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Why Has Law Practice Changed?

December 8th, 2013 / By

When legal educators talk about changes in the legal market, we focus on the Great Recession, the slow recovery, globalization, technology, and the routinization of some legal services. These trends undoubtedly are shaping contemporary law practice, but they’re not the root cause of our graduates’ ills. The force that rules law practice today is competition: To comprehend the profession’s economic trajectory, we have to understand the tremendous rise in market competition for legal services.

The Post-WWII Years

During the third quarter of the twentieth century, the legal profession benefited from a remarkable number of trade restraints:

1. Bar associations maintained minimum fee schedules, which bolstered the price of routine legal work.
2. Professional regulations forbid advertising, which restrained competition among lawyers and prevented consumers from identifying cost-effective service providers.
3. Courts strictly enforced rules prohibiting the unauthorized practice of law, which helped lawyers maintain their monopoly over a wide range of services.
4. Professional regulations greatly restricted practice across state lines, requiring clients to hire new attorneys or local counsel for many matters.

In addition to maintaining these protections, the legal profession welcomed relatively few new lawyers each year. College enrollments were lower then than now; few women or minority men considered attending law school, and they encountered formidable obstacles if they did; and many law students left school before completing the degree. In 1963, just 9,638 students graduated from accredited law schools.

The Tide Turns

During the final quarter of the twentieth century, the legal profession’s protections began to fall. The Supreme Court struck down minimum fee schedules in 1975, making clear that antitrust prohibitions encompass the legal profession. Two years later, the Court initiated a series of decisions striking down restrictions on attorney advertising.

At the same time, state supreme courts and legislatures opened doors for non-lawyers to perform tasks that lawyers had once claimed for themselves. Accountants and title agents replaced lawyers in some roles. A new class of paralegals emerged to assist–and then replace–junior lawyers on some of their work. Companies began generating do-it-yourself forms for individuals with simple legal needs.

Barriers to interstate practice also diminished. States began to repeal residence requirements, and the Supreme Court declared those rules unconstitutional in 1985. As law firms expanded across state lines, and as corporate clients demanded more fluid legal counsel, states eased restrictions on interstate legal assistance.

As the profession’s economic protections diminished, its numbers swelled. Accredited law schools graduated 27,756 JD students in 1973, almost three times the number that had earned degrees ten years earlier. By 1983, the number hit 36,389, almost four times the number who graduated in 1963. During the last eight years of the century, each class exceeded 39,000 graduates–and two topped 40,000.

First Impact

These momentous changes in the legal profession first affected solo practitioners and others who served individuals and small businesses. Those lawyers were the ones who handled many of the matters taken over by non-lawyers; they also benefited most from minimum fee schedules. Between 1975 and 1995, the median, inflation-adjusted income of Chicago solo practitioners fell by almost 50%. For lawyers at the smallest Chicago firms, median income fell by 25%. Both of those figures come from the groundbreaking study conducted by John P. Heinz and his colleagues, Urban Lawyers (p. 163). That study, published in 2005, remains one of the best analyses we have of the legal profession.

Notably, Heinz and his team found that the median income of government lawyers fell during the same period. In 1995, median income for those lawyers was $45,000. Twenty years earlier, it had been $70,828 (in 1995 dollars). Government pay doesn’t depend directly on minimum fee schedules, advertising restrictions, and similar market restraints, but it probably does respond to compensation in the private sector. As solo and small-firm attorneys earned less, government was able to offer lower salaries to attract those lawyers.

The New Century

Since 2000, technology has greatly intensified the changes that began during the last quarter of the twentieth century. Advertising in phone books and on billboards promoted the fortunes of some lawyers, but internet advertising is much cheaper and it reaches more potential clients. The internet has also fed aggressive price competition: consumers can now compare prices for many legal services before they contact their first lawyer.

Computers have made do-it-yourself legal forms more sophisticated, user-friendly, and accessible. One online company, LegalZoom, has generated legal documents for more than 2 million clients since 2000. An online law firm, LegalForce RAPC Worldwide, declares that it “protects more intellectual property as patents or trademarks per year than any other law firm on the planet” and that it secures this protection “for a fraction of the cost” charged by conventional firms.

These technological tools have moved well up the ranks of law practice. Major law firms and corporations use computers to conduct discovery, draft legal documents, comply with government regulations, and perform other professional tasks. Technology has also enabled these organizations to tap lower-wage workers abroad; countries with rising economies have improved their education and infrastructure to meet that demand.

Technology and globalization then prompted innovative lawyers to restructure other parts of their practice. These lawyers reduced prices and secured new clients by unbundling legal tasks and routinizing some of their services. Having successfully shifted routine work to computer programs and offshore workers, these lawyers moved other tasks to staff attorneys and contract lawyers.

The recession and slow recovery exacerbated all of these trends. Even the wealthiest clients wanted price cuts, and they were vocal about their needs. Technology allowed them to track their legal bills more closely than before, to solicit bids from competing firms, and to press for lower prices. Globalization permitted them to look abroad for both high-level legal counsel and routine support work. Well versed in the benefits of efficient production and commoditization, corporations hired law firms that endorsed those approaches.

