A response to LawProf and MacEwen

Larry Ribstein —  19 August 2011

I wasn’t going to comment on LawProf’s attacks on his profession. But now that it has been endorsed by Bruce MacEwen, aka Adam Smith, Esq., an otherwise insightful commentator on the legal profession, I feel compelled to say something.

In a nutshell, MacEwen endorses what he says are LawProf’s three primary points:  that the rising cost of legal education is out of sync with its expected value; that law professors are overpaid (based on LawProf’s findings that a law review article costs $100,000), and the “inarguable” “irrelevance of what law schools teach to what it takes to actually practice law.”

MacEwen accepts LawProf’s reasons for this state of affairs: US News ratings, which create “serious collective action problems” for law schools; regulatory barriers to change; and the ignorance and unconcern of law professors about the problems.  As for the latter, MacEwen blasts the legal academy’s “wrongheaded” and “amazingly blinkered” responses to LawProf.  He summarizes responses he received from a survey of “law professors I’ve asked” over the last few days.

True to this blog’s market focus and title, my response will focus on markets (something I would think one who adopts the “Adam Smith” moniker would have been more attentive to).

One who takes markets seriously would begin with the question raised by what MacEwen calls the main problem:  why would an intelligent group of entering law students overpay for an education that has decreasing economic returns?

The easy answer, of course, is that the law schools lied to or otherwise misled them about their prospects, along with engaging in various forms of price manipulation (aka scholarships).  There is, indeed, evidence that some law schools were lying and the rest were not being totally forthcoming.  That needs to be fixed.  (Law school hypo:  why is this not fraud in the sale of a “security”?).

But will full disclosure really solve the problem?  We will soon see, because the next entering class surely will know about the decreasing returns to legal education in time for this to have affected their choices.  Yet I predict this knowledge will not drastically reduce law school applications.  Here’s why:

–Law students’ declining opportunity costs in a crappy job market.  Nobody seems to credit the possibility that entering law students actually know what they’re doing.  They are part of a huge cohort of highly educated people who have nowhere else to go.  (Are colleges part of the problem?).

–Although I’m not a big fan of behavioral theories, it’s worth considering how even intelligent people would process gloomy job projections in the legal market: Sure there aren’t many jobs, but I’ll be good enough to get one of them. This reminds me of Baker & Emery’s, “When Every Relationship is Above Average,” 17 L. & Hum. Behav. 439 (1993), which showed that newlyweds way under-estimated their chances of a divorce.

I’m not sure what we can do about the second problem in a market economy that generally forces people to live with their choices.  Does this mean that there’s no fixable problem once disclosure is solved?  No, because even if law students are willing to buy a legal education, it’s only because the market leaves them with too few or the wrong choices.  We need to fix the market for legal education.

But how? LawProf and MacEwen would point the finger at US News ratings, which irrationally stress inputs instead of outputs, driving up cost.  But nobody forces law schools to serve the US News god. MacEwen mumbles vaguely about “collective action” problems.  He probably means that a single law school can’t refuse to play the ratings game because it will suffer the consequences of a low rating.  But the “collective action” problem is in some ways the opposite of how firms generally think in a market economy:  if everybody else is going north, compete by going south.

In other words, why would informed law students reject a sound choice just because US News implicitly advises them to?  Why wouldn’t law schools compete by being different from the herd?  If a law school can deliver a super-normal return on the job market, wouldn’t applicants go there regardless of ranking?  Isn’t that the whole reason for disclosing these statistics?

Maybe the argument is that law schools must bow to the ratings god because law firms bow too and will only hire from top ranked schools.  So US News has covered the eyes not only of law students but of savvy, market-conscious employers.  In other words, the “collective action problem” requires us to ignore the possibility of an efficient market where both buyers and sellers are sophisticated.  If this is realistic then capitalism and not just legal education is in trouble.

