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Inside the Law School Scam Redux

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Ten years ago this week I started Inside the Law School Scam, a blog I maintained for 19 months and more than 500 posts (including some from Debbie Merritt, who generously joined the project in midstream).

With the benefit of hindsight, I can say with all due humility that my criticisms of contemporary law schools and legal education were 100% correct, and that the rationalizations and excuses put forth by the legal education establishment look even more ludicrous now than they did at the time, if that’s even possible.

The core argument of the project was that legal education had become far too expensive relative to the job prospects available to law school graduates, and that this situation was a product of self-dealing on the part of law school and university administrators, aided and abetted by law school professors who benefitted from a system whose economic structure they almost universally ignored.

That argument won out in the court of public opinion, in a number of important ways. The law school reform movement, of which ITLSS was a part, managed to pressure law schools into disgorging far more accurate — though still far from optimal — job and salary information than had been available previously. Gone are the days of law schools claiming that 97% of their graduates were “employed” a year after graduation, without disclosing how many of those graduates were working as lawyers or baristas. Nor can schools any longer quote salary numbers, without revealing what percentage of their graduates are actually reporting their salaries (This reform led many schools to simply stop reporting any salary data at all, because the ABA still doesn’t require schools to report salary information).

The major practical consequence of these reforms was that, as much better job and salary information became available, applications to law schools plunged, and enrollment numbers followed suit, though not to the same extent. The result of that was that employment numbers for new law graduates improved. So, for example, the percentage of graduates who had jobs as lawyers a year after graduation improved from 64% in 2013 to 76% in 2020.

But here’s the key point: Considerably more than 100% of this improvement was due to far fewer people graduating from law school, than from improved job opportunities, which did not actually improve. In fact, the members of the class of 2012 — the class whose employment status was reflected in the 2013 employment numbers above — obtained 14% more total jobs as lawyers than did the members of the class of 2019, even though 19% more 2019 grads obtained jobs as lawyers than their peers did seven years earlier. In other words, the decline in law graduates has been even steeper than the continuing decline in jobs for new lawyers (I’m pretty sure these numbers mean The Market Works or something).

But the reform movement still has a very long ways to go. The other key goal of that movement, besides reducing the number of people graduating from law school, has been to reduce the cost of law school attendance. On this front there’s been some modest improvement, although of a very problematic sort. The modest improvement has been that effective tuition — that is, the actual amount of tuition that law students pay after “scholarships” — has on average declined somewhat over the course of the last decade, especially if we remove the handful of elite national law schools from the equation.

The scare quotes around “scholarships” point toward the problematic side of this development: The reason effective tuition has declined is because of cross-subsidization between students. How this works is that while nominal tuition continues to outstrip inflation, schools are far more aggressively discounting the actual tuition that many of their students pay, by simply offering to charge them less. This of course is not a real scholarship, which consists of an income stream that replaces the income that the school doesn’t get from the student receiving the scholarship. It’s merely a price cut.

The problem with this is that almost all this price-cutting is based on “merit,” rather than financial need: the students who get discounts are those with higher LSAT scores and undergraduate GPAs, since those numbers play a big role in the idiotic US News law school rankings, that every law school dean is contractually required to obsess about. And since there’s a strong SES (socio-economic status) correlation between higher numbers and higher SES, this means that “merit” scholarships, which as noted above have become much more prevalent and aggressive in recent years, constitute a kind of reverse Robin Hood system, in which students from poorer social backgrounds quite literally subsidize the legal educations of their richer classmates.

So even the fairly modest decline in real effective law tuition over the past few years is far from an unmixed blessing.

In any event, a new Wall Street Journal investigative report helps throw light on how far the law school reform movement has to go. It uses IRS data collected by the Department of Education to compare how much money law school graduates are making two years after graduation, relative to their debt loads. (The numbers are limited to graduates who have taken out federal loans, which the vast majority have).

It will not surprise you to learn that the salary data collected by the government is quite a bit less rosy than that collected by the law schools themselves, who have to rely on self-reporting by graduates. This results in a significantly biased sample (Graduates with good salaries are far more likely to report them). The WSJ story focuses on the University of Miami, a “good” private law school, where it turns out median salaries for graduates two years after graduation are about $59,000, while median law school debt is $163,000. This of course means that very few Miami graduates are paying down any part of their loans two years after graduation: just 15% were doing so per the government data. (Unpaid interest is added to the principal, meaning that the vast majority of Miami law school grads owe quite a bit more in educational loans several years after they’ve graduated than they did when they received their diplomas).

Nationally, two-thirds of law school graduates who borrow from the federal government have not paid back any part of what they owe two years after graduation. Lawyers are notoriously bad at math, but you don’t need to be C.F. Gauss to figure out where this system is going. (The most gruesome tidbit from the WSJ data tables is that Florida Coastal Law School graduates had a median salary of $38,443 two years after graduation, and a median debt of $183,077. The proudest accomplishment of my career is that I stuck a dagger in that now-defunct scam factory).

Predictably, university administrators claim to be innocent bystanders in regard to all this, standing by helplessly as the natural laws that govern everything from the rotation of galaxies to the rise in law school tuition work their ineluctable magic:

Patricia White, who served as Miami Law’s dean from 2009 to 2019 and is currently a professor there, said tuition at Miami and other law schools “got raised year after year after year so that the schools could operate, and typically it came from government loans.”

