Wednesday, September 25, 2013
Somehow I missed this interesting Bloomberg Law interview of Mark Harris, CEO of Axiom Law. Anyone interested in the future of the legal industry ought to be watching and listening to Mark. Why? Because his company -- which now grosses north of $150 million per year -- has the ear and the pocketbook attention of the general counsel of the world's largest companies.
In the 15 minute video interview below, Mark answers several hard questions:
- Is Axiom Law a law firm? No. That is why it can take outside non-lawyer investment.
- Is Axiom Law competing with BigLaw? In some contexts, the answer is clearly yes.
- Is Axiom Law considering an IPO? Not now, but perhaps someday in the future. "There would be some advantages to being a public company."
All of this adds up to a lot of potential disruption. Mark uses that very word. For additional background on Axiom Law, see American Lawyer story, "Disruptive Innovation."
Monday, September 23, 2013
A few years ago I had the good fortune of teaming up with Rachel Zahorsky for a series of feature stories in the ABA Journal, including "Paradigm Shift" (July 2011), "The Law School Bubble" (Jan 2012), and "The Pedigree Problem" (July 2012). The fourth article, "Who's Eating Law Firms Lunch," is now online; and without a doubt it is my favorite.
Why? Because of the final vignette in the story, which features Dan Katz of ReInvent Law fame. We were sitting at the bar at the January 2013 AALS Conference in New Orleans when Dan told me this story. My jaw just dropped. Dan has faith in his students, just like Bellotti had faith in him. Dan believes, so Dan just does. No fear. No bullshit. It was, suffice to say, quite refreshing.
I am reposting the whole vignette in the hope that a few more academics, lawyers, and law students will read it. The title of the post is the last line in the story. To my mind, that Dan Katz line sums up the next ten years of innovation in legal education. Please keep reading until you get to that final line. The insight is worth the effort.
For the past two years, MSU’s Katz was the only full-time law professor who spoke at the LegalTech conference. Katz and Knake are creating a curriculum relevant to the emerging law and technology sector, albeit primarily for companies like Novus Law and Recommind, whose competitive advantage is rooted in process and technology.
Within the legal academy, Katz is an anomaly. Aside from his JD, he has a PhD in political science and public policy from the University of Michigan. However, he focused almost all of his graduate study on complex systems. It’s a relatively new scientific field that uses mathematical modeling to understand how a multitude of human and nonhuman factors interact and influence one another. Human society and the human brain are two examples of complex systems. Neither can be effectively modeled by conventional math or statistics.
The late Larry Ribstein at the University of Illinois was one of Katz’s early mentors. When he went into teaching a few years ago, Katz says, Ribstein told him: “I bet you must feel like an alien. I greatly admire your work. You are definitely on the right track. But the rest of the legal academy is just not ready for you.”
In June 2011, Katz joined the faculty at MSU Law. Michigan State partnered with the Detroit College of Law in 1995 and moved the law college into a building in East Lansing two years later. Though the school’s rebranding efforts did raise its profile, to most of the profession, MSU Law remains a nonprestigious regional law school located in the heart of the Rust Belt.
None of this dissuades Katz from his sincere belief that it is possible to turn any institution into the preferred recruiting grounds for the nation’s emerging law-and-tech industry.
“When I was 18 years old,” explains Katz, “I had the privilege of joining a transformative organization”— as a kicker for the University of Oregon football team, the Ducks. “We were in the Pac-10, but it’s in Eugene, Ore., where it is often cloudy and raining. We had no shot at all with the top recruits from Southern California. So coach Mike Bellotti had to figure out ways to stretch and optimize what some might call second-tier talent.
“Oregon is now a national powerhouse, but the seeds of that success were sown much earlier. It was difficult to be bigger or faster than USC or UCLA. So Coach Bellotti decided we would be better on the details of the game. We would be better conditioned and we would pay significant attention to special teams. Our emphasis on special teams got us better field position. And by the third or fourth quarters, our opponents would have their hands on their burning legs. But because of our conditioning regimen, we had more stamina. Our success became contagious. Over time, we were able to get prized recruits. It was a culture of innovation.”
During Bellotti’s tenure at Oregon, from 1995 to 2008, the Ducks had only one losing season, blotting out decades of mediocre performance. The year that Katz graduated, the Ducks were co-champions of the Pac-10, a feat that makes him beam with pride.
Katz’s “secret sauce” for ReInvent Law is arguably much more important than a degree in complex systems. He looks at the 25 students entering the ReInvent Law Laboratory as raw human potential. Katz also actively recruits potential law school applicants to his program, though he declines to discuss his strategy.
Katz understands that the most attractive candidates for the law and technology sector are those with special skills that are often obtained through prelaw work experience. “But there is no reason why some of those key skills and experiences cannot be learned and obtained right here,” Katz says of the MSU program.
He notes that virtually all law students have high cognitive ability. He feels the key to their future success is mastery of domain-specific knowledge—often in areas that are complementary to law—and the ability to collaborate across disciplines. This requires engagement and an immense amount of time spent on the task. So how does one develop the educational program that will prepare the law student for legal-tech jobs—some that may not yet exist?
“This,” Katz says, “is just an education design problem."
Perhaps the key insight is that "data by itself is useless. To extract value from it, you need the ‘three Ts’: talent, technique and transformation.
- Talent. "When you start out, you don’t need the top experts to start making sense of your data. You may just need people with curiosity, good statistical skills and a desire to learn. These are the kind of people who will quickly see how data can be managed and packaged to solve problems. And once they do, they will want to get better at it."
- Technique. "Big Data needn’t mean Big Complexity. ... [A]nalytical techniques can be sophisticated, but it’s also possible to keep it simple – especially at the start of the journey. Get the basics right first, and then you can become more advanced as you get better at it."
- Transformation. "Becoming a data-driven legal team – law firm or corporate – is a journey. Change is slow, so don’t expect an overnight transformation. The best approach is to bring the whole organisation with you - if everyone from the partners and CEOs to the interns buy into your data strategy, it will start delivering returns faster."
So who will be the big winners when it comes to Big Data? Definitely some start-ups become they they don't have to transform -- it's a clean sheet operation from the very beginning; they also have more patience and tolerance for trial and error. Yet, BigLaw is sitting on top of a lot of the essential data, so there will be some winners there too. To my mind, it will turn on the ability of some BigLaw shops to leverage talent and technique into some early victories that will aid the tranformation project. If it works, it will be a case study in strategic leadership and effective change management.
By the way, Wolters Kluwer Corporate Legal Services is a sophisticated place. They own TyMetrix, which is the perhaps the best current example of BigData operating in the BigLaw ecosystem. TyMetrix's Real Rate Report is being used to agressively control lawyer billing rates.
Sunday, September 22, 2013
Disruption in the legal industry appears to be crossing an important milestone -- the emergence of the revolving door among the first generation innovators. Evidence comes from this press release published on the Wall Street Journal website.
In 2010, a BigLaw partner leaves BigLaw (DLA Piper) to take a high-level job at Axiom, the most well-known disruptor in the legal industry. Then, 2.5 years later, he leaves to run the Discovery Services practice at Huron Consulting Group. Huron Consulting, by the way, is a publicly traded company (NASDAQ: HURN) with $626 million in revenues in 2012. Legal is one of Huron's core industries. It currently has 1,500 "seats" for conducting 24/7 document review services in the U.S., Europe, and India.
