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The law school crisis: An update

[ 24 ] November 5, 2013 |

Updated below

Almost exactly two years ago, in the fall of 2011, Brian Tamanaha took part in a forum at the National Law Journal regarding whether law schools were in crisis. Tamanaha noted sardonically, and correctly, that “law schools are doing just fine, thank you.”

We should be clear: law schools are NOT in crisis. Although a number of law schools shrank their entering class in 2011, enrollment at most law schools remains near all time highs, and tuition is sky high, especially at private schools. Law schools have more resources than other university departments. Law professors are paid far more than other professors and earn more than most lawyers.

The real crisis, he pointed out, was being endured by law school graduates, who faced mountains of debt and grim job prospects.

Since then, in part because of Tamanaha’s work, the situation has changed drastically. When Tamanaha took part in the NJL forum, the most recent enrollment data (for the entering class of 2010) revealed that ABA law schools had enrolled their largest first-year class ever, featuring 52,500 matriculants. These schools had enrolled a record total of 153,700 JD students over the previous three years. Law schools were both larger and much more expensive than ever: average private law school tuition had increased, in constant, inflation-adjusted terms from $15,000 in the mid-1980s to $40,000 — an astonishing 167% increase in real terms. And resident tuition at public law schools had increased by a vastly greater percentage.

What’s happened since then is what Matt Leichter has called “the law school tuition bubble” has burst. Applications have plummeted from 88,000 in 2010 to around 59,400 in 2013. And the trend shows no sign of reversing: LSAT administrations were down by 11% in October year over year, marking the 16th consecutive administration in which the number of test takers had fallen relative to the previous year. Halfway through the current administration cycle, it appears that a total of around 103,000 tests will be administered, based on historical patterns. This in turn is likely to yield around 54,000 to 55,000 total applicants in this application cycle.

In other words, around 10% fewer people will apply to law school this academic year than were admitted to law school in 2009-10. Even with more and more schools adopting de facto open admissions policies, these numbers mean that the trend in first year matriculant totals will, by next fall, look something like this:

2010: 52,500

2011: 48,700

2012: 44,500

2013: 40,500

2014: 38,000

It’s important to recognize that the effect of this sort of pattern is cumulative: each year, a larger graduating class is replaced by a smaller entering class, so that each year the effects of declining enrollment become more severe. For example, by next fall, law schools will have enrolled 123,000 people over the the previous three years — meaning that, assuming attrition levels have remained constant, there will be 20% fewer JD students enrolled in ABA law schools than there were four years previously. And even if enrollment were to plateau in 2015, schools will be looking at declining total enrollments for at least two more years beyond that.

What about tuition? While nominal tuition has continued to increase, it is far from clear that real per capita tuition — the amount actually collected per law student after taking into account the increasingly aggressive price cutting schools engage in, in the form of faux “scholarships,” will be higher next fall than it was in 2010. Indeed, some schools are now taking the unprecedented step of actually slashing nominal tuition: Just this week Ohio Northern announced that it is cutting nominal tuition by 25% next year, while last month Iowa (whose entering class is half as large as it was two years ago) announced it was drastically cutting out of state tuition for non-resident students.

All this has radical consequences for law school operating budgets. Most law school budgets are heavily tuition-dependent, as only a few schools have large private endowments, and very few faculties generate much in the way of grant money to help fund research. In addition, since almost all law schools are, as a matter of tax status, non-profits, and furthermore are engaged in a negative-sum positional game in which they fight for relative status with each other via idiotic “rankings,” schools have tended to plow almost all their ever-increasing revenue back into ever-increasing operating costs — with the exception of whatever revenues are extracted by central university administration to subsidize other university programs (As we shall see, the extent to which law schools actually subsidize other university operations varies enormously, and indeed at present it appears that, at a large number of schools, any subsidy is now going the other way). Even more problematically, these increasing operating costs have, for reasons that will become clear, a tendency to become fixed rather than variable. Any slowdown in revenue growth, let alone an actual decline in revenue, is thus going to produce serious budgetary strain.

In any case, it’s clear that a very large number of law schools are no longer doing just fine. How many? That will be the subject of a subsequent post.

Update: Further discussion.

Comments (24)

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  1. kindasorta says:

    Couldn’t have happened to a nicer industry.

  2. Jose Arcadio Buendia says:

    I went to update an e-mail list I’ve been keeping for 10 years with all local attorneys in it with the latest additions. I blocked out a fair bit of time to do it. In years past, this has taken a while. This time, in the last two calendar years, there were 90% less people admitted to the bar working in my geographic area than came here in the two years prior.

  3. Ken Houghton says:

    I don’t understand the “lack of endowments” part.