The tuition number would come out,” she said. “The students would go to the government. They’d say what they needed….Suddenly they’d borrow $70,000, $75,000 a year.”

Ms. White said Miami raised tuition to cover the school’s higher expenses, including salaries and financial contributions the law school was expected to make to the broader university. This year, the University of Miami asked Ms. White’s successor as dean to step down, citing in a public statement the need for new leadership amid its current fundraising campaign.

Ah, the inexhaustible charms of the passive voice.

When I graduated from law school 32 years ago, the median reported salary of law school grads a year after graduation was $82,300 in 2021 dollars. Last year it was $72,500. In the interim, private law school tuition nearly tripled in constant dollars.

But even this severely understates how drastically law school rent seeking has undercut the value of law degrees. As I’ve pointed out elsewhere, by the mid-1980s (which is as far back as the conveniently available ABA tuition statistics go, which is why everybody uses them), tuition had already skyrocketed relative to what it was a generation earlier. While private law school tuition in 1985 averaged $17,800 IN 2019 DOLLARS, Stephen Breyer paid HALF that sum when he attended Harvard Law School — which was far more expensive than the average law school at the time — a mere 25 years earlier!

That’s right, Harvard Law School cost $8,700 per year IN 2019 DOLLARS in 1960 — and again it was at the time, as it remains today, one the most expensive law school in the country — except that today the estimated annual cost of attendance is $104,200 (This includes the cost of living in Cambridge, where I’ve been reliably informed a banana costs ten dollars).

Of course none of this fazes the relentless shills for the current economic structure of American legal education, most notably Michael “Million Dollar Law Degree” Simkovic.

In a post entitled “Wall Street Journal Blames Law Schools for COVID Economy,” we get this stellar bit of economic analysis:

Like the 2007 to 2009 recession before it, COVID triggered a large decline in employment. And younger, less experienced workers were again hit hard.

[Impressive looking FRED chart]

The federal government responded by offering 0% interest forbearance on student loans.  Governments also limited collections of other debts, such as rent and mortgage payments, through eviction and foreclosure moratoriums, to alleviate the broad-based economic pain from the pandemic-induced recession.

During this period, law graduates and other highly educated workers have faired [sic] relatively well, at least judging from the imperfect data that is currently available (see also here and here).

How terribly irresponsible of the Wall Street Journal not to mention the critical role the economic effects of the COVID pandemic surely must be playing a major role in all the grim data it has collected regarding the employment outcomes and debt loads of recent law school graduates:

The WSJ’s article notes a decline in law student debt repayments, and is peppered with anecdotes about recent graduates’ struggles, without so much as mentioning COVID or the related national forbearance of federal student loans or declines in employment.

But wait, there’s more!

Data from After the JD III suggests that within 12 years of graduation, graduates of schools ranked below 100 (i.e., in the bottom half of law schools) who passed the bar exam typically achieved median full time salaries in the six figures.  This was measured in 2012, nearly a decade ago. At least in nominal terms, attorney earnings and earnings of professional degree holders have increased substantially since then according to both the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.

Now I am a big believer in professional collegiality, so I am not going to give in to the temptation to refer to Prof. Simkovic as a lying son of a bitch, especially as this is the sort of gendered insult we studiously avoid here at LGM, but according to the very BLS statistics Simkovic cites, attorney earnings declined in real terms between 2012 and 2020 (the most recent year for which statistics are available), which is kind of the opposite of “increased substantially” if you’re talking about real dollars, as opposed to the fake ones he’s citing.

But we haven’t even gotten to the best part, which is that Simkovic ostentatiously insults Miami Law School professor Tony Alfieri, who voiced concern in the WSJ piece about the economic situation of the school’s graduates, by basically saying Alfieri just doesn’t understand all this complicated economic analysis, since he does civil rights law and stuff:

The WSJ does not refer to this data.  The WSJ instead quotes a legal ethics and civil rights professor for the proposition that six figure salaries are rare for graduates of Miami University School of Law.  The professor may have been commenting on starting salaries rather than long term earnings.  Or he may have been focused on pay for the relatively small number of graduates who initially work as public defenders or legal aid lawyers.  According to his faculty web page, the professor runs programs and clinics on historic black churches and environmental justice, and so may be more cognizant of salaries for graduates heading into low-paid public interest fields. 

OK, the punch line:

Simkovic either failed to notice or is simply lying about the fact that 100% of the WSJ’s data regarding law school graduate employment outcomes and law school debt predate the COVID epidemic! I mean it’s right there in the article, and also in the underlying data, assuming he bothered to look at the latter:

Recent graduates of the University of Miami School of Law who used federal loans borrowed a median of $163,000. Two years later, half were earning $59,000 or less. . .  Graduates from a host of other well-regarded law schools routinely leave with six-figure student loans, then fail to find high-paying jobs as lawyers, according to the Journal’s analysis of the latest federal data on earnings, for students who graduated in 2015 and 2016.

Did I mention that Simkovic, who doesn’t want to hear any economic analysis from some civil rights lawyer, has exactly as much formal training in economics as Larry Kudlow, aka none? Not that you need formal training in economics to realize that data about the economic circumstances of 2015 and 2016 law school graduates two years later could not possibly have anything to do with the economic effects of a pandemic that started two years after that. Still I find this particular detail the chef’s kiss at the top of this latest mountain of bullshit from the law school establishment’s most indefatigable grifter.

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