Based on my calculations, the total annual federal investment in law schools through student loans is currently $4.88 billion (2012-13 school year). Last year (2011-12), that number was $4.95 billion.

Calculating the annual investment required a sequence of estimates along with hard data. First, I used school-supplied data to calculate the government’s investment in 2012 graduates of ABA-approved schools. Second, I incorporated ABA-supplied enrollment data to estimate the government’s investment in all students enrolled during 2011-12. Finally, I used enrollment figures and tuition estimates to extend that projection to 2012-13, the academic year that just closed.

Students, of course, use their loans to cover living costs as well as law school tuition and fees. Law students, however, are forbidden from working during their first year, and find limited opportunities for paid work during the second and third years. Law schools can recruit students only as long as the students have a way to pay for both tuition and living expenses. It’s appropriate, therefore, to speak of educational loans to law students as an investment in law schools, not just students.

1. $4.43 Billion Federal Investment in 2012 Graduates of ABA-Approved Schools

Hard Data on 192 ABA-Approved Schools: $4.33 Billion. Students who graduated law school in 2012 borrowed at least $4.33 billion in federally-guaranteed and federal direct student loans to finance their legal education: that’s the amount of federal loan dollars processed and disbursed by 192 law schools to their 2012 graduates who borrowed for law school.

To calculate the amount loaned for each school (available in the table here), I took the number of graduates and multiplied it times the percentage of those graduates borrowing loans processed by the school. I rounded that number to the nearest whole graduate and multiplied it times the average amount borrowed for that school. The known federal government investment figures do not include students who never graduated and those enrolled in non-JD programs.

Here is a table that aggregates federal investment by school type:

The following schools did not report sufficient borrowing data to U.S. News: Barry University (Private, 200 grads), Florida A&M University (Public, 160 grads), Indiana University – Indianapolis (Public, 295 grads), Inter American University (Private, 234 grads), Pontifical Catholic University of Puerto Rico (Private, 217 grads), University of Puerto Rico (Public, 202 grads), University of The District of Columbia (Public, 93 grads).

Estimated Investment in 2012 Graduates of Seven Other ABA-Approved Law Schools: $107 million. The seven ABA-approved schools (immediately above) had 1,401 graduates in 2012, but did not provide sufficient data about student borrowing. Three were non-profit private schools (with 651 grads); four were public schools (with 750 grads).

To estimate total federal investment in these graduates I used the average amount borrowed and average percentage borrowing by school type. The result is 548 graduates of the private schools borrowing an average of $125,963 and 629 graduates of the public schools borrowing an average of $89,078, or $125.2 million total. Because the three schools in Puerto Rico are on average much cheaper than their U.S. counterparts, I also discounted the amount borrowed 25% for the public Puerto Rican school and 30% for the private ones. This reduced the total for these seven schools to about $107 million.

Adding that total to the $4.33 billion discussed above yields a grand total of $4.43 billion that the Department of Education invested in students who earned JD’s at ABA-accredited law schools in 2012.

2. 2011-2012 Federal Investment in All Enrolled JD Students: $4.95 Billion

Estimating the federal government’s annual investment in all enrolled students, rather than just graduates, required some arithmetic gymnastics. Here are the calculations for 2011-12, the most recent year for which we have information about borrowing:

The 46,360 graduates in 2012 (with 84.3% borrowing) borrowed $4.43 billion, but that borrowing was over a period of three years during which tuition and cost of living rose steadily. In other words, the $4.43 billion estimate is for students who were first years in 2009-10, second years in 2010-11, and third years in 2011-12. (These numbers account for part-time and joint-degree students by assuming that, overall, their enrollment was steady from year to year.)

I next determined how much the 2012 graduates borrowed just for 2011-12. From the time those graduates entered law school, tuition rose on average about 7% each year. Under that assumption, 2012 graduates borrowed 31.2% of the amount borrowed for the first year, 33.4% for the second year, and 35.4% for the third year. So, 35.4% of the average amount borrowed for 2012 graduates came during 2011-12. Multiply 35.4% times total federal investment in 2012 graduates of ABA-approved schools ($4.433 billion) and the result is $1.569 billion for 2012 graduates during their last year—or an average of $40,146 for each of the students who borrowed.

Assuming that 1Ls and 2Ls followed the same borrowing patterns as the students who graduated, we could estimate the federal government’s annual investment in JD students simply by multiplying $1.569 billion (the amount loaned to 2012 graduates) by three. That yields a total of $4.71 billion. That initial estimate is low, however, because it doesn’t account for attrition. The graduating class is smaller than 1L and 2L classes.

To get a more accurate estimate of the federal investment in all JD students enrolled during 2011-12, I took the ABA-reported total JD enrollment for 2011-12 (146,288) and deducted the number of graduates (46,360). That left 99,928 students who attended JD programs in 2011-12 but did not graduate that year. If those students borrowed in the same percentages as graduating students did, then 84,239 (84.3%) of them took federal loans. Multiplying that amount times the average amount borrowed ($40,146) yields $3.382 billion. The total amount invested in all JD students enrolled during the 2011-12 school year, therefore, was about $4.95 billion.

Note the assumption that the average price paid did not vary by class year. Note, too, that my calculation does not include students at schools not approved by the ABA but nevertheless eligible for Title IV student loans. Nor, finally, did I include students eligible for federal funds who enrolled in LLM or other non-JD programs administered by law schools.

3. 2012-2013 Federal Investment in All Enrolled JD Students: $4.88 Billion

The estimate for 2012-13 faced several additional hurdles. The 2011-12 estimate must be adjusted for tuition rises (which increase the average amount borrowed), changes in total enrollment (which declined substantially), and the percentage of all students borrowing (which I assumed was steady at 84.3%).

In 2010, 2011, and 2012 law schools enrolled new classes of 52,488 students, 48,697 students, and 44,518 students. Based on prior graduation, enrollment data, and past attrition data, I estimated that 47,000 students graduated in 2013. We know that 44,518 were in their first year so, with total enrollment at 139,362 students, about 47,844 students were in their second year.