By now, we’re all familiar with this part of the story. We tend to forget, however, that these changes are occurring in a legal market that is vastly more competitive than it was in earlier years. Today’s market reflects the pro-competitive changes implemented during the late twentieth century. Those changes, moreover, continue to unfold. Courts and bar associations are still discarding rules that restrain competition; non-lawyers are taking on still more law-related tasks; and the largest JD class in history graduated in 2013. Even if graduating classes now contract, we have already flooded an increasingly competitive market with new lawyers.

The Market’s Triumph

Competitive market forces are the most important characteristic of today’s legal market. Technology, globalization, and commoditization are key trends, but their impact depends on the economic context. If the legal profession still enjoyed the protections it held during the 1970s, today’s technology and globalization might have produced more jobs and higher salaries for lawyers. In today’s competitive market, on the other hand, these trends are pushing inexorably on the bottom line. Clients are tracking prices and seeking competitive bids; law firms are employing efficient technologies and low-cost workers to meet client demands; and non-lawyers are continuing to take over legal work.

These competitive forces are highly favorable for clients. The law practice I knew in the 1980s was remarkably inefficient. Highly paid associates proofread briefs, reviewed documents, and continuously reinvented the wheel. Clients of all types paid more for legal services than they should have; they had no other options. A competitive market has given clients more choices, reduced prices, and (despite the protestations of some lawyers) caused no apparent loss in quality. Indeed, competition may have spurred some lawyers to provide higher quality services.

This competition would have forced 21st-century lawyers to make their practices more efficient, even if technology and globalization had remained stable. Rapid advances in the latter forces, however, compounded the impact of a newly competitive market. These changes offered significant efficiencies that the competitive market insisted we adopt. Rather than enduring a simple shift from protectionism to market competition, which would have been dramatic in itself, the legal profession had to adapt to open competition and new efficiencies at the same time.

This combination explains why law graduates will continue to face a daunting job market–and may not earn as much during their lifetimes as recent generations of lawyers did. The legal market is not rotating through a cycle; it is tumbling out of protectionism. Even when the economy booms again, corporate clients will not pay first-year associates to do work that overseas lawyers can handle. Nor will mom-and-pop clients pay for customized wills and leases, when standardized documents serve their purposes. The efficiencies and cost economies that we have achieved in law practice are here to stay.

The new market, of course, will create opportunities for some lawyers. Technology-savvy JDs will profit by developing attractive software programs marketed to others. Lawyers with strong management skills will earn extra pay by coordinating interdisciplinary teams spread across the globe. Some law firms will prosper by identifying new practice areas and assembling the right combination of lawyers, other professionals, support staff, and technology to efficiently address those needs. As always, the market will reward lawyers with unusual legal knowledge, skills, or client connections.

For most lawyers, however, competition will reduce the financial rewards that recent generations captured. That’s what deregulation does. As we project the economic future of the legal profession, we have to remember our loss of market protections over the last forty years. Those changes have accumulated over time, and many of them acquired greater force with the emergence of new technologies and globalization.

The public, including the large corporations that pay our heftiest bills, is unlikely to restore the protections that favored 20th-century lawyers. Instead, our graduates will practice in a world of accelerating competition. Recent graduates are competing with more peers than ever before. Lawyers of all ages are vying with lawyers in distant cities, states, and countries. Lawyers everywhere face competition from computers and non-lawyers. Competition is the new hallmark–and driving force–of the U.S. legal profession.

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The Protectionism Premium

August 18th, 2013 / By

Brian Sheppard of Seton Hall Law School has raised an interesting point about any financial premium associated with the JD: How much of that premium rests on the legal profession’s restrictions to entry? At the end of his post, Sheppard suggests that an “empirical study of the effects of various protectionist measures would be a worthwhile” endeavor.

I know about one such analysis, conducted by Mario Pagliero. Pagliero, an economics professor at the University of Turin, explored the relationship between bar exam difficulty and entry-level salaries for U.S. lawyers. Pagliero’s study relies on the circumstance that most of our states administer a common set of bar questions (the Multistate Bar Exam or MBE), while establishing very different passing scores. States have also changed their passing scores over the last few decades, offering a robust dataset of passing scores that vary by state and time.

Pagliero compares these passing scores with entry-level salaries reported by NALP for corresponding states and times. In this way, he explores whether exam difficulty (as measured by passing score) bears any relationship to entry-level salary.

In an initial paper, Pagliero reports a clear relationship between the two: more difficult bar exams correlate with higher entry-level salaries. He also finds that lower pass-rates correspond with higher salaries, suggesting that the first correlation relates to supply rather than quality. More difficult bar exams, in other words, reduce the supply of lawyers. Reduced supply, in turn, raises entry-level salaries. By Pagliero’s calculation, a 1% increase in bar exam difficulty corresponds with a 1.7% increase in starting salaries.

In a second paper, Pagliero uses the same data to examine a frequently debated policy question: Do licensing standards help consumers by reducing information asymmetries (in other words, by providing information about quality that consumers cannot readily obtain on their own)? Or do the standards primarily serve the profession, by restricting entry and raising salaries? Based on the data and his modeling, Pagliero concludes that, for the U.S. legal profession, “licensing, as implemented, increases salaries and decreases the availability of lawyers, thus significantly reducing consumer welfare.” (p. 481)

This isn’t terribly surprising. The legal profession enjoys significant barriers to entry: applicants must master (and pay for) four years of college, three years of law school, and the bar exam. Increasingly, they must also devote time to low-paid or volunteer apprenticeships. These substantial barriers reduce competition, allowing lawyers to charge a premium for their services.

