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Catholic University of America to slash overall budget by 20%; plunging law schools apps to blame

[ 19 ] April 15, 2013 |

Last November CUA’s law school announced that the managing partner of Kirkland and Ellis’s DC office would become the school’s dean the following July. In January the school revealed the new dean was taking over immediately, and that staff were being laid off.

Now comes word that the university as a whole will cut operating expenses by 20% (!) because the cash cow that was its law school is being ground up into hamburger by, among other things, the availability of employment statistics regarding outcomes for CUA law school graduates.

Those statistics reveal that 88 out of 246 2012 CUA law grads had a legal job (full-time long-term employment requiring bar admission) in February of 2013, not counting two people who were employed by the school itself.

The law school accounts for about 10% of the university’s overall enrollment, so the mind reels at the extent to which the rest of the university has been depending for its solvency on encouraging the law school to produce massively indebted graduates who are unable to get any sort of legal job in what is at present the worst place in the country to try to get a job as a lawyer (Washington DC).

This naturally raises the question of how many other universities depend on their law school’s graduates to cross-subsidize the rest of the campus to a similar extent. A friend who is in a position to know tells me that quite a few law schools are now actually running operating deficits, although university budgets are so byzantine in regard to cross-subsidization via the charging of “indirect expenses” and the like that it’s often very difficult to untangle the actual financial situation. We law faculty are of course encouraged by our administrative overlords not to worry our pretty little heads about these matters, not that most of us require much encouragement of that sort anyway.

Another friend makes a prediction:

My suspicion is that law schools will close when they appear to need long term subsidization. I got into a row a few times at Prawfs over this, but when you read most schools tenure guidelines as an implied contract, it starts to jump out that cost cutting would be extraordinarily hard in any department – with seniority rules, the need to show financial crisis etc. The easy out is actually to “pull the plug” on the whole department. That is why I think a few colleges could quite abruptly make the decision to simply close the law school.

I do find amusing the idea that some professors have that everyone will take a nice round 10% pay cut. You never can really sell an across the board pay cut – someone always has alimony, kids in school, impecunious parents, a big mortgage, and if it is hell to make it stick. Look how fast law firms push out partners having a bad year… The idea that senior faculty will take one for the team, or junior faculty, many of whom have big student loans – is not that realistic. The problem is that it does not look very easy to layoff tenured faculty and oddly, tenure seems to be one of the few areas in US law where the idea of constructive dismissal may actually apply (I did some research a while back.)

My own sense of the situation, which I have expressed before, is that when the first reputable college jumps and announces that its law school is closing there will be a rising wave of followers. The interesting question is how far are some schools from that point – if enrollment is way down in August/September it could start sooner than many people think.

I note your comment about lack of transparency. The late Dick Gordon told me, when he was Dean of Georgetown, that he took the decision to move to Capitol Hill so that he could segregate the finances better – that the murkiness was in overhead allocation for shared facilities – registration fees, campus upkeep, heating plant, you name it. Some departments pay essentially nothing for their use of campus facilities and office space, lecture halls, gyms, registration services, while law schools often pay inflated charges, and the law school Deans don’t necessarily know how inflated.

Fasten your seatbelts; it’s going to be a bumpy night.

Comments (19)

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  1. Manju says:

    It’s interesting to witness Campos being vindicated before our very eyes. Is the fat thing next? I dunno.

    But you’re not going to hear me brag about my incredible physique, not even my abs, and not even in an oblique way…lest history view me as a dixiefat or something.

  2. Murc says:

    I like how when it comes to cost cutting, your friend immediately leaps into a discussion of how hard it is to cut professor pay and how difficult the rules of tenure make it.

    Because god forbid the first target of budget cuts should be the bloated administration costs.

    • MacK says:

      Administrative costs may indeed be bloated – but that it in part because the faculty have hived out a lot of administrative tasks to administrators. So to cut a lot of these costs would require professors to take on extra roles and workload before say scholarship (which used to actually be the case.) Do you want to run the cafeteria – are you qualified? Enrolment? Admissions?

      Ultimately the biggest expense in running a law school is tenured faculty, the largest cost element, especially senior faculty. It is not a cost that lends itself to easy reduction. LIFO rules mean that the least expensive, most junior staff and faculty must be cut first – and before any cuts of tenured faculty take place there must be an “emergency.”

      The basic issue was one the Dentistry Schools ran into a few years back – it is very hard to cut costs in a department. If the sense is that the department is losing money and will be for the foreseeable future, that 2013 enrolment is bad, but 2014, 15, 16 and so on will be worse, it may simply make sense to close the department. The same ruthless calculation that led colleges to milk their law-schools into near fatal mastitis will also tend to lead the same colleges to decide that that it’s time that dried up old milk cow went to McDonalds.

      • PaulB says:

        Northwestern had the second or third oldest dental school in the country but chose to shut it down about fifteen years ago. Dental schools, unlike law schools, are inherently expensive to operate and while their graduates make a good living, they are rarely in a position to make large donations. If a school with NW’s resources walked away from a professional school that was facing unending operating deficits, what do you think the dozens of universities with far lower endowments will do when they see their law schools unable to support themselves, much less the rest of the university as has previously been the case?

      • mpowell says:

        This isn’t really all that terrible of a thing. Law schools can’t downsize easily. Okay, so a few close down and suddenly the market for new lawyers looks better and law schools can fill their classes again. And it’s not a lot different or worse than layoffs at a whole bunch of law schools. Salary reductions might make more sense, but I think a lot of people would rather take their chances than agree to the across the board pay cut.