I next estimated how much these students borrowed in 2012-13. The 2012 graduate had borrowed an average of $40,146 for the last year of law school. If we assume that this amount rose due to tuition increases by an extremely modest 5% for the 94,844 upper-level students (with 84.3% borrowing), the federal investment was $3.37 billion for those students. However, the first-year students (in the aggregate, at least) did not feel the brunt of the tuition increases. Tuition discounts, financed through the upper-level students, were needed to sway prospective students. I assumed that students who began school in fall 2012 borrowed no more for their first year than the 2012 graduates borrowed for their last year. Using that assumption, I estimated that the federal investment in the 44,518 first-year students (with 84.3% borrowing) was $1.507 billion.

That brings total federal loans for JD students to an estimated $4.88 billion for 2012-13. That’s a substantial investment, but note that it’s $70 million less than the federal investment in 2011-12. JD tuition revenue declined significantly during the last academic year.

4. Bonus: 2013-14 Federal Investment Speculation

In 2011 and 2012, law schools enrolled new classes of 48,697 students and 44,481 students. For the coming fall, the most common projection is just 38,000. Based on prior graduation, enrollment data, and past attrition data, I estimate that 43,800 students will graduate in 2014. Using the projection of 38,000 first-year students, I estimate total enrollment at 125,300 students, which would be the lowest since 2000.

What will those students pay for law school, and how much will they borrow? Schools are competing to maintain first-year enrollments, so I predict that incoming students will borrow no more than the ones who just finished their first year (an average of $40,146). If 84.3% of the class continues to borrow from the federal government, then these incoming 1Ls will borrow a total of $1.29 billion. If we assume that the 87,300 upper-level students borrow 5% more than they did in the current year, and continue borrowing in the same proportions, those students will borrow about $3.18 billion. The estimated total federal investment in JD students during 2013-14 is $4.47 billion. That’s a lot of cash, but it’s $410 million less than the estimate for 2012-13.

Note that this estimate doesn’t include any changes in borrowing for living expenses–other than the reduction in the number of students. If inflation increases the cost of living, or if students have more difficulty finding paid part-time employment, total borrowing may be somewhat higher than this estimate. On the other hand, if students reduce living costs, borrowing may be even lower than my projection. The biggest story, here, however, is the reduction in number of enrolled students combined with modulation of tuition.

Putting all of the numbers together, I estimate that the federal government invested $4.95 billion in JD students enrolled in ABA-approved law schools during 2011-12; that it invested $4.88 billion in those students during 2012-13; and that it will invest $4.47 billion in 2013-14.

Conclusion

The calculations grow hazier as we move from hard data to estimates, but they are good ballpark figures for the amounts that law students borrowed from the federal government during the past two years, as well as for the amounts they are likely to borrow during the coming year. Two conclusions immediately stick out to me.

First, the federal investment in legal education is a lot. Compared to the $112 billion in federal investment in all of higher education in FY2012, law schools are disproportionately funded. As the conversation heats up about law school economics and student loans, and whether the federal government thinks such an investment is justified or fair, the estimates provide an idea about the magnitude of the federal government investment.

Second, law schools have a lot less money to spend and it is only going to get worse this coming year. My estimates for 2012-13 and 2013-14 suggest that fewer students are enrolling and that they are paying less tuition. The largest law school class ever enrolled just graduated and it will be replaced by the smallest class in 40 or so years. To enroll the upcoming class, schools will also likely offer larger discounts than ever before—a number that has been growing very quickly. My projections suggest that law students will borrow $480 million less during 2013-14 than in 2011-12 from the federal government. That’s a loss of almost a half billion dollars caused by lower enrollment and heavily discounted tuition. Information can do wonders, even in a dysfunctional market.

Schools may make up for some lost revenue through non-JD programs, which continue to expand unregulated and quickly. Others will have to cut costs. Most law schools will survive, but they have difficult decisions ahead.

From a student’s point of view, the program seems very appealing. Successful students will lock in a seat at Harvard Law, with freedom to develop other workplace connections and skills before they enroll. Their two years in the workplace may focus their legal studies and make them even more attractive to employers. I’ve noticed anecdotally that law graduates with scientific, business, foreign language, or other pre-law experience seem to fare better in the job market than K-JD graduates with similar law school records. The Harvard program capitalizes on that trend.

From the school’s perspective, the program is also promising. Harvard Law has a chance to choose the most talented Harvard undergraduates, then send them into the world for useful experience. Once Harvard has said “yes,” those graduates may be less likely to apply to other law schools.

What are the downsides of the program? The Harvard program requires LSAT scores, pushing test preparation and test taking back a year. That may discourage some applicants or require a shuffling of other academic priorities. The program may also prevent admittees from negotiating with other law schools for a better financial deal–although Harvard’s need-based aid and generous low-income protection plan diminish those concerns.

On the innovation spectrum, Harvard’s admissions program is a small change. It doesn’t alter the cost of law school, the curriculum, or the forces reshaping the legal job market. The program is worth noting, however, for three reasons. First, shifts in the legal market have pushed even high-ranking Harvard Law School to respond. That should send a signal to other schools that are still hoping for a return to the old market. Second, I wonder whether other schools will follow Harvard’s lead. Does this program have legs? Finally, if the approach does spread, is this a program that will move us toward greater integration of the workplace and academy? Is it one of several steps toward a future in which future lawyers will move more fluidly between work and study? Or is this just a move in the competitive admissions market?

1. Tenure is not the same as academic freedom.

Tenure is an excellent way to assure academic freedom; in fact, it may be the best method of attaining that end. But tenure is a means to an end, rather than an end in itself. Tenure is like the absolute immunity that prosecutors enjoy when acting in their role as advocates. Just as absolute immunity promotes prosecutorial independence, tenure promotes academic freedom.

The distinction between means and ends is important, because means carry costs as well as benefits. Absolute immunity is a great way to protect prosecutorial independence, but a number of scholars and judges have questioned the wisdom of that immunity. Given the costs of absolute immunity (which include dishonest, retaliatory prosectuors), and the availability of other means to protect honest prosecutors (such as qualified immunity and insurance schemes), is absolute immunity the only acceptable means for protecting prosecutorial independence?

