[cross-posted to the Legal Professions Blog]
As the fall progresses, many law students and law school administers will be trying to assess the direction of three market trends: (1) the number or percentage of summer associates who receive offers of permanent employment; (2) the prevalence of deferrals among those lucky enough to be offered jobs; and (3) the volume of summer offers coming out of this year's OCI process. Nobody expects cheery numbers. But as the market information comes in over the next few months, law schools will be in a better position to assess the new landscape.
- Naivete. The modal student entering law school is not homo economicus. Rather, he or she is young, inexperienced, and overly impressed with branding--largely through US News--and the opinions of peers. IQ does not shield the young from overconfidence and the reflexive desire to impress others through the acquisition of positional goods. Indeed, sometimes intelligence in the absence of commonsense can make matters worse.
- Poorly Priced Credit. Banks have lent students funds without a sharp eye to repayment risk. The terms of loans are largely the same regardless of law school attended, geographic market conditions, and law school performance. Yes, historically law students have repaid their loans. But that is the same sloppy logic that created the housing bubble. The only way the math works is if the vast majority of law school graduates, despite low or no starting salaries, experience a steady, multi-year surge in income. This is a foolish assumption for anyone who understands the current state of law firm economics. Of course, just like most home mortgages, student debt over and above the Federal Stafford Loans, often get bundled together, turned into securities, and sold.
- Law Schools are Self-Interested and Locked in a Positional Competition. This is not a criticism; it is a statement of fact. Law schools work very hard to manage their market position, including their US News rank, because students and alumni can be completely demoralized with a significant decline. It does not matter if the decline in quality is illusory; stakeholders will declare the patient sick. This may surprise naive law students, but law schools cannot be counted on to be an objective broker. We need a regulator to level the playing field and force us to be transparent. Which brings me to my fourth point ... .
- Failure of Self-Regulation. The ABA Section on Legal Education and Admission to the Bar bears some responsibility here, but not become it has accredited too many law schools -- the antitrust implications of barring market entry are real. Rather, the Section has become too focused on the comfort of its law school members. If the Section collected and published detailed employment outcome information in a way that facilitated school-to-school comparisons--yes, just like US News--the information would trickle down to potential law schools. It is not helpful to say that 15% of a school's graduates work in business -- they need to know how many of those 15% are waiting tables, driving a cab, or selling insurance. Re jobs in private practice, how many are working as contract attorneys? Nobody really knows, and the issue is not on the Section's agenda. If these data are published, some law schools would probably go out of business.