Let's summarize: BigLaw to legal start-up to publicly held company trying to expand its wedge in the legal industry. Granted, career moves are motivated by a wide range of factors, not just a string of successes that create better oppportunities. Outsiders can only speculate why someone changes jobs. That said, in a start-up environment where the market opportunity is large but the know-how to tap into it has to be developed through trial and error, false starts are just part of the learning curve -- the building block of future success. Indeed, there are books and articles on this topic.
What is revealed by the emergence of the revolving door among legal innovators is that there is tremendous opportunity to make traditional legal services better, faster, and cheaper. Talented people are persisting and betting their careers on it. The biggest unknown is timing -- it is risky to get there too early, and disastrous to get there too late. Alas, it is better to wrestle directly with the issue of timing than to deny that the change is real.
Saturday, September 21, 2013
Lawyers can successfully adapt to the disruption of the Information Age just like we adapted to the legal challenges of the industrial era -- build a system to create the human capital that is in short supply. This was original logic of the Cravath System, which created teams of specialized business lawyers who could handle the legal needs of rapidly growing industrial and financial clients in the early 20th century. This Clockworks approach still works, but the specifications of the system need to be updated. At the end of this presentation, I offer a prototype of what we might include in a 21st century Clockworks approach to lawyer development.
Presented at the "Innovations in the Law: Science and Technology" Conference, Oregon District of the Federal Bar Association (Sept 20, 2013)
Tuesday, September 17, 2013
Monday, September 16, 2013
The trend toward outsourcing of legal work to India may be giving way to "onshoring." What is the attraction of moving legal jobs back to the US? The wage gap between India and the US is closing, but more importantly, innovation and continuous improvement are significantly aided by proximity.
I heard this perspective from a friend of mine who was part of the management team of a successful LPO that was sold (at a substantial profit) to a much larger legal conglomerate. Indeed, he contemplated getting back into the business, but this time running an onshoring operation.
This identical perspective is on display in a recent Minneapolis StarTribune story on Black Hills IP, a 2.0 legal process outsourcer that provides various types of managed services for all things related to intellectual property. According to its website, Black Hills IP is a "US-based IP paralegal service that is faster, more accurate and more cost-effective than in house departments and off-shore providers." The company appears to be growing, as it did a PR-blitz to commemorate its 100th client. The company was originally started in Rapids City, South Dakota but has since expanded to Minneapolis.
What make this story especially interesting is that many of the folks who started Black Hills IP were sophisticated Minneapolis corporate lawyers who created a company in the early 2000s called Intellevate, a 1.0 LPO that was sending legal work to India. In 2006, Intellevate became part of CPA Global, a much larger LPO. In other words, the folks at Black Hills IP are industry players with much better information than the rest of us who are making bets with their own money.
Unlike traditional law firms, these types of legal vendors are growing rapidly. Their secret sauce appears to be combining high-quality processes with capable, motivated paraprofessional talent.
The challenge for law schools and many practicing lawyers is getting our heads around the fact that, from a pure market perspective, bright legal minds may be less valuable than well-designed and well-executed legal processes and systems. This state of affairs is just as much an opportunity as it is a threat.
One last interesting note suggesting that companies like Black Hills IP are part of the same ecosystem as traditional law firms and law schools: The CEO of Black Hills IP is Ann McCrackin, a former professor of law at Franklin Pierce (now University of New Hampshire School of Law), where she was director of the Patent Prosecution and Procedure Program. Prior to that, McCrackin was a shareholder in Schwegman, Lundberg & Woessner, a large patent law firm based in Minneapolis that specializes in high technology.
posted by Bill Henderson
Thursday, August 29, 2013
Thursday, August 22, 2013
During the summers, I usually spend a lot more time around horses and dogs than I do around students. About this time of year, probably because of the impending transition back to the classroom and dealing with humans, it seems like I always go back to one of my favorite movies, Buck, about the horse trainer Buck Brannaman.
Five minutes into the movie, he's beginning a "colt starting" class, in which horse owners are learning how to get horses who've never been saddled, much less ridden, to accept the rider. He narrates: "Colt starting is always interesting because most of the youngsters never been saddled, never had anyone on their back, or a bit in their mouth, so there’s a lot of fear in both the horse and the human."
Then the film cuts to his opening remarks to the owners who are themselves going to have to teach their horses:
“The way I do these colt classes, you guys, you’ll have to get ’em exposed to a lot of things that seem perfectly normal to you but it doesn’t seem normal to the horse.
“You walk up to ’em smelling like a Big Mac, you know, or somethin.’ Your diet is gonna make you smell different to the horse.
“And then you’re gonna tell the horse, ‘don’t worry, I want to crawl on you’ … in a similar posture to how a lion would attack and kill a horse. They jump right up in the middle of them and they reach their front claws around and as they’re biting down on their spine they’re cutting their throat with their claws. You’re asking the horse to let you be in that posture and crawl on him.
"And then about the time he says, ‘Alright, maybe,’ and then you say, ‘Oh one more thing. I want to strap some hides of other dead animals around you before I crawl on you.’
"Damn sure have to have some trust. He’s got to believe in you to let you do that. And amazingly enough, they’ll let you do it.”I'm pretty sure there's a lesson there for all teachers, but particularly law professors facing a class of 1Ls on the first day.
Monday, August 5, 2013
Two constituencies are really worried about their futures. The first is law students and recent law graduates -- they are worried about jobs. The second are state and local bar associations -- they are worried about being relevant to the next generation of lawyers.
So here is my idea. The new guard and the old guard should be talking to each other. It does not take a rocket scientist to see the real opportunity for synergy. If all of us are willing to step outside our comfort zone -- just a little -- we can create new types of bar association events where young lawyers come to have fun, contribute to the community and profession, and develop relationships that put their careers on a clear upward track.
Toward that end, this week's ABA Annual Meeting in San Francisco provides us with a golden opportunity. On Friday, August 9 at 8 a.m. at the Hilton SF Union Square, Michael Bossone (co-creator of LawWithoutWalls) and I will be facilitating a plenary session entitled, "A New Age for the Legal Profession Requires a New Age for Bar Associations."
Well, we could not preside over a session where panels of white guys, 50 and older (my own demographic), sit at a head table and opine on the likes and needs of millennial lawyers. So we have invited a large cadre of law students and recent law grads to take part in a more interactive session. The session is big -- nearly 300 bar association presidents and executives from around the country. And we need 1 to 2 students or recent grads per table -- perhaps for the first time, you are the subject matter experts. Michael and I are looking for a few more qualified volunteers. Interested?
If you are proximate to SF and looking to meet some well-connected lawyers from around the nation who are genuinely interested in listening to your (constructive) point of view, please send me an email with #NewAgeBar (our Twitter hashtag) in the subject line. We have a few slots left -- RSVPs are mandated for this event, as space is limited and name tags are required.
If you are a law student or recent law grad and you think going to a bar association event early on a Friday morning is a grand waste of time, I suggest that you read Mark Granovetter's classic book, Getting a Job. This book is a vivid empirical demonstration of Granovetter's seminal 1973 article, "The Strength of Weak Ties," which is one of the most cited social science articles of all time (23,000+ citations and counting).
