Tuesday, October 19, 2010

The Irresponsibility of Law Schools = Fraud in the Inducement?

Brian Tamanaha:
The chart on the top shows the number of applicants law schools admitted (who actually enrolled) from 2001 through 2009. The chart on the bottom shows total law related employment--attorney and non-attorney--from 2001 through 2009. [Note that the charts are not on the same scale; and the labor chart is not limited to lawyers.]

While legal employment has fallen dramatically since 2007 (with a further decline in 2010), law schools, after remaining flat in 2008, increased by 5% the number of students admitted (and enrolled) in 2009. This increase was greater than the percentage increase in applications to law school. (The 2010 admissions numbers are not yet available.)

Law schools thus responded to the worst recession in the legal market in at least two decades by letting in more law students.
Law schools are enticing this increasing numbers of students into the legal world (and financial servitude) in large part by misrepresenting employment expectations. Things have gotten so bad, the ABA is now being called on to force law schools to be fully transparent in their employment statistics in order to maintain their ABA accreditation. I think this is a much needed step.
Do U.S. law schools need to be more transparent with their employment data?

Yes. At least that seems to be the growing consensus among everyone in the world — outside of law school deans — who routinely trot out a litany of reasons why providing such data would be burdensome, inconvenient, impossible, etc.

The rationale behind the sentiment: that schools are loathe to accurately reflect their job-placement rates, and that applicants are being sold false bills of goods...

At this point, schools have to disclose to the ABA what percentage of their graduates are employed nine months after graduation. But they don’t have to disclose whether students have part-time jobs, full-time jobs, jobs paid for by their law school or jobs that don’t require a J.D.

The Truth in Law School Education resolution could come sooner, said David Wolfe, the chairman of the ABA’s Young Lawyers Division. If it passed, schools would be required to disclose employment and cost information in order to keep their ABA accreditation. That information would be sent to applicants along with their letters of acceptance.

“It’s still in the works, but it will link the requirement to disclose employment and cost information with accreditation,” he said. “You would get that information with your letter of acceptance to a law school. We want people to go to law school with their eyes open.”...

“There’s a total lack of awareness out there. They hear these astronomical salaries which reflect just the top 3 percent of students who go to the top 10 law firms.”
I would also like to see them provide more accurate pictures of salary distributions. If one student comes out making $160,000 per year and two come out making $40,000 per year, schools can show their average income as being $80,000 per year. The two students making $40,000 per year who borrowed $100,000 to go to law school are going to feel duped and find themselves in a financial disaster.

What distinguishes current law school marketing from fraud in the inducement? It might not meet up to all the legal requirements for fraud, but conceptually it seems to come awfully close.

(HT Empirical Legal Studies)


Anonymous said...

Could not happen to a nicer bunch of people!

David said...

The distribution thing is a nice idea, but tricky to measure. For example, my girlfriend is graduating law school and has a clerkship lined up for next year. Clerkships typically pay about $50K and last for a year: they are stepping stones to better positions and law firms (jobs of which are usually secured in the summer before your final year of school). That big pile mound of $50K in the distribution graph is surely composed of many clerkships. Like a student who will make money in the future once they graduate, I don't consider them "poor" in the same way as a person who'll be working their current (relativity) low-paying job in the near future.

The distribution problem is not easy to solve: when do you measure? Graduates can go in a clerkship immediately, work at a firm and go in later, skip the clerkship altogether, never do either, or do a clerkship and then do something outside of a law firm. I suppose distributions at 1 year, 3 years, and 5 years out of school would do the trick?