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NALP and the JD Advantage
April 7th, 2013 / By Deborah J. Merritt
With contraction of the legal job market, law schools are touting “JD Advantage” jobs for graduates. According to NALP, the National Association for Law Placement, these are “jobs that do not require bar passage, an active law license, or involve practicing law in the traditional sense.” Instead, JD Advantage jobs are positions in which “a JD provides an advantage in obtaining or performing the job.”
NALP is now helping law schools promote these JD Advantage positions to prospective students. The organization has created a new webpage, What Is the JD Advantage?, as part of its Prelaw Portal. The page enthusiastically advises prospective law students: “It turns out that the JD degree prepares you for a variety of exciting jobs and careers. While many law school graduates go on to practice law, many others go on to play leadership roles in a variety of settings. Many law school graduates obtain positions for which Bar Passage, or even a JD, is not required, but their legal training is deemed to be an advantage or even necessary in the workplace. As the saying goes ‘you can do almost anything with a law degree!'”
The page then offers videos of five recent law graduates who are happily pursuing JD Advantage positions. The featured jobs are desirable ones: two of the graduates are Presidential Management Fellows; one is a communications director for a U.S. Congressman; one is a senior human resources manager; and the fifth is a vice president of the National Alliance for Public Charter Schools. The graduates speak glowingly of their work and endorse the versatility of a law degree. Each video opens with the slogan: “you can do anything with a law degree.”
This is feel-good stuff designed to promote law school attendance. Some educators might dismiss the webpage as harmless puffery. We all know that it’s not possible to do “anything” with a law degree. Law school graduates can’t practice medicine, pilot planes, speak Urdu, or do hundreds of other things without training separately in those fields. And there are many things one can do with a law degree (sell coffee, scrub floors, go to prison), that most graduates prefer not to do.
Law schools, however, shouldn’t dismiss this webpage as puffery; they should demand that NALP take the page down. The page omits material, negative information about JD Advantage positions–information that NALP itself collects and has readily available. Rather than share the negative data through its Prelaw Portal, or elsewhere on its public website, NALP shelters most of that information in its annual Jobs and JDs book. Few prospective students know about that publication–or would spend the $90 that NALP charges for a copy.
At the same time that NALP omits material information from its “JD Advantage” webpage, the organization reassures prospective students that NALP is “the premier resource for information on legal employment and recruiting,” and that it is able to “provide comprehensive information” on topics related to entry-level jobs secured by law graduates. NALP, in other words, is trading on its reputation as an impartial data collection agency while providing biased information to prospective law students. Even worse, NALP must know that the information on its site is incomplete and overly rosy. Law schools shouldn’t tolerate this type of behavior from an organization that represents us.
What NALP Knows
NALP has four types of data that undermine the unalloyed enthusiasm of its “JD Advantage” webpage. First, and most important, NALP knows that many law graduates in these positions are actively seeking other work. Graduates with jobs that require bar passage, in contrast, are much less likely to be shopping for other work.
As part of its annual employment survey, NALP asks every law graduate to “indicate whether you are seeking a job other than the one described here.” To my knowledge, aggregate responses to this question appear nowhere on NALP’s website; they appear only in NALP’s Jobs and JDs report. Those reports consistently show that graduates with JD Advantage jobs (or “JD Preferred” ones, as NALP used to label this category) are much more likely to be seeking other work than are graduates in “Bar Passage Required” positions.
In 2001, for example, just 6.7% of law grads with Bar Passage Required jobs were seeking other work nine months after graduation; a full third (33.3%) of graduates in JD Preferred positions were doing so. The figures were similar in 2004: 8.5% of graduates in Bar Passage Required jobs were seeking other work, while 37.0% of those in JD Preferred positions were doing so. The same was true in 2007: only 8.7% of graduates in Bar Passage Required jobs were still on the job market, while 37.7% of those with JD Preferred positions were actively seeking work.
For the most recent year, 2011, graduates in both categories were less satisfied with their nine-month positiions. Even among graduates with jobs requiring bar passage, 16.5% were actively looking for other jobs. But a whopping 46.8% of graduates in JD Advantage jobs were looking for other work. Almost half of all graduates with “JD Advantage” jobs were dissatisfied enough to still be on the job market–just nine months after law school graduation. That fact belies the “you can do anything” cheerfulness of NALP’s JD Advantage pitch to prelaw students.
Second, NALP knows that contemporary JD Advantage jobs are much more likely than lawyering ones to be part-time. For the Class of 2011, 21.0% of JD Advantage jobs were part-time; just 8.0% of Bar Passage Required jobs fell in that category. A diligent searcher could find this information on NALP’s general website, but not on its JD Advantage webpage.
Third, NALP knows that a similarly high percentage of JD Advantage jobs are short-term temporary ones. A recent ABA Report shows that 25.2% of all JD Advantage jobs secured by the Class of 2011 were short-term positions. Just 9.7% of jobs requiring bar passage, in contrast, were temporary ones. NALP collects similar information about the short-term nature of JD Advantage jobs, but does not report it, either on the JD Advantage webpage or elsewhere on its site.
NALP, finally, knows that JD Advantage jobs pay less than ones requiring bar passage–and that holders of JD Advantage jobs are less likely to report their salaries. The difference in reported salaries is relatively small: the median for JD Advantage positions was $59,000 in 2011 while that for Bar Passage Required ones was $61,500. More significant, only 33.8% of JD Advantage workers reported their salaries–compared to 57.3% of graduates holding jobs that required bar passage. As NALP itself recognizes, reported salaries skew high. The dramatic under-reporting of JD Advantage salaries suggests significantly lower pay in that sector.
These four facts raise concerns about the desirability of JD Advantage jobs. Prospective students should know these facts, especially the fact about the number of JD Advantage job-holders who are still seeking other work. NALP should know better than to publish cherry-picked videos and cheery claims without disclosing the information it possesses about these “do anything” jobs.
What NALP Doesn’t Know
It’s very troubling that NALP is promoting JD Advantage positions without disclosing the key information it possesses about those jobs. Equally disturbing, NALP is pushing these positions despite its lack of essential information about this job sector. When I first saw NALP’s JD Advantage webpage, I assumed that the organization had gathered data about the full range of jobs labeled “JD Advantage.” I thought, for example, that NALP would know how many of those jobs are Presidential Management Fellowships, how many are compliance positions, how many are paralegal spots, and how many are primary school teaching positions. That type of information would give NALP some basis for promoting JD Advantage jobs as desirable ones–or at least for giving prospective students information about their different options.
