NU Law 2-Year JD Program, Revisited

Over at Leiter's Law School Reports, Brian Leiter has written up a detailed analysis of NU Law's new 2-year JD program.  The post includes a link to my earlier lengthy post on the same topic, which Brian characterizes (fairly) as a "generous appraisal."   More significantly, Brian's post provides an opportunity to examine a large schism that, I argue, is going to fundamentally alter the legal education landscape--including, eventually, the playing field for elite schools. 

Brian's emphasis on crosstown rivalries of Columbia/NYU and Chicago/NW Law provides a good way to illustrate my point.  As Brian notes, the rivalry between Columbia and crosstown upstart NYU played itself out in the form of head-to-head competition for faculty and students.  The two schools are now, arguably, in equipoise.  Dean John Sexton (now NYU President)  got a lot of credit for the "NYU miracle", but it took more than good management--he got an infusion of new endowment money.  In contrast, the crosstown dynamic between Chicago and NU Law is taking a different form, largely because of NU Law's aggressive orientation toward work experience, business training and placement.   Brian suggests that this non-academic (arguably non-law) focus may alienate the types of faculty and students that comprise a truly elite academic enterprise.

The core issue here boils down to perceptions of eliteness and prestige.  Imagine two types of eliteness:

1. Perceptions among legal academics, which are documented by Brian's careful systematic surveys and corroborated by the direction of law professors lateral movement;
   
2. Perceptions among other labor market participants--i.e., prospective students and employers. 

When #1 and #2 are coextensive, we get the impression that there is single "elite" construct that drives the market.   But what happens when there is a divergence between academic versus student-employer perceptions?   I would argue that we academics are too insecure to stick to our traditional measures of eliteness when students, employers, and alumni are dancing to a different tune.   Law professors love an audience.  Further, these folks write the checks.  In other words, there is an interactive effect.  Faculty that fare well under this system will craft their own narrative of eliteness; and over time it could become the dominant one.

Here, it is important to understand the institutional coherence of NU Law's market differentiation approach.  NU Law wants to be, among other things, the #1 law school for elite legal employers -- and, in contrast to 20 years ago, these are all immensely complex businesses operating on a global scale.  Dean Van Zandt is constantly soliciting the input of managing partners.  NU Law holds focus groups (this article lays it all out) with people whose time is worth $1,000 a hour.  I would wager that these high-powered people attend because it is so rare that a law school actually asks them for advice rather than money--as professionals, they are flattered.  They also enjoy networking with other high-powered folks. 

Clearly, the consensus strategy that emerged from this process was sorting plus training--"build it and we will come."  Yet, regardless of whether NU Law actually delivers on a better prepared lawyer--something we cannot pretend to measure--all this hands-on courting of legal employers is likely to set expectations that NU Law students (2-year, and maybe 3-year) are, in fact, more mature and better prepared.  And the market, let's not forget, is just the aggregation of expectations and perceptions.  Further, as this employer network grows, in five to ten years the "ask" become utterly organic.  These monies can finance NU Law's other institutional commitments, such as "multidisciplinary" scholarship, which is (I am told) different than interdisciplinary.

To illustrate my point, consider this thought experiment:  The Financial Times debuts a new ranking of law schools based on a survey of law firm hiring partners and hiring chairs.  Further, it is backed up by a quantification of actual hiring patterns.  NW Law ends up #1, by a lot.  When a student is going $150K into debt, they want to maximize options.  And the FT rankings is providing a much clearer signal than USNWR.  The following year, law school admissions applicants begin tracking FT rankings.  Eventually, law school alumni want upward movement.  What is the dean going to do--argue that USNWR is a better measure of quality?

Dean Van Zandt is trying to harness labor markets--students and employers--to work in his favor.    And the winds are blowing in his direction: 1) only elite jobs are keeping pace with higher tuition; 2) legal employers are actually looking for better trained (or sorted) workers, particularly in an era of high associate attrition--this has been a recurrent theme in my own conversations with hiring partners.  When LSAT scores are essentially co-linear with scholarly reputation and output, which they are now, we academics need to be realistic about the source of our relative market power.   High LSAT scores + sorting + business training are, from a employer's perspective, better than high LSAT scores alone.  If employer preferences are clearly signaled in the marketplace, they will shape student preferences.  NU Law wants to stoke that signal.  In the long run, this could easily marginalize the influence of USNWR.