We need to ask the same question about tenure. Accreditation standards set a floor. Tenure is an excellent way of securing academic freedom, but is it the only acceptable means to achieve that end?

The answer to that question, I think, is clearly “no.” Long-term contracts, review processes, and other mechanisms can shield academic freedom. Those means may not be as effective as tenure, but they also lack the costs of tenure. An accreditation standard should require adoption of policies and procedures to protect academic freedom, but we need not mandate a single means to that end.

2. Lawyers take unpopular positions, without benefit of tenure.

In law school, we tell students that some of them will represent unpopular clients. The client may have murdered a child, contaminated seas with spilled oil, or distributed Nazi propaganda. All of these clients, we declare, have a right to legal counsel. We urge our students to represent those clients, regardless of the economic or social costs to themselves.

We also teach students that lawyers have ethical obligations to the court, the law, and third parties; those duties often require them to give clients advice that the clients don’t want to hear. Again, the lawyer must adhere to those ethical obligations, even at the risk of losing a valuable client.

For practicing lawyers, these costs are real. Suppose an associate agrees to pro bono representation of a human trafficking victim who is attempting to expunge a series of prostitution convictions and start a new life. If a paying business client objects to the former prostitute’s presence in the firm’s reception area, should the associate drop the case? What if a conservative partner suggests that the associate would be “prudent” to refer the prostitute to a “less business oriented firm”?

Or suppose that a junior partner attracts a promising start-up company as a client. The new company’s legal work poses no conflict with existing clients, but an existing client perceives the start-up as a business competitor. If the managing partner asks the junior partner to send the start-up to another firm, should the junior partner comply?

Finally, consider the lawyer defending her firm’s major client in high-stakes civil litigation. The client’s CEO tells the lawyer he “has things under control” because a vice president will lie about a key point at trial. Does the lawyer tell the client that, contrary to what he may have seen on television, lawyers are not allowed to call perjuring witnesses to the stand? Clients can, and do, fire their lawyers for this type of advice.

Many practicing lawyers, in other words, face challenging situations in which they must weigh truth, ethics, or client interest against their own economic and social interests. Given the hardiness that our profession demands from practitioners, why should our academics receive extraordinary levels of protection for their freedom of expression? Or, to phrase the question from the perspective of accreditation standards, why should we require law schools to provide that extraordinary protection as the only possible means of securing academic freedom? We call on other lawyers to speak the truth to their clients, partners, and supervisors, at considerable risk to their own livelihood.

3. Tenure confers unwarranted economic value on professors.

Universities adopt tenure as a way of promoting academic freedom, but the protection also gives professors economic security beyond that enjoyed by their peers in other occupations. Decades ago, when businesses showed more loyalty to their workers, and when law firms rarely dismissed partners, tenured professors held an economic position analogous to that of senior corporate managers or law firm partners. Short of gross malfeasance or the organization’s bankruptcy, all of those workers could count on secure employment until retirement.

Today the picture is quite different. Very few organizations offer their workers the type of economic security that tenured professors enjoy. Some of my peers at law firms or corporations lost their jobs after the Great Recession. They were at least as talented as me, brought great value to their organizations, and demonstrated integrity in their dealings with clients and others. But when times got tough, they were laid off. Professors are protected unless their schools close; even then, the university may have to find them a roost in another department.

As other industries have become more volatile, the economic value of tenure has grown–completely apart from its connection to academic freedom. I value my tenure, not only because it grants extraordinary protection for my academic freedom, but because it gives me a virtually impenetrable shield against economic downturns. Universities don’t grant tenure for the latter reason; the end is academic freedom rather than job security during bad economic times. But I get the latter along with the former.

Some tenure defenders claim that tenure purposely confers this economic benefit. They argue that professors are underpaid compared to other professionals, and that universities use tenure to make up that economic difference. Under this argument, it is cheaper for universities to grant tenure than to pay professors the amounts they would demand absent tenure.

I doubt that this argument is true, at least for law professors. Law faculty salaries have climbed over the last generation, at the same time that the economic value of tenure has increased. These increases don’t seem related to a diminishing supply of potential law professors; if anything, the supply has grown significantly. The lifestyle attractions of law teaching have also grown compared to high-stakes law practice, making the academy even more attractive. Law professors have used their gatekeeping power to raise salaries at the same time that other benefits have risen, producing a financial windfall.

For the purpose of setting accreditation standards, however, we don’t need to know whether tenure substitutes for higher salaries; we should simply leave that choice to law schools. If law schools find it cheaper to grant tenure than to pay higher salaries, they may follow that path. If they find it cheaper to grant higher salaries in place of tenure, or find that high compensation is not necessary, they should have that choice. The point here is that tenure confers a substantial economic advantage that is not part of its avowed purpose. Law schools should have the choice whether to grant that advantage, along with the premium protection that tenure provides for academic freedom, or to provide other forms of economic benefit along with alternative protections for academic freedom.

4. Tenure discourages organizational innovation.

Observers frequently note the academy’s resistance to change. Why are professors, who try to push the boundaries of knowledge, so reluctant to alter the ways they teach, admit students, or perform other institutional functions? I think tenure plays a significant role. Professors run little risk of losing their jobs, whatever students, the public, or others think of their institutional norms. The lack of usual market pressures reduces incentives to change.

Consider how law schools might have responded to changes in the legal market if professors lacked tenure. When Bill Henderson and other scholars started noting structural changes in the legal job market, untenured faculties might have taken more notice. “Gee,” they might have thought, “if our graduates can’t get as many jobs, we may not get as many applicants. If that happens, the school might downsize and I could lose my job. Maybe we better look into this and do something about the situation!” Instead, tenured law faculties largely ignored the trends until this year, when the effects became too glaring to overlook.

