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In 1990, the New York Attorney General and the New York City Department of Consumer Affairs began a series of investigations and other proceedings aimed at chains of various health and beauty schools, largely, if not exclusively in underprivileged neighborhoods. These schools were all licensed by the New York State and City agencies responsible for granting such licenses. The schools advertised broadly, primarily on subway posters, in various newspapers largely directed at underprivileged communities, posters pasted on the walls of these communities, as well as on wrap-around posters on the lampposts in those same areas.
The come-on was simple: The advertisements pitched the fact that beauticians, cosmetologists, hair stylists, make-up artists earned commendable salaries. The posters went on to note that many of those positions required both state licensing and a degree of training. The schools offered the requisite training and assisted the students in obtaining those licenses. And, then, the real hook in this come-on: Federally guaranteed student loans for tuition were available for attendance at these schools and, in essence, as far as the students were concerned, tuition would not impose any costs to the students: all they had to do was show up, sign a few pieces of paper, attend the program (often a year in duration) and after graduation and licensure, a career in one of these fields would provide a financially more rewarding career than was otherwise to these denizens of underprivileged areas.
The “hook” was exceptionally alluring: One would simply show up at the school, sign a few forms, fork over not a buck, take the classes and a more financially lucrative career lay ahead of them. Of course, among the stack of papers signed was the student loan applications. The lending institutions would then advance the entire tuition to the school.
There were only a couple of problems with the entire scheme: The fact was that there were not sufficient jobs available to the schools’ graduates. Many students, after graduating from the schools, could not find any jobs in these fields (there was simply a dearth of such jobs) and most of the schools’ students, after attending the schools and not obtaining any of those so-called well paying jobs, gave up after their job searches and simply found lesser paying jobs and abandoned their job searches. Word also spread from the graduates to the generation that followed and still attending the schools and large numbers of those students just simply walked away from the schools. None of these school graduates or attendees repaid their loaned, quite likely because they felt snookered (which they obviously were), and they simply otherwise lacked the funds.
Of course, the various institutions which either advanced the tuition loans began collection proceeding. A sufficient number of the victims complained about being hoodwinked and filed various complaints with regulatory agencies, which, of course, served as the catalyst for the commencement of these proceedings.
The question that nobody wants to ask is whether the recent crop of law school graduates, those currently attending law school and the thousands of current law school applicants are victim of a similar scheme, intentionally or not, created by the profession and the law school community. I have found very few who have raised or publicly discussed the issue. An absolutely outstanding exception is the blistering report by noted law Professor, Brain Tamahana.
Another interesting question (in the horses are already out of the barn category) is whether a rule recently proposed by the United States Department of Education, 34 CFR Part 668 (http://www2.ed.gov/legislation/FedRegister/proprule/2010-3/072610a.html ) would be applicable to law school tuition loans. Under the proposed rule, the Secretary of Education is mandated to establish measures for determining whether certain post secondary educational programs lead to gainful employment and if they do not, among other things, if the Secretary determines that they do not, federally guaranteed loans would not be available to students of such schools.
In June of this year, the United States Bureau of Labor Statistics reported that the legal profession lost a total of approximately 30,000 jobs during the preceding year; these numbers are actually misleading, as we shall see. Law Shucks, a blog site which maintains a tally of law firm layoffs, reported that as of April, 2010 the AmLaw 100 alone lost 14,000 jobs for the preceding 12 month period. Law Shucks acknowledges that its figures do not reflect accurate numbers for the AmLaw 100 alone. The Law Shucks numbers only include layoffs which AmLaw 100 firms publicly acknowledged and does not include law firms that engaged in stealth layoffs, of which we now there are many. Nor do these numbers reflect law firms, notably Heller Ehrman, which had simply gone out of business, or law firms below the AmLaw 100, of which there are literally thousands. In our work, we found not a single law firm of 50 or more lawyers which had not engaged in some form of reductions in force.