This brings us to the most important problem, which LawProf himself noted without elaboration:  regulation of the legal profession constrains meaningful reform of legal education.  Among other things, mandatory accreditation imposes high costs on law schools and requires three strenuous years of education for everybody who wants to “practice law,” which embraces a bewildering variety of jobs.  Those whose interests lie anywhere in this amorphous category must buy this education and only this education or submit themselves to their next best opportunity set, which in the current economy is not too attractive.  Compare, for example, business schools, which are not subject to rigid legally-imposed accreditation requirements and offer students a variety of models from which they can choose.

If we had a free market in legal education, the problem of over-priced law review articles and overpaid law professors would vanish.  How much should a law review article cost?  How much is Lady Gaga’s music worth?  In the absence of a reliable Platonic metric we let the market tell us.  If the demand for the current style of law school persisted in a deregulated market, so would $100,000 law review articles.

Assuming legal education should be changed, what should law schools do now, or be allowed to do in a deregulated regime?  MacEwen and LawProf are both absolutely sure about the irrelevance of modern legal education to the job market.  Presumably they would want law schools to be more practice-oriented.

But MacEwen/LawProf are stunningly over-confident about their ability to see where legal education should go in a world in which the market for law-related jobs is rapidly and fundamentally changing.  I’ve written about these changes recently, in my Death of Big Law and Law’s Information Revolution. In brief, for reasons discussed in Death of Big Law, the high-end jobs in conventional practice are disappearing and not just experiencing a cyclical decline.  Meanwhile, the lower-end jobs are being replaced by technology, a phenomenon that will accelerate rapidly with the inevitable onslaught of better technology and deregulation.

If I’m right, many traditional lawyer jobs will be obsolete.  I predict that law-trained people will be able to prosper in this future only by becoming legal architects and engineers who create new devices and solutions rather than the mechanics who apply the devices of the past that many are today. This means that if law students are trained only for today’s version of law practice they will not be adequately trained for the future in which they will be competing. Which in turn means that the MacEwen/LawProf ideas about what law schools should do, about which they are supremely confident, would lead legal education into its economic grave.

So what should law schools do?  I present some ideas, as well as the above analysis of the important role of regulation, in my recently published article, Practicing Theory. As the title indicates, I see a role for some (not all) of what MacEwen and LawProf confidently reject as “irrelevant.” My specific suggestions and predictions may be wrong, but that would not mean that MacEwen and LawProf’s confidence in their knowledge of the future is justified.

In general, I suggest less name-calling and a lot more serious thinking about markets.

Larry Ribstein

Posts

Professor of Law, University of Illinois College of Law

14 responses to A response to LawProf and MacEwen

  1. 

    I think you make some good points, but I’d like to see some thought put into the effects of “easy loans” on the law student market. That has to distort things, right?

    I’m no psychologist, but from an early age most of us in the U.S. are taught that higher education is necessary, graduate degrees are excellent, and that taking out substantial (non-dischargeable) loans is not a big deal. Hardly worth considering, even.

    I do think entering law student classes are more cautious, but not overly so. The massive borrowing props up the entire industry. While taking out $150k+ in loans might be worthwhile for some, its hardly a good investment for most considering their likely job prospects (not to mention the time investment, etc). If loans were even slightly more difficult to get, either the law school sticker price would decline or less students would attend, or both. This psychological aspect + easy lending leads to bloated law school classes, IMHO.

  2. 

    So, are all of you lovely law & econ profs going to demand that your respective institutions sign on to the transparency agreements? Some of y’all are deans, even! Put your money where your mouths are.

  3. 

    The other flaw to free market analysis of the law school market is the distortion caused by subsidized loans. It is much cheaper, initially, for a college senior to enter graduate school than to take out a loan to start a business. Easy credit in student loans does what it did in housing loans, it drives up prices and removes rational underwriting. The government’s interference in the loan market by creating incentives for expensive pieces over the creation of a new business (notwithstanding some relatively minor and more constrained SBA-type programs) means that students may have more pressure to find some sort of grad school-based education. And, as we all know, if they are bad at math, that typically means law.

  4. 

    Face it. More lawyers are not needed. Let the students go to medical school. Oh. I forgot. Not enough openings.

  5. 