An example of a strong tie is you and your sorority or faternity friends. Not too good for getting a job. An example of a weak tie might be an acquaintance in the same profession but part of a different generation or living in a different part of the country. As Granovetter shows, these "weak" ties act as bridges and are profoundly influential in opening doors for people. Believe it or not, academic knowledge can accelerate your career. Get out of your comfort zone and give it try.
[posted by Bill Henderson]
Sunday, July 28, 2013
Posted by Jeff Lipshaw
In my last post, I mentioned the update to Memo to Lawyers: How Not to "Retire and Teach." That was a short essay I wrote in 2006 and 2007 about the odd experience of being somebody who practiced for twenty-six years and only then set out to join a law school faculty as a tenure track professor.
This summer I've been working on the look back - Version 1.0 predates the "Great Retrenchment. I've reflected on that change as well as examples of my earlier naivete or "I didn't know what I didn't know" in "Retire and Teach" Six Years On, a draft of which is now up on SSRN. Here's the abstract:
This is a follow up to a 2007 essay I wrote about what it might take for a well-seasoned practitioner to join a law school faculty as a tenure track professor. Having now wended my way up (or down) that track for six years plus, my intended audience this time includes the original one, those seasoned veterans of the law practice trenches who may think but should never utter out loud the words “I would like to retire and teach,” but now also my colleagues in academia who are facing what looks to be the greatest reshuffling of the system in our generation. Much of what I said in the earlier essay still holds. This essay, however, includes (a) a more nuanced look at the strange hybrid creature that is the scholarly output of academic lawyers; (b) a more respectful appreciation of what it takes to become a good teacher, with some notes about what worked for me, and (c) an attempt to reconcile the interests in scholarship and the interest in teaching after the “Great Retrenchment” of the legal profession and legal education, with some brief thoughts about the opportunities that may bring for the aging but not ossifying academic aspirant.
I suppose I ought to dedicate it to the Chief Justice because it gave me a chance to talk about the influence of Immanuel Kant on evidentiary approaches in 18th century Bulgaria.
Photo credit (John Roberts): newyorker.com
Wednesday, July 24, 2013
Posted by Jeff Lipshaw
Until the phrase "$1,000,000 law degree" started filling my RSS feeds, I had paid about as much attention to the issue as I did to the Royal Baby (which, by the way, a new study will show shortly has a .00000000112% chance of being named "Jeff" but is twice as likely as that to be named "Geoff").
Something Brian Tamahana wrote in his most recent post caught my attention, however, so I went back and skimmed Mike Simkovic's paper just to confirm what I'm about to observe. Brian asked in so many words, knowing this data, even if accurate, would you advise somebody to go to law school?
Funny, because I have two children in their mid- to late twenties, both of whom are in the midst of making a job or career change. I occasionally joke about their going to law school. (The older one had any desire to be a lawyer whipped out of her by way of the year she spent as the typical "just out of Ivy League school - going to go to law school next" litigation paralegal in a mega-mega NYC based firm that will remain unnamed.) I think I said, "Only go if you go to Harvard, Stanford, or Yale." That reflects mostly elitism and arrogance on my part, and not my inner Kahneman, which I've gotten in touch with, but unless I've missed something (let me know if I have) I don't see in the discussion that anybody has gotten in touch with theirs.
The point is that even if we take all of Mike's data as saying what he purports it to say, it still doesn't say anything about how people look at the prospects of gain (income) and debt (loss). I'm a skeptic about whether understanding prospect theory actually helps you make a decision (i.e., if I understand my own heuristics, will that counter the bias and cause me to calculate my expected utility - I don't think so), but I don't think you can debate this issue with at least acknowledging that people don't make decisions involving prospective risk or loss by stepping back and viewing the final outcome - the expected utility - over their entire lives.
I will let others, if they want, spend more time explaining the relevance of the above graph to the issue, but it has to do with how being risk-adverse or risk-seeking affects your decision depending on whether you are faced with high probabilities of losses relative to gains, or high probabilities of gains relative to losses. (The exercise I do every year with my students is take a secret ballot vote on whether they would prefer $1,000 in cash or a one in ten chance of $10,000 at the end of class - risk aversion being such that invariably close to 100% chose the former even though the expected utility is exactly the same.)
I've been noodling around with my update to How Not to "Retire and Teach," and have been thinking the odd hybrid of explanation and advocacy that arises when lawyers argue either about what is or what should be. The fancy phrase is that all knowledge beyond pure perception is theory-laden; the equivalent is "lies, damned lies, and statistics."
Tuesday, July 23, 2013
Posted by Jeff Lipshaw
Earlier this summer, I posted elsewhere about two of my summer projects, writing essays for symposia this coming academic year (1) at Illinois in October honoring the memory of Larry Ribstein (left), and (2) at AALS in January commemorating the 30th anniversary of Ron Gilson's (right) publication of his iconic Value Creation by Business Lawyers article in the Yale Law Journal. I've finished readable (I think) drafts of both, and have posted them on SSRN. What inspired my particular spin in both essays was physicist Lee Smolin's new book, Time Reborn, in which he criticizes the aspect of timelessness in the mathematical models that physicists use. Both Gilson and Ribstein based much of their work on transaction cost economics. I perceived similar issues of timelessness both in what transactional lawyers see themselves doing, and how law professors go about describing it in economic models.
The piece about Value Creation is entitled What Is It Like to Be a Beetle?: The Timelessness Problem in Gilson's Value Creation Thesis. Here is the abstract:
This is a contribution to the 2014 mini-symposium honoring the thirtieth anniversary of the publication of Ronald Gilson’s seminal article Value Creation by Business Lawyers. In it, he coined two powerful metaphors: that of lawyers as "transaction cost engineers" and as beetles studied by their entomologist brethren in the legal academy. As a former lawyer-beetle and a current academic-entomologist, I am quite sure that the transaction cost economics he used to explain why business lawyers stay in business missed something important about the subjective and real world experience of being a lawyer-beetle. In this essay, I (a) summarize two different but significantly related critiques of theory, (i) the physicist Lee Smolin’s powerful argument for the unreality and therefore timelessness of algorithmic models of the universe – i.e., why physics as generally practiced is "physics in a box," and (ii) the philosopher Alasdair MacIntyre’s controversial argument for the unreality of modern conceptions of utility, rights, and efficiency, (b) borrow from both critiques in order to understand the difficulties in transposing timeless economic and legal conceptions ("utility" and "rights," respectively) to real transactions that occur in real time, (c) criticize the tendency of the legal profession, in both the academic and practicing arms, to teach and practice a scientific "law in a box," and (d) suggest a vision of what it means for a wise business lawyer not to be so constrained.