The problem with the BLS statistics is that they are similarly misleading in that they do not include lawyers who became underemployed, for example, lawyers who turned to some form of public service jobs, government jobs, joined smaller firms, all at drastically reduced compensation. The BLS statistics also do not include 2009 graduated who have yet to find employment, nor do they count the armies of lawyers who have descended to the purgatory of staff or temp lawyering positions, where seasoned lawyers and young lawyers, who sit cheek by jowl in these often sordid purgatories.
In short, there are tens of thousands of both unemployed or underemployed lawyers nationally. There is no accurate metric by which to measure these numbers. Anecdotal evidence suggests that the total may be anywhere from 30,000 to 100,000 lawyers. More significantly, law.com reported on July 20, 2010 that employment levels for lawyers as a whole has declined to 1991 levels.
In the face of all of this, law firms, as is widely reported and similarly publicly acknowledged by virtually every law firm in the country in the country, predict that hiring of 2010 law school graduates will be sharply reduced. These same law firms predict continued reductions at least through 2011.
In the face of all of this, our nation’s currently accredited law schools, of which there are now approximately 194, insist on adding at least 45,000 new graduates to these armies of unemployed or underemployed lawyers. Add to this mix the facts that (a) ten additional law schools are in a queue to receive accreditation; (b) law school applications have risen dramatically in the last year and a record number of students have enrolled in law schools for the classes of 2013, when, barring an historically and unprecedented event or series of events (perhaps a federal mandate that every municipality hire and compensate a lawyer for every 1,000 of its residents), there will certainly be a pool of at least well over 150,000 lawyers who will be looking for jobs; (c) economic realities are lowering the demand for lawyers and law firm revenues are in decline and (d) a number of universities announced plans to create new law schools.
With regard to the foregoing, let’s, for example, look at the rather odd recent events in Dallas:
Quixotically, in early 2009, The University of North Texas announced that it planned on establishing a public law school in the Dallas-Fort Worth area as part of its university. Those plans seem to continue apace in 2010 in spite of the dwindling job market for law school graduates. Adding to the enigmatic and rationally inexplicably plans of this University is that Houston hosts three law schools (one not yet accredited by the ABA) and 11.5% of the graduates of those law schools were unemployed nine months after graduation; the two existing law schools in the Dallas area, with equivalent post graduate employment results.
West Texas’ rationale: (1) There has not been a law school established in Texas since 1967; and (2) the Houston area had only 538 law school seats available; (3) the ratio of bachelor degrees in Houston to law school enrollment was 10:1, while the ratio in Dallas was 35:1 and (4) while the Dallas-Fort Worth area purportedly generates 1,400 new legal jobs annually, these lawyers were hired from other regional law schools and schools located in other states.
Obvious flaw in this otherwise inexplicable logic is that all of the positions for lawyers in Texas (including each of the 1,400 new openings for lawyers in Texas) are quickly filled and there are already multiple applicants for each such position; there certainly is no dearth of job applicants in Dallas. Another obvious defect is the presumption that Dallas jingoism would somehow favor the employment of students schooled locally by a law school with no track record, while lawyers already employed in the area and those seeking employment there are already drawn from top tier law schools, in existence for many years. Additionally, this new law school does not seem to limit enrollment to residents of the Dallas area; in fact it will likely draw applicants from the rest of the country.
Rather obvious additional questions come to mind: (1) what’s the point? (2) Why add to the enormous pool of unemployed and underemployed lawyers? (3) How can one reasonably expect a faculty and university administration with such patently unsound judgment be entrusted to educate aspiring lawyers in logical thinking, careful analysis and honesty and candor demanded of lawyers? (4) How does the fact that a growing metropolitan area has an entitlement to establish a new law school simply because it hasn’t had a new law school created in forty years make any sense?
It might be a cheap shot to call this proposed law school as Texas’ version of a bridge to nowhere. The fact is that there now exist 194 other bridges to nowhere.