After corresponding with NALP’s staff, however, I discovered that NALP does not know what kind of jobs appear in the JD Advantage category–much less the percentage of each type of job. NALP relies exclusively on graduates and law schools to categorize their jobs as “Bar Passage Required,” “JD Advantage,” “Other Professional,” or “Non-Professional.” When NALP tells prospective students that they “can do almost anything with a law degree,” NALP doesn’t know what graduates with JD Advantage, Professional, or Non-Professional positions really are doing with their degrees.
This strikes me as even more irresponsible than NALP’s omission of the facts it knows about JD Advantage positions. If NALP–or individual law schools–want to promote JD Advantage jobs, then we should collect more information about those jobs. How many of our graduates are Presidential Management Fellows and how many are paralegals? Are the graduates in HR positions doing advanced work, or are they taking jobs that are available to college graduates? If NALP or its member schools believe that JD Advantage jobs are important to the future of legal education, then we should collect and publish honest information about those positions. Without that information, statements that “you can do anything with a law degree” aren’t just glib–they’re disingenuous.
2012 Employment Outcomes
April 2nd, 2013 / By Deborah J. Merritt
The ABA has posted employment data for the Class of 2012. The figures are grim by any measure. The downturn in entry-level employment, which schools dismissed as temporary in 2009 and 2010, has persisted for four years–with a fifth year about to graduate. Only 56.2% of 2012 graduates had found full-time, long-term jobs requiring bar admission by nine months after graduation. More than a tenth of the class–10.6%–was still unemployed and actively seeking work at the nine-month mark. Those are shocking numbers for graduates with a professional degree.
The national unemployment rate was just 7.7% in February; the rate for law graduates was almost 3 points higher. Law schools, moreover, reported that another 2.2% of their graduates were “unemployed but not seeking work,” while still another 2.6% had an employment status that could not be confirmed. The graduates in those categories may belong with the plain old “unemployed”; lower ranked law schools have a suspiciously high number of graduates who either are not seeking work or refuse to disclose their job status.
All told, therefore, the unemployment rate for graduates of ABA-accredited law schools could be as high as 15.4%–more than one in every seven graduates.
Nor does the bad news stop there. Only 56.2% of graduates found full-time, long-term work that required a bar license. Another 9.5% reported full-time, long-term work for which the JD was an “advantage.” That’s a loosely defined category that includes paralegals and other positions that do not need graduate training. But even if we generously count all of those jobs as worthwhile outcomes for law graduates, less than two-thirds of all graduates (65.7%) secured a full-time, long-term job using their degree. And that’s nine months after law school graduation; more than six months after taking the bar.
Will the class of 2013 fare better? That seems unlikely. The class is larger than the class of 2012; it’s the largest class ever to move through ABA-accredited schools. There has been no noticeable upsurge in hiring at private firms, and government budgets are tighter than ever. My admittedly anecdotal sense is that law schools called in all of their remaining favors for the class of 2012. Alumni have already stretched to hire one more graduate; schools are running through funds for short-term jobs. When the class of 2013 joins their still under-employed peers from the classes of 2009 through 2012, the results won’t be pretty.
What’s the Financial Value of a Law Degree?
March 18th, 2013 / By Deborah J. Merritt
Last year, the columnist Shawn O’Connor offered some provocative calculations about the financial value of a law degree. Drawing upon a study from Georgetown University’s Center on Education and the Workforce, O’Connor claimed that a financial investment in a law degree “is likely to produce at least a 10x return” over the graduate’s career.
O’Connor has a personal interest in encouraging students to apply to law school; he is the founder and CEO of a company that offers test prep and admissions counseling to prospective law students. That fact alone should make readers wary of O’Connor’s claims. Several legal educators, however, have asked me to comment on O’Connor’s calculations, so let’s take a close look.
Bad Math
O’Connor gets off on the wrong foot by making a basic arithmetic error. He subtracts $2.3 million from $4.03 million to get $2 million–instead of the actual difference of $1.73 million. This is much more than a rounding error; it significantly affects O’Connor’s claim that investing in a law degree “is likely to produce at least a 10x return.” The sloppy math should further increase any reader’s skepticism.
Degrees and Occupations
A more fundamental problem with O’Connor’s analysis is that he compares the financial payoff for a degree (the BA) with the payoff for an occupation (lawyering). The Georgetown report repeatedly stresses the difference between those two categories: earnings vary by both occupation and educational level. A significant number of law graduates don’t practice law. Indeed, saturation of the legal market is pushing increasing numbers of graduates into other careers. Given that, one can’t estimate the value of a degree by looking at just one of the occupations pursued by degree holders.
The Georgetown study, in fact, suggests that a professional degree provides little financial return compared to a master’s degree in some job categories. Managers with a master’s degree average $3.76 million in lifetime earnings, grossing almost as much as managers with professional degrees (who average $3.87 million) Similarly, an accountant with a master’s degree averages $3.03 million in lifetime earnings, not far below the $3.20 million expected by an accountant with a professional degree. For an elementary or middle school teacher, a master’s degree offers average lifetime earnings of $2.16 million while a professional degree yields just $2.29 million.
These comparisons suggest that a JD does not pay off financially for many law graduates who fail to practice law. O’Connor computes the cost of a law degree as $285,000, which includes three years of foregone income. In each of the comparisons cited above, the lifetime earnings differential is considerably smaller than O’Connor’s cost of a law degree. The law degree, furthermore, must be purchased today–while any earnings bonus occurs over a lifetime.
A master’s degree, of course, also requires financial investment. But many professionals earn master’s degrees while working full-time, avoiding the heavy costs of foregone income. Most master’s degrees also cost considerably less than a JD, due to lower tuition and a shorter time frame. Using O’Connor’s own calculations, law school is a bad financial bet for graduates who go into business, accounting, primary school teaching–and, most likely, other fields outside of law. A master’s degree will lead to equal or better financial success in those occupations.
If Not Law, Then What?
O’Connor assumes that a student who eschews law school will not attend any other graduate program, settling for the average lifetime earnings of a college graduate. Students who can secure law school admission, however, are not average college graduates. If they opt against law school, they are likely to pursue other types of graduate education. Even if they leave higher education with just a BA, they are unlikely to be average wage earners in that group. The same talents that bought them admission to law school will pay off in the workplace.