The piece for the Ribstein conference is entitled Trust and Law (In a Box): Do Organizational Forms Make a Difference? Here is the abstract:
In this contribution to the University of Illinois College of Law’s 2013 Larry Ribstein Memorial Symposium, I assess Professor Ribstein’s approach to both to trust and the “uncorporation.” My thesis is that his disciplinary commitment to a transaction cost economics model resulted in an overstatement of the extent to which business association forms matter in the real world. In contrast to Professor Ribstein’s view that mandatory law (which includes corporate law) “crowds out” trust (implicitly making uncorporations more amenable to trust), I see the orderliness of modern and abstract business structures (of any kind) as distinct from, yet operating at the same time and in the same space as, the usual gamut, for better or worse, of human emotions. Even if, as a matter of economic theory, uncorporations do a better job of corporations in permitting owners to control manager agency costs, the theory leaves out (for otherwise good reasons inherent in doing any kind of rigorous science) virtues like trust and vices like greed, fear, panic, all of which seem just as likely to operate in the uncorporate as the corporate setting.
Wednesday, July 3, 2013
As a result of the ABA’s revisions to Standard 509, Consumer Information, there is now a much greater universe of publicly available information about law school scholarship programs, specifically conditional scholarship programs and scholarship retention. Based on a review of law school websites conducted between March 19 and May 29, 2013, I have compiled a complete list of schools with conditional scholarship programs, with only one-year scholarships, with good standing (or guaranteed) scholarships and with only need-based scholarships.
The availability of this data now gives each admitted scholarship recipient some meaningful basis for assessing the likelihood that any given scholarship will be renewed. (That said, within a given cohort of conditional scholarship recipients at a given school, those at the top end of the entering class profile likely retain their scholarships at a higher percentage than reflected in the law school's overall data while those further down the class profile likely retain their scholarships at a lower percentage than reflected in the law school's overall data.)
What do we know about the conditional scholarship programs in place for students entering law school in 2011-12? There were 140 schools with conditional scholarship programs. The average retention rate across all law schools was 69%. In total, 12,735 students who entered law school in the fall of 2011 and continued into their second year of law school at the same school entered with conditional scholarships and 4,387 students lost those scholarships, a retention rate across individual students of 66%. Across the 194 law schools on which I compiled data, the Fall 2011 entering first-year class totaled 46,233, so roughly 27.5% of the students in the Fall 2011 entering first-year class were on conditional scholarships and roughly 9.5% of the students in the Fall 2011 entering first-year class failed to retain their conditional scholarship as they moved into the second year of law school.
The distribution of scholarship retention rates by deciles across all 140 schools reporting conditional scholarship programs is set forth in Table 1. Table 1 shows the largest number of law schools grouped around the overall average retention rate, with 30 law schools in the 60-69% range and 24 law schools in the 70-79% range; nearly 40 percent of law schools with conditional scholarships fall in these two ranges. Interestingly, the decile range of 90% or better is the second largest decile range, with 26 law schools (nearly half of which are ranked 50 or better in the USNEWS ranking). Notably, 23 law schools had scholarship retention rates of less than 50%.
Table 1: Number of Law Schools Reporting Retention Rates by Decile Range
Less than 40%
Four of the eight were law schools ranked alphabetically
Eight of the 15 were law schools ranked between 50 and 99
16 of the 20 were law schools ranked 100 or lower, while only two were in the top 50
23 of the 30 were law schools ranked 100 or lower, while only one was in the top 50
13 of the 24 were law schools ranked in the top 100, but only three of those were in the top 50
12 of the 17 were law schools ranked between 50 and 145
90% or better
12 of the 26 were law schools ranked in the top 50
As shown in Table 2, law schools ranked in the top-50 in the U.S.News 2012 Rankings had the smallest percentage of law schools with conditional scholarship programs, with only 20 law schools – 40% -- having conditional scholarship programs, directly impacting only 1,674 students who had conditional scholarships (12.8% of the 13,109 first-year students at these law schools) and only 192 who failed to retain their scholarships (11.5% of the 1674 conditional scholarship recipients and only 1.5% of the 13,109 first year students). By contrast, across the balance of law schools, over 80% of the law schools had conditional scholarships with 11,061 of the 33,124 first-year students (33.4%) having conditional scholarships and 4,195 (37.9% of those on scholarship and 12.7% of first-years at the balance of law schools) losing their scholarships after their first-year of law school.
Table 2: Number and Percentage of First-Year Students in 2011 Having Conditional Scholarships and Losing Conditional Scholarships by US News Rankings Categories
Top 50 Law Schools
Law Schools Ranked 51-100
Law Schools Ranked 101-146
Law Schools Ranked Alphabetically
Total Number of Law Schools
Number (%) of Law Schools with Conditional Scholarship Programs
Total First-Years at These Law Schools
Number (%) of First-Years with Conditional Scholarships
1,674 (12.8% of all first-year students in top-50 schools)
4,176 (36% of all first-year students in schools 51-100)
2,754 (29.6% of all first-year students in schools 101-145)
4,131 (33.6% of all first-year students at alphabetically-ranked schools)
Number (%) of Conditional Scholarship Recipients NOT Retaining Scholarships
192 (11.5% of conditional scholarship recipients and 1.5% of first-years)
1,454 (34.8% of conditional scholarship recipients and 12.5% of first-years)
1,044 (37.9% of conditional scholarship recipients and 11.2% of first-years)
1,697 (41% of conditional scholarship recipients and 13.7% of first-years)
A number of law schools switched to non-conditional scholarship programs for 2012-13 or will be switching to non-conditional scholarship programs for the 2013-14 academic year. As a result, for the 2013-14 academic year, there will be 131 law schools with conditional scholarship programs, five law schools with non-renewable one-year scholarships, four that only offer need-based scholarships, and 54 law schools with good standing (or guaranteed) scholarships. Of the 194 schools on which I was gathering information, therefore, as of the 2013-14 academic year, 70% will have conditional or one-year scholarship programs (136/194), while nearly 28% will have good standing (or guaranteed) scholarships (54/194), with 2% (4/194) having only need based scholarship assistance. (Note that some law schools with conditional scholarship programs also offer some scholarships on a non-conditional basis and/or offer some need-based assistance.)
Those who might be interested in a more detailed analysis of conditional scholarship programs, may want to look at the draft article I have posted on SSRN – Better Understanding the Scope of Conditional Scholarship Programs in American Law Schools.
[posted by Jerry Organ]
Sunday, June 30, 2013
As noted in Part I of this post, the competitive dynamics among law schools are about to change due to a combination of two factors: (1) the ABA's collection and publication more granular data on school-level employment outcomes, and (2) the decision by U.S. News to make JD Bar Passage Required and JD Advantaged the primary measures for the employed-at-9-months input to its rankngs formula.
The histogram below reveals a near perfect bell curve for this revamped US News
input [click on to enlarge]. This is a huge change from prior years
when schools were all bunched at the 95% level because employment of any
kind was all that mattered. Under the old methodology, any law school that
limited itself to full-time, professional law-related jobs would have
plummeted in the rankings 10 to 50 spots.
Because spring 2013 was the first year with the new methodology, the impact of the change is not well understood. The most stark fact of the new environment is that the full-time, professional law-related jobs are in short supply. Among the class of 2011 (the stats used for the 2013 rankings), this desirable outcome was achieved by only 63.0% of graduates. When we subtract out full-time, long-term law-related professional jobs funded by law schools -- a luxury that only a small number of mostly first-tier law schools can afford -- the total drops to 61.9%.
Digging deeper, some other significant patterns emerge.
The vast majority of law schools feed into the regional labor markets where they are located. In places like California, those markets are saturated.