Jim Leipold, the director of The National Association for Legal Placement, whose crystal ball is as good as anyone’s, announced last week that the earliest he sees an “uptick” in legal employment for new law school graduates is 2012. Any simple analysis of the facts on the ground ineluctably leads to several conclusions: The current graph shows a complete vertical decline in unemployment and underemployment of lawyers; that straight down vertical drop may move in 2012 to a drop that may move a few degrees to the right in 2012; there is no possibility that the total number of unemployed and underemployed lawyers will ever be absorbed in to the market.
Far more significant is the press release issued on July 22 by NALP, frankly one of the most opaque reports I have ever read and in which at least the second paragraph quoted, may have been inspired by Lewis Carroll, reads in part:
“The national median salary for the Class of 2009, based on those working full-time and reporting a salary, was $72,000, unchanged from that for the Class of 2008, and the national mean was $93,454. However, because some large law firm salaries cluster in the $160,000 range while many other salaries cluster in the $40,000–$65,000 range, relatively few salaries were actually near the median or mean, as the Jobs & JDs report details. The national median salary at law firms based on those reporting a salary was $130,000, compared with $125,000 the prior year, and the national mean at law firms was $115,254.
With the Class of 2009 report NALP introduces the concept of an adjusted mean as an additional way to provide a broad measure of salaries for full-time jobs as a whole and for full-time jobs in law firms. Essentially, the adjusted mean compensates for the fact that the distribution of reported full-time salaries is not the same as the distribution of reported full-time jobs, particularly when it comes to law firm jobs. Whereas salaries for most jobs in large law firms are matters of public record and reported, fewer than half the salaries for jobs in small law firms are reported. The calculation of adjusted means is accomplished by giving more “weight” to the mean or average salary in small firms and less “weight” to the mean or average salary in large firms to calculate the overall law firm mean and also the adjusted mean for all full-time jobs. In other words, adjusted means are based on estimates that account for the unreported salaries. The adjusted mean for all full-time jobs reported was $85,198 (in contrast to the unadjusted national mean of $93,454), and the adjusted mean for full-time law firm jobs was $102,959 (in contrast to the unadjusted mean of $115,254).”
I do not mean to impugn Jim Leipold, NALP’s dedicated executive director, previously trained and having served with distinction as a tax lawyer at DLA Piper, but you may want to try and pierce the opacity of the entire report, particularly the quoted text. The simple meaning appears to be that since NALP does not include compensation figures for small law firms, which employs the largest number of lawyers in the nation and similarly excludes staff or temp lawyers, the reported median salary for 2009 graduates of $72,000 per annum is largely a wild assed guess and the actual median salary is probably much lower. The newly coined phrase, “adjusted mean,” as Mr. Leipold explains (it may take a few readings to comprehend), results in lowering the previous blindfolded shots at the dartboard hitting, which previously, quite fortuitously, I suppose, hit higher numbers.
And, whether we do not address the 12% of 2009 graduates completely unemployed still. In fairness, it does include, apparently those 11% of 2009 graduates who are employed in positions for which a law degree is not required (“would you like fries with that?”)
Certainly, using a “median” or “mean” or “adjusted mean” is simply Orwellian. Using a median number simply begs and avoids the single most important question: “What is the average salary of a 2009 graduate?”
The fact is that even the reported “median salary” of $72,000 is less than many, if not most, legal secretaries earn at large law firms.
Herwig Schlunk, a professor at Vanderbilt University Law School in an article published in 2009 entitled “Mamas Don’t Let Your Babies Grow Up to be Lawyers” ( http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1497044 )performed an investment analysis of the monetary value of a law school education. He determined that the cost of attending a second or third tier law school ranges from $201,000 to $280,000. Graduates of such law schools require average compensation of between $80,000 and $150,000 to justify the expense of law school, while the average compensation of those graduates is below $65,000, although some top of the class graduates do earn up to $145,000. In all cases, Schlunk determined that the expense of law school simply does not yield a reasonable return on investment.
