Brian Leiter's Law School Reports

Brian Leiter
University of Chicago Law School

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Friday, June 1, 2012

Tamanaha's Proposals on Reforming Legal Education Financing and Regulation

Two interesting proposals here; adopting one or both would completely change the landscape of American legal education.  In brief:

To restore some economic rationality, the federal loan system needs to demand greater accountability from law schools: those with a high proportion of recent graduates in financial trouble should lose their eligibility to receive money from federal loans...  The money itself also needs to be reined in. One option is to cap the total amount that each law student can borrow from the government (at, say, a maximum of $125,000). Law schools would then be forced to set tuition with this limit in mind.... 

[A]nother option is to cap the total amount of federal money that any individual law school can receive. A number of law schools now get about $50 million annually in loan money for students directly from the government. Placing an across-the-board cap on total federal loan money (of, say, $40 million) would force law schools to control tuition as well as enrollment....

Then there’s the problem of the American Bar Association-imposed accreditation standards....[B]y imposing a “one size fits all” template, these standards ensure that there is little differentiation among law schools — no lower-cost options and no range of choices comparable to what exists at the undergraduate level among community colleges, teaching colleges and research universities.

One solution to this problem is to strip away the accreditation requirements that mandate expenditures to support faculty scholarship — for example, deleting the requirement that the bulk of professors be in tenure-track positions, removing limits on teaching loads, not requiring paid research leaves for professors, not requiring substantial library collections and so forth. This would allow some law schools to focus on training competent lawyers at a reasonable cost while others remained committed to academic research. Law students would then be able to choose the type of legal education they desired and could afford.

What do readers think?  Signed comments only:  full name and valid e-mail address.

http://leiterlawschool.typepad.com/leiter/2012/06/tamanahas-proposals-on-reforming-legal-education-financing-and-regulation.html

Legal Profession, Of Academic Interest, Rankings | Permalink

Comments

Aren't many federal student loans already capped for individual student debtors? I assume BZT wants to tighten the existing limits; limits aren't new. Curbing total loan funds for each law school would presumably shrink class sizes ... which sounds good, but I can't tell how the scheme would be implemented. Would each school's financial aid/admissions office have to know, and monitor, the debt that each admitted student will incur?

One-size-fits-all accreditation costs students a ton of money and may have to go for that reason. Dropping one-size-fits-all along the lines BZT suggests has hefty costs of its own, though. Power would migrate to corporate managers and investors. The quantity and quality of published legal scholarship would fall. Tuition savings might be disappointingly low: sellers like to charge high prices, and buyers would lack information to guide their comparison shopping (at least at first).

Posted by: Anita Bernstein | Jun 1, 2012 11:08:28 AM

Some student loans, like Stafford loans, are capped, yes. Where the problem occurs is the GradPlus loan, which law students are eligible for. GradPlus is designed to fill the gap between what other federal loans will cover and the "expected cost of attendance", which is determined by the school. So, the size of your GradPlus loan is directly dependent on how high your tuition plus living expenses are, and it can go as high as the school certifies its cost of attendance.

For example, let's say School A is a state school where cost of attendance is $45,000/yr; that's tuition, books, room and board, etc. Stafford covers the first $20,500 of that (some subsidized, some not.) GradPlus allows you to borrow the remaining $24,500. At School B, a private top-tier school, the cost of attendance is $74,000. Stafford still covers the first $20,500, except now GradPlus lets you borrow the remaining $53,500.

Undergraduates don't have access to GradPlus in the same way that graduate and professional students do, so the caps work differently. GradPlus is designed to be that gap-filler, and the size of the gap is basically determined by the school. If, for example, you capped the GradPlus loan as well, then school tuition plus living expenses could be forced to remain under the cap (after scholarships and other grants) or risk losing students who couldn't afford to attend.

As to the suggestion that "the quantity and quality of published legal scholarship would fall", it seems to me that other professional and graduate schools are much more free to determine their own service levels, unlike law schools, and yet I've seen no suggestion that there is a lack of quantity or quality in, say, economics literature or political science. Schools that wish to remain large research institutions will do so, and as Professor Leiter has previously pointed out, legal scholarship is not distributed equally across the law school spectrum.

All that being said, however, I have a feeling the largest obstacle to this proposal will be resistance from law school faculty who believe, rightly or wrongly, that they would be forced to sacrifice some of their privileges and benefits (by teaching more, or taking less pay, or having less of a stranglehold on hiring when more adjuncts and less tenure-track faculty are introduced, for example.)