    • MacK says:

      On administrative costs, it would be useful to remember that at least a proportion of what is called administrative costs are necessary marketing. Thus many law students decry the career services office as being as useful as “tits on a bull” (I’ve got a theme going here), but the reality is that the first school to cut the CSO would catch merry hell from its students and applicants all of whom are looking at their job prospects. They may regard the CSO as useless, but without it there would be no-one to beg and cajole law firms to come on campus interviews, etc.

      Similarly, marketing departments may seem a waste of space, ditto admissions – but in an environment where schools are competing for suckers students that can make bank or sign a student loan paper that are qualified to attend boost US News Rank many of these costs cuts may be pretty phyrric. Another big cost item is the vig you give the kids that can walk and chew gum at the same time to get them to attend financial aid, which is extending to an every growing group of students.

      I have been in, and represented businesses where the numbers started to unravel and the line that many schools are telling is looking implausible – a dairy can supply only so much bullshit, mostly cows after all.

  3. Am I mistaken in my understanding that an important part of why CUA has a law school is to educate priest-lawyers? Obviously the majority of its students will be regular old chumps, just like every other law school, but Holy Mother Church needs lawyers just like every other large enterprise, and I’d assumed that Catholic was where priests who studied canon law, or priests who were needed as in-house counsel at the dioceses went. If that is the case, I’d expect that the university would be more inclined to subsidize the law school’s operations.

  4. EricEsq'10 says:

    I’m still a little skeptical that we’ll start seeing schools close soon. I know that the declining applicant pool has caused cut throat competition for the better students, but don’t the total number of students willing to matriculate have to drop below the total number of seats before we’ll see a real correction? I know that assumes that schools are willing to have a completely open admissions policy, but I don’t doubt that will be the case at many places.

    I wonder how many students are willing to matriculate. We know the number of applicants, and we know the number of students who matriculate, but I wonder how many opt not to enroll each year because they have second thoughts or they didn’t get into the school they wanted. That’s why you can’t just look at the total number of applicants and compare it to the number of seats to be filled.

    • Rock On says:

      I don’t think you realize the difficult calculations of admissions offices. Of course, not 100% of students pay full freight but in this day and age what is the actual number? 75%? 65%? Financial aid and merit scholarships add lots of extra costs and while the federal student aid spigot still gushes, the same students who qualify for those loans might be in the same category as those students who are being lured with merit and financial aid packages. Some students may not even be filling out their full 3 years so if a few kids with deep pocketed parents suddenly decide to go AWOL, then you might suddenly have a several hundred thousands dollars operating deficit. Resorting to endowments cannot be done carelessly and that is likely to be the biggest impediment to closing schools. A lot of donors gave to a law school damn it and there will be hell to pay if suddenly the law school disappears and the corpus of long past donations gets diverted elsewhere. The reputational harm would be enormous.

      • MacK says:

        It is extremely hard to work out what dedicated endowments law schools have – that is to say separate from a college or universities general endowment. But there are 200+ ABA accredited schools and a lot have not been around for very long – many not long enough to build up any significant endowment. In many instances the “endowment” was a building but to operating costs for it.

        I did once try to work out what endowment some of the more vulnerable schools I could think of have, but it is very hard to find anything that is segregated from the general fund.

      • EricEsq'10 says:

        Yeah, that makes sense. The theory being that law schools have only kept their current matriculation rate thanks to offering generous rate cuts. Those cuts eat into their bottom line as well. Perhaps we should look at the number of students not only willing to matriculate, but the subset of those willing to pay full freight. Those are the ones they’ll need to cross subsidize other students.

  5. Sooner says:

    I found the linked CUA newspaper article very illuminating. Usually, articles like this are covered in a bunch of “Spanierspeak” (admin gobbledygook that masks really simple ideas in complex, many times illogical, phrases). The CUA story on the other hand is wide-open in terms of exposing the utter cluelessness most possess about the moral dilemma of hosing a class of graduates due to a perceived financial destiny. Pathetic. You can read a lot in to what the article leaves out.

  6. Huh? says:

    “what is at present the worst place in the country to try to get a job as a lawyer (Washington DC).”

    Washington is the worst place to try to get a lawyer job these days? How do you figure, sports fan? By almost any conventional metric (housing prices, unemployment rate), the Washington metro area is doing comparatively well. What statistics show that the legal job market in Washington is bucking these trends? From first- and second-hand experience I know the legal job market is still soft, but is Washington worse than *all other* markets? Is it really worse for lawyers seeking employment in Washington right now that in, say, Las Vegas or Detroit?

    • Hogan says:

      Sequester?

      • Huh? says:

        That’s one hypothesis. But is there reason to believe that the sequester disproportionately affected government jobs for lawyers I could see the Washington area job market softening generally due to the sequester. But if that’s not happening, why should we think that Washington lawyers have been hit particularly hard.

        Again, if you think that the job market for lawyers is “the worst” in Washington, your advice to an out-of-work Washington lawyer should be to take the Michigan bar and look for work in Detroit. That doesn’t pass the laugh test.

  7. [...] Too many tenured professors chasing too few suckers willing to take on $200k+ in debt. (See Paul Campos at Lawyers Guns and Money for the news.) Some theorize that the law school was keeping everything else afloat and now that [...]

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