How can this premium persist in the face of under- and unemployed lawyers? It is difficult for many of those lawyers to compete against established firms. Ethics rules prohibit lawyers from using outside investments to build a practice; lawyers may take loans, but may not share profits with nonlawyers. New lawyers also lack access to adequate supervision unless they obtain jobs with existing firms. Law graduates who fail to obtain jobs at prevailing wages may seek work in other fields rather than attempting to undercut fees.

If at least some lawyer income stems from protectionism, that raises at least two important questions. First, is protectionism good policy? Pagliero’s model suggests that US courts protect lawyers, rather than the public, by limiting access to the profession. Based on these results, other authors have called for deregulation of the profession. As individuals struggle to obtain affordable legal services, and courts flounder in a growing sea of pro se litigants, calls to deregulate the profession will continue.

Second, even without formal deregulation, the work reserved exclusively for licensed lawyers is shrinking. Companies like Legalzoom and RocketLawyer, which provide low-cost legal documents to individuals and small businesses, are flourishing. Software like WillMaker is even cheaper. My husband and I produced a full set of wills, powers of attorney, and living wills for less than $25.

These services cannibalize the work available to lawyers serving individuals and small businesses. Corporate firms, meanwhile, are losing business to in-house compliance officers, HR officials, and others who administer complex regulations for their companies. Within BigLaw, US-licensed lawyers have lost jobs to software and overseas attorneys.

The biggest threat to lawyers’ historic livelihood comes, not from technology or globalization alone, but from the way in which those forces encroach upon work that once belonged exclusively to lawyers. Lawyers, like other workers, are seeing some of their jobs lost to computers or overseas workers. For us, however, the loss may be greater than for those in unregulated fields. To the extent our incomes depended partly on a protectionism premium, we may lose a significant part of that premium as consumers find ways to address legal needs without direct representation by lawyers.

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10-9 for Nine to Ten

August 10th, 2013 / By

By a narrow vote of 10-9, the ABA’s Legal Education Council has approved a proposal to move back the reporting date for new-graduate employment–from nine months after graduation to ten months after earning a degree. Kyle and I have each written about this proposal, and we each submitted comments opposing the change. The decision, I think, tells prospective students and the public two things.

First, the date change loudly signals that the entry-level job market remains very difficult for recent graduates, and that law schools anticipate those challenges continuing for the foreseeable future. This was the rationale for the proposal, that large firms are hiring “far fewer entry level graduates,” that “there is a distinct tendency of judges” to seek experienced clerks, and that other employers are reluctant to hire graduates until they have been admitted to the bar.

The schools saw these forces as ones that were unfairly, and perhaps unevenly, affecting their employment rates; they wanted to make clear that their educational programs were as sound as ever. From a prospective student’s viewpoint, however, the source of job-market changes doesn’t matter. An expensive degree that leads to heavy debt, ten months of unemployment, and the need to purchase still more tutoring for the bar, is not an attractive degree. Students know that the long-term pay-off, in job satisfaction or compensation, may be high for some graduates. But this is an uncertain time in both the general economy and the regulation of law practice; early-career prospects matter to prospective students with choices.

Second, and more disappointing to me, the Council’s vote suggests a concern with the comparative status of law schools, rather than with the very real changes occurring in the profession. The ABA’s Task Force on the Future of Legal Education has just issued a working paper that calls upon law faculty to “reduce the role given to status as a measure of personal and institutional success.” That’s a hard goal to reach without leadership from the top.

Given widespread acknowledgement that the proposal to shift the reporting date stemmed from changes in the US News methodology, we aren’t getting that leadership. Nor are we getting leadership on giving students the information they need, when they need it. This is another black eye for legal education.

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More on the ABA Questionnaire

July 9th, 2013 / By

Legal educators on several blogs have been discussing the ABA’s decision to eliminate expenditure data from the annual questionnaire completed by law schools. I called Scott Norberg, Deputy Consultant to the ABA’s Section of Legal Education and Admissions to the Bar, to find out more about the change.

Professor Norberg noted that the expenditure elimination is part of a larger project to slim down the annual questionnaire. Most of the changes went into effect last year, but the Section’s Council waited a year to implement elimination of the expenditure section. No objections arose to the proposed change, so the Council adopted it for this fall’s questionnaire.

Although the annual questionnaire will no longer ask explicitly about expenditures, it does request information about a law school’s reserve funds and debt (p. 7). These questions will allow the ABA to identify schools that may be in financial trouble, without needing more detailed expenditure data every year.

That’s a relief from a consumer protection perspective. But do we have to worry now that US News will incorporate financial reserves or debt level into its ranking scheme? I’m not sure I even want to think about that one.

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Bar Passage and Accreditation

July 4th, 2013 / By

The Standards Review Committee of the ABA’s Section of Legal Education has been considering a change to the accreditation standard governing graduates’ success on the bar examination. The heart of the current standard requires schools to demonstrate that 75% of graduates who attempt the bar exam eventually pass that exam. New Standard 315 would require schools to show that 80% of their graduates (of those who take the bar) pass the exam by “the end of the second calendar year following their graduation.”