The Georgetown report shows that 17.2% of workers with only a BA earn more than professional degree holders. The professional category in that comparison, moreover, includes doctors–who earn considerably more than lawyers. If we looked just at lawyers, closer to 25% of college graduates (with no further education) would earn more than the average lawyer over a lifetime. Similarly, 24.2% of master’s degree holders earn more than the average professional (again including both doctors and lawyers in the latter category).
The top quarter of PhD holders also earn considerably more than the average lawyer. According to the Georgetown report, those PhD’s average $4.7 million while the average lawyer earns just $4.03 million. With lower tuition and fellowship support, doctoral students usually pay less than JD students–further enhancing their financial advantage.
The Value of Money
Even the middle-of-the-pack college graduate, who obtains no further education, can obtain better financial returns than the average lawyer. All she has to do is invest the money she would have spent on law school in a conservative mutual fund, such as a stock index fund. Then she can work at her BA job while watching her nest egg grow. O’Connor and the Georgetown report both use 40 years to calculate lifetime income, and 40 years is a long time for an investment to grow.
Even at just 6% interest, a college grad’s investment of $285,000 (the cost of law school as calculated by O’Connor) will grow over 40 years to more than $2.9 million. That’s considerably more than the $1.76 million lifetime bonus the lawyer will secure. Indeed, as long as the BA grad secures at least a 4.7% interest rate–easily achievable over 40 years–she’ll beat the lawyer’s return on the law degree.
What about lower priced law schools? A student might pay just $20,000 a year with a scholarship to a public school. Adding that $60,000 to three years of lost salary ($135,000 in O’Connor’s calculations) yields a cost of just $195,000 for a law degree. Again, however, the college graduate who invests that money in a mutual fund will easily beat the $1.76 million bonus earned by a lawyer. $195,000 invested for 40 years at just 6% interest will yield a little over $2 million as the college graduate’s bonus. (O’Connor omits any discussion of taxes in his calculations, so I do as well. Both salaries and investment income are taxed, at a variety of rates, so it is not clear how taxes would affect the comparisons.)
Most college graduates, of course, don’t have money sitting around to invest. They borrow money for law school, hoping that the financial return will pay off their debt plus more. This reality, however, doesn’t improve the financial comparison. Let’s assume that we have two college graduates, one who goes directly into the workforce and the other who borrows money for law school. To simplify the comparison, let’s eliminate living expenses; we’ll assume that they each have the same living expenses, paid for three years by their parents.
Again using O’Connor’s figures, the grad who enters the workforce will earn $135,000 over three years. Since her parents are paying her living expenses, she’ll invest all of that salary in a mutual fund. If she realizes a return of 6.5%, she’ll have $1.67 million after 40 years–plus, of course, her earnings during those 40 years as a college graduate.
The grad who attends law school, on the other hand, will borrow at least $60,000–the money needed for three years of discounted tuition at a state law school. She won’t need to borrow any money for living expenses in this comparison, because her parents are paying those. This hypothetical law student is borrowing less than $20,500 per year, so she’ll benefit from the lowest interest rate for graduate student loans (6.8%). If she’s able to repay her loan within 10 years of graduation, an optimistic scenario, she’ll pay about $32,500 in total interest (including the interest that accumulated during law school). Assuming this law school graduate works 40 full-time years as a lawyer, her financial bonus is $1.67 million (her $1.76 million premium for working as a lawyer minus her tuition and interest payments). Even with very favorable assumptions on tuition and repayment rates, the lawyer will fare no better financially than the college graduate.
Both graduates in this comparison face some risks. The college graduate, for example, might not obtain 6.5% interest on her investment. The law graduate, however, faces equal or greater risk. If she is unable to find work as a lawyer, takes time off to care for family, or suffers any months of unemployment, her earnings premium will fall. The college graduate’s mutual fund will grow regardless of her employment history.
Past, Present, and Future
No one knows what today’s law graduates will earn over their lifetimes. O’Connor, like the authors of the Georgetown report, can only try to predict the future from the past. To do that, the Georgetown authors looked at workers in different age cohorts. They collected data on the wages that lawyers (and other workers) of different ages earned between 2007 and 2009.
Each of those age cohorts started practicing at different times. The 25-year-old lawyers in the Georgetown study started practicing law after 2005. The 64-year-old ones started practicing as early as 1967. It is very unlikely that a legal career spanning the years 1967 through 2007, widely recognized as boom years for the American legal profession, will look the same as one reaching from 2005 through 2045–much less from 2016 through 2056 (the projected career span for students who will enter law school this fall). Projecting one generation’s financial success from a very different generation’s experience demands caution.
The Georgetown report, in fact, includes an ominous note on this point. The authors acknowledge that their data show salaries for professionals climbing steeply from age 25 through 40, then leveling off for the rest of the working lifespan. That pattern could suggest that professionals work hard early in their careers to build their earning potential, reaping their greatest financial returns after age 40. But it could also mean that the professionals who were over 40 in 2007-2009, those who began their careers before 1995, are riding a wave of high return on their professional degrees–while those who graduated later are doing less well. Without more longitudinal data, we can’t distinguish these explanations.
Conclusion
O’Connor’s calculations offer little reassurance that investing in law school promises high financial rewards. On the contrary, a closer look at the math suggests that law degrees are overpriced compared to their likely financial pay-off. If we want people to continue serving as lawyers, we need to reduce the cost of law school. Senior lawyers today undoubtedly benefited financially from their legal education; they averaged $1.76 million more in lifetime earnings than their college graduate peers, and they paid very low rates for law school.
The calculation for today’s law students is very different. High tuition, the need to withdraw for three years from the workplace, and uncertain job outcomes make law school a relatively poor financial investment. It’s time to shift that balance.
2012 Employment Data
March 15th, 2013 / By Deborah J. Merritt
Consumer advocates have criticized law schools, not only for posting misleading employment data, but for disclosing those figures too slowly. The ABA acted to remedy both of those problems. Its revised Standard 509 and accompanying worksheet require schools to publish specific employment outcomes “on the school’s website each year by March 31” for “persons who graduated with a J.D. degree between September 1 two calendar years prior and August 31 one calendar year prior.” That’s legalese for: nine-month employment outcomes for the Class of 2012 must appear on websites by the end of this month.
