The NYT misses the point about law schools

Cite this Article
Larry Ribstein, The NYT misses the point about law schools, Truth on the Market (July 17, 2011),

Today’s NYT is among the last news outlets in the universe to discover the story of legal education being overpriced for today’s job market.

The article tells the tale of how NYLS’s outgoing Dean Richard Matasar, after years of lecturing about the need to reform legal education to better address its market, succumbs to legal education’s basic economics.  In 2009 he significantly expands NYLS’s class size in the face of a bad job market in order to pay the debt on the school’s new business. The result is that this third-tier school’s students will face an employment crunch when they graduate while being saddled with their own debt. 

The reporter concludes:

This is a story about the law school market, a singular creature of American capitalism, one that is so durable it seems utterly impervious to change. * * * [E]ven [Matasar] * * * is engaged in the same competition for dollars and students that consumes just about everyone with a financial and reputational stake in this business.

The article gets one thing right:  there is a problem with legal education.  But it gets just about everything wrong about the source of the problem, and therefore offers zero guidance about how to fix it.

To begin with, the reporter’s quest for a nifty zealous-reformer-sells-out plot misses the point that NYLS isn’t typical.  It’s a standalone law school which keeps 100% of its revenue, unlike typical law schools which give up revenue to their universities (as the story points out).  Indeed, the article, in order better to pin the blame on its villain Matasar, refutes his yield-based explanation by showing that his university-based peers did not similarly increase class size.  The unexploited angle here is how non-profit universities benefit from the peculiar economics of legal education. 

Moreover, Matasar is an unlikely villain.  As the article says, he has “argued for a student-centric approach to education.”  Indeed, at an Iowa Law Review symposium on legal education I attended earlier this year I heard him say exactly what I’ve argued: that legal education’s price can’t continue to increase without an increase in value, and that it has to get better without getting costlier.

True, the NYT article suggests that in 2009 Matasar focused on bodies in seats in order to pay the debt on the building, which seems inconsistent with the student-centrism he was preaching.  But the reporter confesses at the end that this isn’t what he purports to be writing about:

The tale of Mr. Matasar’s career is not primarily about a gap between words and actions. Rather, it is a measure of how all-consuming competition in the legal academy has become, and how unlikely it is that the system will be reformed from within.

Instead of cheap shots at Matasar’s words vs. actions, the reporter might have asked the important questions about his purported subject, the “legal academy” in general.  He might have started by wondering why the students NYLS admitted decided to come.  Why did they pay one of the highest tuitions in the country to earn salaries on graduation that the law school told them (exceeding existing disclosure requirements) are likely to top out at $75k and may be as low as $35k? 

The story makes the usual nod at US News, the legal education version of “the devil made me do it.”  But the problems with the US News ranking (including its perverse emphasis on the cost rather than value of legal education) have been shouted from the rooftops for years.  Moreover, the rankings did NYLS little good given its third-tier ranking.

In the end, the NYT reporter is left with the explanation that law schools are just a business, “and what industry has ever decided that for the good of its customers, it ought to charge less money, or shrink?”  The answer is, every industry.  Although a businesses may not want to do anything “for the good of its customers” it nevertheless makes that decision because if it doesn’t its competitors will put them out of business.

But legal education is not like every industry.  As I’ve said in my forthcoming article about legal education (footnotes omitted):

Regulation, other exceptional government treatment of the legal profession, and law-school accreditation freed legal educators from the market without imposing any substantive constraints. Accrediting agencies lacked the expertise and resources to micromanage law-school teaching and curricula. Moreover, practicing lawyers had reason to prefer to train law graduates rather than to delegate this task to denizens of the ivory tower. Accrediting agencies were satisfied with imposing certain quantitative and formal requirements concerning factors such as library size. Accreditation and licensing mainly insulated lawyers and law schools from general market competition rather than dictating a particular content of legal education. Universities and academics accordingly replaced the practicing bar as the main institutions responsible for determining the content of legal education.

But my article goes on to point out that law schools’ insulation from market forces is ending:

[T]raditional markets for the skills learned in law school are shrinking, and legal education’s regulatory protection from market forces may be fading. At the same time, the changing environment is creating markets for skills not currently taught in law school and the globalization of law practice is changing the market for legal education. The cumulative effect of these phenomena may be to pressure law schools, for the first time, to better understand and serve the markets for the skills they provide.

In other words, lawyer licensing is the elephant in the bedroom that the NYT somehow missed.  As long as you can purchase a monopoly on transmitting legal knowledge from NYLS for almost $50 grand a year you will continue to buy it in a depressed job market that offers a paucity of alternatives.  And of course you will then use your bar certificate to charge what the regulation-determined market will bear for those services.

But even legal monopolies ultimately are vulnerable to market as well as political pressure.  And that’s a good thing, as I’ll argue this Friday.