I support the new standard, and I urge other academics to do the same. The rule doesn’t penalize schools for graduates who decide to use their legal education for purposes other than practicing law; the 80% rate applies only to graduates who take the bar exam. The rule then gives those graduates more than two years to pass the exam. Because the rule measures time by calendar year, May graduates would have five opportunities to pass the bar before their failure would count against accreditation. As a consumer protection provision, this is a very lax rule. A school that can’t meet this standard is not serving its students well: It is either admitting students with too little chance of passing the bar or doing a poor job of teaching the students that it admits.

The proposal takes on added force given the plunge in law school applications. As schools attempt to maintain class sizes and revenue, there is a significant danger that they will admit students with little chance of passing the bar exam. Charging those students three years of professional-school tuition, when they have little chance of joining the profession, harms the students, the taxpayers who support their loans, and the economy as a whole. Accreditation standards properly restrain schools from overlooking costs like those.

Critics of the proposal rightly point out that a tougher standard may discourage schools from admitting minority students, who pass the bar at lower rates than white students. This is a serious concern: Our profession is still far too white. On the other hand, we won’t help diversity by setting minority students up to fail. Students who borrow heavily to attend law school, but then repeatedly fail the bar exam, suffer devastating financial and psychological blows.

How can we maintain access for minority students while protecting all students from schools with low bar-passage rates? I discuss three ideas below.

The $30,000 Exception

When I first thought about this problem, I considered suggesting a “$30,000” exception to proposed Standard 315. Under this exception, a school could exclude from the accreditation measure any student who failed the bar exam but paid less than $10,000 per year ($30,000 total) in law school tuition and fees.

An exception like this would encourage schools to give real opportunities to minority students whose credentials suggest a risk of bar failure. Those opportunities would consist of a reasonably priced chance to attend law school, achieve success, and qualify for the bar. Law schools can’t claim good karma for admitting at-risk students who pay high tuition for the opportunity to prove themselves. That opportunity benefits law schools as much, or more, than the at-risk students. If law schools want to support diversification of our profession–and we should–then we should be willing to invest our own dollars in that goal.

A $30,000 exception would allow schools to make a genuine commitment to diversity, without worrying about an accreditation penalty. The at-risk students would also benefit by attending school at a more reasonable cost. Even if those students failed the bar, they could more easily pay off their modest loans with JD Advantage work. A $30,000 exception could be a win-win for both at-risk students and schools that honestly want to create professional access.

I hesitate to make this proposal, however, because I’m not sure how many schools genuinely care about minority access–rather than about preserving their own profitability. A $30,000 exception could be an invitation to admit a large number of at-risk students and then invest very little in those students. Especially with declining applicant pools, schools might conclude that thirty students paying $10,000 apiece is better than thirty empty seats. Since those students would not count against a school’s accreditation, no matter how many of them failed the bar exam, schools might not invest the educational resources needed to assist at-risk students.

If schools do care about minority access, then a $30,000 exception to proposed Standard 315 might give us just the leeway we need to admit and nurture at-risk students. If schools care more about their profitability, then an exception like that would be an invitation to take advantage of at-risk students. Which spirit motivates law schools today? That’s a question for schools to reflect upon.

Adjust Bar Passing Scores

One of the shameful secrets of our profession is that we raised bar-exam passing scores during the last three decades, just as a significant number of minority students were graduating from law school. More than a dozen states raised the score required to pass their bar exam during the 1990’s. Other states took that path in more recent years: New York raised its passing score in 2005; Montana has increased the score for this month’s exam takers; and Illinois has announced an increase that will take effect in July 2015.

These increases mean that it’s harder to pass the bar exam today than it was ten, twenty, or thirty years ago. In most states, grading techniques assure that scores signal the same level of competence over time. This happens, first, because the National Conference of Bar Examiners (NCBE), “equates” the scores on the Multistate Bar Exam (MBE) from year to year. That technique, which I explain further in this paper, assures that MBE scores reflect the same level of performance each year. An equated score of 134 on the February 2013 MBE reflects the same performance as a score of 134 did in 1985.

Most states, meanwhile, grade their essay questions in a way that similarly guards against shifting standards. These states scale essay scores to the MBE scores achieved by examinees during the same test administration. This means that the MBE (which is equated over time) sets the distribution of scores available for the essay portion of the exam. If the July 2013 examinees in Ohio average higher MBE scores than the 2012 test-takers, the bar examiners will allot them correspondingly higher essay scores. Conversely, if the 2013 examinees score poorly on the MBE (compared to earlier testing groups in Ohio), they will receive lower essay scores as well. You can read more about this process in the same paper cited above.

These two techniques mean that scores neither inflate nor deflate over time; the measuring stick within each state remains constant. A score of 264 on the July 2013 Illinois bar exam will represent the same level of proficiency as a score of 264 did in 2003 or 1993.

When a state raises its passing score, therefore, it literally sets a higher hurdle for new applicants. Beginning in 2015, Illinois will no longer admit test-takers who score 264 on the exam; instead it will require applicants to score 272–eight points more than applicants have had to score for at least the last twenty years.