    Empirical evidence— anecdotal only. But I have observed that most people I knew who went to law school and most business undergraduates are poor at logical thinking, that law students have their brains vastly stretched in that department in their first year, and that lawyers are okay at logical thinking (even tho perhaps even most of them should stay away from appellate work).

    It would be interesting to see how well end-of-first year law students do on the LSAT compared with start-of-year.

  6. 

    “What critics don’t seem to realize is that law schools do a very good jobs of teaching mushy-brained students to think— a far better job than the non-technical college majors from which most law students come.”

    Do you have any empirical evidence to back up that statement?

    “There is, indeed, evidence that some law schools were lying and the rest were not being totally forthcoming.”

    I honestly appreciate any acknowledgment of this from a law professor. When I was in in school, getting a professor to admit this (when I could see it everyday with my own eyes) was like pulling teeth. I think it actually does tone down some of the animosity towards legal academia when they at least admit this fact.

    However, when UVA Law is stating that the number of students unemployed at graduation is ~5%, while accidentally providing reasons to believe it’s as high as 25%–which was closer to my experience while attending a top ten school and doesn’t even begin to match the stories I hear from graduates of lower ranked schools–I think you are severely understating the extent to which law schools distort their employment numbers.

    http://abovethelaw.com/2011/08/uva-laws-employment-numbers-are-less-than-impressive/

  7. 

    What critics don’t seem to realize is that law schools do a very good jobs of teaching mushy-brained students to think— a far better job than the non-technical college majors from which most law students come. And even the engineers need to learn how to use verbal logic as well as math.

    Whether a specific subject is useful in legal practice is distinct from whether it is good for teaching people how to think about law. Law schools could be teaching the Talmud and still end up training good lawyers.

    In a changing industry, being able to think is particularly important. Thus, as the post says, this is probably the wrong time to be teaching to the bar exams or learning how to fill out court forms. In a few years (or maybe even now?) a computer or somebody on-line in India will be able to do that “real life lawyering” better than a lawyer can.

  8. 

    Kind of an ominous, but credible, post by the way Mr. Ribstein. I think you’re right about the changes you foresee in the legal job market.

  9. 

    I think the solution is simply honest and detailed information about what happens to law graduates. A simple list of graduates and where they are working (which is public information any way! I mean, nobody works in secret) would suffice.

  10. 
    Robert D'Agostino 19 August 2011 at 9:08 am

    Unfortunately, security for a law professor generally means publishing articles in student reviewed journals, hence, many worthless law review articles are published in essentially worthless law reviews. To call the typical law student “part of a huge cohort of highly educated people” is absurd. Credentialed doesn’t mean educated. the real function college serves for most is to keep people out of the labor market for 4 or 5 extra years while prolonging their adolescence. A great many graduating students go to law school because they have nothing better to do, there are many slots available and the money comes from Uncle Sam. In other words, there are perverse incentives to entering a law school while at the same time law professors have figured out its easier and more profitable to write articles no one reads than to actually deal with students.

  11. 

    In a profession replete with anomalies, trained by academies rife with eccentric anomalies, the overproduction of both law schools (http://kowalskiandassociatesblog.com/2010/07/25/what-if-they-built-a-new-law-school-and-nobody-came/ ) must be seen in the context of actual statistical overproduction of lawyers, not merely anecdotal meanderings. One blogger has provided these statistics: http://lawschooltuitionbubble.wordpress.com/original-research-updated/law-graduate-overproduction/

Trackbacks and Pingbacks:

  1. Law schools roundup - September 15, 2011

    […] critique of legal academia reveals self as Paul Campos of Colorado [Kerr, Horwitz, Conglomerate, Ribstein, Lat] Lawprof cage match, Campos vs. Leiter — go Campos! [Caron, Campos, […]

  2. Non-Sequiturs: 08.19.11 « Lawyer Help « Lawyer Help - August 22, 2011

    […] * I’m very glad that everybody is now here at the “there’s a huge problem with the market for legal education” party. Can I interest anybody in the “prospective law students are incapable of making a rational choice” punch? It’s spiked with Absolute Special Snowflake and it gives everybody the same deranged sense of self worth as new law student. [Truth on the Market] […]