they aren’t enforceable as quasi-retention bonuses, since per Sager’s own description the loans were given out in return for “a moral commitment” not to leave UT for at least five years. A “moral commitment” is obviously not the same thing as a legally enforceable commitment. Update: It turns out the “moral commitment” language is purely for tax purposes, to avoid having the payment treated as an employment bonus, which would subject the lump sum to an immediate income tax liability. The “loans” would in fact have to be repaid if those getting them left voluntarily during the term of the loan.

(3) I have no basis for making any judgment regarding the merits of Mullenix’s sex discrimination suit, other than to note that the fact that the overall level of compensation for UT law faculty — and indeed for law faculty in general — is absurdly and unjustly high does not mean that people such as Mullenix don’t necessarily have a valid complaint when they point out apparent inequities within that system. In other words, that Mullinex is grotesquely overpaid relative to American university professors, or American teachers, or Americans in general, or inhabitants of the planet, does not mean that she wasn’t underpaid relative to her colleagues on the UT law faculty.

In the end the significance of this kind of thing is how it reveals the extent to which legal academia is giving itself over to sheer self-dealing. Over the last seven years the UT law school’s resident tuition has gone from less than $14K a year to more than $32K, while non-resident tuition has gone from 25K to $47.5K. The ultimate justification for this explosion in the cost of getting a law degree is that you have to pay your faculty literally twice as much, in real terms, as what the school’s faculty was making 25 years ago (while at the same time cutting their teaching loads etc etc), in order to keep up with the Joneses. That shall we say less than compelling argument will remain tolerable to the people paying the freight (the school’s students, and to a far lesser extent the state’s taxpayers at public schools like UT) to the extent that they’re actually getting something like a decent return on the investment they have to make to become lawyers.

But when the gap between what the professors and their graduates are getting paid gets to be too much, even law students will eventually rebel against this preposterous system.