Why should that be? Why do today’s racially diverse applicants have to achieve higher scores than the largely white applicants of the 1970s? Law practice may be harder today than it was in the 1970s, but the bar exam doesn’t test the aspects of practice that have become more difficult. The bar exam doesn’t measure applicants on their mastery of the latest statutes, their ability to interact with clients and lawyers from many cultures, or their adeptness with new technologies. The bar exam tests basic doctrinal principles and legal analysis. Why is the minimum level of proficiency on those skills higher today than it was thirty or forty years ago?

If we want to diversify the profession, we have to stop raising the bar as the applicant pool diversifies. I do not believe that states acted with racial animus when increasing their passing scores; instead, the moves seem more broadly protectionist, occurring during times of recession in the legal market and as the number of law school graduates has increased. Those motives, however, deserve no credit. The bottom line is that today’s graduates have to meet a higher standard than leaders of the profession (those of us in our fifties and sixties) had to satisfy when we took the bar.

Some states have pointed to the low quality of bar exam essays when voting to raise their passing score. As I have explained elsewhere, these concerns are usually misplaced. Committees convened to review a state’s passing score often harbor unrealistic expectations about how well any lawyer–even a seasoned one–can read, analyze, and write about a new problem in 30 minutes. Bad statistical techniques have also tainted these attempts to recalibrate minimum passing scores.

Let’s roll back passing scores to where they stood in the 1970s. Taking that step would diversify the profession by allowing today’s diverse graduates to qualify for practice on the same terms as their less-diverse elders. Preserving accreditation of schools that produce a significant percentage of bar failures, in contrast, will do little to promote diversity.

Work Harder to Support Students’ Success

Teaching matters. During my time in legal education, I have seen professors improve skills and test scores among students who initially struggled with law school exams or bar preparation. These professors, notably, usually were not tenure-track faculty who taught Socratic classes or research seminars. More often, they were non-tenure-track instructors who were willing to break the law school box, to embrace teaching methods that work in other fields, to give their students more feedback, and to learn from their own mistakes. If one teaching method didn’t work, they would try another one.

If we want to improve minority access to the legal profession, then more of us should be willing to commit time to innovative teaching. Tenure-track faculty are quick to defend their traditional teaching methods, but slow to pursue rigorous tests of those methods. How do we know that the case method or Socratic questioning are the best ways to educate students? Usually we “know” this because (a) it worked for us, (b) it feels rigorous and engaging when we stand at the front of the classroom, (c) we’ve produced plenty of good lawyers over the last hundred years, and (d) we don’t know what else to do anyway. But if our methods leave one in five graduates unable to pass the bar (the threshold set by proposed Standard 315), then maybe there’s something wrong with those methods. Maybe we should change our methods rather than demand weak accreditation standards?

Some faculty will object that we shouldn’t have to “teach to the bar exam,” that schools must focus on skills and knowledge that the bar doesn’t test. Three years, however, is a long time. We should be able to prepare students effectively to pass the bar exam, as well as build a foundation in other essential skills and knowledge. The sad truth is that these “other” subjects and skills are more fun to teach, so we focus on them rather than on solid bar preparation.

It is disingenuous for law schools to disdain rigorous bar preparation, because the bar exam’s very existence supports our tuition. Students do not pay premium tuition for law school because we teach more content than our colleagues who teach graduate courses in history, classics, mathematics, chemistry, or dozens of other subjects. Nor do we give more feedback than those professors, supervise more research among our graduate students, or conduct more research of our own. Students pay more for a law school education than for graduate training in most other fields because they need our diploma to sit for the bar exam. As long as lawyers limit entry to the profession, and as long as law schools serve as the initial gatekeeper, we will be able to charge premium prices for our classes. How can we eschew bar preparation when the bar stimulates our enrollments and revenue?

If we want to diversify the legal profession, then we should commit to better teaching and more rigorous bar preparation. We shouldn’t simply give schools a pass if more than a fifth of their graduates repeatedly fail the bar. If the educational deficit is too great to overcome in three years, then we should devote our energy to good pipeline programs.

Tough Standards

Some accreditation standards create unnecessary costs; they benefit faculty, librarians, or other educational insiders at the expense of students. Comments submitted to the ABA Task Force on the Future of Legal Education properly question many of those standards. The Standards Review Committee likewise has questioned onerous standards of that type.

Proposed Standard 315, however, is tough in a different way. That standard holds schools accountable in order to protect students, lenders, and the public. Private law schools today charge an average of $120,000 for a JD. At those prices, schools should be able to assure that at least 80% of graduates who choose to take the bar exam will pass that exam within two calendar years. If schools can’t meet that standard, then they shouldn’t bear the mark of ABA accreditation.

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Organizational Form for Postgraduate Law Firms

June 13th, 2013 / By

John Colombo has posted a useful paper examining the best organizational form for postgraduate law firms created by law schools. Several law schools are exploring that type of firm; we discussed the general idea in several earlier posts. Professor Colombo probes the important tax consequences of organizing these entities, an issue that no school would want to ignore.

Colombo’s analysis suggests, first, that a firm operating as a division of a law school would not endanger the school’s tax-exempt status. Even if the firm charged clients for representation, paid graduates employed by the firm, and generated net revenue, the firm would not negate the school’s tax-exempt status as long as its activities remained “functionally related to the educational mission of the underlying school.” Colombo offers more detail on meeting that and related IRS tests, but concludes that postgraduate firms should readily pass muster.

