Exactly five months earlier, that paper’s recurring Business Day feature ran this article.  Here’s the quick summary: top tier law firms, concerned about labor costs, have begun splitting their incoming attorneys into two tracks: a highly paid partner tracks and a lowly paid, non-partner track.  The article  blamed this trend on several factors–the economy, competition from non-traditional sources, growing client dissatisfaction with legal costs on repetitive or process-intensive work, a teeming oversupply of law school grads.  Then it made the dismal prediciton that the legal industry will continue to lose “many of the lucrative partner-track positions for which law students suffer so much debt.”

Four months prior to that sad nugget, the Times’ regular Business Page queried “Is Law School a Losing Game?” in a feature that bluntly deconstructed the sconomics of attending law school. Those economics works like this: (a) most students rack up something like $150,000 in loan debt to get their JDs; (b) they do so because of the promise of high-paying BigLaw associateships; (c) very few of them ever secure such associateships; (d) the majority face increasingly bleak employment prospects; (e) those prospects seem unlikely to improve.  So…why do students bet so much on odds that seem so long?  Quoting Indiana Law School professor William Henderson,  the Times placed much of the blame on the schools and the “Enron-style accounting” they use to keep students and student loan dollars  rolling in.  For a genteel broadsheet that still refers to athletes as “Mr. Jeter” and “Ms. Sharapova,”   this was especially strident stuff.  Besides reverberating througout legal and academic circles, the article touched off one of 2011’s few moments of true bipartisanship, as Senators Barbara Boxer (D-CA) and Charles Grassley (R-IA) both went upside the ABA’s head with stern rebukes.

That’s not all   In the months leading up to that noisome tiff, such varied sections of the paper as Legal/Regulatory, Education, Economics, and Fashion & Style, each weighed in on the hollowing out of the law school value proposition.

[Aside:  The Fashion article is notably odd.  It begins ostensibly as a commentary on a new ABC law drama called "The Deep End."  After just a few paragraphs th0ugh, the author veers sharply away from the over-considered grooming and bottomless self-involvement of the show's young AmLaw associate characters and sails squarely into a dissertation on the economic problems faced by their real-life counterparts.  In the end, the reader is left with the impression that “The Deep End” is some ratio of law school debt to anticipated legal profession earnings.  Which is a shame, because I really wanted to know more about  the show.  I'm sure it had to be transcendant broadcasting fare.  I don't know how it could only have lasted five episodes before ABC pulled its plug. People, I guess, just don't appreciate Billy Zane as much as they should.]

So the Times’ “series” on student-school-firm-client economic model has lasted much longer than “The Deep End.”   But with almost every section of the paper except  maybe Sports weighing in over the past eighteen months, it’s almost feeling  more like a gang-harangue than a series. 

Which is why I was wholly unsurprised while waiting in line at Starbucks today to glance down at the Times front page and see “What They Don’t Teach Law Students: Lawyering” staring back at me. 

The article’s thesis—law schools architect their curricula to teach law students three years and $150,000 of stuff other than how to practice law—is hardly a novel one.    But if you view that thesis along the line of cases the Times has been making against the student-school-firm-client model, it all feels particularly damning. 

(Aside #2: Yes, I did learn the phrase “line of cases” while I was at law school.  So that’s one thing at least…Also, I learned that it was important not to snicker every time a professor referred to a case as being ”seminal.”  And I think there might have been more than one of those Oliver Wendell Holmes guys. )

Connecting the dots, here’s our little drawing of the  Times thesis:

(1) The core mission of a law school is no more to educate students than the core mission of an insurance company is to pay out claims.  Insurance companies live to collect premiums; law schools live to collect premium tuitions.  Everything else is just a means to those ends.

(2) To collect these tuitions, schools intentionally create in their students unrealistic expectations about the likelihood of landing a high-paying job in the legal profession.

(3) Spurred on by these expectations, students become increasingly willing take on more student loan debt than is economically rational.

(4) By guaranteeing higher and higher amounts of this debt, (before ultimately taking over all of it), the federal government keeps creating larger and larger piles of money for schools to chase.  And schools, unsurprisingly, chase that pile.  Which might explain why we’re building more and more law schools as the legal industry is hemorrhaging more and more jobs.

 (4) Law schools–and the professors they employ–simply do not consider it their responsibility to teach their students the skills they will need in order to do the jobs that will pay off these massive loans.  As today’s article points out, a recent survey revealed that as many as half of law school professors have never practiced and the median practice experience level among all professors is somewhere around one year.  This doesn’t make those professors bad people.  It does mean that the things they do (produce scholarly and sometimes esoteric law review articles) and the things their students’ employers do (practice law) are fundamentally different things.  It also means that someone has to assume the cost of training those students how to practice once they begin practicing.