More interesting and indeed perhaps even scandalously shocking is a document published in late 2009 that first surfaced and was only widely reported in January 2011 from some deep catacomb of the ABA entitled “The Value Proposition of Attending Law School.” This paper was authored by the ABA Commission on the Impact of the Economic Crises on the Profession and Legal Needs. The paper notes:
Although many factors may influence one’s decisions about whether and where to attend law school, a proper understanding of the economic cost of a legal education is vital for making an educated decision. Far too many law students expect that earning a law degree will solve their financial problems for life. In reality, however, attending law school can become a financial burden for law students who fail to consider carefully the financial implications of their decision. ….
Many prospective law students are already familiar with the steep price of a legal education. What many do not know, however, is that these costs often exceed the expected return on their investment in the job market. Prior to the recession, starting salaries for associates at large law firms stabilized around $160,000 a year, and many prospective law students expect to be able to earn a comparable amount. In reality, however, only 23% of the graduates of the class of 2008 started with such a high salary, including only 37% of those who went into private practice. Shockingly, most of the rest of the graduates, about 42%, started with an annual salary of less than $65,000…..
The combination of the rising cost of a legal education and the realities of the legal job market mean that going to law school may not pay off for a large number of law students. Dean David Van Zandt of Northwestern Law School estimates that to make a positive return on the investment of going to law school, given the current costs, the average law student must earn an average annual salary of at least $65,315. As the data above show, however, over 40% of law school graduates have starting salaries below this threshold. Thus, many students start out in a position from which it may be difficult to recoup their investment in legal education. Even students who do ultimately prosper over the course of a career face difficulties from high debt loads during the beginning of their career. High debt can limit career choices, prevent employment in the public service sector, or delay home ownership or marriage. In short, going to law school can bring more financial difficulty than many law students expect. [Footnotes omitted]
I frankly cannot fathom why this four page report was not delivered to every prospective law school applicant after its rather clandestine publication by the ABA, nor why the 979 word report was never prominently posted on the NALP web site nor why this critical warning is not contained in every law school catalogue. It could be easily argued, I would suggest, that the report is a veritable “smoking gun” evidencing the fact that critical material information was being withheld from law school applicants.
The fact that data released and distributed (and withheld) by both law schools and NALP are obtuse, misleading and, a group of law school graduates recently formed a group known as Law School Transparency, whose mission statement is:
[I]nform prospective law students about the value of a law degree by providing open access to ABA-approved law school employment information. To this end, our website functions as an employment information and data clearinghouse. We aim to help prospective law students sort through employment information to understand some aspects of beginning a career post-graduation. We have also begun an initiative to collaborate with law school administrators and the ABA in the creation of a new reporting standard.
Towards that end, the project, in July, 2010 sent out requests to 199 law schools asking for meaningful data, which, among other things, would demonstrate more meaningful information than that which is currently available from both law schools and NALP. As of mid-September, 2010, 10 law schools responded and with the exception Northwestern and Ave Maria) the balance said no, thank you. Ultimately, Northwestern and announced that they will instead rely on data Forbes Magazine will purportedly be releasing in its ranking in its ranking of law schools, which will include some as yet undefined “return on investment.” The only source I have found for the proposition that Forbes will include or report on such data is a blog maintained by some law school professors, which merely noted that Forbes will “reportedly” will include data, in its maiden law school ranking, information concerning “return on investment” based, in part on employment data for both recent graduates and graduates five years after graduation. Notably, on September 16, 2010, Ave Maria law school, ranked By US News and World Report in the fourth tier (the lowest tier). While Ave Maria is to be much commended, the obvious question is what do the other law schools have to hide?
[Update: On February 23, 2011, Ave Maria reneged; so much for commendation].
On November 17, 2010, The Law School Transparency project, issued a second rather polite revised request for data. Don’t hold your breath waiting for any responses.
The smoke and mirrors continue.
Add to that the fact that the nation’s law schools inexorably add 45,000 new lawyers in to the gaping and growing canyon of unemployment and underemployment lawyers every year. What we have here is the equivalent of BP oil relentlessly spewing out tens of thousands of barrels of oil, with no possibility at the current time that anybody has any interest in sealing this annual eruption.