Some schools, however, might prefer to establish a law firm as a separate non-profit entity. In particular, schools (and their governing universities) might prefer to isolate the school from liabilities incurred by the firm. Professor Colombo’s analysis, however, shows that it would be difficult for a separate non-profit to qualify for tax-exempt status. The precedents conflict, but “the bulk of these precedents indicate that organizations conducting commercial-like businesses as their primary activity will face considerable hostility from the IRS in seeking exempt status.” Even if a school-related law firm ultimately won the day, few law schools would want a new project like this to face IRS opposition.

Fortunately, there is a solution for schools located in states that allow law practices to function as limited liability companies (LLC’s). If the law school creates an LLC to house the firm, with the school as the LLC’s only member, then “the law school will receive the state-law liability protection of a limited-liability entity, while having the tax exemption issues analyzed as though the firm were operated as a ‘division’ of the law school.” The firm, in other words, would receive the school’s tax-exempt status.

I can’t pretend to evaluate Professor Colombo’s assessment; I’ve figured out relevant parts of the personal income tax, but don’t have a clue about the taxation of businesses or other organizations. Colombo, however, is a pro in this area, and his analysis is cogent–even readable for those of us who don’t commune daily with the Internal Revenue Code. Tax treatment is only factor in choosing organizational form, but it’s a significant one. Any law school considering creation of a postgraduate law firm should read Colombo’s concise perspective on organizational form and tax exemption.

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Proposed Employment Data Change

June 5th, 2013 / By

On Friday, the ABA Section of Legal Education considers a recommendation from the section’s data policy committee about when schools collect graduate employment data. Instead of collecting data nine months after graduation, schools would collect data ten months after graduation.

The change looks minor, but it’s misguided. Though the council should dismiss the recommendation outright for reasons outlined below, the council needs to at least decline to act on the recommendation this week.

The Committee’s Justification

The committee’s reasoning is straightforward: some graduates don’t obtain jobs by the nine-month mark because some state bars have a slow licensing process. As committee chair Len Strickman puts it in the committee’s recommendation memo, the data policy change would have “the benefit of a more level playing field.”

Several New York and California deans have lobbied for the policy change because those jurisdictions release July bar results so late. Last year, California provided results on November 16th, with swearing-in ceremonies in the following weeks. New York provided results earlier, on November 1st, but many struggled to be sworn in for months.

A variety of employers, such as small firms and the state government, tend to hire licensed graduates. Compared to schools in states with a quicker credentialing process, New York and California schools are disadvantaged on current employment metrics. Changing the measurement date to mid-March instead of mid-February would allegedly take some bite out the advantage.

To check for a quantifiable advantage, the data policy committee considered two sets of data. First, the committee sorted schools by the percentage of 2012 graduates working professional jobs (lawyers or otherwise) as of February 15, 2013. Second, the committee sorted schools by the percentage of 2012 graduates who were unemployed or had an unknown employment status. For both measures, the committee determined that New York and California schools were disproportionally represented on the bad end of the curve.

Poorly Supported Justification

Professor Strickman notes in his committee memo that many of the poorly-performing schools are “are broadly considered to be highly competitive schools nationally.” I’m not sure exactly what this means, but it sounds a lot like confirmation bias. Is he suggesting that the employment outcomes don’t match U.S. News rankings? The committee’s collective impression of how relatively well the schools should perform? Faculty reputation? It’s a mystery and without further support, not at all compelling.

Professor Strickman acknowledges that other factors may explain the relative placement. He does not name or address them. Here are some factors that may explain the so-called disadvantage:

(1) Graduate surplus (not just 2012, but for years);
(2) Attractiveness of certain states to graduates from out-of-state schools;
(3) Overall health of local legal markets;
(4) Graduate desirability;
(5) Ability of schools to fund post-graduation jobs.

Neither do we even know whether the rule revision would level the playing field. In other words, one extra month may not capture more professional job outcomes for graduates of New York and California schools than graduates of other schools. More time, after all, ought to produce better results for all schools with high under- and unemployment.

In sum, the committee should have declined to recommend the ten-month proposal until its proponents meet their burden of persuasion. The problem has not been well articulated, and the data do not support the conclusion.

The Accreditor’s Role

Worse than recommending an unsupported policy change, the committee ignores the group for whom law schools produce job statistics: prospective students. Prospective students, students, and a society that depends on lawyers are the Section of Legal Education’s constituents. Calling the uneven playing field a “disadvantage,” “penalty,” and “hardship” for law schools shows from where the committee obtained its perspective.

(1) Is there a normative problem with an uneven playing field?

It’s not apparent that there’s an issue to resolve. Grant the committee its premise that state credentialing timelines affect performance on employment metrics. Is it the ABA’s job to ensure that schools compete with each other on a level playing field?

In one sense, yes, of course. When a school lies or cheats or deceives it gains an undeserved advantage and ABA Standard 509 prohibits this behavior. But it does not prohibit that behavior because of how it affects school-on-school competition. Prohibitions are a consequence of the ABA’s role in protecting consumers and the public.

The ABA was ahead of the curve when it adopted Standard 509 in the 1990’s. The organization interpreted its accreditation role to include communicating non-educational value to these constituents through employment information.

