Tuesday, August 16, 2011

First Steps Toward Reform

Why does law school cost so much?  Imagine a world in which law schools were run in such an efficient and rational manner that they cost students just a few hundred dollars per month in tuition, while delivering the same quality of education (such as it is) as they do today.  Employing what some might consider almost mystical powers of perception, I have peered into the distant utopian future and seen the outlines of such a world.  It is called "the 1980s."  (Note: All monetary figures in this post are expressed in current, inflation-adjusted 2011 dollars).

25 years ago, i.e., roughly around the time that most of the people running law schools today were law students, median resident tuition at public law schools was $3,582 per year (Again, hard as it may be to believe, that figure is inflation-adjusted. The nominal figure was less than half that).  But LawProf, you say -- wasn't that during the socialist regime of President Ronald Reagan, when tax subsidies for public education in America were at positively Scandinavian levels of munificence? (I well remember Reagan's 1980 presidential campaign slogan, "The Struggle of the Proletariat is a Political Struggle").

True enough, young Jedi. I see you have learned to think like a lawyer, and to distinguish otherwise similar fact patterns. But learn you now this: Median private law school tuition was $14,762, in present dollars. That's right: 25 years ago, completely unsubsidized legal education at ABA-accredited law schools was slightly more than one third of what it is at such schools today, and 25% less than resident tuition at public law schools today.  (Median tuition for private law schools is now nearly $40,000 per year, and median resident tuition is about $18,500).  And note these are medians, which means of course that half of all law schools had lower tuition than these figures represent.

In other words, unless you assume that the law school graduates of a couple of decades ago were drastically less well-prepared to practice law -- and to teach it! -- it seems that figuring out a way to provide a perfectly adequate legal education at a small fraction of today's cost should not be the equivalent of discovering a cure for cancer, or leading the Detroit Lions to a Super Bowl victory.  No miracles are necessary. Instead, law schools could just stop doing the things they've been doing with increasing intensity over the past 25 years that have put the cost of legal education through the roof.

The main drivers of law school expenses are: faculty and staff compensation, physical plant expenditures, library operating costs, financial aid for students, and cross-subsidization of other university programs.  With the possible exception of the last item, the cost of all the other things on this list has skyrocketed at the typical law school over the course of the last generation.

The first step toward stopping this pattern is to recognize it for what it is: that is, a series of discrete decisions on the part of law schools (or more accurately the law school cartel -- for as we shall see what we have here is a classic collective action problem) that were not mandated by external economic or political pressures, but have been produced by a combination of the regulatory structure of contemporary legal education, and the ideological structure of contemporary American society, with the technical academic description of the latter being "I've got mine Jack."

Over the next few weeks, law school faculties will be getting together for the first meeting of the academic year, at which it's traditional to discuss long-range goals and strategy and the like.  Here's what I recommend as one possible agenda item for such discussions: How can we stop spending like drunken sailors, given that we're passing on the tab to people who, increasingly, can't really afford to pay it?  This is not, needless to say, merely an ethical question. It's very much a pragmatic question, given that the laws of economics predict that, if present trends continue, we're going to get cut off rather abruptly.  From the perspective of sheer self-interest, it would be better to sober up gradually.  And the first step is to recognize the problem for what it really is.


  1. For a discussion about why law faculties fight change see:


  2. Okay, is this going to be like one of those old Saturday morning serials where the story line is artificially dragged out? Just go ahead and say what you think.

  3. Another great post. But as I understand, most of the increase in tuition hasn't even gone to the professors. Don't get me wrong, professors are in the top 5%ish of society for 20 hours or so of work per week. However, most of the tuition increases have gone to fund completely unnecessary things like (a) gigantic new facilities and (b) supporting the undergraduate institution. Or it goes to an inefficient and bloated IT department. Or some other waste.

    Let me put it this way. Your average 1L class is taught by one professor teaching 120 students (each of whom paid $40,000). That professor is sure as hell not making $4.8 million!

  4. People got greedy, and society encouraged it. Profs and admins could pay themselves what they wanted because the students were willing to take on the debt. That's ending now. Smaller salaries or fewer profs with larger class loads.

    I can't help but laugh when I look at physical costs. My school has been promising to build us a new facility for years now (ours is a dump), and even managed to squeeze through a tuition raise on this expectation. Of course, the $ went to salaries.