Among the ABA-accredited law schools in California, 46.5% of the class of 2011 obtained full-time JD Bar Passage Required jobs. The comparable figure for the remaining ABA-accredited law schools was 56.0%. Likewise, there is also a disparity for JD Advantage jobs: 6.2% in California versus 8.3% for schools in all other states. In fact, among the 19 ranked California law schools, only four -- Stanford, UC Berkeley, USC, UCLA -- are above the 63.0% average for full-time, professional law-related jobs.
Based on these data, it should come as no suprise that no law school located in California went up in the 2013 U.S. News rankings. Stanford, USC, and Santa Clara hung onto their ranking, but 11 California law schools dropped, with an average decline of 11 spots. Five other Calfornia schools remained in the unranked fourth-tier category.
In contrast, some of the biggest winners in the methodology change were flagship public law schools that are relatively big fish in smaller regional markets. Students at these schools tend to stay in-state and get JD Bar Passage Required jobs at rates far higher than the 54.9% average for the class of 2011 average.
Below are the top 15 non-national public law schools based on the proportion of FT Bar Passage Required jobs.
Between 2012 and 2013, the average rankings gain for the above schools was +9 spots. Among this group, the only school to go down in the rankings was ASU Law (-3). And that decline was largely due to the fact that ASU reported a 98% employed-at-nine-months figure for the class of 2010--a figure that drew suggestions of aggressive gaming. See Brian Tamanaha, When True Numbers Mislead, Balkanization, April 2, 2012.
The heavier weighting for JD Bar Passage Required jobs also benefits a handful of lower-ranked private law schools that are practice-oriented and tend to feed smaller firms within their regional areas.
- Campbell (71.4% FT bar passage jobs) went from unranked to #126.
- South Texas (64.4% FT bar passage jobs) went from unranked to #144
- St. Mary's (78.3% FT bar passage jobs) went from unranked to #140.
Part-Time Law Schools Dominate JD Advantaged Jobs
JD Advantaged Jobs count the same as JD Bar Passage Required Jobs. But what, exactly, is included in this category? According to the ABA,
A position in this category is one for which the employer sought an individual with a J.D., and perhaps even required a J.D., or for which the J.D. provided a demonstrable advantage in obtaining or performing the job, but which does not itself require bar passage or an active law license or involve practicing law.
See ABA Class of 2012 (definitions). Many professionals enroll in law school on a part-time basis to improve their career prospects. It should be no surprise, then, that schools with part-time programs tend to be the largest producers of graduates with full-time JD Advantage jobs. In many cases, it is the full-time job that the student held during law school -- and presumably retains upon graduation -- that confers the advantage.
Of the top 10 schools based on the percentage of JD Advantage law school jobs, eight had part-time programs and the other two were located in a state capital, which tends to increase the number of opportunities related to government and public policy.
The schools listed above gained an average of 3.5 spots in the rankings, albeit the average is pulled down by the inclusion of Southwestern, which had to weather the brutal California legal market.
It is worth noting that the percentage of JD Advantage jobs is negatively correlated with the percentage of JD Bar Passage Required Jobs (-.33) .The table below summarizes the differences between schools with Part-time versus Full-Time only programs.
The higher percentage of JD Advantage jobs (10.1% versus 6.9%) for schools with part-time programs is unlikely the results of chance, as the differences in means are statistically signficant at p < .001. But what does this inverse relationship mean?
programs tend to be affiliated with lower ranked law schools, which in turn would produce a lower average percentage of JD Bar
Passage Required jobs. Yet, part-time programs are also in larger,
urban locations. Thus, in addition to the continued employment of
part-time students with their current employers, the sheer proximity to
large, specialized regional economies probably increases the proportion
of JD Advantage jobs. Indeed, any school in an large metro area would
be foolish to ignore the human capital needs of non-legal employers, as
knowledge of the law is very helpful in navigating through an ever more
complex, regulated, and interconnected world.
What is the Best Strategy for Maximizing Full-Time, Professional Law-Related Jobs?
Largely through happenstance, the ABA and U.S. News have created an environment where law schools have to ask this basic but very important question. Part-time jobs will no longer cut it. And few law schools have the cash to hire their own grads full-time for a year past graduation -- and if they do, there are probably better uses for the millions of dollars needed annually to prop up a school's ranking.
The new gold standard employment outcome is full-time, long-term professional law-related jobs. The issue of how to maximize this outcome is so pressing and intricate that it may warrant trade-offs in the admissions process, favoring students will lower credentials but more rock-solid employment prospects on the backend at graduation. This is the topic I will take up in Part III.
[posted by Bill Henderson]
Friday, June 28, 2013
NALP recently released the employment outcome data for the class of 2012. The good news is that the absolute number of JD Bar Passage Required jobs went up from the prior year. The bad news is that a significantly larger class of entry-level lawyers were competing for those jobs. The class of 2011 totaled 41,623, versus 44,339 in 2012 (+2,716, or +6.5%). And note, the class of 2013 is likely to be even bigger -- roughly +1.6% based on the size of the entering 1L classes in the fall of 2010 (see ABA enrollment data).
Setting aside the year-over-year flucuations, the trendlines suggest a relatively large and persistent shortfall in the number of full-time, professional law-related jobs. I assembled the graph below from NALP data [click on to enlarge].
[Methodological notes: NALP used the JD-Preferred category until the class of 2011, when NALP and the ABA collaborated on the creation of the JD Advantage category. According to NALP, the jobs in the two categories are "largely the same." See NALP, Detailed Analysis of JD Advantage Jobs (April 2013). The figures for 2012 are estimates of full-time employment calculated from (a) NALP's just released figures for 2012 class size and the percentage breakdowns by job category, and (b) the percentage breakdowns of full-time versus part-time from the prior year, which also relied on the new JD Advantage definition. In short, basic algebra.]
A reasonable expectation of a 3-year, $100,000+ financial commitment is that nine months after graduation, the entry-level lawyer has secured a full-time professional job. See Legal Whiteboard, June 26, 2007. Those outcomes are reflected in the blue-red-green bars above. Since 2007 (the first year that NALP collected data on full-time versus part-time employment), the percentage of jobs fitting these criteria has fallen from 85.0% to 73.9%. So the overall size of the purple bar -- part-time jobs, nonprofessional, unemployment, etc. -- has grown from 15% to 26.1%.
Unfortunately, the pain does not end there. With a limited pool of full-time professional jobs and the number of graduates trending upward, the law of supply and demand kicks in. Consider this arc of median entry-level salaries of employed graduates: $65,748 for class of 2007, $72,000 for 2008, $72,000 for 2009, $63,000 for 2010, $60,000 for 2011, $61,245 for $2008. So, in short, the odds of landing a full-time professional job have gone down, and so has the starting pay. Yet, tuition and student debt continue to edge up. These unsustainable trends have made law schools fair game for criticism by the media and law student bloggers.
That said, a market correction is clearly underway. A considerable number of prospective law students are deciding (rationally) not to apply to law school -- from 98,700 when the class of 2007 enrolled in the fall of 2004 to an estimated 58,424 for the fall of 2013. Likewise, law schools, to the extent they can afford it, are enrolling fewer students. From the high water mark in the fall of 2010 (49,700), law schools only enrolled 41,400 1Ls in the fall of 2012, and the numbers are sure to be even lower this fall. See Jerry Organ's estimates, Legal Whiteboard, May 20, 2013. To weather this storm, law schools are running significant deficits or drawing down their endowments.