Here, the ABA failed to adequately consider the prospective students who want to make informed decisions, and the public which subsidizes legal education.

Prospective students received only a passing mention in Professor Strickman’s memo. In describing why the committee rejected several schools’ request to move the measurement back to one year, Professor Strickman’s explains:

The Data Policy and Collection Committee decided to reject this request because that length of delay would undermine the currency of data available to prospective law students.

As it happens, the committee’s chosen proposal also has a currency problem. The committee also failed to convey whether or how, if at all, it considered the change’s impact on the value of the consumer information.

(2) Does the new policy impede a prospective student’s ability to make informed decisions?

One of the ABA’s recent accomplishments was accelerating the publication of employment data. Previously, the ABA published new employment data 16 months after schools measured employment outcomes. In 2013, the ABA took only six weeks.

But if the Section of Legal Education adopts the ten-month proposal, it pushes data publication to the end of April—after many deposit deadlines and on the eve of others. While applicants should not overrate the importance of year-to-year differences, they should have the opportunity to evaluate the changes.

The new policy also makes the information less useful.

At one time, schools reported graduate employment outcomes as of six months after graduation. In 1996, NALP began measuring outcomes at nine months instead. The ABA, which at that time only asked schools to report their NALP employment rate, followed.

The six-month measurement makes far more sense than the nine-month date. Six months after graduating, interest accumulated during school capitalizes and the first loan payment is due. Ideally that six-month period would be used to pay down the accumulated interest so that less interest is paid later. The credentialing process makes this a rarity. Adding another month to the measurement makes the figure even less valuable.

Reducing comparability also dilutes the value of recent employment information. Students should not consider one year of data in isolation, but should analyze changes and the reasons for those changes. It’s for this reason that the ABA requires schools to publish three years of employment data as of last August.

Conclusion: Dismiss or Wait

The council needs to add additional viewpoints to the data policy committee. Right now, the committee is dominated by law school faculty and administrators. All twelve members are current faculty, deans, or other administrators. The name change from the “Questionnaire Committee” to the “Data Policy and Collection Committee” envisions a policy role for the group.

Just like the council, standards committee, and accreditation committee need a diversity of viewpoints, so too does the data policy committee. Perhaps if this diversity existed on the committee to begin with the new measurement date would not have been recommended too soon or at all.

As the council considers whose interests it serves and whether the data policy recommendation is ripe for adoption, I hope its members also consider the drivers of the policy beyond a law school lobby promoting its own interests.

The policy presupposes a reality where there are enough graduates who cannot derive economic value from their law degrees nine months after graduating that the ABA needs to modify its collection policy in order to count them.

Let me repeat that. It takes so long to become a lawyer that almost a year can pass and it’s reasonable to think many people are not yet using a credential they invested over three years of time, money, and effort to receive. A career is (hopefully) decades long, but the brutal reality of credentialing is that its costs go beyond what any fair system would contemplate. A change to the data policy as a solution would be funny were the economics of legal education not so tragic.

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Tenure

May 15th, 2013 / By

In my comments to the ABA Task Force, I endorse an accreditation standard that embraces academic freedom but does not require tenure. Brian Tamanaha made the same proposal in his book Failing Law Schools, but most academics vigorously defend an accreditation standard requiring tenure. Why do I favor the looser standard? Here are my top five reasons:

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.

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Advice to the ABA

May 13th, 2013 / By

Like many other lawyers and educators, I have submitted comments to the ABA’s Task Force on the Future of Legal Education. As I note in my letter, the challenges facing legal education will require responses from many quarters. I tried to focus my comments on issues where the ABA could play an effective role. My six recommendations are:

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.

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Decelerated Degrees

April 16th, 2013 / By

Accelerated degree programs, which allow students to obtain a JD in two calendar years, are starting to spread. Law schools offering these programs include Northwestern, Vermont, Arizona State, and Regent. Students generally pay as much tuition as they would for a three-year JD, but they join the workforce a year earlier and save a year of living expenses. For some students, two-year programs offer a way to reduce the cost of a JD.

What about the opposite approach? What if students could spread their classwork over four or five years, while paying no more than they would for a three-year program? Students in a “decelerated degree program” could work year-round, defraying at least some living expenses and perhaps securing more meaningful work. Law schools could create these programs with relative ease; deceleration doesn’t require establishing a formal night program, making major curricular changes, or obtaining ABA approval. Deceleration just requires thinking about the JD from a different perspective.

Outdated Assumptions

Most law schools assume that it’s best for students to complete the JD in three full-time academic years. The standard three-year track promotes camaraderie; supports conventional moot court and law review programs; and moves students relatively quickly into the workplace. In the late twentieth century, the three-year model also gave students adequate opportunities to gain workplace experience and offset their expenses: they could work full-time over two summers, plus part-time in the second and third year.

Changes in the legal market, however, have sharply curtailed job opportunities for law students. The shifts haven’t just undercut post-graduate employment; they’ve affected summer and part-time work as well. Fewer paid jobs are available and, when they exist, employers have little interest in accommodating student schedules. Employees who work only 10-15 hours a week offer little value to most employers. The headaches of training, supervising, and scheduling such “low-time” workers quickly outweigh the benefits. As a result, students tell me that their employers press them to work 20 or more hours per week.