    Libraries? I don't know. How is online research changing this? My guess is that we'll need to spend less and less money on physical library books, so admins and profs will use that money to pad their salaries.

    Law school financial aid drives me nuts. The idea should be that those who can most afford something subsidize those who can least afford something. Law school turns this model on its head by giving ridiculous free rides to top students, who are likely to hit the ground running at big law jobs when they graduate. They do this at the expense of other students, who may spend years underemployed or unemployed. Your law school poor are supporting your law school rich.

  5. LP, I want to point out that one of the spending areas you've mentioned skyrocketing is financial aid to students. To a degree, that will offset the cost of legal education. I don't doubt that the cost has gone up, but as financial aid becomes more common, the sticker price becomes a less valuable measuring point.

    At NYU, 46% of students received a grant from the school, with a median amount of $16,500 (I believe this is per year, but US News doesn't specify). There is also a lot of money given to students through LRAP, after graduation.

    The average indebtedness of $125k, with 80% taking out loans, speaks for itself though.

    @Anonymous 7:48 above, Your average 1L isn't just taking 1 class. For that year he's spending $40,000 on, he's probably taking 8 classes. In that year the professor may teach 2-4 classes, but probably not another giant lecture.

  6. P.S. or it goes to the career services office. At my T2 school (where the career services office is quite possibly the most useless and ineffective human venture I have ever encountered. seriously, you'll walk in and everyone is sitting on their ass yet they force you to make an appointment to talk to them, and when you do they do nothing but fault you for not finding a job. They are so consdescending about it. I have never heard a student praise them or get a job through their efforts, and no I don't give them credit for OCI since that's a function of student grades. They are an iconic example of Murphy's law beauracracy.) Any way, this office employs no less than FIVE career counselors, a couple of whom are former attorneys who I imagine got laid off. Each has their own office and the career services office has enormous office space complete with a waiting room, kitchen and so on.

    If I was ever Dean, the first thing I would do is fire all but one of the career services people. The remaining person's job would be to coordinate OCI. I would tell the students that the career services office is not there to find you a job and never was, so it has been cut in size and the cost savings will go to each student to fund resume paper, suits or whatever they need for their job search.

    Meanwhile, some departments are understaffed, akin to some sort of slave shop. For example, take the secretaries who support the roughly 60 faculty members and school management. It's about three people in a typing room working their asses off all day for a meager hourly wage. It's embarrassing to see how hard they work and I feel bad for them. To be fair, they are working as hard as your averge private sector secretary but it looks odd when everyone else lives a cush academic lifestyle, and these people are working frantically.

    You also see this when you compare adjunct professors to full time professors. The former make less than minimum wage. The latter live like fat cows.

    Any way, let me get to my point - schools should publicly disclose how the tuition money is spent. The same goes for tuition increases. No better disinfectant than sunlight and all that.

  7. BL1Y I'm going to address that whole issue in a separate post. As you know NYU has enormous resources in comparison to the average law school. At most schools the large majority of students pay full boat tuition. Also I'm given to understand that very few NYU students end up taking advantage of the school's very generous (comparatively speaking) LRAP program. Most schools have nominal LRAP programs at best.

  8. BL1Y,

    I read your post about South Park and profs, and how they don't get it. I think that really hits the nail on the head.

  9. I don't know where the rest of the money goes, but I do know about libraries. Shark Sandwich is right about paying less and less for physical library books, but the electronic replacements aren't free either. Westlaw, Lexis, BNA, Wolters Kluwer, and all the other publishers are jacking up the prices for electronic information all the time, and as long as the legal profession insists on the traditional, perfectionist "I have to have access to every case there is" approach, that's not going to change.

    I suspect most faculty don't have any idea where the money goes, and most deans aren't willing to share the information.

  10. BL1Y wrote: Anonymous 7:48 above, Your average 1L isn't just taking 1 class. For that year he's spending $40,000 on, he's probably taking 8 classes.
    You're right I was being sloppy. Let me rephrase that. About 10 professors teach one 1L section. That 1L section has 120 students (excluding the 10 on scholarship) each of whom paid $40,000. The lecture hall was donated by an alumnus (this was true of my 1L lecture hall). Still, those 10 professors don't together make $4.8 million. Not even close.

