Asymmetrical Information - Megan McArdle

01.18.13

Law School Enrollments are Plummeting. What Happens Next?

A whole lot of changes ahead

"I couldn't do this if I didn't have tenure."  

That's what law professor Paul Campos told me, sitting at a table in Brasserie Beck after a Cato panel on law schools.  By "this", he meant "crtiticize law schools for their graduation rates", something he's been doing, vociferously, since 2011.  In an interview with me a few months ago, Campos laid out the dire math facing current law students:  

I found that half of our graduates, like more than half of graduates nationally, weren't getting real legal jobs at all, and the majority of those who did get jobs weren't making enough money to service their loans in a timely manner. I was also shocked by the radical increase in the cost legal education, and what has turned out to be a two decade long contraction in the market for the services of lawyers. This is a disastrous combination for our graduates, and indeed for lawyers at all levels of the profession.

At the Cato Panel, Campos and Tamanaha argued that while lawyers from mid-ranked schools have actually been struggling for years, the last decade has seen a radical collapse in the fortunes of all but the very elite.  Enrollments have expanded, and tuition has skyrocketed, even as the profession is contracting.  Technology and outsourcing are taking over the most mundane tasks, leaving less work for lawyers.    At the same time, they argue that federal student loans have allowed schools to ratchet up tuition.  That means that the schools, rather than the graduates, are capturing more of the value of the degree . . . to the point where many schools are capturing more value than the degree actually confers.  Professor Campos argues that at this point, the expected value of all but the most elite degrees is probably negative unless you have personal connections to help you get a job afterwards.  

This has not made him popular with his colleagues, which is why he's grateful for tenure: it enables him and Tamanaha to question the whole system that employs them.  But he also recognizes that tenure is what makes his colleagues so resistant to his arguments.  Tenured law professors have one of the best jobs in the country right now: it's dry, it's safe, it pays well, and it offers incredible autonomy.  And you can't be fired.

What Campos and Tamahana are saying implies that the entire apparatus of law school needs to change radically, with fewer professors more focused on scholarship.  At this point, says Campos, law school is largely serving the needs of only one group: tenured law professors.  At the expense of kids who end up with six figure debts and no jobs.  During the panel, Campos argued that many people would be better off without the degree even if it were free, because having a JD on your resume, and no job, sends terrible signals to future employers: you couldn't get a job as a lawyer, you're a smartypants knowitall despite your lack of real-world experience, you'll sue everyone if you don't like the office coffee.  People may be better off coming up with a story to cover their three-year resume gap and just taking the degree off entirely.

But the system may not even benefit law professors for much longer, because in an unexpected development, enrollments are collapsing:  

Law schools are facing the second straight year of plummeting applications. Yet colleagues around the country have assured me that there's nothing to worry about because those applications are simply returning to "historic levels." Apparently we're going back to 2002, or maybe 2000.

Except that we're not. According to the Law School Admission Council, about 68,000 students applied for spots in this fall's entering class. Almost half way through the current admission cycle, it looks like about 53,000 students will apply for the fall 2013 class. When did law schools last see that number of applicants?

Not in any year since 1983, the earliest year for which I can find data. For that fall, ABA-accredited law schools chose among 71,755 applicants--and there were only 173 accredited schools that year. The lowest number of applicants recorded during the last thirty years was in 1985, when only 60,338 people competed for 40,796 spots. At this point in the admission cycle, it's hard to believe that applicants for fall 2013 will top 60,000--or even 55,000.

Those numbers imply an entering law school class in the mid-thirty-thousand range, since not all applicants are qualified, and not all admits enroll. Those are numbers we haven't seen in decades--but there are now a couple dozen more acredited law schools. That means shrinking incoming classes--possibly to the point where a bunch of law schools can no longer support themselves.

This will have a few knock-on effects worth thinking about. The first thing to consider is that law schools have opened at such a big clip in part because they are cash cows for the schools that operate them. You don't need a bunch of expensive labs, just some classrooms and some law professors. Yet students pay tuitions much higher than that of other graduate programs. Shrinking or closing law programs will put financial pressure on other departments.

Another thing to think about is what happens to departments like English and Political Science.  When I was an English major, law school was the obvious backup plan if you couldn't get a job--indeed, more than a few kids chose it in order to ensure that they had the best possible GPA for their law school applications.  If it becomes clear that this is no longer a sure-fire rescue plan, do kids start rethinking the interesting-but-non-remunerative departments?

But the largest knock-on effect is, obviously, more unemployed law professors. Ideally, this will happen mostly through attrition--people who simply never get hired into the legal academy (note that this worsens the job outlook for law grads at least slightly). But when an entire school shuts down, its professors are going to be thrown on the job market. And it's going to be pretty hard for them to find another teaching job, given those enrollment numbers.

What happens to someone who has been teaching law for 20 years? Many of them are very smart people who might once have been great lawyers, but comparatively few of them have actual experience practicing law. When a law school shuts down, the professors will go from having one of the best jobs ever, to having to scramble for a job in a pretty lackluster market.

Of course, at worst we're talking about a few hundred, maybe a few thousand people, trickling onto the market over the next decade. It's not even going to show up in the labor statistics. But arguably it's a symptom of something much larger: the breakdown of even stalwart, safe options for middle class employment. Where are all of those non-lawyers, and non-law-professors going to go? And what if they're only the canary in the coal mine for doctors and MBAs and government workers? What if the entire professional class is about to lose its tenure?