Finally, NU Law understands that its sorting strategy only works in a differentiated marketplace.  If all schools adopt the same 2-year program, then the sorting function gets diluted and employers will not privilege NU Law.  But I suspect that NU Law doubts that will happen; instead, it is banking that the legal academy will collectively turn up its nose at this approach.  The more we criticize, the more we show how out of touch we are with market forces.  I have to believe this is all part of NU Law's strategy.

NU Law is trying to remake the elite law school market--the market is, after all, segmented.  But further down the law school hierarchy, there is evidence that that the market is about to break in a new direction.  Students at lower ranked students are increasingly daunted by ever higher debt loads and an unforgiving bi-modal distribution of entry level jobs.  If the interest rates go up, many law schools will have a hard time filling their 1L classes with qualified students.  Building alliances with legal employers helps solve this problem; thus, it is likely the wave of the future.  This is, to my mind, a descriptive rather than normative assertion.

Comments

[vahila]

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[C]

I assure you, as an entering 1L this fall, that 0Ls give an incredible amount of thought to their exit options after law school. Blame JDUnderground if you want, but debt and paying it off are a huge part of the discussion. I can't think of anyone I know who is entering a top program without a huge scholarship whose plan doesn't include working for a large law firm for at least a few years. Even the people who are hot for public interest all seem resigned to 3-5 years at a firm to pay their debts before they can go to a job they enjoy. I suspect that most students take the numbers on %grads in amlaw50/100/250 and in federal clerkships which can be found at a few places as being a much better guide for school choice than where it ranks in usnews. If, in a few years, NU starts performing especially well in these metrics, I would be shocked if there weren't a rapid response by applicants to the information.

[Bill Henderson]

Corey,

You raise some good points. Biglaw continues to grow; at the same time, there may not be a proportionally amount of growth in the number of young lawyers who want to make a career in Biglaw. So there may be a structural problem that will cause the large firms to adapt their business model -- something that happens very slowly, if at all, in this sector.

Re attrition, you have to be right. Profits and attrition have been climbing in unison for several years now. But a lot of Biglaw associates lateral to another Biglaw firm. This churn is not necessarily optimal for the firm. If the firm could find a better ex ante screen device, it would be better off. And the 2 year program may be that device. That said, if the 3rd year really does make students better rounded -- or better rounded students opt for 3 years --the whole thing may not work. Great lawyers are not machines; they need great analytical skill AND judgment.

So you are right, the utility of the 2-year JD is an empirical question, and the market will provide the answer. bh.

[Corey]

"These are the type of people biglaw firms would rather avoid no matter how smart they are."

No, there is more associate work than partner work. Partners can't bill $750 an hour to review docs. Plus there is pressure not to split the pie and add more partners. Plus, half the new partners at some firms are laterals. Bottom line, big firms plan for/experience 60-80% attrition from hire to partner. So hypothetically, what's the harm in opting yourself into the attrition pool from day one if you still pull average hours for the 4 years you are there?

Billing rates are up, hours are up, writeoffs are down. A model new biglaw lawyer this year made 160K and billed 2000 hours at $300 an hour. The firm collects $440K on that. That is a heck of a lot more than engineering firms pull in on new engineers. With those margins you can almost burn money on overhead and still turn a profit.

There is this mythology that firms lose money on lawyers unless they stay and bill 2500 for five years, but the average associate bills 2000 for 3 and quits and the firms are still recording $1M+ profits per partner. Maybe the authors of this blog can undertake to study and debunk some of the myths about firm economics that lead young associates to overwork themselves into illness and despair and still feel guilty about it.

[Corey]

"Also, based on the information you just revealed -- that Big Law is primarily a way to pay off your loans -- are you the type of person that the program is designed to self-select? Information gets revealed through this process, and that is valuable to employers."

Well I doubt the invisible hand would have selected me but it does turn out that I am a good biglaw lawyer after all. Neither my preference for a job I can truly love nor my firm's preference for an employee that truly loves the job were fully served, but my 120K sallie mae bill guarantees that I'll bill enough hours to fill my firm's ROI expectations on me.