The ABA caps employment at 20 hours per week for students enrolled in more than twelve class hours. Even 20 hours, though, is challenging for students to juggle if they are taking a full load of classes and participating in co-curricular activities such as a journal or moot court. Some students have asked me why they can’t stretch their legal education out for an extra year–or take summer courses–without paying extra tuition for the degree.

The answer is that they can–if we let them.

Deceleration

Decelerating the JD is simple: we allow students to spread their degree work over as much as six years, paying for their classes by the credit. We also remove the obstacles (petitions to the academic affairs committee, special permission from the associate dean) that discourage students from extending their work in this manner. Students can choose the best way to integrate their classes with workplace opportunities.

One student might complete the first year full-time, then stretch the remaining two years over three part-time years while working 30-40 hours a week year round. Another might complete her degree in the standard three years by taking summer classes and a reduced academic-year load, while working 25 hours a week. Another might take a semester’s leave to work full-time for an employer, then continue working 30-40 hours a week with a reduced load.

We can even extend deceleration to the first year. Although we think of first-year courses as an integrated block of learning, the courses are less integrated than we assume. My school regularly accepts transfer students who have completed a different first-year curriculum; they make up the missing courses as 2Ls sitting in our first-year classes. We also allow academically challenged students to lightload during the first year; again, they make up the missing classes during the second year. We could offer this kind of schedule to more students, allowing them to split the first year into two halves–or into a 3/4 chunk followed by a few remaining classes integrated with upper-level offerings.

Deceleration Versus Night Programs

How does deceleration differ from traditional part-time or night programs? There are three major differences: (1) Deceleration does not require creation of a separate schedule or set of classes. Students who choose to decelerate enroll in the same curriculum as students who remain on the full-time track. (2) There is no separate admissions process. Deceleration is an option for all students in the JD program. (3) Students may change their course over time. A student might attend school full-time for a year, decelerate for a year and a half, and return to full-time study. The program adjusts to the student’s needs.

Deceleration depends upon a key assumption about today’s workplace: Employers want employees who can work more than 15 hours a week, but they are increasingly flexible about when and where those employees work. Students who decelerate to work may need some early morning, late afternoon, or evening classes, but they will not depend upon them to the same extent that part-time students have in the past.

Advantages

What’s the point of a program like this? As explained above, deceleration would give more students an opportunity to work during law school. Some students might keep the jobs they held before applying to law school; others might find new work while in school. Either way, students who can work 20 or more hours a week are likely to find better opportunities than those with less flexibility.

Those jobs could pay off in at least three ways. First, students will be able to pay some of their expenses, reducing the amount they borrow for law school. Second, serious jobs (those that require 20 or more hours per week) are more likely to lead to post-graduate employment. Finally, those jobs can complement classroom work by giving students the hands-on experience we used to expect from summer clerkships.

Based on my reading of ABA rules, deceleration raises no accreditation issues. ABA Standard 304 requires students to complete a minimum number of instructional hours in residence, but deceleration simply spreads those hours over more time. The same standard requires students to complete their degree within 84 months (7 calendar years); the deceleration I have proposed fits well within that time frame. ABA Interpretation 301-5, finally, requires schools “providing more than one enrollment or scheduling option” to give all students “reasonably comparable” educational and co-curricular opportunities. Deceleration programs would satisfy that requirement because all students could choose from any classes or activities.

Deceleration, finally, should not affect most students’ elibility for federal loans. The Direct Loan program requires students to register at least half- time, but the definition of half-time is very liberal for professional and graduate students. Students, however, would need special counseling if they dropped below half-time status; under those circumstances, they would lose both loan eligibility and deferment.

Negatives

What are the drawbacks? First and most important, deceleration doesn’t solve the major issues confronting law students today. It won’t create more jobs, and it won’t lower tuition below the cost of a standard six-semester program. Deceleration might give some students an advantage in finding available jobs, and it might help some students cope with the high cost of law school, but it doesn’t solve either of those serious systemic problems.

Second, the approach might help only a small number of students. There may be relatively few employers who are interested in hiring law students, even if those students can devote substantial time to the job. Students themselves may not be interested in prolonging the agony of law school. Three years and out may be better than four years and more.

Third, deceleration might raise the cost of law school for some students. Although students would pay by the credit, rather than the year, tuition has been rising faster than inflation. If that trend continues, students will pay more for credits earned later in their law school careers. Delaying entry into the full-time workplace can also be costly. A student who is confident of securing a high-paying job after bar admission has a financial incentive to secure that job as quickly as possible.

Finally, deceleration will work best if schools are willing to change some of their course offerings. The concept doesn’t require night courses, but some evening and night courses would help students pursuing this option. Schools might also need to beef up their summer programs to meet the needs of students spreading work and classes more evenly over the full calendar year. Those changes take administrative time–and may not appeal to some faculty.

Conclusion

Deceleration is a small change, but it’s an option that might appeal to some students, reduce their debt, and improve their job prospects. The approach also complements the growth of externships, distance learning, and other new modes of legal education. The contemporary workplace is in flux, but it seems to be moving toward an era in which individuals integrate education and work more flexibly than in the past. Decelerated JDs might be part of that evolution.

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