I’ve been developing a theory for awhile about what the structure and composition of lawyers at a typical BigLaw firm may look like in future, and how it’s evolved already, and now that The New York Times has made it official that law school applications are plummeting, it’s timely to bring the two together and talk about why anyone in their right mind would want to go to law school today.

First the Times story, because once a phenomenon makes the front page of the Times it’s all but universally recognized as true (as Paul Campos says, it achieves ontological truth) even if it hadn’t penetrated the universal consciousness just yet.

Now, for those of us who’ve been following the remarkable spread of the recognition that law school-except for the top students at the top schools-has become a very bad bargain indeed, with costs wildly out of proportion with benefits, this is extremely welcome news. Indeed, the Times article comes close to being a public service.

But just to quickly rehearse what’s wrong with law school for the great bulk of current and prospective students: It saddles hem with nondischargeable debt on the order of $150,000 in exchange for dismal job prospects. If you want a complete, chapter-and-verse, recitation of the bill of particulars against law schools today, there’s no more comprehensive source than Washington University School of Law Professor Brian Tamanaha’s Failing Law Schools.

Here are the numbers, from the Times:

Law school applications are headed for a 30-year low, reflecting increased concern over soaring tuition, crushing student debt and diminishing prospects of lucrative employment upon graduation.

As of this month, there were 30,000 applicants to law schools for the fall, a 20 percent decrease from the same time last year and a 38 percent decline from 2010, according to the Law School Admission Council. Of some 200 law schools nationwide, only 4 have seen increases in applications this year. In 2004 there were 100,000 applicants to law schools; this year there are likely to be 54,000.

Such startling numbers have plunged law school administrations into soul-searching debate about the future of legal education and the profession over all.

“We are going through a revolution in law with a time bomb on our admissions books,” said William D. Henderson, a professor of law at Indiana University, who has written extensively on the issue. “Thirty years ago if you were looking to get on the escalator to upward mobility, you went to business or law school. Today, the law school escalator is broken.”

This graphic tells the story  more vividly than any words:

Those who follow the industry, even in the shallowest fashion, have seen widespread coverage of the cost/benefit mismatch in going to law school for the past few years:  The indispensable Paul Campos has been producing a running commentary on developments, while even the Gray Lady has produced hard-hitting stories for some time.  Here’s the problem in a nutshell—not that law school is worthless, but that the investment required and the payoff delivered have gotten totally out of whack:

“Students are doing the math,” said Michelle J. Anderson, dean of the City University of New York School of Law. “Most law schools are too expensive, the debt coming out is too high and the prospect of attaining a six-figure-income job is limited.”


“We have been sharply increasing tuition during a low-inflation period,” [Brian Tamanaha] said of law schools collectively, noting that a year at a New York City law school can run to more than $80,000 including lodging and food. “And we have been maximizing our revenue. There is no other way to describe it. We will continue to need lawyers, but we need to bring the price down.”

So far, pretty well known reporting—and kudos to Ethan Bronner, the Timesian who got the byline.

But the most fascinating aspect of this story to me is how we see the dynamics of supply and demand working out in real time.  Take another look at that chart (above): It shows applications plunging almost 50% in less than a decade, with about 80% of that total drop (eyeballing the graph, from about 90,000 in 2010 to barely 50,000 this year) taking place in three years. I must confess I would not have predicted two or three years ago that people would vote with their feet so decisively and massively, but give them credit: They have.

Even more interesting (you may call it ominous should you prefer) is that the drop in applications has been disproportionately high among students earning the best scores on the LSAT. In other times and places this phenomenon has been called a “brain drain”-out of law schools, that is, and into unknown other precincts. If to engineering schools, some might say “About time,” and who could argue? Regardless of where the former law school applicants with high LSATs are going, it probably makes sense that they are going-somewhere. After all, they’re the ones with the most options. And yes, life is unfair.


What lesson do I take away?

I actually think this behavior should be read as a cautionary tale for any set of institutions that finds its customers turning away because the value of the offering has seriously deteriorated—and which cannot change quickly in response. At the end of the Times piece, Prof. Bill Henderson of Indiana (disclosure: a friend) points out the obvious reality:  “There are going to be massive layoffs in law schools this fall. We won’t have the bodies we need to meet the payroll.”