There’s no reason for schools to neglect that deadline. They already have the 2012 outcomes, which are tabulated as of February 15. They’ve had another month to compile the figures, which are due in the NALP office by next Monday, March 18. Most important, prospective students need that information. As applicants weigh the offers extended to them, and decide whether to attend law school, they should know the job outcomes for the students who graduated ten months ago–not just for the ones who graduated twenty-two months ago.
I have great sympathy for Career Services staff, who feel that they operate under a blizzard of deadlines. First NALP wants this, then US News wants that, and now the ABA wants a somewhat different set of numbers by yet another deadline. Permeating all of that, deans and faculty want them to !!get jobs for graduates by February 15!! Sometimes the dates and reports seem more important than the jobs and graduates themselves.
But this ABA deadline is the most essential one: publishing updated information to prospective students is crucial. That shouldn’t be simply the task of Career Services staff; it should be the first website priority for the school as a whole.
Every accredited law school will update its website multiple times between now and March 31. With admitted students weighing offers, there will be plenty of upbeat news items about alumni accomplishments, faculty awards, and other achievements. That’s as it should be. But let’s make sure that the 2012 employment data appear as well. They’re the first website priority.
I welcome notifications of schools that have already complied with the ABA rule and posted their 2012 job data.
How fortunate you are
March 13th, 2013 / By Kyle McEntee
Dean Dan Rodriguez has written to his students at Northwestern University Law School to announce a class size reduction, a tuition increase, and a commitment to increase scholarships and to cover LRAP costs. (Letter below.)
The letter is a mostly honest assessment of the challenges faced by Northwestern, its peers, and law schools generally. There are too few jobs; attending law school costs a lot of money; and the legal economy is undergoing (and has undergone) a significant shift. Rodriguez is not the first dean to go on the record about these issues and he will not be the last. Without a doubt, acknowledgement is an early step for reform.
The far bigger challenge is having legal education leaders provide solutions that actually combat the problems they rarely struggle to articulate. Here I find that sincere philosophical differences stand between the people who want to see a reimagination of legal education and the people who believe that the scope of necessary change is relatively narrow. Both groups acknowledge the need to reform, but disagree on what reform looks like. In my opinion, the differences largely stem from how far away one thinks legal education is from a reasonable price and from a reasonable balance between students and jobs.
In the rest of this post, I respond to three of the solutions adopted by Northwestern to combat the problems facing law students, recent graduates, and the legal profession. However, Dean Rodriguez’s letter could have been written by any number of law school deans, faculty members, or trustees. The applicant market has forced schools across the country to cut class sizes, increase tuition discounts, and stop unrestrained budget expansion. Credit is due when schools move in the right direction, like when a school cuts enrollment because there aren’t enough jobs or because the school refuses to admit students who are unlikely to ever pass the bar. However, the motivation is never solely noble; among other vanity measures, schools want to maintain their U.S. News ranking. It’s important that decisions like Northwestern’s receive in-depth analysis and be challenged beyond their glossy exterior.
Class Size
Legal education is in an interesting place when an elite law school like Northwestern reduces class size due to a weak entry-level hiring market that cannot absorb all of its graduates. Each school needs to do its part to reduce size, and it appears that Northwestern’s contribution will be about 12-15% over a three year period. Compared to the incoming class of 2013 (274 students, enrolled in 2010), Northwestern’s incoming class of 2016 (enrolling in 2013) will be roughly 235-240 students. Northwestern has publicly set a baseline for class size reductions for schools of its kind. I’d say it amounts to a challenge to schools that do not have job outcomes like Northwestern to justify why they do not follow suit. For schools like Northwestern and its peers, they need to continue to assess whether current cuts suffice.
Of course, if a school reduces the number of people it charges, it needs to cut expenses and/or increase revenue.
A “Moderate” Tuition Hike
Rodriguez takes a page out of the higher education administrator’s playbook when he talks passively about tuition increases, as if they just happen to schools. According to this play, schools simultaneously deserve credit for restraint and sympathy for having to raise tuition. One current Northwestern student sarcastically thanked Rodriguez for “tell[ing] us how lucky we are that the school is taking more money from us, but [] not as much as they could be taking.” That the increase is in line with expected inflation and better than peers is supposed to be a consolation. Students do not see it that way.
| Increase | |||||
|---|---|---|---|---|---|
| Tuition | $ | % | CPI | x inflation | |
| 2004 | $35,896 | ||||
| 2005 | $38,372 | $2,476 | 6.90% | 3.40% | 2.03 |
| 2006 | $40,680 | $2,308 | 6.00% | 2.50% | 2.41 |
| 2007 | $42,942 | $2,262 | 5.60% | 2.80% | 1.99 |
| 2008 | $45,332 | $2,390 | 5.60% | 3.80% | 1.46 |
| 2009 | $47,472 | $2,140 | 4.70% | -0.40% | -11.8 |
| 2010 | $49,714 | $2,242 | 4.70% | 1.60% | 2.95 |
| 2011 | $51,920 | $2,206 | 4.40% | 2.90% | 1.53 |
| 2012 | $53,168 | $1,248 | 2.40% | 2.10% | 1.14 |
| 2013 | $54,763 | $1,595 | 3.00% | 3% | 1 |
| Total | $18,867 | 52.56% | 20.80% | 2.53 | |
My criticism is not directed at Rodriguez alone. The law school dean has less responsibility than one might expect and a variety of factors go into the nominal tuition rate–how many factors and to what extent each factor impacts the final number depends on the school. Nevertheless, somebody or a group of somebodies at Northwestern is responsible for a price point that continues to trend in the wrong direction. The appropriate next step for Northwestern stakeholders is to wonder why a law school representative–at any school, law or otherwise–would find it distinctive to talk about an increase of “only” three percent. Rodriguez’s letter stipulates that Northwestern is part of the solution, but its supposedly-progressive policies showcase what’s truly wrong these days in higher education.
But fear not, to temper the tuition hike even more, the school can increase its financial aid awards.