The same is true of rising tuition and mounting student loans. In any other industry, insiders would have realized years ago that their economic model was broken and that a crash was inevitable. Worried about losing their own jobs, they would have moderated tuition or found other ways to avoid disaster. Tenured professors have little incentive to worry about these challenges. Even an industry tsunami–like the current plunge in law school applicants–will result in relatively few tenured professors losing their jobs. A few schools may close, with those professors losing their tenured positions, but most schools will lay off staff, trim other expenses, and hold off replacing retired professors. Tenure means that relatively few professors place their own livelihood at risk by ignoring market forces.

Tenure shields professors from market effects, but students and graduates aren’t as lucky. While professors pooh-poohed talk of structural changes in law practice, and ignored cracks in our economic model, law schools kept admitting students and raising tuition. If we’d faced facts earlier, would we really have raised tuition in 2009, 2010, 2011, and 2012? Would we have reduced class sizes earlier? Would we have moved more aggressively to find better ways to prepare students for available jobs? Quicker, market-based reaction could have helped our students and graduates.

5. We’ve lost the pension-plan hedge.

Until recently, pension plans gave universities a hedge against some of tenure’s worst financial effects. Many pension plans provided defined benefits that lured professors into retirement at age 65. If a university faced rocky economic times, it could sweeten the deal to tempt even earlier retirements. Some of these deals were literally too good to refuse. If working more years won’t increase your pension, and if the promised pension is close to your current salary, it makes economic sense to retire. At public universities, these deals shifted costs to state pension plans–with the calamitous effects some state plans now face. But that’s a different story. From the law school’s perspective, defined-benefit plans provided a way to move senior (and highly paid) professors off the payroll.

At the turn of the century, defined-contribution plans became popular and more professors opted for them. These plans offer very little incentive to retire. On the contrary, as long as a professor can satisfy the minimum job demands, defined-contribution plans encourage senior professors to stay in the workplace. As a University of California website explains, traditional defined-benefit plans “can be designed to encourage early retirement” and “may financially penalize workers for working additional years beyond the normal retirement age.” Defined-contribution plans, in contrast, “cannot be designed to encourage early retirement but instead rewards employees for working additional years.”

I’m part of the rising wave of potential retirees with defined-contribution plans. As I look ahead to age sixty-five, I see no reason why I would retire. By that time, I will have been a law professor for more than thirty-five years. Even if I’m burned out, fatigued by age, or suffer a partial disability, I’ll probably be able to handle a few hours of teaching a week, plus a few committee meetings and office hours. After decades of experience, those things come pretty easily to me. And with tenure protecting me against pressure to publish or volunteer for extra duties, I could spend the rest of the week gardening, playing poker, or resting up for my campus appearances. Teaching is a nine-month gig, so I could also forego the summer research grants and spend my summers traveling the world in flat-out retirement mode. I may even persuade myself that my elder wisdom compensates for any other shortcomings in teaching or research. Surely the students and younger faculty will want to know what law practice was like in 1980!

With the benefits of modern medicine, tenure, and the supportive academic lifestyle, many of us will be able to follow that game plan well into our eighties–twenty years or more after the traditional retirement age. We’ll keep earning our senior professorial salaries, most likely with at least annual inflation increases, while socking more money into our retirement accounts. Best of all, we can even use the money in those retirement accounts without actually retiring! Conversely, if bad investments or a poor market shrink those accounts, we’ll have even more reason to keep working.

Some of these senior professors, of course, will continue making valuable contributions to both teaching and research. Sixty-five, seventy, and eighty are still young for many people. The professors doing that today, however, often are drawing their pay from pension plans rather than the law school’s budget. The big switch, which will start over the next few years at many schools, is that these highly regarded, highly paid professors will continue drawing their salaries from school budgets long after age sixty-five. Whether they contribute mightily or meekly to the school’s mission, they will be very, very expensive.

Universities have started talking internally about the financial threat of defined-contribution retirement accounts, but I haven’t heard of solutions. The costs of tenured faculty are going to rise significantly–beyond what schools have been accustomed to paying–just at a time when tuition revenue will start falling. Tenure combined with defined-contribution retirement plans will create an unprecedented financial crisis in the academy–and that’s saying something given the extent of the current crisis.

Once again, there’s no reason for accreditation standards to force this crisis on law schools. If a law school believes that the benefits of tenure outweigh this financial threat, it is welcome to grant tenure. But if a school wants to protect academic freedom in less financially ominous ways, it should have the power to do so.

Conclusion

Tenure has other costs, which I’ve omitted here. It protects lazy professors, incompetent ones, and even the truly malicious. In theory, a university can de-tenure professors in the last two categories, but the process is difficult. Other means of protecting academic freedom would give universities greater latitude to weed out professors who harm the academic mission. The absence of tenure probably would deter some of that harmful behavior from occurring.

The absence of tenure, on the other hand, might well expose some professors to job loss for expressing unpopular views. Tenure is the premium plan for academic freedom; other plans won’t work quite as well. But other plans also cost less. Law schools–and their students–deserve the opportunity to balance these costs and benefits, choosing the plan they prefer to for protection of academic freedom. Potential professors will also be free to choose whether the proposed benefits suit their needs.

1. Limit the availability of federal loans by (a) advocating for Congress or the Department of Education to modify loan rules, and (b) adopting accreditation standards that would tie accreditation to graduates’ ability to repay loans.

2. Adopt an accreditation standard that would require law schools to divide scholarship dollars equally between need-based and merit-based awards.

3. Encourage “flex-time” degree programs that would allow students to integrate work and academic study in a greater variety of ways.

4. Allow law schools to apply some pre-matriculation credits toward the JD. This would change current Interpretation 304-5 in the accreditation standards.

5. Adopt proposed Alternative C to Accreditation Standard 405, which would allow schools to protect academic freedom through mechanisms other than tenure, and would require schools to afford the same job security and status to all full-time professors.

6. Repeal Rule 5.4 of the Model Rules of Professional Conduct, which prohibits lawyers from forming partnerships with non-lawyers or obtaining outside investment in their practices.