So, can we conclude that the market correction will be complete when the relatively small class of 2017 enters the job market four years from now? I certainly think the smaller number of graduates will help. But I would argue that two things have fundamentally changed:
1. Revenues versus credentials. Law schools are struggling with the need to balance their desire to hang onto respectable LSAT/UGPA medians with a need to generate sufficient revenue to cover their operating costs. If a law school favors revenues this year, its US News rankings could drop, affecting its applicant pool in future years. On the other hand, the combination of shrinking 1L classes and lavish scholarships -- a strategy being pursued by dozens of law schools -- is unsustainable over the medium to long term. A decision to enroll fewer students this year is a three-year commitment to lower revenue. If the smaller entering class is repeated next fall, the budget pain doubles. Do it three years running, and the revenue shortfall triples. Many law schools are not trying to outrun the bear; they are trying to outrun other law schools in their regional market. Some law schools may not make it out of this trough.
2. Competition over full-time, professional law-related jobs. If there is one silver lining that has emerged from this troubled period in U.S. legal education, it is the willingness of the ABA to collect and publish more granular employment outcome data at the law school level. In turn, U.S. News has incorporated these data into its rankings formula. Instead of propping up our rankings by hiring our own students or benefiting when they got jobs nine months out working as a retail manager or a cab driver, under the new 2013 U.S. News rankings formula, only full-time, long-term jobs that are JD Bar Passage Required or JD Advantaged are given "full weight."
It is this second point that is going to push change in how law schools do business--we now have an employment outcome in which the ranking payoff is now fully in allignment with what law students want--full-time, professional law-related jobs.
Specifically, the employed-at-nine-months input to the U.S. News rankings formula is currently given 14% weight. According to the U.S. News law school rankings methodology, the magazine is weighting 22 of the 35 employment outcomes collected and published by the ABA. Among these 22 factors, we don't know the internal weighting. What we do know based on the "full weight" given to JD Bar Passage Required and JD Advantage jobs, is that the highest employed-at-nine-month scores will go to law schools with the highest percentages in these two categories. This is a completely new world for law schools -- one that incentivizes what law students care about when they make the decision to enroll.
Part II to follow ...
[Posted by Bill Henderson]
Thursday, June 13, 2013
Posted by Jeff Lipshaw (cross-posted at PrawfsBlawg)
Well, I say yes. There's more money potential in narcotics than anything else we're looking at. Now if we don't get into it, somebody else will. Maybe one of the Five Families, maybe all of them. Now with the money they earn, they can buy more police and political power; then they come after us. Now we have the unions, we have the gambling; an' they're the best things to have. But narcotics is a thing of the future. An' if we don't get a piece of that action, we risk everything we have -- I mean not now, but ah ten years from now.There are many of us who believe that The Godfather is an inexhaustible source of appropriate metaphor, and this morning I apply it to a telephone marketing scheme from what you would think was an otherwise reputable company. And with a certain humility given the number of decisions like this in which I was involved in my corporate career (one only hopes for the better - i.e. "there but for the grace of God go I"), I'm prepared to pass judgment on this one below the break.
Wednesday, June 5, 2013
For those trying to better understand how legal education can better prepare law students for the world that awaits them, I would encourage you to take a look at the draft article my colleague, Neil Hamilton, Director of the Holloran Center for Ethical Leadership in the Professions at the University of St. Thomas School of Law, recently posted on SSRN. The article is entitled Law-Firm Competency Models and Student Professional Success: Building on a Foundation of Professional Formation/Professionalism. Here is some of the description from the abstract:
A law student who understands legal employer competency models can differentiate him or herself from other graduates by using the three years of law school to develop (and to create supporting evidence to demonstrate) specific competencies beyond just knowledge of doctrinal law, legal analysis, and some written and oral communication skills. . . .
In Part I below, this essay analyzes all available empirical research on the values, virtues, capacities and skills in law firm competency models that define the competencies of the most effective and successful lawyers. Part II examines empirical evidence on the competencies that clients evaluate. Part III evaluates the competencies that make the most difference in fast-track associate and partnership promotions. These data and analyses lead to several bold propositions developed in Part IV:
1. Law students and legal educators should identify and understand the values, virtues, capacities and skills (the competencies) of highly effective and successful lawyers in different types of practice (one major example is law firm competency models analyzed below in Part I);
2. Each student should use all three years of experiences both inside and outside of law school (including the required and elective curriculum, extracurricular activities, and paid or pro bono work experiences) to develop and be able to demonstrate evidence of the competencies that legal employers and clients want in the student’s area of employment interest;
3. Law schools should develop a competency-based curriculum that helps each student develop and be able to demonstrate the competencies that legal employers and clients want; and
4. Both law students and law schools should understand that the values, virtues, capacities and skills of professional formation (professionalism) are the foundation for excellence at all of the competencies of an effective and successful lawyer.
The article presents far more useful information than can be summarized here, and different readers may be struck by different things discussed in the article. One of the most significant takeaways for me, however, is the convergence around an array of competencies frequently not taught in law school. The article analyzes competency models used to assess associate development at 14 medium to large law firms in the Twin Cities and compares that with some other literature on competencies clients look for in attorneys. The analysis demonstrates that in addition to traditionally understood technical skills – legal analysis, oral and written communication, and knowledge of the law – there is significant convergence around several competencies frequently not taught in law school – 1) Ability to initiate and maintain strong work and team relationships; 2) Good judgment/common sense/problem-solving; 3) Business development/marketing/client retention; 4) Project management including high quality, efficiency, and timeliness; 5) Dedication to client service/responsive to client; and 6) Initiative/ambition/drive/strong work ethic.
Whether law schools are going to be able to find efficient ways to offer students opportunities to develop these competencies, it is imperative that we make our students aware that they need to be developing these competencies to give themselves the greatest likelihood of professional success.
[posted by Jerry Organ]
June 5, 2013 in Data on legal education, Data on the profession, Important research, Innovations in legal education, Law Firms, Scholarship on legal education, Scholarship on the legal profession | Permalink | Comments (0)
Friday, May 31, 2013
That's right, law students now have an opportunity to add hands-on e-discovery training to their skill set. Surely, a first-of-its-kind program is being offered by one of the 200 ABA-accredited law schools struggling to adapt to a changing legal market, right?
Well, actually, no. It is being offered by Bryan University, which began life in 1940 in Los Angeles as a stenography school for court reporters. It subsequently evolved into Bryan College, which offered associates degrees in various vocational tracks. More recently, it has received accreditation as a university, with a masters degree in applied medical informatics and a cetificate program in e-discovery. Both are offered exclusively online.
The e-discovey certificate program has some interesting features (press release here).
- It's an actual graduate program. Enrollment is limited to law students who have completed a course in civil procedure (so, functionally, 2Ls and 3Ls) or, at most, completed their JD studies in 2013.
