January 30, 2012 12:04 PM

Clever Plans to Reform Legal Education Won't Make Legal Services Any Cheaper

Posted by Matt Leichter

Due to the stream of negative press America's legal education system has received, it is becoming almost a rite of passage for aspiring reformers to submit their own proposals to fix the problem. There's nothing wrong with that, but some proposals are more sophisticated than others. Here are ten examples in no particular order:

• UCLA law professor Stephen Bainbridge recommends unilaterally shutting down the bottom half of the ABA law schools per U.S. News & World Report's rankings.

• Law School Transparency advocates requiring law schools to gather and provide accurate graduate employment data to applicants and letting them decide whether law school is worthwhile.

• Two economists, Clifford Winston and Robert W. Crandall, want to completely deregulate legal services.

• Yale law professors Ahkil Reed Amar and Ian Ayers want first-year law students to be able to demand a partial tuition refund if they choose to discontinue law school. (It should be noted that Southern Illinois law professor Christine Hurt proposed the same idea in 2010).

• Attorney Ari L. Kaplan proposes law schools backload their costs, making the first year cheap so students can decide if they want to continue without significant financial penalty.

• One common suggestion is to turn the third year of law school into an apprenticeship program.

• Scambloggers' views differ, but generally they advocate eliminating the formal legal education requirement altogether, though some would like the deans incarcerated for fraud.

• CUNY law professor Michael Macchiarola and attorney Arun Abraham argue for law schools to give their graduates "put options" on their student loans, which if exercised would require law schools to reimburse graduates the difference between their projected incomes after ten years and their actual incomes.

• I'd like to see the Direct Loan program dismantled and bankruptcy protections restored to student debt. Legal education can be financed by human capital contracts in which graduates pay roughly 10 percent of their disposable incomes for ten years back to the law school, providing they're employed using their legal educations.

• And most recently, Northwestern law professor John O. McGinnis and attorney Russell D. Mangas (Kirkland & Ellis) stepped forward on the Wall Street Journal’s opinion page to advocate reducing legal education into an undergraduate major.

All these proposals have their drawbacks, particularly Winston and Crandall's, which I believe uses the plight of underemployed, indebted law grads as a pretext to ram through their neoliberal deregulation agenda.

But I'd like to focus on McGinnis and Mangas's proposal, and not because I disagree with it. Quite the contrary, as far as I'm concerned the test of a reform proposal rests on its ability to allow market demand for legal services to control excess demand for legal education. The current system tries to do it the other way around, resulting in an expensive, pushing-the-string ideology that promotes people paying for education and then letting the market decide whether they get to use it fruitfully. McGinnis and Mangas's proposal doesn't fully address that, but at least it clearly reduces the education costs lawyers would incur in entering the profession. However, it leans on two premises I believe are false, and importantly, other proposals duplicate them:

(1) There is a shortage of attorneys in the United States.

(2) The costs of legal education raises the cost of legal services.

The first is easy to falsify, the second is more involved.

For specific numbers on lawyers, the ABA recently updated its Web site with a spreadsheet of its "Total National Lawyer Counts," which measures the number of "active and resident" attorneys in the United States. It's an impressive dataset, though I think the pre-1980 numbers aren’t very accurate and also include nonpracticing lawyers who serve as judges, legislators, executives, administrators, etc. The ABA also gives us the number of people who graduated from its law schools each year, which isn't the total number of potential attorneys (aside from the several thousand that have passed away or could never pass a bar exam), but it does represent the majority. Archived issues of the Bureau of Labor Statistics's (BLS) Occupational Outlook Handbook (OOH) provide estimates of the number of employed lawyers between 1994 and 2008. In each edition, the OOH predicts there would be more law graduates looking for work than the number of jobs available for them. I contacted the BLS, and in addition to sending me the Current Population Survey's (CPS) number of employed lawyers going back to 1983, it informed me that the BLS considers the CPS more definitive than the OOH. Here's a comparison against the population going back to 1950, using Census Bureau data:

Given that there were a few years in which the BLS managed to find more employed lawyers than state bar authorities reported as active on their rolls, I suspect the CPS overstates the number of employed lawyers and that the actual number is closer to the OOH's, which is unfortunate given its shallow employment projection for 2018. Nevertheless, it's clear that the lines have been splitting apart for quite some time, a topic I may cover at a future date. True, many potential attorneys could have left the rolls and found gainful employment in other industries, but many more left the profession early in their careers while others never had good chances at creating them. This is the exact opposite of what we would expect to see if there was a shortage of lawyers.