I’ll offer more detail on each of these proposals in separate posts. Meanwhile, if you’re interested in my letter to the Task Force, it appears here.

First some good news for our home team: Harvard Law School tops the QS list, and four other U.S. schools (Yale, NYU, Columbia, and Stanford) appear among the top ten. These United States similarly dominate the top fifty, with fourteen American schools in that group. The United Kingdom is our closest competitor, with nine schools listed among the top fifty. Next comes plucky Australia, with six law schools in the top fifty. If this were the Olympics, we would win; we have the most medals and that’s that.

American students and professors, however, may be surprised to find the glory spread among schools from so many different nations. In addition to the U.K. and Australian schools, the top fifty includes law schools from France, New Zealand, Hong Kong, Canada, Singapore, Belgium, the Netherlands, Germany, Japan, China, Chile, and Italy. The top U.S. schools have a strong global reputation, but so do schools from many other nations.

Some of our dominance, furthermore, stems from our size. The United States has a population of 313.9 million residents. The United Kingdom is just one-fifth our size, with a population of 62.6 million. Australia is even smaller, with a population of just 22.6 million. A nation our size has many more educational institutions–and more opportunities to make a top-fifty list–than smaller countries do.

To adjust in a very rough way for size, we can compare the QS showing for California, with a population of 38 million residents, to both the United Kingdom and Australia. California’s population is about three-fifths as large as the population of the United Kingdom. Puny Australia, in turn, is about three-fifths the size of California.

California fares quite nicely on QS’s ranking of law schools: It has one school (Stanford) in the top ten and two others (Berkeley and UCLA) among the top fifty law schools worldwide. But the United Kingdom triples that showing, with three schools in the top ten and six others among the top fifty. The U.K. achieves that record with a population that is less than double California’s size. Tiny Australia, meanwhile, trounces California: It has two schools in the top ten and four others among the top fifty. That’s double California’s performance at just over half its size.

What does this mean for U.S. law schools and their graduates? The most lucrative forms of practice, serving corporate and financial clients, are now global practices. U.S. law matters, but so does the law of the European Union, China, and dozens of other nations. Large corporations obtain counsel from lawyers around the world, and many of those lawyers received their training outside of the United States.

To get a sense of this, scan the lawyers associated with Baker & McKenzie. For 2012, the latest year available, Baker grossed more money than any other law firm in the world. Baker is headquartered in the United States and it hires plenty of U.S. law school graduates. According to a search box on the firm’s site, it employed forty-six Harvard Law School graduates to help accomplish that end. The firm, however, also employed twenty-three lawyers educated at the University of Melbourne. Nor did those Melbourne lawyers stick to Baker’s Australian offices; they also practice in Chicago, Washington, DC, London, Hong Kong, Shanghai, Singapore, and Kuala Lumpur.

Examine the leading law firms headquartered outside of the United States, and you’ll find even more lawyers from all of those non-U.S. schools on the QS list. Clifford Chance, the U.K. mega-firm, has thirty lawyers in its Hong Kong office. Only two of those thirty have a law degree from a U.S. school, and one of those is an LLM earned to complement a Hong Kong degree. United Kingdom degrees predominate at Clifford Chance, but degrees from Hong Kong, Switzerland, Singapore, and Australia also appear among the Clifford Chance lawyers in Hong Kong.

Graduates of U.S. schools, in other words, are competing against a wide world of lawyers. That competition is one of the forces reducing the number of BigLaw positions for graduates of our schools. Corporate clients hire law firms located in many parts of the world. Those firms, in turn, hire lawyers from many countries–and often show little interest in U.S.-educated lawyers. As BigLaw positions contract, displaced U.S. lawyers move into positions more focused on the domestic market, placing pressure on those positions as well.

The United States enjoyed such global dominance during the last half of the twentieth century, that I fear many legal educators, law students, and prospective students don’t grasp the impact of global competition on jobs in our profession. BigLaw is no longer our playground; it’s a busy marketplace that we share with the rest of the world.

This news provokes several thoughts. First, colleges are caught on the same tuition-scholarship merry-go-round that law schools ride. We raise tuition, then raise scholarships–although never quite as much as tuition. Students pay more, and everyone is confused about what tuition really is.

Second, this tuition-scholarship shuffle transfers money from some students to others. Colleges offer more need-based grants than law schools do, but they provide plenty of “merit” scholarships. Colleges purchase high SAT scores, just as law schools buy impressive LSATs. Some day, I hope, educators will look back at this era and shake their heads at the sordidness of buying scores from paper-and-pencil tests that are taught in high-priced prep courses.

Third, the steady rise in tuition discounts suggests that parents and students are reaching their limit. They either can’t pay any more for higher education or they won’t. Colleges are moderating tuition increases while offering more scholarships.

That leads to a final question: What does this portend for law schools? When these freshmen apply to law school, will they be willing to pay higher tuition because colleges gave them a bigger break? Will their families have some cash in reserve to help fund law school? Or will these price-sensitive students demand even more discounts from law schools?

Responses may differ. Some students may be willing to pay more, while others remain stingy. A lot can happen in both the economy and higher education before these freshmen apply to law school. My guess, however, is that the steadily increasing discount rate for college tuition means that students are more concerned about the value of their higher education. That means that they may examine law school more closely as an investment and that, if they decide to apply, they will expect more discounts.

A visit to Finnegan’s site reveals that the firm currently employs thirty-eight of these student associates. I didn’t check every bio, but most of the future lawyers have science degrees and currently work on patent applications. They are enrolled in every D.C. law school (where Finnegan is headquartered), as well as at a range of schools in other cities that host Finnegan offices. Those include Boston, Atlanta, and San Francisco.

Finnegan’s program has two important implications for law schools. First, of course, it’s welcome news that talented professionals are enrolling in law school; it’s even more striking that an employer is paying for their legal education. Finnegan’s investment lends support to the idea that legal training could have special value for professionals employed in related fields–especially if they are able to keep working while in law school.