There are an additional series of bizarre enigmas that must be added to the equation:
1. Law school tuitions are rising well above the rate of inflation annually.
2. As the hordes of new graduates are added to the kettle, simple rules of supply and demand will likely reduce Professor Shlunk’s suggested average compensation of $65,000 and even NALP’s optimistic and speculative $72,000.
3. These facts are well known to law school administrators, particularly deans and admissions personnel.
4. Although these facts are presumably ascertainable by those extremely bright college graduates who apply to law schools, law schools which are replete with (a) lawyers of presumably the highest moral integrity; (b) professors who are charged with imbuing law students with the ethical mandates required of lawyers; and (c) every law school has a passel of securities and corporate professors who spend their time drilling in to law students about the legal requirement of making full disclosure of all material facts while also being obligated not to make any omission of material facts; and that failure to do so would result in severe civil and criminal penalties.
5. All of the nation’s law schools are extremely well served by selfless alumni, hard working lawyers of accomplishment, who dedicate their time and service to the leadership and guidance of their alma maters. They well know the score.
Illustrative of these inexorable facts is a lovely glossy full color 64 page brochure I received from my own alma mater, New York Law School, just yesterday. The first eight pages contain a one page encouraging note from the law school’s extremely well regarded – and highly compensated new dean, Richard Mastagar — a distinguished legal scholar, with an outstanding biography.
When I attended that school, 35 years ago, tuition was $1,200. Today, with the creep of inflation, it is $67,000. Yet, a significant number of 2009 graduates of are still unemployed and the majority who actually have found employment are likely earning starting salaries less than that amount.
Dean Mastagar’s brief one page introductory message was “the [current] economic crisis continues to hit our profession hard.” (a) That he was proud of the fact that New York Law School’s graduates are flexible [emphasis in original].in terms of jobs they have taken. I may be improperly projecting, but I read that as saying that the school’s graduates are taking jobs that are either low paying or completely outside the profession; (b) The school’s graduates are innovators [emphasis in original] “Where other see problems, they see solutions.” Isn’t that the hallmark of any successful lawyer? And (c) the school’s graduates add value [emphasis in original] “in countless ways.” That reminded me of William Shakespeare’s oft quoted “damning with faint praise” from Twelfth Night. And, I must confess, while I do not intend to impugn any of the school’s graduates, my barista, Tony, describes himself as having all of these three attributes.
Not a word about the actual employment gained by the school’s recent graduates. Not a word about their average income.
Dean Mastagar’s cheerful introduction was followed by a mere three page article punctuated by handsome photographs (remember, this is a 64 page glossy brochure) entitled Navigating the Legal Job Market, stating (a) the virtues of patience, the history of the recession and its effects on the profession, (b) finding a job will be prolonged, (c) “The wait may yield unexpected rewards” ( I guess so would winning the lottery, (d) the “need to see the “big picture,” (e) “the need to interview effectively,” (Wow, I didn’t know that), the need to develop a network, (f) consider employment opportunities at small and medium sized firms (with no mention of the fact that tens of thousands of graduates are doing the same thing nor that the compensation offered at these firms often do not provide enough money to repay student loans, while simultaneously eating or paying for housing, and for at least 50 years, most NYLS graduates wound up practicing at small firms; in 1977, for example, there was only one NYLS graduate who obtained a job in the then equivalent of an AmLaw 100 firm: me ), (g) consideration of temp jobs (same problems as the preceding suggestion only worse working conditions) coupled with a daily fear that the temp job can abruptly end and the young lawyer will then look for another open casting calls), (h) starting your own law practice, citing the example of one graduate who successfully did so; and, finally the need to “think strategically.” (Clearly another innovative thought).
All of the parentheticals are mine.
The next 55 pages in this glossy handsome brochure are about the joys of photographing wonders of nature (you can’t make this stuff up), the school’s admirable bar pass rate and on campus activities and little bits about the faculty and school graduates.
