Thursday, February 02, 2006

On Debt and Law School

There's a good article today on concerning the massive debt loads many law students carry. While some big national firms recently increased starting salaries by $10,000, many more firms have held fast. And even for those that did hike salaries, that is the only raise in the last five years.

Now, that in and of itself is not a bad thing--first year lawyers often incur losses for their firms (i.e., cost firms more than they bring in), which suggests they are paid more than they are worth in the short term. And getting an exorbitant salary can be a Faustian bargain, as I discussed in an earlier post on this blog.

But when you compare the lack of recent raises to the increases in tuition levels over recent years, then you have a real problem. With average tuition debt increasing dramatically in the past decade, the pressure to work for the big bucks to pay off loans is even greater. It likely scares some good people away from law school, and it certainly makes lower paying social services jobs less viable for those who do attend.

A recent commentator to some of my posts (on January 5 and January 7) argued vociferously that the solution is to make law school optional--that you should be able to practice law either by passing the bar OR going to law school. Check out those previous posts and comments. I disagree strongly with the notion that law school is not needed--if anything, we should require law school and dispense with the bar exam, which is largely a memorization contest. But that commentator was dead on in saying that high paying law jobs often attract people for the money, when we would be better off as a society if more people went into public service work. I'm not saying that high paying law jobs (or law firms) are bad; I enjoyed my big law firm experience. I am saying, though, that big salaries sometimes lure people who really would be happier doing something else.

Dean Richard Matasar of New York Law School has been saying for several years now that there are probably too many law schools in this country, and that many of them may not survive the next 20 years or so. New law schools are continuing to crop up nationwide anyway, but Matasar might be right. Law schools have large fixed costs if they are going to do their jobs right and give students a proper education--after all, practical courses and large faculties (to improve professor-student ratios) cost money. And if the money doesn't come from endowments or state coffers, then it has to come out of student pockets.

So how do we solve the tuition-debt dilemma? It's something I think about a lot, and there is no easy answer. Do we need to revamp the current system, or is society better served by the existing approach, which enables more people to go to school but makes them pay extravagent amounts for that privilege?


Anonymous said...

If law school is be the only route to entry into the profession then the high debt load is a given.

In fact, functionally, it works out as a benefit for the power players in the system: the consumers of the product of law schools (the partners in the firms) get first crack at very docile, very controllable attorneys who will subject themselves to horribly mind-numbing and socially unproductive donkey work for years because of their huge debt load.

By strapping law students to a huge debt, firms can guarantee themselves an endless supply of supplicants who will toil, toil, toil and take just about any amount of abuse without complaint.

Besides, high starting salaries are not a real cost to the firms, because firms don't pay salaries, clients do.

And the people who really pay the price of the inflated legal salary structure (which is what leads, ultimately, to the inflated cost of a law degree) who can't afford the fees -- the folks who cannot afford an attorney because new attorneys with $100k+ of debt suddenly find that the public interest or government job doesn't grab them like it did when they were 1L.

Bottom line is that, absent some phantom source of free money, you can't reduce tuition unless you are willing to reduce faculty salaries. And faculty salaries won't go down while law schools (and thus, faculties) have a chokehold on admission to the profession. Law school faculty are the guild within the guild, so no economist would predict that their salaries will drop anytime soon. Thus, tuition will not drop either.

Thus, all the handwringing you read about law graduate debt is only that -- handwringing, much like all the gassing about the image of lawyers in society. The system works well for the people running the system, so why expect any changes? (I note the link to Adam Smith, Esq. on your page.)

Gregory W. Bowman said...

Thanks for the comments. Here are a few points in response.

One: If a law firm spends $250,000 on a new associate (wages, insurance, office space, etc.) and can only collect $150,000 in billings from that associate until about the third year, then it is in fact the law firm that pays for the loss, and not the client.

Two: The characterization of all associate work as "donkey work" is a dangerous and inaccurate generalization. And I say that as a former associate in the trenches. There is some drudge work to be sure, but increasingly, associates are required to do really difficult, challenging stuff--because clients won't pay $200 per hour for donkey work when a smaller firm will do it for less. So in that regard, the market is indeed taking care of itself.

Three: You most certainly can reduce law school costs without reducing faculty salaries--you reduce the quality of the education offered by massively increasing class size and student-teacher interaction. But how does that help anything, really? It doesn't.

If you view law school as nothing more than an institutional embodiment of self-interest, which it appears you do, then by definition your arguments are correct. However, if you see the education offered as valuable, as I do--remember, I got into teaching because I saw the value, and not the other way around--then I think they have less merit. And if you believe other parts of the academy are underpaid, the answer is to raise their salaries, not reduce law school faculty salaries. In any event, the average law school professor salary is not as high as I suspect you think it is. The proof is in my W-2.

Anonymous said...

1) How does your solution--raising salaries in other parts of the academy--address the issue of law student debt load?

Note, I don't think _anybody_ on tenure track in academia (by which I mean colleges and universities) is underpaid. The people who I think are underpaid are undergrad adjuncts and virtually all American secondary and elementary school teachers. (I don't typically see these latter two groups referred to as members of academia, so if that's what you had in mind then I misunderstood you.)

2) For me, the key statement in the piece you linked to was this:

Stephen Friedman, dean of Pace University School of Law in White Plains, N.Y., points to the "basic economics" of law schools, which, unlike corporations, cannot "sell more stuff or operate more efficiently."

Thus, Dean Friedman says there's nothing law schools can do to be more efficient---and he is right. ABA rules don't allow it and schools cannot innovate because the ABA has insulated itself into a position where it dictates every aspect of a school through accreditation and the threat of accreditation denial.

So, basically, I think we're in violent agreement here--I said you can't drop tuition without dropping faculty salaries and concluded that, therefore, it wouldn't happen.

You said that it is possible but very wrongheaded to reduce tuition without dropping faculty salaries because the only way to do it is by ripping off students by jamming more of them into classes. So we agree--if we take law school as we know it as a given then there is no solution to the debt problem being described.