I’ve suggested before that law schools should implement more flexible degree programs, ones that support concurrent professional employment. The Finnegan policy seems to support that idea. Even if other employers aren’t willing to pay for their employees’ law school tuition, they might be willing to adapt that employee’s work schedule to accommodate law school classes. Professionals in law-related fields may be a modestly growing source of students for law schools.

Second, however, Finnegan’s approach may place further pressure on the traditional college-to-law-school-to-firm route of entering corporate law practice. Finnegan has 38 of its talented scientists, who have already worked with the firm’s lawyers and clients, enrolled in law school. With that type of talent in the pipeline, will the firm continue hiring as many conventional associates?

Equally important, what if corporate clients adopt Finnegan’s way for themselves? Companies could send senior compliance managers, financial analysts, and others to law school, hoping that a cadre of law-trained managers will reduce their need for outside counsel. These managers would provide a new pool of promising law students, but might further reduce hiring at the companies’ outside law firms.

It’s hard to predict the math on this, but I would take Finnegan’s program as a useful signal for law schools. To keep up with the twenty-first century market, law schools may need to focus more heavily on educating professionals who work in related fields and who continue that work throughout law school. If we value those students and accommodate them, we might tap a new pool of applicants. And, if legal work continues to shift from law firms to corporations, we would at least keep up with that movement.

BigLaw may be stabilizing, but the numbers don’t suggest any recovery in hiring levels for new associates. Revenue increases are modest, and headcount rose a miserly 0.8% over the last year. A detailed analysis of firm billing, meanwhile, declares that “[t]he most endangered species in The Am Law 100 appears to be the junior associate.”

Revenues

Gross revenue among the Am Law 100 increased 3.4% in 2012. Inflation, however, was 1.7%, which accounts for half of the increase. Average revenue per lawyer, meanwhile, increased just 2.6%, not much faster than inflation.

Profits per partner, notably, rose more than any other indicator. Those profits increased an average of 4.2%. Those increases make partners happy but, when partners take more than their share of gross revenue, there’s less money for hiring or compensating new lawyers.

Junior Associates

The day after publishing its Am Law 100 list, The American Lawyer released details of a study underscoring the decline of junior lawyers at those firms. The study analyzed a sample of bills submitted to BigLaw clients over the last three years. In 2010, those bills included hours billed by 3,322 junior lawyers (those with less than three years of experience). In 2012, the number of timekeepers in that category was just 2,327–a thirty percent decline.

The report notes that BigLaw clients have resisted paying for junior lawyers’ time, but finds that fact an unlikely explanation for a decline of this size. An associate would appear in this study even if the firm billed just a single hour of her time. It’s unlikely that any firm wrote off an entire year of work by a junior associate. The junior associates who did appear in the billing records, moreover, billed more time than midlevel or senior associates.

Instead, the most likely explanation for the decline is that firms have not been replacing entry-level lawyers. They are shifting work to staff attorneys, contract attorneys, and outsourcing firms. Or, when they hire new associates, they may be seeking ones who already have three years of experience.

Client Demand

The analysis of billing records reveals another grim fact: The large clients represented in the study hired BigLaw firms for fewer hours in 2012 than in 2011. In 2011 these clients bought 4.4 million hours from the studied firms; in 2012, they purchased just 4.3 million. That’s still significantly higher than the 3.7 million hours billed in 2010, but a dip between 2011 and 2012 does not bode well–especially for law students seeking associate positions at these firms. BigLaw clients may be handling more work in-house, solving problems through other means, hiring smaller firms, and turning directly to legal process outsourcers.

Conclusion

Most BigLaw firms are still vibrant, handling large amounts of work, and increasing profits for their partners. Business may have stabilized somewhat since the worst days of the recession. For law schools and new lawyers, however, any BigLaw recovery seems modest at best. At worst, in the words of The American Lawyer‘s columnist, junior associates are an “endangered species” in BigLaw.

The omission is both regrettable and deceptive. NALP has published much of the data it collects on JD Advantage jobs, while ignoring some of the most negative–and relevant–information in its possession. This biased disclosure reflects poorly on NALP, but it also embarrasses us as legal educators and professionals. NALP is a membership organization composed of law schools and legal employers, so it speaks for us. The last thing that law schools need, after years of bad press about distorted job statistics, is publication of more misleading data.

As educators, we care about both our graduates’ welfare and the accuracy of data. NALP’s dissembling with respect to JD Advantage jobs raises real questions about whether it is capable of continuing to represent our interests. Perhaps it is time for law schools to create a different organization–or work solely with the ABA–to collect and publish unbiased data about the careers of law school graduates. We need that information, not only to advise prospective and current students, but to guide our own decisions about how to reshape legal education. Feel-good presentations that omit key facts will not help us confront the ongoing challenges to our schools and profession.

I summarize here some of the information we currently have about JD Advantage jobs, including the data omitted by NALP. I also suggest ways that we could begin collecting more objective data about these jobs. If JD Advantage jobs are going to play an important role in the future of legal education, we have to get serious about examining these positions.

Looking Back

There have always been law graduates who pursued careers outside of law practice. The information we have, however, suggests that most of those graduates embraced alternative careers after practicing law for at least a few years. An earlier statement by NALP, for example, acknowledges: “It is certainly true that people with JD degrees work in a wide variety of alternative careers. However, while that may be true down the road, lawyers most often choose a non-traditional path after practicing law for at least a few years.” (This statement still appears on the NALP website, but it is not connected to the pages promoting JD Advantage jobs as entry-level positions.)

This distinction is important. Graduates who take JD Advantage jobs after practicing law differ from those who seek these jobs immediately after law school. The historical record suggests that some employers value the JD plus law practice experience for certain jobs; the record tells us very little about the value of the JD alone for those career paths. When we advise current and prospective students about the value of JD Advantage jobs, we have to be careful to distinguish graduates who used their degrees plus practice from those who attempted to secure JD Advantage jobs immediately after law school. A graduate who takes a job in “compliance” right after graduation has a very different job from one who moves in-house to do compliance work after three years in a regulatory law practice. Their long-term career trajectories may also differ; we have little available information on that score.