I certainly have no particular gripe about New York Law School. It provided me with an excellent education and the skills necessary to have a wonderful career at the law.
But the fact is that more than 150 law schools regularly issue similar blather. What they should be saying, as loudly as possible, is “OMG, our hair is on fire! Run for your lives!”
A quick note about another vice in which law schools have recently been engaging, particularly third and fourth tier law schools: Most graduating college students, when applying to post graduate programs, apply to both “safe schools” and schools at the height of their grasp. Third and fourth tier school in recent years, in order to improve the employment reports of their graduates, have been inducing and recruiting top college graduates (in campaigns similar to that engaged in by NBA teams for LeBron James) to enroll in their schools with expansive and enticing scholarships, which are extremely difficult to decline. These students tend to do well and most often do wind up with far better jobs than their peers; not great jobs, just better jobs or at least get a job. The direct consequence is that students below the top quartile, those least likely to gain meaningful employment, are actually subsidizing the education of students who are far more likely to do well professionally.
So, you may wonder, what’s the point of all of the foregoing? Here it is:
- Law schools owe a duty to make full and fair disclosure to all applicants.
- The nation’s law school student population must be reduced by at least one-half, probably two thirds, for the near term, probably at least three years.
- The nation’s bar owes a duty of every nature to demand these changes and shepherd through the inevitable resistance of the academic community.
I must confess that my conclusions, which are seem beyond dispute, are not mine alone. At least four law firm managing partners, a number of other prominent lawyers and several law school professors have shared these thoughts with me. However, they openly expressed fear about making public statements supporting these obvious conclusions because they all felt they would be seen as pariahs, shunned by the profession, insofar as the practicing lawyers were concerned, they expressed the fear that their firms’ recruiting activities would be hampered at important schools; the academics also expressed the concern of being shunned by their colleagues, since, in effect, they would be encouraging significant unemployment among the academic community.
Analogous defenses to a securities fraud lawsuit brought on the grounds of failures to disclose or omissions of material facts, would certainly not fare well. An issuer could not defend his non-disclosures because investment bankers would shun him, non-disclosures or omissions would be viewed as contrary norms by issuers or that making honest disclosures would result in a reduction in force at his or her own company, without meeting with loud guffaws from judges, juries and prosecutors.
If you have reached this point in this note, in the unlikely event you haven’t already come to these other rather undebatable conclusions, here they are: (a) law schools must stop behaving like the beauty schools of 1990 and (b) law schools should make full, fair and candid disclosure to every law school applicant (before they even remit the application fee) and have each applicant sign a document that he or she has read the disclosures and understands them.
Finally, law school graduates, law school administrations and law professors might take a look at 16 CFR Part 254 and speculate whether these rules apply to law schools directly or by extension and if there is any private right of action thereunder. The recent spate of class action lawsuits brought against trade schools ( http://www.usatoday.com/news/education/2010-09-27-1Aforprofit27_ST_N.htm?loc=interstitialskip ) , asserting claims against trade schools based on the fact that students at these trade schools were defrauded by the trade schools regarding their employment prospects following graduation should give the legal academic community some serious pause.
A glimmer of light is now appearing at the end of the tunnel: On December 13, 2010, US News and World Report announced that it intended to publish more detailed information regarding actual employment figures for law students nine months after graduation. In addition, an ABA panel is considering requiring law schools to make fuller disclosure and at least a handful of law school deans are displaying some pangs of conscience and are advocating greater disclosure of actual post graduation employment prospects.
It is sometimes said that historical events do not exist unless they have been reported in the New York Times. Thus, for better or worse these matters were covered by the Times On Sunday, January 9, 2011 in a feature first page article in the business section entitled “Is Law School a Losing Game?” by Times reporter David Segal.
You are invited to read much more on the subject in my book, “Navigating the Perfect Storm,” to be published by Ark Press of London. You can order by contacting me or Anna Shaw at Ark at email@example.com or Daniel Smallwood at Ark at firstname.lastname@example.org
(c) Jerome Kowalski, 2010. All Rights Reserved.
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