Bill may have, uncharacteristically, been holding his tongue. Layoffs will be followed by law schools closing outright, I believe.  You would think, as a rational economic actor, that schools facing potentially mortal peril would reform to save themselves. You would think. But who honestly believes many schools will?

This is the perversity of complacency in action.  It’s almost as if schools preferred failure to change.

As I said, a cautionary tale.

Finally, we cannot leave this article without noting one of the oddest invocations of “supply and demand” I’ve run across in many months, here:

“We have a significant mismatch between demand and supply,” said Gillian K. Hadfield, professor of law and economics at the University of Southern California. “It’s not a problem of producing too many lawyers. Actually, we have an exploding demand for both ordinary folk lawyers and big corporate ones.”

She said that, given the structure of the legal profession, it was hard to make a living dealing with matters like mortgage and divorce, and that big corporations were dissatisfied with what they see as the overly academic training at elite law schools.

I wouldn’t single out Prof. Hadfield for scrutiny were it not for how common the error she makes is. She glides right over the fact that there are actually three distinct markets involved (each, needless to say but permit us to stipulate for the record) with its own supply/demand dynamic.  She conflates it all into one, palpably imaginary and nonexistent, market.  Let me explain, first by citing Paul Campos’ analysis and then by adding a few thoughts of my own.  Campos:

The claim about “ordinary folk” is even stranger [than the one about big corporations], but it’s one that’s being made a lot these days by legal academics desperately searching for a raison d’ paycheck. The argument goes something like this:

(1) Many people in this country who could benefit from legal services aren’t getting those services because they’re too expensive.

(2) Those services are too expensive because law school costs too much.

(3) If future lawyers could go to law school without incurring so much debt, they could afford to offer legal services at a price that far more people could afford to pay.

(1) is certainly true. (2) and (3) are just wrong, and obviously so.

Big corporations have stopped paying for innocently incompetent and innocently but grossly overpriced junior associates because they’re finally behaving rationally.  They have discovered a combination of things: That non-lawyers can do some of that work, that software can do some of that work, that some of that work needn’t be done in the first place, and that even if some of it is to be done by junior lawyers at BigLaw, they don’t have to pay anything close to what they used to pay.  That’s the easy case.  Please note:  Nothing whatsoever in this analysis has anything to do with the price of law school.  In fact, I challenge you to relate the price of law school to this analysis in any way. That’s market #1: BigCorps hiring BigLaw.

As for “ordinary folk[s],” Prof. Hadfield makes the same analytic error, inserting the price of law school into the argument in a superficially plausible way, but which dissolves on a moment’s thought.

Explain to me how what ordinary folks will pay a lawyer to handle their “mortgage or divorce” has anything to do with the sunk cost of tuition at that lawyer’s school?  Nothing, is the answer.

The price for handling a residential mortgage or a divorce is, well, the price—set by the market, with all the attendant implications, such as its being less in Bentonville, Arkansas than in Manhattan.  While the experience and relative specialization of the practitioner might be an element going into the price, the cost of that lawyer’s long-ago JD degree is as irrelevant as whether it’s spring or fall, rainy or sunny. That’s market #2: Folks needing SmallLaw.

This demonstrates a larger truth: Clients don’t care about your costs.

This brings us to market #3: Prospective students evaluating to-JD-or-not-to-JD, a/k/a the market for a law school education.

The vacuity of Hadfield’s argument, by the way, is no different in structure or concept  from that of law school grads who might be tempted to think they “have to” earn $160,000/year to start because they have a boatload of student debt. I’m sorry (and I truly am heartbroken at the human toll), but that’s not the way the market works.  I might as well tell my boss I need a raise because I bought a second home in the south of France.  Income does not expand to match expenses, nor does the price the market will bear for your services conveniently match what it takes for you to meet your past costs.

Which is another way of underscoring the point that if law schools don’t realign their price with the value of what they deliver, the lines on that graph at the top of the article will continue downwards. Without regard to the implications for law schools’ making their budgets.

Sorry, but my theory about what BigLaw’s lawyer composition may look like must await another column.

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