  11. Jim,

    Fair enough. I have no idea how much electronic databases cost. But my gut tells me that even as physical costs decrease, electronic costs won't increase enough to make the savings negligible. Eventually, there is going to be a lot ofmoney left over, and the savings won't be passed on to the students.

  12. I'm not sure, but I'm pretty sure that Westlaw/Lexis do not charge the law schools for the service. I think it's completely free (the idea being to get the students hooked so they'll pay for it later). Westlaw/Lexis are by far the most important (and arguably sufficient) research tools provided by a school.

  13. Anon: Those 10 professors probably do make a combined $2 million though.

    Typical law firm model is when an associate bills, 1/3 of their revenue goes to them as compensation, 1/3 goes to overhead, and 1/3 goes to partner profits.

    If the prof salaries are $2 million, and the total revenue is $4.8 million, they're getting back 42%. There is still some overhead, and the 'profits' equivalent would be pay to deans and other top admins, the money kicked up to the parent university, and money given to professors for sabbaticals and such.

  14. Another tuition driver is student loans. If the government wouldn't gaurantee a student loan of more than $X per semester, then tuition would probably be about $X per semester.

  15. Take away government support in the form of student loans and this whole bubble self-corrects in a few years.

    Law schools and higher education raise tuition every year because they can; the extra costs are simply passed onto the federal government.

    Student loans have been a complete failure; they have corrupted higher education to the point that all these institutions now mostly care about revenues than actual education.

  16. I spent my life in this business, at a top tier law school. I published, I taught, I litigated high profile law reform lawsuits. I had a good time and I was paid well. That said, LawProf is right-on about the current situation. But as an old trial lawyer/professor I object to use of the word "scam"--it serves no purpose other than to take the potential reader's eye off the ball. It is a word pregnant with meaning, much of which is not relevant to the purpose of the blog. Indeed, the cold, hard truth is hard enough to take. Most of my colleagues over the years were not bad folks but they were (and are) blind to the reality of their enterprise.

  17. Good thing I'm also Chairman of the Board of Access Group; my $520,000 per year salary as dean of New York Law School doesn't go too far with the cost of living in New York City.

    Thank god for all the Access Group student loans that we originate at NYLS. I'm not sure if you know, but Access Group is the default loan provider at NYLS. At $50,000 per year in tuition, that's a lot of Access Group-originated cash into NYLS's coffers. And our bank account grows and grows.

    One hand certainly does wash the other.

  18. Westlaw and Lexis are most definitely not free to law schools. When I was library director, a few years ago, we were paying around $80,000 per year for both services. Pricing is based on student FTE, so larger schools pay significantly more.

  19. Law schools and higher education raise tuition every year because they can; the extra costs are simply passed onto the federal government.

  20. Law schools and higher education raise tuition every year because they can; the extra costs are simply passed onto the federal government.


    This is true, but what's scary is to think of the Tea Party gaining control at some point - eliminating student loan subsidies like deferments, IBR and such and then all of the sudden you have to make a $2,000/month student loan payment!

  21. When I was library director, a few years ago, we were paying around $80,000 per year for both services.


    Thanks. Interesting. That has to be a subsidized rate though, right? Considering that the students have access to law reviews, treatises and all cases. What does it cost per year at a firm?

  22. As a law librarian, I would also like to speak to the library cost issue. The Lexis/Westlaw duopoly do give schools a break on their services in order to hook students into doing their research online. But library material costs have been steadily rising faster than inflation.

    West, as the principle legal publisher, is a far from benign publisher of print materials. Costs keep rising every year and they have replaced pocket parts [a cheap update] for annual paper supplements. Another example is West's nutshell series. When I was in law school these cost $5.00 whereas now they are $35 and over. This is typical of the price escalation. The source of this price gouging has been lax antitrust enforcement as more and more independent legal publishers have been purchased by the big two.

    BNA has recently raised its online subscription rates significantly. Most schools are cutting back on print materials and some online services.

  23. This is in reply to the Anonymous post at 10:01 regarding use of the word "scam."

    The use of the word scam does exactly as it is intends: shines the spotlight directly on the issue bringing it front and center. Lawprof has quickly garnered much attention in a matter of days. The time for cordial discourse and discussion is over.