(5) For a long time, firms have been hiring these untrained graduates and billing their time out to clients at hundreds of dollars an hour while those graduates train on the job.  This effectively transfers the cost of that training from the schools (who don’t feel they need to provide it) and the firms (who need it) to the clients.

 This feels an awful lot like a bubble, right?  People paying sums they can’t afford for things that likely will not be worth those sums…paying those sums because the sums’ recipients are shading value propositions of what they sell…cost and risk are being offloaded onto unrelated third parties.  In fact, it feels especially like one particular bubble.  Try this…swap in these phrases: homebuyer for law student, mortgage for student loan,  mortgage industry for law school,  Fannie Mae (federal mortgage guarantor) for Sallie Mae (federal student loan guarantor), collateralized debt obligation for student loan guarantee,  taxpayer for client, and taxpayer for taxpayer…and the logic holds.  This is because both housing bubble finances and law school finances depend on the same three things:  (a) payees (schools/mortgage industr)y being blind to or disingenuous about the risks of signing up for what they’re selling; (b) students/purchasers committing irrational faith to the proposition that their purchase will appreciate in value  (“My degree/house will be worth so  much money to me that it almost doesn’t matter what it costs…besides….EVERYONE I know is doing this!”); (c) a market-wide practice of passing the bucks by transferring costs and risk away from sellers and onto third-parties (guarantors, taxpayers, clients).

The trouble with bubbles, of course, is that a system dependent on transferring risk to third parties (economists call this “negative externality”) is that eventually that third party is going to refuse to accept, or become incapable of accepting, more of that risk.  And then, in Yeats’ words, “things fall apart, the center cannot hold, a blood-dimmed tide is loosed upon the earth.” In the case of the housing crisis, this market risk rejection began on a sharply involuntary note with gigantic buyers of mortgage debt collapsing overnight.

For the law school bubble, the market risk rejection is a lot simpler…and hopefully a lot less blood-dimmed:  clients just started saying “no.”  Today’s article cites two stats familiar to legal industry mavens:  about half of law firms have had clients push back on paying for work done by 1^st year and 2^nd year associates; and a greater number have been pressured about flat or alternative fees.  Again, the concept is hardly novel.  Echoing a recent ACC survey, the ABA reported last month that over 20% of all legal departments now refuse to pay for work done by 1st year (and in some cases, 2nd year) associates.

So, the third-party client rejecting the cost and risk ain’t new.  But the rate of that rejecton and the feelings underlying it are on the rise.  That feeling is expressed most plainly in today’s Times by Jeffrey Carr, general counsel of FMC Technologies and  a leading advocate for reform of longstanding legal economics:

”The fundamental issue is that law schools are producing people who are not capable of being counselors,” says Jeffrey W. Carr… “They are lawyers in the sense that they have law degrees, but they aren’t ready to be a provider of services.”

The larger question is when will law schools be ready to be providers of providers of legal services.

Supply:

1.  The number of JD’s awarded by schools is up 11.5% over the past ten years. 

2. The number of newly accredited law schools is up 9% over the same period. 

3. The number of LSAT takers is up 20%  since 2007.

Demand:

1. The number of law jobs available has fallen by 7.8% since 2007.

2. This represents a 50% steeper decline in jobs than that seen in the general economy.

3. This trend is expected to continue.

4.  In an effort to preserve their rankings and continue the flow of incoming students, schools report job placement and salary stats that they have to know are misleading, making the supply look richer than in actually is.

On this last point:  it has become increasingly clear that schools are fudging the post-graduate employment rates and salary figures that they send to U.S News and World Report and the National Association of Legal Placement.    When they report that “88% job placement,” what they really mean to say is “since those students who have jobs are way more likely to repond to our questionnaire than those who don’t have jobs, and since we include temporary and part-time jobs as ‘employment,’ and since we’ve created thousands of make-work fellowships to keep our employment numbers up, we’re guessing that the percentage of our recent grads who are fully employed might be closer to 40%…but we’re going to call it 88% because that keeps the applications flowing in.”  Also, when schools report a mean salary of $80,000 for first-year grads, they may technically be accurate, but only because the small percentage of grads who land high-paying BigLaw associateships  disproportionately elevate that mean.  The median salary–what the typical grad might reasonably expect to earn–is definitely much, much lower and so (surprise!) goes unreported by the schools.

