Monday, October 24, 2016

Succession Planning in Law Schools

Succession[by Rick Bales] In business, one of the principal responsibilities of a leader is to groom a successor. At General Electric, for example, CEO Jeff Immelt spends about 40% of his time on developing the company’s future leaders. At Eli Lilly, half the variable compensation for senior executives is tied to mentoring skills and leadership development.

The impact of succession planning in business is often obvious and public. On the negative side, consider Sumner Redstone, who is having a King Lear year as family and confidants publicly grovel for his affection and fight among each other over his media empire even while he’s on the right side of the grass. On the positive side, consider Proctor & Gamble, where for 175 years every CEO started a career there as an entry-level employee.

In law schools, and higher education generally, the impact of succession planning is equally dramatic, if less public. Universities drift; law schools become internally dysfunctional. Moreover, the change in skill sets required as one moves up the higher-education ladder are at least as significant as in business. A great faculty member is strong in the classroom (which requires lots of solo class prep) and a gifted researcher – mostly solitary work; a successful dean must be visible and social and a consensus-builder. Likewise, a great associate law dean is detail-oriented and knows precisely how the train works; a successful dean envisions future destinations and can raise money to lay the track.

The average tenure of a Fortune 500 CEO is 4.6 years – longer than the 3-odd-year tenure of an average law dean. Yet, though succession planning is institutionalized at most large companies, in law schools and higher education generally it is haphazard at best. Consider, for example, the number of  searches in which there is not a single viable internal candidate.

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October 24, 2016 | Permalink | Comments (0)

Wednesday, October 19, 2016

The ABA 75% Rule: Dead on Arrival?

Shark[by Rick Bales]

Current ABA accreditation standards have attracted widespread public criticism for being toothless in the face of predatory law schools granting admission (and charging hefty tuition) to students with little or no chance of passing a bar exam. In response, proposed ABA standards would create a new 75% rule. As Daniel Rodriguez (Northwestern) and Craig Boise (Syracuse) explain in the National Law Journal (cross-posted without subscription requirement at TaxProf Blog):

The American Bar Association's Section of Legal Education and Admissions to the Bar has proposed tightening up its regulation of those law schools with a significant ­percentage of graduates who have failed their state's bar exam. Under the proposed new accreditation standard, law schools must ensure that at least three-quarters of their graduates pass the bar after two attempts, rather than five, as is the case under the current standards. As with any numerical benchmark, the measure is imperfect, yet its purpose is a sound one.

Yet before the ink is even dry on the proposed rule, at least one school has found a way to circumvent it. Arizona Summit (formerly Phoenix Law School), the same school that paid its low-GPA graduates not to take the bar exam yet still had an overall July 2016 pass rate of 19.7%, has created a new requirement that each student with a GPA below 3.33 must pass the school’s mock bar exam as a prerequisite to graduating. Theoretically, Arizona Summit could set the mock-bar pass rate at 10%, meaning that only the top-10% would qualify to sit for a bar exam. That would virtually guarantee technical compliance with the ABA’s 75% rule. Meanwhile, 90% of the school’s students would have paid $136,062 in tuition (plus expenses, lost opportunity costs, etc.) for a degree that does not qualify them to sit for any bar.

Note that Arizona Summit’s mock bar is not analogous to the “baby bar” required at unaccredited California law schools. The baby bar is given after the first year, so students with no realistic chance of passing the California bar exit early. Arizona Summit’s mock bar is a graduation requirement, so the school will get three full years of tuition before students are required to exit. Moreover, tuition at most unaccredited California law schools is relatively low. Arizona Summit’s is $45,354 per year.

One possible response might be for the ABA to go back to the drawing board and create a bar-pass threshold requirement for matriculants, not just graduates. But that would exacerbate a problem that HBCUs and others already have identified with the 75% rule – it may have a disproportionate effect on minorities, and it penalizes legitimate opportunity-based law schools that admit at-risk (but potentially successful) students, give them an opportunity to prove themselves, then then have an early-exit mechanism for students who don’t. Moreover, if the ABA plugs this hole in the dike, predatory schools like Arizona Summit will just find another weakness to exploit.