    The problem has reached a breaking point. Former students are suing law schools for deceptive and fraudulent practices (Thomas Jefferson, Cooley.) A number of schools have been caught straight up lying about incoming class statistics. Not using creative accounting, just intentionally give false information to the ABA for US News ranking purposes (Villanova, BLS).

    At least two United States representatives have started to formally question the ABA.

    We now have other legal academics personally attacking and threatening Lawprof. (I.E. Brian Leiter, though I'm sure no one was surprised by his behavior).

    Lives will continue to be ruined unless something drastic happens. There are too many entrenched forces at play; forces slowly manipulating the legal academic institution through decades of self-interested action, finally bringing "law school" to its current untenable state.

    No matter who you want to blame, law professors as individuals or a group, school administrations, the ABA, U.S News, the U.S. government's guarantee of nondischargable debt - they are all to blame to some extent. Their actions all aptly fit somewhere on a continuum starting with questionable self-interested action and ending with downright unethical behavior.

    Throughout all of this the one group consistently screwed is the very group the legal academic institution purports to protect - the students. For many students and recent graduates, the word "scam" is a perfect description of the current state of law school and the value of a law degree.

  24. How big of a school is that with $80,000 a year in West and Lexis fees?

    If you're on the small side, say 700 total full-time enrollment, that's $114 per student, for both Lexis, and West. Considering that a single search can cost that much, $114 per year per student is very close to free. Less than the cost of a single text book.

  25. What is missing in this post, and all of the subsequent comments is that the identified expenditures are all used as criteria for determining the ranking of schools. I understand that the ranking of schools has become an enormous collective action problem, often bemoaned by the legal academy. I would challenge academics seriously interested in pursuing meaningful cost reforms to apply their intellectual firepower toward finding a way to get their balance sheets out of the rankings. Ranking schools based on expenses is almost certain to drive the cost of legal education higher despite the best efforts of concerned faculty.

  26. Good point, Bl1Y. Here's another question: How much of the library budget is that 80 k? I would guess that law libraries are multimillion dollar enterprises. The 80 k would be a lot of money, but not a huge percentage in in a 2 million dollar budget. So, if we get to a point where a library costs 500 k to operate, where is the rest going to go? You can bet it won't get back to the students.

    Anon @ 11:19, good points as well. For better or for worse, many students still trust their profs and admins. Prof and admins abuse that trust, and if they don't get on board by admitting there's a problem, and reforming the system, they're going to get left behind. Profs and admins need to show some leadership skills.

  27. Great issue spotting Anonymous at 11:56

  28. What is missing in this post, and all of the subsequent comments is that the identified expenditures are all used as criteria for determining the ranking of schools.

    I agree. The fact that US News ranks schools by expenditure per student, but not by tuition(!!!), is one of the most bizarre things about the industry.

  29. Expenditure per student is supposed to be a surrogate for quality. What would ranking by tuition signal, other than the raw information?

  30. Shark: I looked at salaries for library staff at 5 schools (Texas, UVA, SUNY, W&M, and Michigan), and the average cost per student per year for the library was $1200. And that's just the staff salaries, not benefits, not the cost of the facility itself, or the books, or other expenses.

    Here's the article on that: http://bit.ly/iSkjCK

    As for the issue of expenditure per student, I can see why that is relevant. What should happen though is either that amount should be discounted for tuition, or have a just another score for (low) tuition.

  31. "What would ranking by tuition signal?"



  32. The cheapest would be the best value just on the raw number?

  33. It's a proxy for value. All else being equal, cheaper schools would provide more value for the dollar than would expensive ones.

  34. "all things being equal" contains a whole lot.
    All things are never equal.

  35. When you lie - knowingly - to get money out of people, it's a scam.

  36. Much of the increase in costs has come from trying to make the school attractive to students ('name' professors, great facilities, lots of staff for hand-holding). It's a vicious cycle, since the rising costs mean prospective students look for these amenities to justify the 'investment' they're going to make.

  37. With Jim Schwartz at the helm, the Lions may be in the Super Bowl faster than people think. =)

  38. The solution, which already has been suggested, is pretty simple and straightforward: (1) cap the amount of money a student can borrow, and (2) make the law schools refund all or part of the defaulted loans back to the government.

    This situation is little different from fraudsters who would sell home mortgages to people who could not afford them, but took none of the risk of those bad loans.


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