    I mean, I understand the reality of the lack; what I don’t understand is that, as with Business and Medical schools, Law Schools are supposed to be actually transformative in creating Professionals.

    Shouldn’t one’s loyalty to their Law School be greater than that to their Undergraduate institution? That is, assuming the process was working in the past, or at least before Paxton (1992) revealed the pending Law School crisis.

    • loyalty says:

      Law Schools don’t have football teams?

    • Anonymous says:

      I think that most US law schools are not old enough to get endowments from rich alumni. It takes 30-40 years to get alumni to positions where they have such money to spend. A grand or two from middle class alumni is relatively unimportant.

      And I think that in general, people are more loyal to their undergrad institutions. It’s different with Ph.D.s, though. The relationship between a supervisor and the grad student is a personal one, but it is more about loyalty to the person and to the research group, not about loyalty to the instituution.

    • BoredJD says:

      I can’t speak for the older generation. The current generation of recent grads is probably not going to give endowments because being treated as a “consumer” (read: a unit that a profit making enterprise attempts to extract as much money as possible from) tends make one hostile to idea of forking over additional money after the transaction has been consummated.

      In other words, I don’t give an extra couple hundred bucks to the used car dealership where I got my first clunker.

      • kc says:

        The current generation of recent grads is probably not going to give endowments because being treated as a “consumer” (read: a unit that a profit making enterprise attempts to extract as much money as possible from) tends make one hostile to idea of forking over additional money after the transaction has been consummated.

        That, plus the fact that they don’t have jobs.

      • MacK says:

        Yep,

        Except that this view goes back to 1990 – when at least at Georgetown students started wearing NOPE badges to graduation – NOt a Penny Ever…. It apparently spread by the mid-90s

    • PaulB says:

      Ken,

      Most college donations go to the undergraduate colleges of donors.

    • NewishLawyer says:

      I think people feel more loyalty to their undergrad institution because they are younger and live on-campus for part of the time or all of the time. They tend to be what molds a young person formatively. They are also very good at developing unique cultures.

      It doesn’t even need to be about sports. My undergrad was small and had no football team or frat/sorority system. There is still an incredible amount of school pride among many alums.

      My feeling for professional schools is that you don’t really see it as part of your psychological development. You might spend a lot of time on campus and with your cohort but you also have a built up life outside of the school. Friends from previous places, girlfriends or boyfriends, maybe children, maybe a job, etc.

      • I was so busy during law school that I really didn’t have time to enjoy my university’s campus or to really get to explore and know the college. It’s weird, but in a way it feels as though I really hadn’t been there. I don’t feel I had a “college” experience at that great institution.

  4. editing says:

    “Even with more and more schools adopting de facto admissions policies”

    Missing an ‘open’?

  5. Agatha Christie says:

    I am very, very curious to see what happens to bar passage rates over the next five years of so. If enough law schools have open admissions policies, it could be a real bloodbath.

    • MacK says:

      Especially because state bars are raising the standards for passing the bar – see the famous safety bar of PA (takers of New York could do the NY state on day one + the multistate on day 2 and then rush to PA to take PA-state on day 3 (or 4, I forget if there was a one day gap), where it was alleged a pulse and the ability to sign your name would get you through.) The safety bars are now getting tough.

  6. Downpuppy says:

    Remember CWRU Dean Lawrence Mitchell, defender of the sacred mission? Grab the popcorn.

  7. Easy come, easy go says:

    Law schools lost sight of their mission and universities sold out for the cash. Most will be ok until the student loan spigot closes.

  8. BoredJD says:

    “The market” seems to have replaced the active deity as some sort of all-knowing, all-powerful force to explain why things are the way they are when to actually explain it would (1) be too complicated, (2) result in a conclusion that conflicts with the way you intuitively view the world. The idea that tens of thousands of college kids just woke up one day and decided to seek out basic employment information for no reason is insane.

  9. matt says:

    How many schools do you think will be able to stay alive by: 1) curtailing hiring of new faculty (already happening), 2) curtailing offering of tenure (maybe be a surprise to junior faculty who thought everyone got tenure), 3) hire adjuncts if you need people to teach classes, 4) move to open admissions, 5) lobby the ABA to reduce or eliminate the requirement that 80% of a school’s grads pass the bar using the argument that a) the requirement stifles diversity and b) the requirement is no longer needed because lot’s of grads want JD advantage jobs.

  10. Mr Derp says:

    So what factors are contributing to many potential law atudents from attending: is it scam bloggers and academic critics, the scam lawuits, main stream newspapers, rising tuition rates, parents gathering better infirmation, the slow growing economy, ???? What major event or events that triggered so many potential students into becoming cautious about

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