Does tomorrow start the same old thing again?
First published: October 14, 2024. Posted here for archival purposes.
“Everything in Between” is about the systems, institutions, and practices that people build, “things” of a sort that sit in between us, between groups of us, between “us” and “them,” and between us and other systems and institutions that seem terribly far away: “the market,” “the state,” the universe, and so on. Once a week, usually on a Monday, I’ll have something new.
I’m continuing with pieces of my essay on the past, present, and future of law schools, partly as interesting, useful, and important institutions in their own rights and partly as case studies for exploring higher education full stop. Three weeks ago, I introduced the theme and offered a big picture summary: law schools on the whole, like universities on the whole, confront giant structural, systemic challenges that are partly economic, partly cultural, and partly epistemological. Then, I got started with some details. How did we get here? I began with an initial look at the history of US legal education. Last week’s installment hit the proverbial heights, describing the high performing, economically stable law school that thrives in the imaginations of many lawyers, judges, and law professors today.
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I closed last week with a rhetorical question: Can the good times continue indefinitely? The answer is: of course not. As Willie Nelson sang in the song of the same name, the party’s over. I close my history by bringing the story up to more or less the present.
Hierarchy and fragility: Late 1990s to 2010, more or less
USNews introduced its ranking system in the late 1990s, formalizing what had previously been a word-of-mouth system among prospective students and faculty for determining which schools, particularly at the elite level, were “better” than others. The USNews system creates the perception of status as a scarce resource for lawyers, law students, law professors, and law schools, precisely when money, student demographics, large law firm hiring, and novel law practice technologies (particularly computerization at speed, scale, and relatively low expense) are preparing to create conditions of actual scarcity of opportunity in the legal education and legal profession markets. Computerization and computer networks and their uses in law mean that law (like other professions) starts to become explicitly an information business. Lawyers are becoming gatekeepers for public goods rather a business about human bodies, books, and buildings.
The rankings formula evolves, first over years and then from year to year, but the effects of the shift to abundant legal information and scarce status and opportunity are consistent. Those include:
1. A race to prestige for everyone. This is correlated (like all of higher education) with history, money, and power. Faculty compensation and student tuition are signals of quality, exclusivity, and opportunity to access high levels of professional status. Students pay to play; tuition (the nominal price of access to legal education) goes way up. And the race for faculty talent gets expensive, too.
2. Offsetting (but only partial) cost reductions for students, as tuition discounting follows competition for student talent. Students at different LSAT levels learn to play law schools for money. The race for student talent gets expensive for law schools, as financial aid budgets swell.
3. Soaring student debt. The race for student talent gets expensive for students, too, despite tuition discounting and other financial aid, as they chase prestige and the opportunities that prestige seems to provide.
4. New and deeper creaks and cracks in the fragile law school budget. The “cash cow” metaphor starts to break down as student enrollment numbers stay high but student revenue drops relative to those numbers. Variable (operating) costs go up, with added staff and more specialized faculty. Fortunately, opportunities for law firm jobs for new graduates remain largely stable, now organized rhetorically in the new term “Big Law” (or “BigLaw”).
Beyond a tipping point: 2010 or so to the present
The Great Recession of 2008 exposes significant underlying flaws in the basic HLS-prompted law school model, motivating a renewed round of hand-wringing by law professors and deans about the perceived mismatch between what law schools teach students and what the market for new law graduates demands. On the ground, evidence of institutional fragility includes:
1. Legal profession market conditions deteriorate, a trend that starts before the Great Recession and that accelerates considerably during 2008-2010. Large private law firms stop hiring large numbers of JDs, largely in response to large corporate clients pushing back on the high margins implied by outside counsel billing models and pushing forward with their own technology-based substitutes for junior lawyer labor. That drives large numbers of Big Law-eligible students out of larger cities and into mid-sized and smaller cities, where they compete with local law graduates. The deterioration cascades downward, slowly. The heterogeneity of the labor market grows; regional and local law schools start to lose their traditionally dominant place in supplying new lawyers to nearby communities. “Standard” legal education based on the Harvard “mass education” model starts to appear less obviously useful across the entire profession.
2. Pre-law advising starts to catch on. Pre-law advising learns that the legal industry is not the safe, secure bet for students that it previously appeared to be. Also, alternative career paths in LegalTech and other alternative legal services providers (eventually consolidated under the acronym “ALSPs”) suggest the idea that they offer fewer opportunity costs and greater career upsides than classic Big Law pathways. As pre-law advising absorbs the changing economics of legal careers, “justice-oriented” law students (goal: to make the world better) start to dominate “business-oriented” law students (goal: to build stable status-based careers) among incoming first-year students.
3. Total law school student enrollment declines significantly. The total JD graduating population peaks at 46k in 2013 (traditionally, enrollment climbs in a recession); today (2023 and 2024) the total graduating population is roughly 35k students per year.
4. As student numbers go down, the legacy equilibrium that defines economic sustainability for law schools under “peak legal education” takes a hard hit. Law schools still rely on a high fixed cost, low variable cost model carried over from the Harvard origins of “mass education” and the “cash cow” golden age of plentiful students. But there are fewer students, and there is aggressive tuition discounting. The Great Recession (predictably) delayed retirements of senior faculty; the COVID pandemic coincides with a start of a wave of turnover among that tier of expensive labor. Still, the law school budget is strained to the breaking point.
5. Law schools shrink. The forecast circa 2010, as part of the Great Recession, was: law schools will close! Some accredited law schools do close; some accredited law schools lose their accreditation. Also, for profit schools come and go, and some law schools split up, merge, and even do both. A handful of new law schools open. But on the whole, instead of closing, many law schools contract. The COVID pandemic allows many schools the relative luxury of deferring questions about replacing retiring faculty; virtually all hard questions about budgets are paused. As of 2024, it appears that many law schools are returning to 2019 financial patterns, meaning replacing teaching staff based on the premise that the school should preserve the institution’s (smaller) size and its legacy economic model. No one now forecasts widespread (voluntary) law school closures.
6. The effects of institutional contraction are unevenly felt. Because shifts in labor markets for new JDs are unevenly distributed both geographically and demographically within the profession, most law school contraction is below the elite level. In multiple urban areas (especially in the eastern US) and in multiple regions (especially in the middle and western US), markets that previously offered an enrollment/new graduate employment equilibrium that supported two or even three economically sustainable law schools (or in a few cases, more), that same number of law schools operating with reduced enrollments are looking at substantial financial difficulty even as placement percentages remain relatively high. Cities or regions where two or three law schools operate today may be looking at a future with one or two law schools.
7. The future hits harder. Big changes in demand for lawyers in the legal industry, the legal profession, and other legal institutions suggest the need to imagine different teaching/training modalities. The HLS mass education model is no longer functional for all lawyers in training, either because not all new lawyers need to be initiated via extensive HLS-style analytic training or because not all lawyers need to be initiated in analytic skills by human instructors, or both.
All of the above is backward-looking, along with just about all of the installments in this essay so far. What does the future hold? What’s next?
Yet to come: an elementary introduction to the economics of US law schools, with a nod or two to the economics of higher education. I framed this exercise in terms of systemic challenges that are partly economic, partly cultural, and partly epistemological. My experience is that people from many fields, inside and outside of law, can intuit the cultural challenges and in some ways the epistemological ones, too. But the economics of universities and their “units” – colleges, schools, departments, centers, institutes – are often baffling both to outsiders and even to a lot of insiders, including a lot of highly-placed insiders. I’ll try my best to demystify what I can.