- It's real-world relevant. The program is organized around the Electronic Discovery Reference Model (EDRM), which is a detailed yet evolving set of industry standards that flow from nearly a decade of meetings involving literally hundreds of major and minor players in the litigation industry -- law firms, tech start-ups, Fortune 500 companies, consultants, etc. I have been at an EDRM meeting. Just learning the arcane, technology language of this massive subfield could itself a big value-add for students.
- Students learn how to use tools. The program is an immersion experience in which students will learn how to use high-end software related to predictive coding and machine learning; after that, they move to human review using another industry software suite. This event is supported by several legal vendors, mostly software providers, because they want their tools to become industry standards. Lexis and Westlaw used this same playbook 30 years ago.
- It's compact and efficient. The program meets online in real-time two hours a day, four days per week, for four weeks.
The faculty is comprised of practitioners and technicians in the e-discovery business, not full-time law professors. The tuition is $1,495 (very cheap if measured by contact hours), which can be paid online via credit card. Alas, May 30th was the last day of registration!
Signficance of the Bryan University program
Is the Bryan University e-discovery certificate program evidence of law's slide into vocationalism, or are 200+ ABA-accredited law schools missing the boat on the future of law? This may frame a provocative debate among academics, but it gets us quickly onto the wrong track.
Let's separate changes in the legal economy from debates over academic identity, which tend to arouse our emotions. In other words, let's respond to these circumstances like level-headed lawyers and acknowledge the substantial evidence that the world of lawyering is changing in dramatic ways. If this is true, by extension significant changes to legal education are likely on their way.
If we focus on facts, Exhibit #1 has to be access to justice. Resolution of disputes through state and federal courts --the paradigmatic work of lawyers -- has become prohibitively expensive for the vast majority of U.S. citizens. Further, it is now getting a too rich even for major corporations. Part of the problem is proliferation of electronically stored information (ESI). Finding and analyzing the law, it turns out, is the easy part. We teach that in law school. But in this permanently digital world, facts never get lost. Rather, they accumulate. This creates large problems for litigants.
Instead of redesigning our judical system to deal with this challenge -- something a conservative legal profession is loath to do without a decade or two of deliberation -- we are now witnessing the rise of a massive industry of legal vendors trying to make electronic discovery more efficient.
Exhibit #2 in our factfinding journey is that a huge proportion of these new legal vendors are owned and controlled by nonlawyers. See Henderson, Losing the Law Business. It turns out that the MR 5.4 ban on fee-splitting is, to a large extent, not much of a barrier at all. Virtually everything up until the courthouse door or the client-counseling moment can be disaggregated and turned into a process or product delivered by a nonlawyer vendor adept at technology and systems engineering. Because there is so much money to be made by the application of technology and process to legal problems, the nonlawyer genie is not going back into the bottle. It is time to accept that fact.
Below is a chart I use in a lot of presentations to law schools and bar associations.
The point of this chart is very simple. A legal services industry has arisen around the traditional legal profession. Now, increasingly, the word "service" is falling out because products and mechanized processes are taking their place, driving up quality, and driving down cost and cycle time. Society wins. Lawyers adapt.
So, at a practical level, what does all of this mean?
Let's start with the good news. Law is not going away. In a highly interconnected, complex globalized world, law is actually becoming more important.
But here is the realistic inner lining. Law is also suffering from a productivity imperative. The average citizen -- including the typical lawyer -- can't afford to engage the services of an artisan lawyer. And large firms filled with high-priced artisan lawyers are becoming a less attractive option for even large corporations. They want better, faster, and cheaper legal solutions.
So, for law professors anyway, here is the bad news: Training artisan lawyers -- what U.S. law schools do -- is indeed a mature industry. The U.S. economy can't fully absorp 45,000 law graduates per year, at least not doing traditional artisan-type legal work. So, if we want reliable employer demand for our graduates, some retooling needs to take place. Is the retooling process hard and complicated? Absolutely. Does this type of change occur in other industries? Yes, as reliably as the sun rising in the east. Now is our turn.
How do we retool?
The most difficult hurdle is just accepting the need to change. It's purely an emotional obstacle. The cheese has been moved. It's gone. It will not reappear. We need to find new cheese. Not familar with the reference? See Who Moved my Cheese.
The next step is just showing up to industry events and accepting the fact that we are not the smartest person in the room, at least when it comes to intersection of technology, process design, project management, knowledge management, big data analytics, machine learning, and modern law practice, etc. Instead, it is time to just soak and poke. Practically speaking, this means listening to others and trying to decipher patterns that simplify and unify what we are observing.
Third, with the help of some adjuncts we deputize along the way (both lawyers and nonlawyers), we design and offer some new courses that capture these new realities. Fumbling through a very crude version of this methodology, I taught project management back in 2010. Not only was it a lot of fun, I learned new skills, both as a problem solver and as a teacher, made dozens of industry connections that opened doors for my students, and obtained a more realistic view of the legal profession. In short, it changed my life -- for the better.
Fourth, a subset of the legal academy needs to really dive into the topic of institutional design. The rise of the e-discovery business is entirely a artifact of how our legal system is structured. Perhaps it is time to think about better ways to resolve disputes and facilitate transactions. See, e.g., Disputes in the credit care industry. To me, law schools are the exact right places to think about, and wrestle with, these critically important issues. These are mountains just waiting to be climbed by the next iteration of law schools and law professors.
Fifth, with some smaller victories under our belts, we need to collaborate with colleagues to begin the messy process of organizing our new insights into a coherent curriculum that produces graduates with the most valuable skills sets in the shortest supply. With a world ramping up in complexity, I doubt these will be vocational skills. That said, we are probably a decade or two away from a more settled law school curriculum. But we will get there, and when we do, we will be incredibly proud of what we have accomplished.
[posted by Bill Henderson]
Thursday, May 30, 2013
APPLICANTS -- In my November blog posting, I noted that for the three-year period from 2010-2012, the number of applicants in each admissions cycle represented an average of 92.9% of the tests administered in June/October. There were 63,003 June/October test-takers in 2012. I noted that if this admissions cycle results in 92.9% of June/October test-takers turning into applicants, law schools could anticipate there being roughly 58,530 applicants to law schools for fall 2013.
In January, that estimate seemed like it might be high, as LSAC projections were running more in the 53,000 to 54,000 range. LSAC’s January 25, 2013 Current Volume Summary showed 30,098 applicants at a point in the previous year when the applicant total represented 56% of the preliminary final applicant count. That projected to an applicant total of roughly 53,750. But the most recent LSAC Current Volume Summary dated May 17, 2013, shows 55,764 applicants, at a time in the cycle which last year represented 95% of the preliminary final applicant count. That means there has been an increase in applicants in recent weeks compared to the same period last year. If the present count truly represents 95% of likely applicants, we can expect roughly 58,700 applicants for fall 2013. If late applications continue to come in at numbers higher than last year, this number could go even higher. For purposes of these projections, however, I will assume 58,700 applicants.
ADMITTED APPLICANTS -- Of the projected 58,700 applicants for fall 2013, how many will be admitted? Notably, the LSAC Volume Summary shows that from 2003-2011, law schools never admitted fewer than 55,500 applicants, but also never admitted more than 71% of applicants. The LSAC has not posted the 2012 numbers, but it is likely that law schools only admitted approximately 52,000 of the 68,000 applicants, the smallest number in over a decade, but with the highest admit rate in over a decade -- an estimated admit rate of over 76%. (For the period from 2003-2011, an average of roughly 82% of admitted students became LSAC matriculants. If we assume enrollment declined 8% from fall 2011, that would result in roughly 42,500 LSAC matriculants in fall 2012. One reasonably could project that roughly 52,000 applicants were admitted to generate those 42,500 LSAC matriculants.)