The article concludes that there will have to be a contraction among the nation’s law schools in the future, with the better schools and the schools that are better equipped to handle new market realities surviving while the weaker schools fail.  The logic seems irrefutable.

Or, if you’re Massachusetts, you could choose this time to launch a brand new state law school.

Before we dig into it, a bit of background:  for the past several years, the Massachusetts Legislature  and Board of Higher Education have waged a tumultuous battle over whether the Commonwealth’s public university system should create a public law school by absorbing the private, unaccredited Southern New England School of Law and merging it into the University of Massachusetts’ nearby satellite campus in the town of Dartmouth.  The plan’s proponents noted that 44 states already had a public law school.  They promised to keep costs low enough so that the school would be reasonably affordable to its students.  They reassured all that the school would be self-sustaining economically and would add no cost burdens to an already-strapped state budget.  After several defeats, these proponents resurrected the plan (again) in 2009 and (this time) won approval for the new institution, to be called the University of Massachusetts School of Law. (Sadly, my proposal to dub it “Dartmouth Law School,” gained no traction.)  The school, still unaccredited, began accepting students this spring for fall admission.

The author of the Globe article, Tracy Jan, compared data between the old private school and the new public one, and, citing a rise in applications for admission (from 201 to 462 ) and in average LSAT score for inbound students (from 141 to 146), pronounced the UMass Law off to a “strong start. ”  Yay.

Jan continued on, noting that the school’s relative affordability makes it ideal for students who wish to pursue legal careers in public service fields.  Those fields traditionally do not pay well enough to accomodate the massive loan debt many law students graduate with.  Therefore, the thinking goes, lower tuition equals lower postgraduate debt equals more freedom to pursue lower-paying work. Jan then lauds (anectdotally) the breadth of this fall’s incoming class, which we are told includes students “as old as 59″ as well as: “an MIT alumnus and son of Italian immigrants who is leaving the high-tech industry to pursue a law career to protect the rights of new immigrants,” ”a victim-witness advocate in the Bristol district attorney’s office,” and “an occupational safety professional who wants to ensure that workplace health and safety standards are enforced.”

To quote cranky 18th century British philosopher, Jeremy Bentham, this article is ”nonsense on stilts.”  

We love lawyers.  We work with lawyers.  Many of us are lawyers.  We’re passionate about the future of the legal profession and we live that future every day.

Jan’s entire argument is only focused on the front door:  a law school is fulfilling its purpose if its admissions policy and cost structure allow it to let in more students and different types of students than you might find at other law schools.  To the extent that any school does these two things, she feels it can be deemed “off to a strong start.” 

This is not the purpose of law school–or any graduate school for that matter–any more than the loading dock is the purpose of the factory.  The simple core purpose of any graduate school in any field is to (a) educate its students in such a manner that (b) prepares those students for successful careers in that field.   And here, UMass Law is destined to be a failure before it even begins.  Here’s why…

(a) Educating its students – The school is still unaccredited and cannot coherently claim that it will offer anything approaching an acceptible legal education until it becomes so.  It plans to seek that accreditation, which it describes as a “long-term goal,” over the next few years.  In the twenty-eight years that it existed as the Southern New England School of Law, it twice applied to the ABA for accreditation and was denied both times.  So what will be different this time?  Hmm.  Let’s see…I guess that as a first rehabilitative step towards accreditation, the fact that the “new” school made the “old” school’s professors re-apply for their jobs, and then re-hired all but one of them, is not likely a good sign of sweeping change.  According to the ABA’s former Accreditation Committee chair and that Committee’s lead consultant, it will likely take $90M-$102M to upgrade the school to the point where accreditation is feasible.  This means that UMass-Law will either have to break its promise to become accredited or its promise to not burden Massachusetts taxpayers. Or, theoretically, it will break both promises.

Whatever.  Let’s assume that somehow the school finds the money under a rock and pulls this off.  It still fails epically at…

(b) Preparing those students for successful careers in their chosen field.  Put simply, there are no careers to be successful at.  Okay…that’s a slight exaggeration.  But only a slight one.  To say that there is presently a glut of law school graduates and a dearth of jobs for them would be a massive understatment.  Over the past 2-3 years, the legal industry has been shedding jobs at an unprecedented rate, and 2010 is shaping up at the worst year yet.  The National Association of Law Placement estimated that 2011 will be even worse, calling the market for future law school graduates “very compromised.”