Tuition Discounts
Financial aid sounds completely benevolent. After all, it’s “aid” that helps all but the very wealthy afford to attend school. The term refers to student loans (at exorbitant rates), as well as merit and need-based scholarships. The latter category is an expenditure like faculty salaries or janitorial services. While scholarship money sometimes comes from limited purpose endowments, they’re usually tuition cross subsidies. That is, a scholarship for one student comes from the tuition revenue of all others. Need-based scholarships are scarce, so a huge chunk of scholarship expenditures comes from the tuition revenue from the students least likely to succeed. These students subsidize the students with the best incoming LSAT scores and GPAs (i.e. those most likely to succeed).
This translates to something far less noble than a solution to the soaring cost of a Northwestern education. Like almost every other law school, the school has chosen to expand its budget to buy credentials to continue its participation in the U.S. News charade. Who pays for this? The incoming 1Ls who pay more than the average price paid, current 1Ls, current 2Ls, and the alumni that Northwestern plans to obtain “external funding” from to recoup lost (and apparently necessary) revenue from class size reductions. At a certain point, if it hasn’t already happened, alumni will simply refuse to cover the difference and wonder why the budget must grow to provide a sound legal education. As mentioned previously, students already wonder.
Digging into Northwestern’s three solutions, even if presented as non-exhaustive, takes some polish off of Rodriguez’s letter. These are conscious spending decisions dressed up as solutions to various aspects of the legal education crisis that’s hitting even students at elite law schools. Unfortunately, continuous boasting from law schools about how they’re ahead of the curve on reform, when their solutions can only hope to make tiny dents into the legal education crisis, proves how far we are from affordable legal education that provides entry into the legal profession.
Letter from Rodriguez (emphasis mine)
During the past year, we have met in various venues and with a multitude of stakeholders to discuss the challenges facing legal education today, all of which are receiving due attention in the media and blogosphere. Most notably, over the past few years a decline in hiring at firms and the outsourcing of certain types of legal jobs have led to fewer opportunities for law school graduates. Further, too many students graduate with student loan debt that seriously affects both their career choices and their quality of life. And fewer people are applying to law schools nationally (20% fewer this year and an estimated 38% decline since 2010). Northwestern has not faced the same level of decline as other schools, nor have we suffered as greatly from the decline in legal positions as most other law schools. We are not immune, however. And we are not going to ignore the ways in which the legal economy affects our alumni, current students, and prospective students.
This significant shift in the legal economy presents real challenges. It also presents real opportunities. Informed by our culture of innovation and with the creative work of our faculty, students, and staff we will craft strategies, big and small, to meet the challenges facing legal education so that we will continue to thrive in the years to come. The strategic planning process, which is actively underway, will help shape curricular and external relations strategies to help propel us to the next level of achievement and reputation. Meanwhile, we will carry out three important first steps with an eye toward addressing these challenges. These steps result from several months of deliberate analysis and are, quite properly, focused on protecting and enhancing our reputation and reducing financial burdens on our students.
First, we will implement a modest reduction in the size of our traditional JD program: approximately 10% or 20 to 25 fewer entering students in 2013. As we become leaner, this modification also provides an opportunity for us to further enrich the strong and close-knit sense of community and camaraderie for which we are known.
Underlying this decision is the match-or, if you will, the mismatch-between the number of JDs who graduate each year and the actual demand the legal economy is creating and can sustain. Earlier this year the Bureau of Labor Statistics predicted that the economy will generate approximately 75,000 new legal jobs in the next decade while ABA-approved law schools are graduating more than 40,000 students annually. The specifics are debatable but the big picture is credible, and law schools must take heed and act in strategically responsible ways.
Second, we will continue to moderate our tuition increases. JD program tuition for the 2013-2014 school year will once again rise by just 3%, matching last year’s increase which was our smallest in more than 40 years and a rate that coincides with historical measures of inflation. Last year, this modest increase was at the very low end of the spectrum for top law schools. We expect that this will be at the low end this year as well.
Third, we will increase our total investment in need- and merit-based financial aid for entering students and in our LRAP program for graduating students by at least 25% during the next two years. This commitment, along with other measures we will explore, and our conservative approach to tuition increases going forward, are manifest efforts to limit the rising cost of a Northwestern legal education and corresponding burdens of student indebtedness.
Finally, we will look closely at managing more conservatively the expenses within the Law School, investigating ways we can repurpose dollars toward more efficient and efficacious methods of instruction. No part of the Law School will be immune from this careful review. For years, we have been asking students to make sacrifices by the tuition we charge and the debt undertaken; as faculty and staff of the Law School, we need to be prepared to make these sacrifices ourselves. While we look at cost-saving measures, we will be guided by answers to this overriding question: “Does this request for additional expenditures further directly the goals and objectives of our academic program?” That all said, we are not going to shrink precipitously the size of the Law School budget so as to impair the quality of our academic program. Indeed, due to the prudent and forward-thinking budgetary and contingency planning by our administrative team, we will be able to carry out these adjustments without the need to implement any major cuts to our operating budget. In the long run, however, we will need to pursue ambitiously alternative sources of revenue and, in particular, we will need to secure significant external funding, at even higher levels than before, through the generous financial support of our alumni and friends. This, too, we will do.
These changes are no panacea and no doubt there will be further adjustments down the road. Yet, present times call for these actions which, when implemented collectively, tangibly begin to address the convergent challenges facing all law schools. At Northwestern Law School, we know that a first-class, innovative legal education need not be provided with insufficient regard to students’ economic circumstances. We can be great and efficient, elite and compassionate.
Our Law School provides an exemplary legal education. Our graduates have been remarkably successful at lucrative and influential jobs around the globe. Supported by our community and our culture of innovation, we are prepared to confront these issues, and we will emerge from this era well ahead of the curve.
Thank you for all you do for Northwestern Law School.
US News and Employment Outcomes
March 12th, 2013 / By Deborah J. Merritt
Over the last two years, pressure has mounted for more transparent information about the jobs that law school graduates obtain. US News traditionally used very coarse measures of employment, most recently focusing on the percentage of graduates who reported any type of job nine months after graduation. Those nine-month employment rates included part-time jobs, temporary positions, and employment with little relationship to a law degree. A part-time sales clerk at Macy’s was just as “employed” as a law firm associate on the partnership track.
This measure allowed law schools to claim very high employment rates, both in the US News tables and in their own promotional materials. The dazzling nine-month percentages–97%, 98%, 99%!–implied that law school was still a sure road to secure, professional, and well paid employment. Applicants had to seek other information, often buried in complex websites, to understand how many of those “employed” graduates were working in part-time, short-term jobs–sometimes funded by the law schools themselves.