Better, I think, to draft a standard that looks at admissions, academic support, early v. late attrition, and bar pass, and gives the ABA considerable discretion within that framework to deny or withdraw accreditation. Simultaneously, we would need to ensure that the folks doing the (un)accrediting have both the backbone, and support from above and below, to make difficult decisions which may well result in litigation.

Rigid rules are easy to circumvent. But it’s not rocket science to spot a predator.

rb

October 19, 2016 | Permalink | Comments (4)

Competing Against Luck

CompetingOver at TaxProf Blog, Paul Caron calls attention to Clayton Christensen's new book Competing Against Luck: The Story of Innovation and Customer Choice (HarperBusiness 2016). Here's a very brief excerpt from Philip Delves Broughton's review in the Wall Street Journal:

Disruption, in Mr. Christensen’s formulation, is not caused simply by anything new or clever. It arrives in the form of “minuscule threats” at the bottom of the market. The studios and networks treated Netflix as a minor player when it mailed DVDs, not seeing that the move to online streaming would turn it into a formidable competitor.

Similarly, grand universities right now see no threat from grubby online courses. But over time students and parents may wonder why they should pay all that money for sports facilities they don’t use and professors who don’t teach. Meanwhile, employers start to ask potential employees what they can do rather than where they went to school. And maybe the whole structure of higher education shifts.

If Christensen is right, I would expect economic pressure at many "teaching" schools to disaggregate scholarship from teaching, so that cost savings can be passed along to students thus giving those schools a price advantage. Look for a further bifurcation of research universities from teaching universities, and perhaps for a spill-over into law schools.

rb

 

October 19, 2016 | Permalink | Comments (0)

Sunday, October 16, 2016

Law School Innovations

Idea[by Rick Bales] Law schools have responded to the changing marketplace for legal education in a wide variety of ways designed to add revenue streams or improve the quality of education. Here’s a list of some of those innovations; comments adding to the list are welcome.

  1. Non-J.D. Master’s programs, especially in subject areas that involve regulatory compliance such as health care. These programs often are mostly or entirely online.
  2. Online law courses and hybrid-online courses. ABA Standard 306 restricts distance education, but within those restrictions there is plenty of room for online legal education.
  3. Niche LL.M. programs. LL.M. programs that provide little more than what a student could have obtained in her J.D. degree do not seem to have attracted substantial enrollment, but many niche and value-added programs are performing strongly.
  4. J.D. programs for international lawyers. These programs typically give credit for previous study and allow the J.D. to be completed in about two years.
  5. Flexible or alternative course scheduling, such as allowing a J.D. to be completed in two years, or on weekends.
  6. Classroom and teaching innovations, such as flipped classrooms, new forms of experiential learning, expanded use and varieties of formative assessment, and the like.
  7. Academic and bar-pass support. Not just more, but better: many AS programs use principles of cognitive psychology to enhance learning, retention, and application. Other AS programs have become integrated into doctrinal, writing, and experiential courses.
  8. Certificates, concentrations, and guided pathways.
  9. Unbundling the J.D. “package” and marketing the pieces to target audiences – e.g., “contracts for businesspeople”.
  10. Teaching law-themed courses for, or in conjunction with, other university programs. Examples include “Intellectual Property Law for Scientists”, “Election Law” for political science students, and creating an undergraduate Legal Studies major or minor.
  11. Incubators and other programs to help graduates transition from law school to practice. These programs vary from well-designed programs to fairly naked attempts to game placement statistics.
  12. Third-year curricular changes, such as full-year simulation courses , nontraditional externship programs, and a semester of study and practice in D.C.
  13. Satellite campuses, especially in a state capital or major metropolitan area if the law school is geographically isolated.
  14. Using diagnostic tests to identify student strengths and weaknesses (e.g., in reading speed and comprehension) at both individual and aggregate levels, and using online training programs to remedy those weaknesses.
  15. Using data (beyond simple measures like first-year GPA) to identify at-risk students at both individual and aggregate levels, to calculate the efficacy of curricular and programmatic changes, and to measure educational outcomes.

rb

October 16, 2016 | Permalink | Comments (0)

Friday, October 7, 2016

What Would an Efficient Market for Law Schools Look Like?

