July 18, 2011
There's No Business Like Law School Business
In his June 16, 2011 NYT Business Day article, David Segal observes that the basic rule of supply and demand does not apply in the legal academy.
Legal diplomas have such allure that law schools have been able to jack up tuition four times faster than the soaring cost of college. And many law schools have added students to their incoming classes — a step that, for them, means almost pure profits — even during the worst recession in the legal profession’s history.
It is one of the academy’s open secrets: law schools toss off so much cash they are sometimes required to hand over as much as 30 percent of their revenue to universities, to subsidize less profitable fields.
In short, law schools have the power to raise prices and expand in ways that would make any company drool. And when a business has that power, it is apparently difficult to resist.
How difficult? For a sense, take a look at the strange case of New York Law School and its dean, Richard A. Matasar.
For more, see Segal's Law School Economics: Ka-Ching! [JH]