We’ve made progress over the last year. Law School Transparency led the way by publishing more detailed job information about every ABA-accredited law school. The ABA followed suit by requesting more nuanced information from law schools and publishing that data. The ABA also revised its accreditation standards to insist that law schools disclose more complete information to students. But still, those tables in US News, with all of those high employment rates, were very, very appealing.
Today US News joined the push for more accurate employment information. The 2014 rankings include a new measure of employment outcomes. US News now weights jobs according to whether they are JD-related, part-time or full-time, and short-term or long-term. The online magazine is not disclosing the full formula, but notes that “[f]ull weight was given for graduates who had a full-time job lasting at least a year where bar passage was required or a J.D. degree was an advantage.” At the other end of the spectrum, “[t]he lowest weight applied to jobs categorized as both part-time and short-term.”
Perhaps most important, US News has published for each law school the percentage of its 2011 graduates who obtained jobs falling into the first category–jobs that were full-time, long-term, and related to the JD. Those percentages are available, free of charge, for all law school applicants to ponder.
The results aren’t pretty. At the top eight schools, more than 90% of graduates are still finding full-time, long-term jobs that use their law degrees. Some of those jobs may not justify the cost of attendance, and we might still wonder about some of the graduates who didn’t obtain full-time, long-term, law-related work within nine months of graduation. But law-related employment rates of 90% or more might justify three years of expensive, intensive professional education.
Outside the elite eight, however, job outcomes plummet sharply. Berkeley and Michigan, two premiere public schools, tie for ninth place in the new ranking. Yet only 82.6% and 85.8% of their graduates, respectively, found full-time, long-term employment for which the JD conferred an advantage. Conversely, by nine months after graduation, 14-17% of their graduates were still marking time in part-time, short-term, or non-legal positions. Those aren’t outcomes for which students should pay top tuition dollars.
Further down the list, the outcomes are even more bleak. Minnesota and Washington University in St. Louis round out the top twenty law schools with a tie for nineteenth place. Yet nine months after graduation, only two thirds (66.3% and 66.6%) of the graduates from these schools were working in long-term, full-time jobs related to the JD. A full third of each class failed to achieve employment that used their expensive and hard-won degrees.
The percentages vary after that, climbing as high as 88.0% (for George Washington) and falling as low as 23.6% (Whittier). Over the next few days, bloggers will analyze the factors that contributed to higher employment rates (school-funded positions, geography, a large percentage of JD Advantage jobs) and those that produced lower outcomes. No amount of analysis, however, can conceal the overall pattern. No school outside the top eight placed more than 90% of its graduates in full-time, long-term, law-related work. Only 13 schools, including that top eight, exceeded the 85% mark. And only 34 schools, out of the 195 supplying employment information, managed to place as many as three-quarters of their graduates in a full-time, long-term, law-related job within nine months of graduation.
The new employment measure devised by US News is far from perfect. Its greatest flaw lies in equating all “JD Advantage” jobs with positions requiring bar admission. Statistics gathered by NALP show that law graduates are far less satisfied with JD Advantage jobs than with ones requiring a law license. Among 2011 graduates, 46.8% of those in JD Advantage jobs were still seeking other employment; just 16.5% of those in bar-admission-required jobs were doing so. Those statistics appear only in NALP’s Jobs and JDs book, and they do not distinguish full-time, long-term jobs from part-time, short-term ones, but I will ask NALP if they can provide more information on those distinctions.
Even more worrisome, I don’t believe that any organization audits the claims that graduates and law schools make about which jobs carry the “JD Advantage” tag. NALP counts the jobs reported in that category but, apparently, does not ask schools to identify the positions that count as “JD Advantage.” Nor, to my knowledge, does the ABA or US News. Does a job as a court assignment clerk count as a “JD Advantage” position? What about a job as a middle school social studies teacher? Or one as a bail agent, debt collector, or police officer? I can imagine a JD assisting workers in any of these fields–but the jobs are ones that the majority of job holders perform quite well without the training or expense of a JD.
These are issues that we need to address very soon, both for purposes of the US News ranking scheme and with respect to the information that law schools provide their applicants. But for now, the generous definition of “employed,” which includes any job carrying the “JD Advantage” label, makes the outcomes reported by US News especially troubling. Even allowing for a very liberal definition of law-related jobs, even including all of those “alternative” careers that schools have touted, law schools are leaving a remarkably large percentage of their graduates without jobs that use their degrees. Short-term and part-time jobs are not good outcomes for students who have spent over $100,000–often borrowed at high interest rates–for a legal education. Neither are jobs unrelated to the JD, ones for which schools don’t even dare claim a “JD advantage.”
Prospective students and law schools need to take note of these outcomes and take them seriously to heart. If we can’t provide even solid “JD Advantage” jobs to a substantial number of our graduates, then the value of our degree is in serious question.
NJL 250 Law Firm Hiring Data
March 9th, 2013 / By Robert Rhee
I crunched the numbers on the NLJ 250 law firm hires for 2012. The total number of new graduates hired by NLJ 250 law firms is 4,457. This constitutes about 10% of the entire graduating law school class of 2012. (more…)
Captive Firms and Jobs
March 9th, 2013 / By Deborah J. Merritt
Kyle McEntee, my co-moderator here at the Cafe, and Kevin Outterson, Chair of the Strategic Planning Committee at the Boston University School of Law raise some important issues about law school firms. I want to thank Kevin in particular for sharing his views and letter to the ABA Section of Legal Education with us.
I agree completely with Kevin and Kyle that we need to guard against post-graduate law schools becoming just another way for schools to pump up employment statistics at the nine-month reporting mark. Some law schools already hire a significant percentage of their own graduates in short-term positions to achieve that result. Currently, the most common jobs in that category seem to be research assistance for the schools’ professors, fellowships at government or public interest agencies (with a small stipend from the school), and school-subsidized work with private employers. These positions achieve some laudable results: they provide a small amount of financial relief to heavily indebted graduates and, in some cases, help grads land more permanent positions. But there is little doubt that law schools also maintain these programs to improve their employment figures.