Earlier graduates in non-traditional positions offer an important resource for gathering information about JD Advantage jobs and, if those jobs seem promising, developing career paths for current graduates. We have to seek that information, however, in a serious way. It’s not enough simply to talk with these graduates at reunions. We need to map law-related opportunities more systematically, seek feedback on which law school experiences are particularly valuable for those jobs, and analyze objectively how much a JD contributes to graduates obtaining those positions and advancing in them.

JD Advantage Today

As entry-level jobs in law practice have contracted and shifted to less attractive positions, law graduates have looked to alternative fields. NALP’s Detailed Analysis of JD Advantage Jobs shows how important those jobs have become. Among 2011 graduates who reported their job status, 12.5% took JD Advantage jobs. That represents one out of every eight graduates. As a percentage of all graduates, including those who did not report their job status, graduates in JD Advantage positions accounted for 11.7% of the class.

According to recently released ABA figures, the percentage went up for the class of 2012. Among those who reported their employment status, 13.2% held JD Advantage jobs. As a percentage of the full graduating class, these jobs accounted for 12.9% of graduates.

Those percentages are substantially higher than the rates reported during the century’s first decade. For the class of 2001, 5.9% of graduates reporting their employment status indicated that they held “JD Preferred” jobs; that category was the precursor for the contemporary “JD Advantage” one. For the class of 2004, the figure was 7.5%, and in 2007, it was also 7.5%. The percentage edged up to 7.8% for the class of 2008, then began jumping noticeably each year: to 8.8% for the class of 2009, 10.2% for the class of 2010, 12.5% for the class of 2011, and 13.2% for the class of 2012.

This pattern in itself suggests that law graduates are turning to JD Advantage jobs as a “Plan B” when they cannot find jobs in law practice. Interest in these jobs has not been “growing steadily” since 2001, as NALP suggests in its recent analysis. Instead, interest jumped significantly after the recession hit the legal market in 2009. We need to look seriously at graduates’ satisfaction with JD Advantage jobs. Do recent graduates hope to build a career in this work? Or are they using JD Advantage jobs as place-holders while looking for work in law practice? If the latter, how well can graduates make that transition?

Job Satisfaction

NALP already has data on some of these questions. As part of its annual survey of law graduates, NALP asks employed graduates whether they are “seeking a job other than the one” reported to their Career Services Office. The answers to this question shed important light on a graduate’s job satisfaction. Graduates answer this survey within nine months of law school graduation. If they are seeking another job that quickly after graduation, the reported job either lacks permanence or holds little appeal.

Responses to this question consistently suggest that law graduates prefer jobs that require bar admission over JD Advantage ones. In 2001, just 6.7% of graduates working in lawyering jobs (those that required a law license) were looking for other work; a full third (33.3%) of those with JD Preferred jobs were actively seeking another job. In 2004, the percentages were 8.5% (for those in jobs requiring bar admission) and 37.0% (for JD Preferred jobs). Three years later, in 2007, the percentages were virtually identical to the 2004 ones: 8.7% of graduates with lawyering jobs were seeking other work, while 37.7% of those with JD Preferred positions were on the job market.

NALP’s latest figures, from 2011, show the same pattern. With a tighter market and more ad hoc jobs, the percentages have risen in both categories. 16.5% of graduates with lawyering jobs were seeking other work, and 46.8% of those with JD Advantage jobs were doing so. For graduates with other types of professional employment, the percentage was even higher: more than half (52.1%) of those graduates were sufficiently dissatisfied with their jobs to be seeking a different one.

These figures further suggest that JD Advantage positions are fallback jobs, rather than affirmative career decisions, for many graduates. Some graduates may eagerly pursue jobs in this category, but a large number do not. Almost half are seeking other work as soon as they begin these positions. Even among JD Advantage workers who have temporarily withdrawn from the job market, at least some may hope to move into law practice eventually.

This is essential information to know about the job market, but you won’t find the data on NALP’s web page offering a “Detailed Analysis of JD Advantage Jobs.” A prospective law student or interested law professor would have to purchase NALP’s $90 book on Jobs and JDs to find that information. The student or professor, of course, would also have to know that the additional data exist.

We need to grapple with negative information about JD Advantage jobs, not selectively ignore those data. Which graduates are satisfied with JD Advantage jobs and why? What work are the other graduates doing? Will that work help them secure jobs that better fulfill their career ambitions?

Toward Better Data

As noted above, I’m not sure that NALP is the best organization to collect more data on JD Advantage jobs or other evolving facets of the job market. The organization’s recent treatment of JD Advantage jobs suggests that it is spinning data rather than providing objective information. The ABA might serve as a better resource for ongoing career information. That professional group is providing data more quickly than NALP, and it is publishing the data in both summary and detailed form. Law School Transparency is also offering rapidly updated, objective career information through its Score Reports.

Whatever organizations we work with in the future, here are some questions that we need to address about JD Advantage jobs:

1. What are these jobs? Both NALP and the ABA allow graduates and their schools to decide whether a job qualifies for this category. It is very easy for a JD graduate or a JD-granting institution to conclude that their degree confers a “demonstrable advantage in obtaining or performing” a particular job. These decisions, however, may overstate the value of the JD. Is a job as a substitute middle school teacher a “JD Advantage” one? What about a job as a police officer? Law graduates in these jobs probably would draw upon their legal training, but are these the type of jobs we envision as “JD Advantage” ones?

There’s no reason to debate these questions in the abstract. We should simply require schools to list the jobs they have counted as “JD Advantage” ones. The ABA could publish that information, both for individual schools and in the aggregate. Some students may find positions as middle school teachers or police officers attractive; others may decide that the JD is not the best route to those positions. By publishing the data, we can inform both students and ourselves about possible career paths for law graduates.

2. How many students take different types of JD Advantage jobs? Law schools count paralegal positions as “JD Advantage” ones, but they rarely tout those jobs. Instead, websites tend to refer to policy analysts and investment bankers. Following the previous suggestion would allow us to advise students (and ourselves) about the prevalence of graduates in these very different JD Advantage positions.