But you are right, even if I had fully understood the economics in advance I would have still bought the 3L year. The judicial externship, note publication, and faculty interactions I had that year provide the only credentials that keep my long term career ideas at least somewhat realistic. Dreams of a better future reduced the feelings of being fated or compelled. 2 + 2 = 5.

I've encountered firms that might prefer their billing machines with less outside interests and might find 2-year programs more efficient, but I've also seen deep thought firms that want their candidates cured and rounded a bit more. I'd love to see comparisons of 2Y and 3Y students at major firms, both on mechanical metrics like billed hours and soft factors like networking and business development. Guess that will take some years.

[Jkoerner]

I agree with Professor Henderson that NU's 2 year program is driven by and will reflect employers' desires for biglaw associates. I also agree that there is a divide between employer constructs and faculty constructs (as can be seen by the prevalence of race and other "hot topic" law classes compared to the dearth of upper level business law classes in many law schools).

Most of the biglaw lawyers I know from school and since took their jobs to pay off loans and earn a big salary for a few years rather than to start a career. Many of them quit after a year or two or more likely were let go as their interest and performance waned. These are the type of people biglaw firms would rather avoid no matter how smart they are.

I would bet that NU's 2 year program is highly successful in placing students and that its success will be noticed by incoming law students as the high cost of law school is more widely advertised.

[Bill Henderson]

Corey,

I understand your point about pre-law preferences, and I am familiar with the 85/15 to 15/85 flip described by Nader. But only 40 students per class will enter the 2 year program. If we assume that 15% of qualified students are interested in completing their degree in 2 years (24 months, but complete 1 year before their 3 years counterparts), Northwestern's program), that is a large and potentially underserved market. In contrast, if you are part of the 85%, your preferences are overserved.

Also, based on the information you just revealed -- that Big Law is primarily a way to pay off your loans -- are you the type of person that the program is designed to self-select? Information gets revealed through this process, and that is valuable to employers.

For a comprehensive analysis from a business perspective, see:
http://www.bmacewen.com/blog/archives/2008/06/northwestern_law_schools.html

[Corey]

"NU Law could be taking us back to our trade school roots."

Well I specifically avoided NU Law because it (even in 2003 when I was applying) played itself off like a trade school. When I was coming in, I had high-minded notions of learning theoretical jurisprudence and rhetoric and finding inspiration from my peers to make the world a better place. The tuition bill (and the fact that my grades permitted a fast sellout) is what sent me to biglaw.

I think your analysis is interesting but you should be careful not to confuse the 3L preferences of law students (big firm job to pay back excessive tuition) with the pre-1L choosing-a-school preferences. Nader talks in one of his books about a poll of incoming Harvard Law students where something like 85% said they wanted to do public interest work and then that same group ends up 85% in private corporate practice at the end.

If the preference for the kind of jobs NU Law is teaching to doesn't develop until after the 1L year, then their admissions marketing model isn't generalizable. Sure there are a few kids out there who read Above the Law and fantasize about Skadden partners throwing staplers at their heads even before they apply to law school, but how many? And why would anyone else want to go to a school that caters specifically to kids who are in it for the money from day one?

Oh, and I categorically disagree with the comment that some people are [inately] smarter than others. People come to law school admissions and faculty hiring pre-sorted, pre-educated, and pre-privileged. The fact that law school "eliteness" measures track prep-school admissions and birth zip-code just indicates that the privilege hierarchy is widespread and ingrained. One's position in some artificial "eliteness" sub-hierarchy is a result, not a validation.

[solicitor]

Regarding the "smartest of the smart," have the test score credentials of NU students gone up or down as this experiment has begun to play out? I could see those rising even if some of the more theoretical academics eschew a school that signals professional usefulness.

[Bill Henderson]

That is a fair point. It reminds me of the status of Harvard Business Review, which includes article by B-School professors and is read by "practitioners" in the business sense of the word. Non-business school professors run it down as non-academic. But HBS is at the top of the food chain in the B-School world. NU Law could be taking us back to our trade school roots. bh.

[Brian]

Interesting analysis, as always. Just one very brief observation now: "eliteness" is not just a matter of perception. Some people (faculty, students etc.) are smarter than others, and it's a serious question whether the smartest of the smart thinking about law school are going to go to a law school that wants to be a business school. The answer may well be yes. But that remains to be seen.