Tuesday, September 1, 2015
Subpoena Envy Long Gone
Hey, my son is married to a Jewish doctor, and what’s more, he’s not a lawyer! Wow! I must have done something right. He’s an investment banker, and the way to explain why being a lawyer wasn’t the smartest move, I summarized it for him this way (when he was making his career choices): it’s a personal service business based on constant confrontation with long hours and no exit strategy. You stop working, the income stops right there, and you can’t even take a successful law practice into the capital markets to cash in on your success. Because of state bar rules, you cannot sell a law practice to a non-lawyer. That was enough for him. But today, there are even more reasons why you “don’t let your children to grow up to be lawyers.”
With self-help forms online, lots of legal information just a Web-search away, even access to practicing lawyer for a low fee to get an answer to a specific question out there in the Worldwide Web, too many clients do their own simple legal work. Corporations are bringing tons of legal work in-house, often performed by paralegals with highly focused, if somewhat limited, expertise. They are capping fees, demanding benchmark performance billing or simple flat rate charges. Some won’t even pay for “lawyer training,” by refusing to pay for any legal work done by anyone with fewer than two years of experience. And fee renegotiation is now constant. Bottom-line, demand for lawyers has dropped like stone tossed off the Empire State Building.
Steven Harper’s Op-Ed in the August 25th New York Times provides the ugly statistics: “TEN months after graduation, only 60 percent of the law school class of 2014 had found full-time long-term jobs that required them to pass the bar exam… Even that improvement over the class of 2013 (a 57 percent employment rate) came with three asterisks: Last year, the American Bar Association [disclosure: Dekom is a member] changed the job-reporting rules to give law schools an extra month for the class of 2014 to find jobs; graduates employed in law-school-funded positions count in the employment rate; and the number of jobs that require bar passage fell from 2013 to 2014.
“Amazingly (and perversely), law schools have been able to continue to raise tuition while producing nearly twice as many graduates as the job market has been able to absorb. How is this possible? Why hasn’t the market corrected itself? The answer is that, for a given school, the availability of federal loans for law students has no connection to their poor post-graduation employment outcomes.
“Students now amass law school loans averaging $127,000 for private schools and $88,000 for public ones. Since 2006 alone, law student debt has surged at inflation-adjusted rates of 25 percent for private schools and 34 percent for public schools.
“In May 2014, the A.B.A. created a task force to tackle this problem. According to its recent report, 25 percent of law schools obtain at least 88 percent of their total revenues from tuition. The average for all law schools is 69 percent. So law schools have a powerful incentive to maintain or increase enrollment, even if the employment outcomes are dismal for their graduates, especially at marginal schools.”
Doctors have to live with “managed care,” and face those early non-earning years of residency and fellowship where pay levels hover between $50-60,000/year while trying to manage six figure debt. But at least a medical school grad probably isn’t worried about getting a job. Most engineers and folks who are proficient writing computer code can find solid work as well. But among the once-highly-paid fields, lawyers are facing false employment promises, high tuition, and massive debt with limited ability for most to pay it back.
Law school enrollments are down, and many marginal law schools are disappearing. “Total enrollment in JD programs (including both full-time and part-time students) at the nation’s 204 ABA-approved law schools fell to 119,775 in 2014, down nearly 7 percent from 2013 and about 18.5 percent from its historic high of 147,525 in 2010, according to the data collected by the legal education section [of the American Bar Association].
“Enrollment data is included in the information reports that schools are required to file annually with the section, which is recognized by the U.S. Department of Education as the accrediting agency for JD programs in the United States… The last time total enrollment was so low, states a Dec. 16  news release announcing the enrollment numbers, was 1987—when there were 29 fewer ABA-approved law schools than there are today.” ABA Journal, March 1st. For those third level, non-ABA-approved law schools, enrollments are abysmal and true post-graduating jobs requiring a legal degree are even more elusive. The staggering, six figure debt, however, is horribly real.
Where you go to law school and where you rank in your graduating class do matter. But unlike many other degrees, getting J.D. generally means that the student is in fact paying for (including borrowing) most of their tuition. Harper continues with some harsh words for the ABA legal biz watchdog: “In May 2014, the A.B.A. created a task force to tackle this problem. According to its recent report, 25 percent of law schools obtain at least 88 percent of their total revenues from tuition. The average for all law schools is 69 percent. So law schools have a powerful incentive to maintain or increase enrollment, even if the employment outcomes are dismal for their graduates, especially at marginal schools…
“The task force report said that some witnesses proposed ‘capping law student loans, requiring law schools to have ‘skin in the game’ by being responsible for loan repayment in certain situations, and even scrapping the current federal student loan program altogether.’ It characterized proponents of such measures as hoping ‘that a kind of fiscal tough love will force schools to become more financially responsible and reduce cost.’
“But the task force argued that ‘there seems to be little need to impose the kind of tough love some want because the market is already doing it.'.. Except that the market is doing no such thing. While enrollment did decline to about 38,000 last year from 52,000 in 2010, it has not been falling at the pace necessary to reach equilibrium in a stagnant legal job market. Too many incoming law school students still believe they will be among the lucky few who get decent jobs.
“[The ABA] task force, having dodged the issues that should have been the focus of its work, offered four suggestions: law schools should offer students better debt counseling; the Department of Education should develop ‘plain English’ disclosure information about student loans; the A.B.A. should collect and disseminate information about how law schools spend their money; and the A.B.A. should encourage law schools to experiment on curriculums and programs.” And before young men and women apply to law school, someone better tell them exactly what risks they are about to assume.
I’m Peter Dekom, and economic transitions require a shift in underlying educational policies and decision criteria.