Sunday, March 17, 2013

Illinois Bar Association: Special Committee Report--How Excessive Law School Debt Decreases the Quantity and Quality of Legal Services Available to the Public

This week, I am discussing the Illinois Bar Association: Special Committee on the Impact of Law School Debt on the Delivery of Legal Services: Final Report & Recommendations. Today, I would like to focus on the part of the Report concerning how excessive law school debt decreases the quantity and quality of legal services available to the public.

The Report states the following concerning the consequences of heavy law school debt:

1. Small Law Firms Face Challenges Hiring and Retaining Competent Attorneys: "Many small law firms are unable to pay the salaries new attorneys need to manage their debt."

2. Fewer Lawyers are Able to Work in Public Interest Positions: "Attorneys with excessive debt are less able to take legal aid or government jobs which, in Illinois, have starting salaries between $40,000 and $50,000 per year."

3. New Attorneys Have Too Much Debt to Provide Affordable Legal Services to Poor and Middle Class Families and Individuals: Because debt makes it difficult for attorneys to survive at that salary level, young attorneys move quickly to higher paying legal sectors if possible, and, if not, many leave the profession. That exodus has contributed to the profession’s inability to meet what the Legal Services Corporation calls "an explosion in the demand for legal services" among middle class and poor Americans in recent years."

4. As Fewer Attorneys Find Sustainable Jobs in the Private Sector, More Attorneys Enter Solo Practice: "Because of their debt loads, however, these attorneys are unable to adequately finance a new law practice. As a result, most struggle, and many consider leaving the law if they are unable to move on to other jobs. This group is also more likely to commit ethics violations and to be the target of malpractice suits."

5. Attorneys Report that Debt Burdened Lawyers are Less Likely to Engage in Pro Bono Work: "Financial pressures make it more difficult for attorneys to volunteer their time to provide pro bono services."

6. Debt Drives Young Attorneys Away from Rural Areas: "As lawyers age and retire in more rural environments, there will be fewer young attorneys to take their place."

7. Heavy Debt Burdens Decrease the Diversity of the Legal Profession: "high debt loads may drive minorities away from the profession, making it less reflective of the diversity of America and diminishing its ability to serve minority clients."

8. Threats to Professionalism: "The Special Committee heard much anecdotal evidence suggesting that attorneys with heavy debt loads may be more likely to commit ethics violations. The greatest pressures are on solo practitioners, who may take work beyond their level of competency, face financial pressures to prolong litigation, or terminate a representation inappropriately if a client has difficulty paying."

The Report recommends:

1. Law Schools Connected to Universities should not be a Source of Funding that the University Can Tap to Fund Other Programs. "The existing ABA accreditation standards prohibit excessive transfers to a university. Law schools should use the leverage that standard provides to ensure that they receive reasonable and direct benefits for any payments they make to a university, and that their payments are fair compared to those that other departments of the university make for comparable services."

2. Place Reasonable Limits on the Amounts Law Students Can Borrow: "Congress and the Department of Education should place reasonable limits on the amount that law students can borrow from the federal government. Student loans should also be made dischargeable in bankruptcy so private lenders have the incentive to properly screen loan applicants based on the chance that the school they attend will prepare them to be successful in the job market. That way, law schools will have an incentive to restrain costs to the level that students can borrow."

3. Impose Outcome-Based Requirements for Federal Student Loan Eligibility: "Rather than allowing all accredited law schools to enroll students receiving federal student loans, Congress should restrict federal loan eligibility to schools whose graduates meet certain employment and debt-repayment outcomes. . . . Under this program, law schools would face additional market pressure to train attorneys for practice at an affordable price, or they would lose their federal loan eligibility and likely go out of business."

4. Reallocate the Funds Available Through Loan Forgiveness Programs: "The federal government should ensure that funds available in the IBR program are targeted to attorneys most in need."

I discussed reforms in law school curricula and law school faculty last Thursday.

(Scott Fruehwald)

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