Moving on to the second premise, the cost of legal education's bearing on the cost of legal services, McGinnis and Mangas write:

“[T]he great benefit of the undergraduate option would be lowering the cost of legal education, thus increasing the supply of lawyers willing to charge lower fees.”

The authors assume that lawyers pass their education's costs (especially student loans) onto their clients. Thus, the more unevenly student debt is distributed among lawyers, the more they will have to eat their student loan payments to compete with those who paid less. Here’s what we know about the unevenness of law school debt’s distribution.

(1) As recently as 2010, about 15 percent of all ABA grads finished law school with zero law school debt.

(2) Some law schools are cheaper than others, especially public law schools and those in Puerto Rico, so those who graduate with debt have varying amounts. (Notice that McGinnis voices no concern that Northwestern's graduates will be unemployable when Mangas's firm decides to switch to hiring Northern Illinois or Southern Illinois grads to cut costs.)

(3) Older lawyers frequently have less student debt than more recent grads, so their loan payments are smaller.

(4) Some states allow graduates of cheaper, non–ABA law schools to sit for their bar exams, or they allow people to forgo the legal education requirement altogether.

Additionally, even if debts were evenly distributed, lawyers might still find that offering lower prices offsets the cost of their debt payments with increased business, until others do the same.

The fourth point, though, is critical. California has scores of relatively cheap state-accredited, unaccredited, distance-learning, correspondence, and online law schools. This system is not new, yet none of the reformers who believe cheaper education leads to cheaper lawyers has compared the cost structures of California's legal industry to "ABA–only" states'. Surely by now there are more than enough non–ABA attorneys licensed in California to have made a noticeable difference in the cost of legal services as McGinnis and Mangas argue, yet California’s ABA law schools (including public ones) aren’t competing with non–ABA schools in terms of price. They charge about $40,000 per year in tuition, and they increase it each year over inflation.

Why aren't California's more price-sensitive firms hiring grads directly from the People's College of Law in Los Angeles rather than from UCLA? Better yet, given non–ABA graduates' lower bar passage rates, why aren't firms sending associates to stand around outside LSAT test centers, handing people their business cards and offering to help them through a correspondence program to cut out the ABA middleman? Better yet, they could simply hire people straight out of college (California doesn't even require that much) and have them qualify for the bar by "reading the law," which California allows.

Firms could do this, but instead, they prefer ABA grads from highly regarded law schools. Either California’s legal employers are all monumentally bad businesspeople, or the cost of legal education isn't their (much less their clients') problem.

Let me be clear, McGinnis and Mangas's proposal offers more than some of the others I listed above. But while it would save would-be lawyers time and money, it still does not ensure that the country's need for legal services determines how many people undergo legal education. Those concerned about providing legal services to the poor will have to demand poverty alleviation and expanded legal aid programs. These solutions politicize the legal profession's role in society, but I think that's unavoidable. More than clever proposals, it will take courage for the profession to admit that noblesse oblige and low-cost education won't entice lawyers to serve the destitute. It will also take courage to admit that law graduates' debts do nothing but reduce their living standards, especially when the profession has no place for them.

Matt Leichter is an attorney licensed in Wisconsin and New York, and he holds a masters in International Affairs from Marquette University. He operates The Law School Tuition Bubble, which archives, chronicles, and analyzes the deteriorating American legal education system. It is also a platform for higher education and student debt reform.

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