What will the admit number and rate be for fall 2013? That is a great mystery. Even as many law schools move closer to open enrollment, the reality is that some percentage of applicants is truly inadmissible – with significant character and fitness issues and/or LSAT/GPA profiles that are just too low to believe the applicant can be successful in law school and on the bar exam. Perhaps 3% of applicants have significant character and fitness issues (between 2008 and 2011, at least 3% of applicants with an LSAT of 170 or higher were not admitted). In addition, several thousand applicants have an LSAT below 145, many with GPAs that are less than 3.0, resulting in indices that should be problematic for most law school admissions offices that are attentive to whether applicants can be successful in law school and on the bar exam.
If we assume that collectively law schools will find 10,000 applicants to be truly inadmissible, that would leave 48,700 applicants that might be admissible. Assuming everyone who is admissible is admitted somewhere, that would be a national admit rate of 83%. But what if the number of truly inadmissible applicants is more like 12,000? That means there would be only 46,700 applicants that might be admissible. Assuming everyone is admitted, that would be a national admit rate of just under 80%.
MATRICULANTS – As noted above, the average rate at which admitted students became LSAC matriculants between 2003 and 2011 was roughly 82%. If the admit-to-matriculant rate remains at 82% for fall 2013, then the 48,700 likely admitted applicants would translate into roughly 39,900 first-year students. If there were only 46,700 admitted students, with an admit-to-matriculant rate of 82%, then one could expect roughly 38,300 first-year students. If the assumptions about the numbers of admitted students set forth above are accurate, and if the assumption that the admit-to-matriculant rate remains at 82% remains is accurate, law schools should expect somewhere between 38,300 and 39,900 first-year students to enroll this fall, an enrollment decline of roughly 6-10% from the estimated 42,500 LSAC matriculants in fall 2012 noted above.
UNEVEN REDUCTIONS IN ENROLLMENT – The law schools ranked in the top 15 only saw an average decline in enrollment of roughly 5% between 2010 and 2012, while the alphabetical list of law schools saw an average decline in enrollment of roughly 18%. Law schools ranked 16-145 saw an average decline in enrollment of roughly 15% (14% for those 16-50, 15% for those 51-100, and 16% for those 101-145). If the fall 2013 LSAC matriculant number declines by 2,600-4,200 from fall 2012, one could anticipate that the decline once again would impact the law schools ranked in the top-15 only slightly, but would significantly impact a number of law schools ranked between 16 and 145, and even moreso, those ranked alphabetically.
Within each ranking category, however, there are likely to be some law schools hit harder than other law schools, as reflected in the information posted yesterday indicating that over 70 law schools saw first-year enrollment decline more than 20% between fall 2010 and fall 2012.
Moreover, the fall 2013 admissions cycle is the first admissions cycle in which the ABA’s school-specific employment outcomes data will have been available for prospective law students to make meaningful school by school comparisons. It also is the first admissions cycle in which law schools have had to publish scholarship retention information and include such information in scholarship award letters. It will be very interesting to see the extent to which those law schools with relatively poor employment outcomes for the Class of 2011 and/or Class of 2012 suffer greater declines in enrollment or in LSAT/GPA profile. It also will be very interesting to see the extent to which those law schools with relatively low scholarship retention rates suffer greater declines in enrollment or in LSAT/GPA profile.
FURTHER REDUCTIONS IN LSAT/GPA PROFILES – In November I noted that there are two competing tensions law schools must weigh in making admissions decisions in a declining market – revenue and profile. Some schools may have made conscious decisions in 2011 or 2012 to try to hold enrollment to generate revenue while taking a hit on profile or to take a hit on enrollment (and revenue) in an effort to hold profile, but as noted above, a significant number of law schools saw both a significant decline in enrollment (and revenue) AND a decline in profile.
Having taken hits on revenue over the last two years as a result of an overall 15% decline in first-year enrollment, with at least 73 law schools down more than 20% in enrollment, and facing a shrinking applicant pool again, many law schools are going to have to be focused largely on revenue, on simply trying to get as many students as possible in the door to minimize revenue shortfalls. As a result, LSAT/GPA profiles are likely to take significant hits across the board. (One exception might be Kansas, which recently announced that it likely will have only 120 students this fall and in the foreseeable future, down from a first-year class of 165 in 2010 (a decline of more than 27%), partly to right-size so that it can be more selective in the future. (In shrinking from 165 to 141 between 2010 and 2012, Kansas gave up a point at each LSAT indicator, but gained slight ground on each GPA indicator.))
Even law schools ranked in the top-50 are going to have profile challenges. In 2012 there likely were roughly 7800 first-year law students with LSATs of 165 or higher. (In previous years, roughly 85% of the applicants with LSATs of 165 or higher became first-year students. For fall 2012, there were roughly 9200 applicants with LSATs of 165 or higher, which would translate to roughly 7800 first-year students with LSATs of 165 or higher.) Of the 7800 who likely became first-year students in fall 2012, I would estimate that roughly 6800 might have found their way into top-50 law schools (based on an analysis of LSAT profiles for top-50 law schools).
Based on the current projections from LSAC for fall 2013, however, there likely will be only about 7600 applicants in the fall 2013 applicant pool with LSATs of 165 or higher, which might mean only about 6450 first-year students with LSATs of 165 or higher (if 85% become first-year students). That means there just are not going to be enough high LSAT students for every top-50 law school to hold its 2012 profile, even with a decline in enrollment. As these schools seek to fill their classes by taking applicants with slightly lower LSAT and GPA profiles, that is likely to have a cascading effect on profiles throughout the rankings.
When one looks more closely at the LSAC Current Volume Summary data, one discovers that 82% of the growth in applicants from January through May (21,041 of 25,666) has been from those applicants with LSATs below 160 and over 43% (11,124 of 25,666) has been from those applicants with LSATs below 150. In 2012, over 44,000 applicants had LSAT scores of 150 or higher. Present projections suggest that perhaps as few as 38,000-38,500 applicants will have LSAT scores of 150 or higher, some of whom will be inadmissible because of character and fitness issues or really low GPAs.
In yesterday’s blog posting, I noted the decline in average LSAT/GPA profile between 2010 and 2012 and noted that the number of law schools with a median LSAT in the 140s has more than doubled from 9 to 19 between 2010 and 2012. There are 17 more law schools in the list of alphabetical law schools with median LSATs of 150 or 151 in fall 2012 who could also slide into the 140s. It is possible that some law schools ranked 100-145 also will see their median LSAT slide to 149 or 148.
Fall 2013 is going to be another year in which many law schools see significant enrollment declines while most law schools see further declines in their LSAT and GPA profiles. This will be an admissions season in which “success” may be measured by not doing quite as poorly as others in terms of enrollment and profile.
And what about fall 2014? That is an even greater mystery that will have law school admissions personnel and law school deans and university presidents thinking long and hard about budgetary realities.