Longer term, things are even more uncertain.  Most commentators forecast that technological and financial trends will force a contraction and overall re-shaping of how legal services are provisioned.  In his book, The End of Lawyers(?), Richard Susskind forecasts several general trends that will lower traditional attorney demand: in-sourcing, de-lawyering, relocating, off-shoring, outsourcing, subcontracting, co-sourcing, leasing, home-sourcing, open-sourcing , computerizing, no-sourcing.

[Check out Susskind's book for a deeper look at these trends.  Basically, they translate in aggregate to this:  the market for legal services will increasingly have less appetite for highly paid attorneys performing rote and repetitive tasks for which viable alternatives exist.  Attorney work will necessarily devolve to a more strategic core that focuses on consultative, high-end while process work is offloaded, automated, or eliminated. This will shrink the demand for the bottom end of the attorney market while transforming the industry.] 

So, as UMass-Law graduates begin to enter the job market in a few years, they will be fighting over fewer jobs with the graduates of the Commonwealth’s eight private law schools (Boston College, Boston University, Harvard, Massachusetts College of Law [unaccredited], New England School of Law, Northeastern, Suffolk, Western New England School of Law), as well as with the backlog of recent graduates who are still looking for legal work.  And those other graduates will likely be viewed by employers as more qualified.  UMass Law’s recent jump in median LSAT to 146 places it in the 29th percentile of all test takers.  The scores for the schools that UMass Law graduates will most directly compete with?  New England School of Law is at 152 (56th); Suffolk is at 157 (71st);  Northeastern at 161 (86th).  When you factor in that Massachusetts is already third among U.S. states in lawyers per-capita, it becomes very difficult to see where UMass Law graduates will find work. 

If you view, as the Globe article does, that schools exist to admit students broadly and not charge them too much, then you may well view the existence of UMass Law positively.  If, however, you think that maybe, just maybe, people go to graduate schools so that they might one day have jobs, that you’ll view this as the mistake that it really is.  And you might wonder why we weren’t launching a Computer Science school or an Institute for Clean Energy Technology.  You know, areas where the demand for graduates might meet the supply of graduates in the coming decades.

Don’t-take-credit-for-the-weather….One final note: the fact that the applications are rising  and that the school is therefore able to be slightly more selective should not be interpreted as signs of success.  Despite the headlines about law firms layoffs and serial deferrals of start dates for incoming first year associates, all of the Commonwealth’s private law schools reported increases in applications this year as well.  Nationwide, almost 20% more people took the LSAT last year than the year before.  This is what happens in a recession: people unable to find jobs retreat into school in the hopes that their prospects will be better in a few years.

When I began my summer internship at Brightleaf Corporation I had just survived the infamous 1L year of lawschool. I knew Rule 12(b)(6), res ipsa loquitor, and all of the other things 1Ls think make or break their careers.  But most importantly, I knew that the economy would pick up by the time I graduated and I would be fine. How did I know this? When I entered law school, they said that 94% of their graduating class had a job within 9 months. The world needed lawyers and I was going to be one. After all, I got good grades, made the National Trial Team and I was in a Clinic. I had big dreams of running down a Manhattan street in my power suit on my way to some major law firm where I would work my way up the ranks. There was no reason for me to worry, right? Wrong.

I came out of my internship with a completely different frame of mind. The idea that I would need skills that law school didn’t give me had never crossed my mind before then. Didn’t they want us to be prepared for our future careers? How had I never heard about the inefficiencies of law firms? How did I not know about the economics of firms?

In trying to answer these questions, one professor came to mind. My 1L Property professor had been the only one who had taken the time to talk to us about things we would need to know. In the “Last Ten Minutes” we would discuss a variety of issues, from interviewing to billable hours. So, I went back and picked his brain one more time.

He had spent years working for a big law firm down in D.C. While he was there, he suggested document automation to his firm and oversaw the implementation. Now, he teaches his Estates class how to use the system to quickly make documents from templates. So, I asked him why other classes or even law firms never discuss that? He responded with another question. What was your major in undergrad? I immediately saw where he was going with this and quietly mumbled “political science.” And there it was. Most lawyers do not have a background in science and are not as receptive to the use of technology as a result.

He also explained that this was the same basic reason as to why many law firms are not managed well. The skills we use as lawyers do not always translate to management skills. Does it really make sense that the lawyer with the most billable hours should end up running the firm? As much as it pains me to admit it, probably not.

Lawyers and law schools need to reevaluate what is important in today’s legal world. The advancements in technology and changing business models are lost on most of us. If we don’t make an attempt to catch up, we will fall hopelessly behind on the curve.