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How many ABA law schools are going to go out of business?

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The Chronicle of Higher Education has a piece ($$) on the not-good financial state of American law schools these days:

The growing number of universities that are subsidizing struggling law schools “are certainly not happy about the money running the other way,” said Paul F. Campos, a professor of law at the University of Colorado at Boulder whose biting critiques of law schools in blogs and books have made him a polarizing but influential figure in legal education. He estimates that at least 80 percent of law schools are losing money — a figure that an ABA spokesman said could not be confirmed.

“The attitude of a lot of the universities is, OK — we’re willing to carry you guys for a while, but you have to shed a lot of costs or come up with other sources of revenue because we’re not going to subsidize you forever,” Mr. Campos said. . .

Some legal-education experts say it’s been a long time since law schools could be counted on to fork over big profits to their universities.

That’s because the more money they brought in with steadily rising tuition, the more they spent on libraries, fancy buildings, and faculty members to maintain their position in all-important national rankings.

“Prestige-chasing leads to massive spending, which is sustainable as long as revenue is coming in,” said Mr. Campos. “But then you have a downturn, and all of a sudden, everyone’s bleeding red ink.”

Even before the downturn, many law schools were struggling to hang on to revenues that universities were eager to tap into.

Universities often required law schools to hand over 25 percent or more of their revenues, a portion of which covered the cost of maintaining buildings and providing common administrative services. But the days when law schools had healthy coffers to raid have long since passed. The flow, in many cases, is going in the opposite direction. Some schools are having to shower incoming students with scholarships that take some of the financial pressure off of the students but dig the schools deeper into debt.

So is anybody going to actually pull the plug? Paul Caron thinks so:

While many law schools are experiencing trouble, predictions of institutions closing have not come true. Caron thinks no university wants to be the first to close its law school but he believes eventually it will happen.

“I find it incomprehensible that we’ll have 200 law schools in business five years from now,” he said.

I’m not so sure. Even a place like Valparaiso can probably eventually break even if they just get back to the faculty-student ratio they had a generation ago, which, under administrative force majeure, they appear to be racing toward at the academic equivalent of warp speed:

Speaking recently to Indiana Lawyer, Dean Andrea Lyon, who will soon begin her third year at Valparaiso’s helm, was focused on the future. She said the worst is over for the school and she wants to look forward rather than second-guess past decisions. She noted remaining faculty was willing to roll up their sleeves to do the work that needs to be done.

Still, she acknowledged the past school year was very stressful with the most difficult part coming from the decision to cut employees. Ten tenured faculty members accepted the buyout and the school has given termination contracts to three junior tenure-track professors who will leave after the 2016-2017 academic year. Also, seven staff members were laid off.

Reducing personnel along with cutting other expenditures everywhere possible, the law school is slashing its annual budget by $4 million, which is roughly a third. Teaching loads for the remaining faculty will increase by one to two additional courses per semester. Also, the size of the incoming class this fall will number about 75 students compared to 130 in 2015 and 174 in 2014.

This isn’t rocket surgery in other words.

Again, as long as the federal loan gravy train stays on the tracks, and/or private educational loans remain non-dischargeable in bankruptcy, pretty much any law school should be able to totter back toward government-subsidized solvency, even if half their graduates fail the bar and half of the rest don’t get jobs.

The ABA’s proposed new standard that would require 75% of grads to pass the bar within two years will pose a real problem if it’s ever actually enacted and enforced. But a knowledgeable observer has some serious doubts about whether current reform efforts will amount to much of anything:

The capture of the ABA Section on Legal Education remains strong, and to group of solid law schools have demonstrated an unwillingness to call out bad actors, choosing solidarity over collective integrity. Law deans and the AALS will never say out loud that several dozen law schools (not just Infilaw’s) are filling their classes with unqualified students in clear violation of ABA rules, who will be financially ruined as a result. The NYT piece on Valpo brought out the human cost, but vocal legal educators quickly attacked it as another unfair, unbalanced hit piece.

We defend ourselves with talk of “providing opportunity”, “need for more minorities in the legal profession,” “let prospective students make the choice,” “peer review study proves it’s a great deal over the long run,” “rule of law important to society(!),” “Obama is a law graduate who did not practice law”—and replay the rationalization loop.

The ABA Section will scramble a bit in response, and make a few moves for show, but things will largely carry on. The new bar standards are significantly better than before, but it will be a drawn out process with various ways to avoid or delay serious action. The random audit plan is weak, poorly structured (an audit triggered by red flags would be much more effective), and non-transparent. And so it goes.

Sorry about the cynicism, but I have lost all faith that responsible internal actors will take real action to fix things.

I wish I could disagree, but for now I’d take the over on that 200 ABA law schools (there are currently 204) five years from now bet.

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