3. How do other degrees and experiences contribute to graduates’ success in pursuing JD Advantage positions? A JD offers an advantage for some accounting positions, but it is very unlikely that a law graduate could obtain an accounting job without also holding a degree in accounting. Similarly, some JDs in business hold an MBA along with the JD. To give our students good counsel, as well as to enhance our own understanding of legal education, we need to collect more granular data about the relationship of JD Advantage jobs to other degrees. This research might suggest that other degrees shoulder much of the weight in securing some “JD Advantage” positions. Alternatively, it might identify particular joint degrees as especially useful for law students. The research might also suggest that we could benefit our students by incorporating elements of other degree programs in the JD curriculum.

4. How do law graduates fare in fields dominated by graduates with college or master’s degrees? According to the Department of Labor, only 20% of arbitrators, mediators, and conciliators hold a professional or doctoral degree; both BA and MA degrees are more common in this field. The Department does not even mention the JD as an educational prerequisite for a Human Resources Manager; 73% of those workers have just an associate’s or bachelor’s degree, while 27% possess a master’s degree. What do we mean, then, when we say that the JD provides an advantage for these positions? Do law graduates enter these fields at higher levels of responsibility than graduates with other preparation? Do they advance further? Based on anecdotal information, my sense is that the answer to both of these questions is “no.” The JD plus practice experience gives graduates an advantage in these fields, but the JD alone may not. But that’s just an impression; we need hard data on this issue.

Answering questions like these will help us advise prospective and current law students. Equally important, this information will inform our own decisions about the future of legal education. Is a three-year necessary for these JD Advantage jobs? Would a one- or two-year degree serve equally well? What elements of legal education contribute to these jobs? Is it critical thinking skills? Knowledge of legal doctrine? Both? How large are the contributions? We have to be willing to ask these questions as researchers and to interpret the answers objectively. Armed with that information, we can make responsible and productive decisions about how to improve the value of legal education.

First, mastering these tasks gives students self-confidence as new lawyers. A lawyer who can’t file documents is like a doctor who doesn’t know how to use a stethoscope. Sure, you can learn on the job, but you’re not much of a professional until you do. One of our conventional claims in legal education is that we give students the tools and confidence to master new areas of law. The same rationale applies to giving students a basic set of practice tools. If we want graduates to be self-confident professionals who are eager to expand their learning, we should ground them in both theory and practice.

Second, these tasks are more complicated than most academics claim. The process for requesting criminal discovery may seem obvious: find a form request, adapt it to your case, take the request to the courthouse, and give it to someone. But these “obvious” steps raise a host of issues: Does it matter what form you use? Have there been any recent changes to the rules, which make some forms outdated? Exactly who is that “someone” who receives the request at the courthouse? Do you also have to serve the prosecutor directly? What type of response should you expect–documents, videos, electronic files? Will you have to make your own paper copies or bring a blank DVD to record the response? How soon will the discovery arrive? How will you know if the prosecutor has produced everything you’re entitled to? Do you need to renew your requests to obtain new materials? If the prosecutor is slow, what are the appropriate ways to nag the prosecutor for quicker compliance? If the discovery conflicts with your client’s claims, what are the best ways to discuss the conflicts with your client?

These challenges range from the mechanical (do I need to bring quarters for the copy machine?) to the legal (do I need to renew requests?) to the interpersonal (what’s the best way to handle a procrastinating prosecutor or recalcitrant client?). Some traditionalists may protest that schools can teach issues falling in the last two categories without attempting to replicate the first. We can teach the rules governing discovery in a criminal procedure course, and we already offer classes on client counseling and professional responsibility. Surely we can teach those parts of lawyering without educating students on the need to take a blank DVD to the courthouse for discovery.

Most of these more complex issues, however, become salient only after a student tries to file a specific document in the real world. In campus classrooms, it’s hard to remember all of these challenges, much less teach them. Real-world practice seems simple and straightforward–until we actually try to perform it. In my experience, as a professor who has taught both doctrinal courses and clinical ones, the nuts and bolts of law practice are harder and more complicated than doctrinal professors assume. Even when an initial step is straightforward, it quickly leads to more complicated issues that we rarely touch in doctrinal classrooms.

The third reason to teach the mechanics of lawyering is that students learn theory better when it’s linked to practice. It’s one thing to read Federal Rule of Criminal Procedure 16(c), which imposes a continuing duty to disclose without renewed discovery requests. It’s another thing to file your own motion, wonder whether you need to renew that motion, check the rules in your own state, and discover (usually) that a single request is sufficient. Even putting quarters in the copy machine gives the abstract process of “discovery” a reality that makes learning easier.

Cognitive scientists have shown repeatedly that humans learn in part through three-dimensional experience. Our brains store information more efficiently when we can tie abstract concepts to real world actions, rather than simply spinning a web of shapeless principles. Professional expertise is like a climbing plant: it needs a three-dimensional trellis to support growth. The scaffold, in both learning and gardening, is usually a humble structure; but it’s just as essential as the showy leaves and fruits.

Finally, students who explore the nuts and bolts of practice learn important lessons about how contemporary lawyers streamline their work. Printing and filing individualized discovery motions is tedious and costly. Does the jurisdiction allow electronic filing? Does the prosecutor’s office have a shortcut for requesting discovery? After months of filing four-page discovery requests, the students in my criminal defense clinic learned that other lawyers were obtaining discovery by completing a one-page form available at arraignment. The particular process adopted in our courthouse may not matter in their future practice, but the general lesson will stick: In contemporary law practice, there’s often a faster and cheaper way to turn those nuts and bolts. The lawyers who keep up with those changes have a competitive advantage.

Yes, the nuts and bolts of law practice vary from state to state, and these practices shift over time. But the same is true of legal doctrine. We assume that educating students in a set of doctrinal principles will help them master new principles after graduation. The same is true of the nuts and bolts: students will have to master new processes constantly, but they will learn faster–and with more confidence–if they’ve fastened some nuts and bolts before graduation.