Efficient [by Rick Bales] As the U.S.’s 200-odd ABA-accredited law schools endure a sixth year of admissions and enrollment pain, their response to the market downturn has not been what one would expect in an efficient market. In an efficient market, one would expect to see some combination of the following from oversupply, weak demand, and a plethora of suppliers:

  • Innovation and Differentiation. Considerable market differentiation should result as schools try to find a niche in which they can command a premium price, because chasing a declining demand is, in the long term, a losing proposition. However, except for some tinkering at the LL.M. and Master’s-level margins, law schools still look remarkably the same.
  • Budget Cuts. Most affected law schools have cut their budgets, but not necessarily in ways that efficient markets would predict. Companies experiencing a sustained downturn in demand tend to make the first cuts to high-cost areas that are unlikely to affect future survival. In higher education, personnel costs are the biggest expense, but instead of focusing on efficiency or cutting across the board, most law schools have cut staff first, then non-tenure-track faculty, then tenure-track-but-not-yet-tenured faculty. Staff cuts (especially to admissions, placement, and academic support) and the elimination of junior faculty through hiring freezes and layoffs may have been politically palatable, but amount to eating the seed corn.
  • Closures and Consolidation. An industry with 200+ market participants experiencing a 50% sustained decline in demand should expect some – probably many – of the weakest firms to close, but that hasn’t happened with law schools. Likewise, one would expect industry consolidation, as the strongest schools jostle for market share and the middling schools seek efficiency through growth. Again, that hasn’t happened.
  • Realignment of Supply with Demand. In a world where Blackberry has gone from market leader to obsolescence in a few years, six years is more than enough time for law schools to have adjusted to the new normal. Instead, many if not most schools are still operating at half capacity and a significant financial loss, and are nominally charging (but also discounting) twice the tuition that the market is willing to pay.

What gives?

  • ABA accreditation requirements and faculty tenure impede internal restructuring. ABA accreditation requirements and the importance of reputation in a conservative industry make law schools loath to be the first mover on any sort of innovation outside the norm, such as online education. At many schools, tenured faculty cannot be laid off for economic reasons without declaring a university-wide fiscal emergency; making such a declaration would be a self-fulfilling prophecy. Firing underperforming faculty is culturally taboo and internally painful. 
  • Financial insulation from market discipline. Existing student loan programs help ensure that there is always some prospective student – even if an unqualified one – available to fill a law school seat. Endowments and university subsidies allow financially bleeding schools to stay on life support much longer than they would if they had to be consistently self-supporting.
  • University leadership is overcautious and rewarded for programmatic growth rather than sound business decisions. A faculty member once remarked to me that he belonged to the only institution in the world more resistant to change than North Korea – American higher education. University leadership is exceptionally risk-averse. Unlike the private sector, no university leader every got fired for being too cautious, and it is exceptionally rare for a university to close for being too slow to adapt to market changes. Moreover, university presidents are reputationally rewarded for growth (in enrollment, programs, budget), not for strategic realignment. Most presidents are accustomed to having some programs subsidize others, and would consider it a huge black eye for a law school to close on their watch. Finally, the prestige of having a law school may prevent some closures, but presumably at some point the price tag becomes too high.

So what is the take-away? In part, this helps explain why law schools have not closed/merged/differentiated as one might expect given the sustained down-market for legal education. More importantly, it indicates that there are significant rewards yet to be distributed to the market players who recognize and are able to capitalize on existing market inefficiencies.

rb

October 7, 2016 | Permalink | Comments (1)