Hello Congress, Want to Eliminate Wasteful Public Spending in the Legal Academy?

Why do we keep reading that new law schools are being launched when there is and has been for some time an oversupply of lawyers in the labor market? Because employment prospects look great based on fudged placement data? I don't think so. It is because there is an endless supply of federal loans for prospective students willing to gamble that they will be one of the lucky ones to get a job. If loan money were to dry up, the legal academy's tuition bubble would burst. In $53 Billion in New Law School Debt by 2020, Matt Leichter observes:

Knowing how anemic job growth has been for lawyers over the last few decades, it is clear that the federal government will waste a lot of money supporting the legal education system due to the impracticability of repayment under even 25-year repayment plans.

Matt Leichter is an attorney who knows how to crunch numbers. His Law School Tuition Bubble blog hasn't come under attack as a "law scam" blog by law profs. Perhaps that is because he is just beginning to receive national attention. Or perhaps it is because the legal academy doesn't want to call attention to his data out of concern that any Congressional hearings on placement stat gaming will lead to Congress eliminating government waste by pulling the rug out from under the legal academy's guaranteed revenue stream.

Some law profs have been criticizing one minor (read sideline) topic in Eric Segal's recent New York Times article, What They Don’t Teach Law Students: Lawyering, namely an estimate of the cost of legal scholarship. Segal was assisted by "law scam" blogger-prof and object of law prof blogosphere criticism Paul Campos to produce the guestimate. WIth respect to the cost estimate for legal scholarship, the criticizing is justified on the basis of fundamental labor economic analysis.

How Much Does Legal Scholarly Work Cost? No one really knows what academic legal scholarship costs. One would first have to define the unit of production. Is it a new idea that pops into a law prof's head. Is output going to be defined by a written work? Does the written work have to express something original? In the day in the life of a law prof, is scholarship also evident in courses taught: all courses, some, none, only new ones for their first "perfomance on stage"? Does minor tweaking of set piece lectures "performed" year after year after year count?

The traditional metric is unit labor costs. The basic forumla encompasses total compensation + cost of materials + cost of means of production/ unit of production. Even if we all agree that the unit of production is a law review article and assume that total compensation is reduced to salary and benefits for the time spent by the author (and his/her research assistant and library staff) to produce the article, costs for materials (let's just limit that to information resources) and means of production (let's just limit that to equipment and software to produce the article) have to be factored in.

Who Funds Legal Scholarly Work? I doubt law faculty really want to calculate the economic cost of legal scholarship on the campus shop floor or industrywide. Why? One source of the revenue funding legal scholarship is tuition. It sure as hell isn't the profits from the sale of goods produced. Hell, if a law prof earns anything from his publications, he gets to keep that money.

Clearly tuition is not the only source but tuition is the one virtual guaranteed revenue stream available. Tuition revenue might be shared with the law school's IHE but IHEs can and have made non-tuition-related budget cuts. Sure some criticize the irresponsiblity of law schools burdening students with heavy debts but few identify the source of debt funding; it is ultimately federal loan programs. Obviously calling attention to this is not something most in the legal academy want to do.

What If... . Congressional examination of the legal academy gaming placement data could eventually leads to curtailing the legal academy's federally financed revenue stream. Imagine the consequences if federal loan programs placed loaned money in escrow until law school grads obtained jobs requiring a JD? And if they did not within a specified period of time the law student did not have to repay the loan because the loan program would not pay the law school. The law school tuition bubble would burst. Unlike the Internet and housing bubbles, impact on the economy would be nil. No bailouts allowed. Welcome to the breadline... . Granted, some careers would be disrupted by my hunch is academic law librarians would find law library gigs one hellva lot sooner than most law profs.

Frankly, I believe the legal academy deserves this. Money talks and it is the only likely cure for the moral corruption evident in the administration of law schools. For example, to obtain loan funds held in escrow, admission practices would have to take into account applicant qualifications while being labor market sensitive which in all but perhaps the top 20 law schools. would be based on localized, not national labor market trends.

From this hypothetical point of view, take a look at Leichter's ranking of public and private law schools by debt revenue in 2010 at The Law School Debt Blob. These are not per capita stats because total dollar amounts matter when it comes to revenue streams. Note well, for once Thomas Cooley ranks in the top ten of something legitimately. In fact Thomas Cooley ranks first by "earning" more money than any other law school from student debt last year.

Leichter observes

The list of top 20 public law schools by graduate debt-revenue doesn't contain too many surprises, but for private law schools, it's an interesting mix of expensive, prestigious law schools and less expensive ones that have very large enrollments... .

For an contrary view on Tuition Debt Bubblenomics see James Surowiecki's Debt By Degrees (The New Yorker, Nov. 21, 2011). NB Surowiecki's case focuses on college student debt, not professional school student debt. It makes a difference. [JH]