I’m less worried than Kevin that post-graduate law firms will worsen that trend. These law firms require much more time, effort, and expense to create than the positions described above. Why would a school go to those lengths when it can already report graduates as employed simply by funding low-paid research positions with the school’s professors? At worst, the post-graduate law firm positions will achieve the same reporting results but with more practice-oriented opportunities for graduates. The law school firms also seem to promise more lasting and remunerative employment; Arizona State’s new firm will employ graduates for up to three years. That type of commitment allows a more genuine opportunity to develop practice expertise and a client base than the short-term, part-time fellowships that some law schools currently offer.
We do need to remain vigilant about how law schools report their graduates’ jobs. The ABA’s decision to collect and report information about school-funded jobs was an important step; that information now appears on a special site maintained by the Section on Legal Education. The Section also requires schools to disclose this information on their own websites, using a worksheet designed by the section. Law School Transparency recently documented which schools are complying with that requirement.
This partial transparency is an important step, but there is still room for many abuses. Deans, for example, can ask alumni to hire graduates for a short period surrounding the employment date. Those graduates will register as “employed, short-term,” on either a part- or full-time basis. The jobs can be fleeting and low paid; since NALP collects salary information only about jobs that last a year or more, the school runs no risk of lowering its salary figures. As long as the alum, rather than the school, funds the graduate, the job won’t appear in the “school funded” column.
We need to figure out ways to deal with this type of data manipulation. One approach, which I’ve followed in my own research, is to count only full-time, permanent jobs. My point here is that, however we address this problem (and I agree that it is a major one), I think the problem exists independently of post-graduate law firms. At worst, these firms may fall in the same category as law-school-funded jobs, temporary arrangements with alumni, and other contemporaneous tricks of the trade–but with better experiences and pay for graduates.
A more serious concern raised by Kyle is that law school firms will temporarily mask the real problem, that schools are graduating more lawyers than the economy can support. If post-graduate law firms take work from other practitioners or legal aid organizations, then we are simply shuffling work around. Some graduates will help start-up companies through ASU’s new law firm, but established firms will hire fewer associates. We will all fool ourselves for a few more years that there is enough work for the graduates we’re producing.
As the previous paragraph indicates, there is a self correcting mechanism for that problem. If law school affiliated law firms take jobs from local practitioners, those practitioners will hire fewer graduates (as well as fewer part-time students during law school). Law schools don’t generate legal business (unless their professors start suing one another, divorcing their spouses, and redrafting their wills on a monthly basis), so a cannibal firm will affect other opportunities for graduates.
Schools establishing firms, of courses, may hope that those firms will seize jobs from graduates of other law schools. That may, in fact, happen. If a law school creates a firm that provides excellent training, and partners with its alumni in an appropriate way, the school’s alumni may obtain a local market advantage. In addition to hiring lawyers who have completed residencies at the law school firm, local employers may favor students and immediate grads of that school over students and graduates of competing law schools. The school with the affiliated firm, after all, will have demonstrated a commitment to developing more sophisticated practitioners–and it will be working directly with alumni to achieve that result.
If this competitive motive drives creation of law school firms, I can’t fault the schools. Tight markets spur competition, and I’m sure every law school in the country puts the interests of its graduates above those of other schools. Competition, furthermore, can create winning ideas. If law school firms do provide better training and networking opportunities than other types of temporary employment, then the alumni of those schools deserve to find favor.
I think, though, that law school firms hold potential beyond a zero-sum competition among law schools. A major reason for the mismatch between the number of lawyers (too many) and the amount of legal services provided in our society (too few) is that lawyers are terrible managers. There is a growing literature on our poor management skills, which I will discuss at greater length in other posts. Suffice it to say here that we teach almost nothing in law school about the most efficient ways to structure legal services, we produce almost no scholarship on that issue, and our graduates often remain clueless on those matters.
For too long, lawyers have viewed every legal issue as a sui generis one requiring customized legal research and analysis. And who can blame them? We educate lawyers primarily through appellate opinions that present novel issues of law. Why wouldn’t they structure their law practices to follow the assumptions of novelty, time-intensive analysis, and clients whose needs will lead eventually to a path-breaking Supreme Court decision?
The real promise of law school firms lies in developing new ways to manage law practices. Legal educators, of course, are poorly suited to do that on their own. But if interested educators work with groups of alumni, they may be able to create structures that reach new client bases. Services such as Rocketlawyer and LegalForce have already developed some of the tools–not just online systems and client-friendly software (although those are important), but new methods of managing legal problems.
Law school firms have this potential, I believe, because they are new institutions. When designing an organization from scratch, it’s easier to break old forms. Most law schools also sit in the middle of a huge untapped client base: University faculty and staff. University staff, from office associates and custodians to nurses and groundkeepers, are the mid-income Americans who struggle to find legal services. They earn too much to qualify for legal aid; they don’t earn nearly enough to afford traditional legal services. But what if there were an office, bearing the trusted brand of the University’s own affiliation, that could help those staff fight foreclosures, deal with evictions, navigate divorces, create child custody arrangements, defend criminal charges (against the staff member or, say, a wayward teenager), and handle the dozens of other brushes with the law that occur during a lifetime? If we could find ways to tap that market economically, we would broaden access to legal services as well as employment opportunities.
But, and this is a big BUT, none of that will address the excessive cost of legal education. Serving middle class Americans with legal issues is an important policy objective; so is broadening the services to the woefully served poor. Serving those markets, however, will not service the debt that law graduates carry today. If we want to make legal education and the legal profession work, we need to bring down the cost of legal education, make that education more professionally relevant, and give applicants the transparent information they need to make informed decisions about the scope of professional opportunities. Law school firms can be a step in the right direction by developing new mechanisms for delivering legal services, making legal educators more aware of those mechanisms, and improving the professional training of lawyers (not just through the firms themselves but through integration with the school’s earlier education). None of that will matter, however, if we can’t break the chokehold of high tuition.
Describing “Law School Firm” Jobs
March 8th, 2013 / By Kyle McEntee
Professor Kevin Outterson sent me a letter (below) he wrote today to Barry Currier, Interim Consultant on Legal Education at the ABA Section of Legal Education. In this letter, Outterson describes his concerns about law school-funded law firms.
Outterson makes one point that I find particularly interesting. If we think of these firms as post-grad clinics, where the employees are more like glorified interns, then it’s odd to consider these graduates employed in any sense that credits the school with positive job outcomes.
