How To Fix The U.S. News Law School Rankings

January 13th, 2016 / By Kyle McEntee

This was originally published on Above the Law.

To put it mildly, I’m not a fan of the U.S. News law school rankings. They poison the decision-making process for law students and law schools alike. For students, they cause irrational choices about where to attend or how much to pay. For schools, they produce a host of incentives that do not align with the goal of providing an accessible, affordable legal education.

Because of their undeniable influence, it makes sense to seek methodological changes that nudge schools in a better direction.

Of course, the man in charge is cautious about change. Here’s what Bob Morse said at the Association of American Law Schools (AALS) conference this weekend, courtesy of Bloomberg:

We’re wary of advocacy. We believe we can read right through it if somebody is suggesting something that will clearly benefit them. Hopefully we’re smart enough to understand that. We listen, but we never promise anything.

Luckily nobody would ever confuse Law School Transparency with a mouthpiece for law schools. We are transparent about what we want: making entry to the legal profession more transparent, affordable, and fair.

Perhaps the most troubling aspect of the U.S. News rankings methodology is the expenditures per student component, which actually includes two related metrics. The first, worth 9.75% of total rank, is the amount spent on faculty, staff, and services divided by total JD students. The second, worth 1.5% of total rank, adds the amount spent on financial aid to the equation.

If you burn money (literally), you improve your standing on the rankings as long as there’s an educational purpose.

The latter metric appears to value schools that help people afford high tuition prices. If law school scholarships came from endowments rather than tuition discounting, it would do a good job of rewarding generosity. However, based on how law schools do scholarships, this metric simply incentivizes schools to increase sticker tuition and offer price cuts. Schools are rewarded for the aggregate price cut.

Say a school needed $30,000 per year from all students to meet budget demands. The school could price their education at $30k and suffer in U.S. News, or it could price their education at $40k, offer everyone an automatic $10k discount, and reap rankings rewards through an accounting trick.

The metric actually hurts the most disadvantaged students at every school. Schools do not usually offer across-the-board discounts. Instead, they offer discounts to the students who are most likely to pass the bar and get a good job. This year, more than a third of students at ABA-approved law schools paid sticker price.

Not only do the expenditures per student metrics incentivize burning money (again, literally), but they also incentivize schools to engage in shameless price discrimination. All in the name of (maybe) a higher ranking.

The basic premise of the metric is that when a school spends more money, it probably provides a better or more thorough education.

If this ever worked as a proxy, it sure doesn’t now. It has corrupted the legal education system and it is time for U.S. News to own its role in breaking a system to the disadvantage of tens of thousands of students. Whether U.S. News wanted to be in the incentives game or not, they are now a participant in the system and cannot hide behind the auspice of neutral observer.

There is good news. Morse told me many years ago that he’s open to changes to the methodology when you come to him with concrete alternatives. Fair enough, and it’s been true so far. He listened when it came to changing the formula for calculating employment outcomes in 2011; he listened again a few years later when he changed the employment metric to discern among jobs, e.g., whether they require bar passage or not.

Last year, I wrote a memo to Morse and his team, co-signed by Chief Justice Randall Shepard (former CJ of the Indiana Supreme Court) and professor Bill Henderson, asking U.S. News to adopt one of two alternatives to the expenditures per student metric.

We also asked that the new metric replace two other metrics: student-to-faculty ratio and library resources. The library resources component does not relate to a 21st century legal education. Additionally, the ABA Section of Legal Education determined that the student-faculty ratio is an outdated proxy for quality and no longer uses it in assessing accreditation.

In sum, the proposed metric would replace 15% of total rank. Importantly, it aligns rankings incentives with the goal of providing an accessible, affordable legal education. Here are the two proposals:

Expenditures per High-Quality Job

Numerator: Total expenditures (same as used in the current metric).

Denominator: High-quality jobs, as measured by jobs in which bar passage is required or the JD is an advantage. Ultimately, the high-quality job denominator aims to make sense of what students choose to attend law school to do.

Relative Ordering: On this metric, a school that spent less money is relatively better than a school that spent more money to achieve the same number of high-quality jobs. In other words, the metric values efficiency by attaching total expenses to desirable outcomes.

Tuition Revenue per High-Quality Job

Numerator: The total revenue from tuition and fees that the school collects from a defined student cohort over a defined period of time. The cohort could be all students or all graduates. The period could be the most recent year or combined with previous years.

Denominator: The same as the previous alternative.

Relative Ordering: On this metric, a school that charged students less money is relatively better than a school that charged students more money to achieve the same number of high-quality jobs. In other words, the metric values efficiency by attaching total money spent by students to produce desirable outcomes.

The incentive here is for schools to take in as little money as possible from students while still providing access to high-quality job opportunities. A school with a large endowment would not be hurt under this metric because the expenditures that come from endowment returns would not be relevant. Likewise, schools that receive money from alternative sources such as grants, state support, or other ventures would not find that their wealth hurts them. Schools could spend non-tuition revenue however they choose without a rankings penalty.

My preference is the second. What will U.S. News do?