Is Your Law School Going Broke?

I’ve just posted an article on SSRN that undertakes a granular breakdown of the current and past — as in 16 years ago — finances of almost all ABA-accredited law schools.

I conclude that what I call Peak Law School was reached in 2010, when both total JD tuition revenue and per capita JD tuition revenue reached historical highs (inflation-adjusted of course).

Since then it’s been pretty much a bloodbath. JD tuition revenue is down 41% — 24% per capita, with the rest of the decline attributable to falling enrollment.

The vast majority of law schools depend on JD tuition revenue for the vast majority of their self-generated revenue, so this has left a huge number of schools in dire economic straits. By my estimate, 40% of ABA law schools are in severe financial distress, and another 30% are in considerable economic difficulty, if not quite as severe as the two in every five law schools who are getting a massive percentage of their operating income from sources other than self-generated revenue.

Some other data points:

*The transformation of law schools from cash cows, or at least self-funding enterprises, into economic basket cases is directly attributable to the malign effect of the US News law school rankings, that became an annual thing in 1990. Schools got rewarded in the rankings simply for spending more money, so you don’t need to be a scientitian to figure out what happened next.

*In the past decade, eleven ABA law schools — more than five percent of the total — have gone out of business. Only one ABA school closed in the previous half century.

* Many other schools have engaged in sometimes radical downsizing, in an effort to balance their budgets, or at least not have them so far out of wack. This has sometimes been successful but sometimes not. For example, Cooley Law School, which became something of a byword in the whole law school scam discourse, has gotten rid of 75% of its full-time faculty, but is still losing money at a brisk pace, and seems likely to shut down in the next couple or three years (The school has spent down two-thirds of its modest endowment in the last few years. The fact that’s still bleeding red ink despite generating more than $500,000 per year in JD tuition revenue per full-time faculty should put the JD tuition revenue per faculty member figures for other schools in some perspective.)

*The members of UCLA’s tenured and tenure track law faculty were averaging $407,000 in salary in 2024. This figure does include professorship stipends and the like, and summer research stipends — rather oddly, law professors at most schools are paid extra to keep doing their jobs in the summer — but it’s still about double the average figure for tenured/tenure track faculty in the arts and sciences at UCLA generally. The traditional justification for this wild disparity in pay is that law professors were all temporarily embarrassed Skadden partners, which is exactly as plausible as assuming they would choose to be starting NFL quarterbacks if not lured into legal academia by appropriate emoluments. The notion that law professors need to be paid a lot more than professors in the humanities and social and physical sciences is an anachronistic remnant of a bygone era, and I’m hoping it disappears immediately after my retirement.

*The latest major innovation as legal academia tries to avoid the metaphorical re-enactment of the Dudley & Stephens case is the creation of undergraduate law majors. As a result of this, several schools now have far more undergraduates enrolled than law students. This is a type of law school model that didn’t even exist less than ten years ago, and it will be interesting to see how it plays out in both an economic and regulatory sense.

*The basic pattern here — institutions quasi-bankrupting themselves in an almost wholly vain pursuit of a completely phony institutional prestige — is one that has application to a whole lot more corners of higher education than the law school world.

I put quite a bit of effort into collecting and synthesizing all the data here, so I hope people find it practically useful at least.

. . . Any interested party that wants to discuss the analysis for a particular school or schools confidentially can email me at [email protected].