In my experience, the ABA–both its professional staff and members of the Council of the Section of Legal Education–is reticent to judge jobs as good or bad, real or fake. Generally, I agree with this; judging job quality too generally can pose problems because prospective students are diverse in their needs and desires. But Outterson’s point seems different. It’s like counting a graduate as employed at graduation because, on a certain day, a student was working at an in-school clinic.
Granted, these graduates will be paid, so they’re not much different than today’s school-funded jobs. (Although the pay appears better.) But is this putting permanent lipstick on a pig? School-funded jobs are a trend, especially at the richer schools, because law schools graduate too many students. Far more people want substantive legal work that sets them up for a legal career than can. Law school firms may solve the twiddling-thumbs problem faced by unemployed law school graduates, but they may also serve as an alternative to adjusting enrollment to sane levels.
While we cannot be confident that schools are not motivated by appearances (U.S. News or otherwise), we can be confident that the ABA is in a position to dictate what U.S. News uses in its methodology for employment data. With rare exception, U.S. News will not ask schools questions that the ABA does not ask on its annual questionnaire. If the ABA finds merit in Outterson’s suggestions, it should and can effectively act.
Dear Barry,
I read with dismay in the New York Times yesterday about the plans at some law schools to create and fund “law firms” that will exclusively employ their graduates. These are not “law firms,” but are more like post-grad clinics — internships in a law school post-grad clinic that charges fees on a sliding scale.The unspoken assumption is that these students will be counted as employed at graduation for ABA and US News purposes. Does anyone doubt that if these internships were not counted, the enthusiasm for these programs would evaporate? Whether funded directly through the law school or indirectly through the alumni association, one goal here is to boost employment numbers artificially.
I strongly support the need to reform law school, especially the third year. The list of potential reforms from the Coalition of Concerned Colleagues is an excellent place to start. Real internships at real employers can be an outstanding career boost. Law schools posing as law firms will be an expensive travesty.
If the ABA fails to act immediately, US News may handsomely reward the sponsors of these programs. Law schools focusing on real jobs for their students will be hurt by comparison.
Best wishes,
Kevin Outterson
Boston University School of Law
Law School Firms
March 7th, 2013 / By Deborah J. Merritt
A post-graduate law firm is an attractive idea. Recent graduates could develop skills under the supervision of more senior lawyers. The firm could provide secure placement for at least part of a school’s graduating class. And, if the firm charged low prices for the recent graduates’ services, middle-income clients might secure needed legal representation. Benefits like these are prompting some law schools to consider creating law firms associated with the school.
The idea parallels medical residencies, which provide hands-on training to all doctors. Most of those residencies occur in teaching hospitals linked to medical schools, a connection that offers a smoother, more rational path from classroom to practice than the legal profession currently offers.
Law schools exploring the creation of affiliated firms, however, readily acknowledge that the medical profession has a key asset lacking in law: private and government insurance underwrite a large portion of medical care. Teaching hospitals don’t have to chase ambulances looking for clients; the ambulances come to them–along with insurance money to pay for the patient’s care.
Establishing a client base is one of the biggest hurdles that post-graduate law firms must overcome. Arizona State’s Sandra Day O’Connor College of Law, which will launch a post-graduate firm this summer, plans to draw some business from other university initiatives. The ASU “Alumni Law Group,” for example, will work with start-up companies nurtured by ASU’s innovation center and with nonprofits assisted by its nonprofit center. The firm will also reach out to veterans and the Hispanic community.
The ASU business plan contemplates charging $125 per hour rather than the $250 per hour billed by other firms in the area. One question is whether that discount will be sufficient to draw sufficient clients to the firm. And if it is, will the firm draw work away from existing firms (including other ASU alumni) or will it tap new clients?
The University of Utah’s S.J. Quinney College of Law follows a different business model. Utah’s “University Law Group,” founded in November 2011, charges just $50 per hour and focuses on providing basic services to low- and mid-income families. Even at that rate, the project has had some difficulty building a client base. Dennis Gladwell, a retired BigLaw partner who supervises Utah’s University Law Group, notes that local firms have not referred smaller cases to the Law Group.
For law schools exploring creation of a post-graduate law firm, there are at least two indispensable references. One is an article by Bradley Borden and Robert Rhee, outlining the concept of a law school firm. The other is a report prepared by Hanover Research on programs that help law graduates transition to solo practice. That report focuses on solo incubators, but offers some information about post-graduate firms.
I’m intrigued by the concept of law school firms, and hope others will offer their insights. Here are two thoughts to start the discussion. First, I think these firms offer the most promise if they tap new client markets. Small businesses, as well as low- and mid-income individuals, have unaddressed legal needs. If we can respond to those needs, that’s a win-win-win for law schools and the legal profession: We would ameliorate a longstanding problem in our justice system, offer better training for new lawyers, and avoid the specter of simply shuffling legal business from one graduate to another. Indeed, if law schools can not find new client markets to tap, then we have to face the fact that we are graduating far too many lawyers.
Second, to tap those markets, I think law school firms need to re-think existing practice structures. We need to think hard about which tasks demand a senior lawyer’s attention, which ones can be handled by new graduates, and which ones can be completed by law students, paralegals, or computers. Creating a law firm in which graduates perform customized tasks for clients won’t prepare those lawyers for the way most law will be practiced in the twenty-first century. Nor will it allow those lawyers to support themselves by serving a low- or mid-income client base.
Despite the many challenges to establishing a post-graduate law firm, law schools have one advantage: We have access to an employee base that ranges from college students interested in exploring law practice, through law students, recent graduates, and experienced alumni. Can we use those personnel to create logical, efficient, and economical systems for handling legal problems? Could we, for example, use college interns and 1Ls for some paralegal and clerical tasks; trained 2Ls for some intake; 3Ls with licenses for basic legal work; residents for more advanced work; and supervising attorneys for more complex matters–with each level supervising the one below it?
We could add to this mix professors and practitioners willing to offer workshops or instructional materials to the public. Those efforts, like Houston’s Peoples Law School, would perform a public service and perhaps also draw clients. The post-graduate firm could also connect to alumni practitioners, referring to them cases that exceed the firm’s capabilities.
If we can design practice structures of this type, I think a post-graduate law school would have the best chance of achieving all of its goals. And, by bringing schools and practitioners together, it might help us create more efficient methods of delivering legal services.
About Law School Cafe
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