Posted by: Peter Orlowicz | Jun 1, 2012 12:32:37 PM

Peter, how could the quantity of scholarship NOT fall when accredited law schools now have to live with rules that let professors do research--supporting them with job security, well-equipped libraries, ample time for writing--whereas in the new world these employers can demand from everyone on the faculty a full day of nothing but teaching? Sure, schools would be free to emphasize research, as you say. But today ALL of them have to go that way, giving their full-time faculty a minimum level of support.

Lower quality of scholarship is more speculative: but if law professors can be fired at will, they'll publish only what pleases their bosses. Under standard ABA accreditation rules there's at least the hope of bold ideas in print. I'd also argue that, other things being equal, law professors are better judges of scholarship quality than the people BZT's plan would empower, the aforementioned corporate managers and investors.

The most disturbing aspect of this plan is not faculty "forced to sacrifice some of their privileges and benefits;" it's the shift of these privileges and benefits (they don't go away!) to people who are free to care even less than law professors about the welfare of tuition-payers.

Posted by: Anita Bernstein | Jun 1, 2012 2:32:16 PM

Do we know for sure that the vast majority of tenured professors at law schools across the spectrum actually currently do significant research and publish (or attempt to publish) scholarship? Not to mention, there are individuals (judges, practitioners) who do not enjoy the advantages of tenure at an accredited law school that nevertheless manage to contribute to the legal discourse. It's not like we're anticipating any school forbidding its professors from doing research, it's merely a question of the institutional support, and my impression is that at least some professors don't choose and aren't required by their institutions to take advantage of those resources to actually produce scholarship. It seems likely to me, then, that those schools are the ones most likely to opt for a more practice-related model, and so the amount of scholarship that's likely to be lost is accordingly low.

The entire question, moreover, is premised on the assumption that more legal scholarship is better, no matter the overall quality (as you admitted, lower quality is more speculative, and if we can maintain the quality even as quantity is being reduced... what's the disadvantage?) I believe for many schools, the reputational advantage of having well-respected scholars on faculty will remain strong, and thus there will still be strong incentives for schools to maintain a research footprint even if the ABA doesn't require it (though this point itself suggests the reform may not be terribly effective for that exact reason.)

If we take your point as true that law professors, if deprived of tenure, will no longer dare to write on controversial subjects, then in the current system, we should see only negligable numbers of law review articles on controversial subjects by those who are haven't been granted tenure, right? Does the data bear that out? It seems to me I've heard more than one career academic admit that their most influential and groundbreaking work was done early in their careers, before gaining tenure at their respective institutions.

I'm afraid I don't quite understand your point that the advantages are going to shift away from law schools and professors to "corporate managers and investors." At least with regard to the loan cap, the idea is to shift the benefits away from the schools and onto the students, not to a vague third party. It's just unclear to me who those people are in your hypothetical and how exactly they would be calling the shots under Professor Tamanaha's proposal.

Posted by: Peter Orlowicz | Jun 1, 2012 3:18:43 PM

It’s hard to disagree with Brian’s assertion that the current trajectory of American legal education is unsustainable, particularly in terms of cost. However, I think there are reasons to believe that changing the ABA’s accreditation standards would not be the panacea that Brian suggests. (I look forward to reading his book for the more nuanced version of his argument.) For decades California has been running an experiment in providing its citizens with low-cost options in legal education. The state allows students who have graduated from schools without ABA accreditations to take the bar exam and, if they pass it, practice within the state. As a result, dozens of “state accredited” law schools and “unaccredited” law schools exist within the state. (No, I can’t explain the difference between these two categories.) While these schools have their defenders, an objective observer couldn’t possibly believe that their existence has created a market in legal education within the state that allows students to select schools according to their needs or desires. These schools do indeed charge considerably less than ABA accredited law schools, as much as 90% less in certain instances. However, their bar passage rates hover in the high teens, with a number of schools reporting bar passage rates in the single digits. Obviously, these schools don’t publicize their employment data.

It’s not my intent to argue that California’s experience justifies the ABA’s one-size-fits-all standards. Nor is it to make a straw person out of Brian’s argument -- I know that he is not suggesting that the ABA do away with accreditation altogether. Instead, my point is simply to emphasize that taking steps towards deregulating legal education has some real risks, and could lead to unintended consequences. It would be a shame, for example, if the loosening of the ABA’s standards resulted in nothing more than the creation of a large number of for-profit law schools that did little more than take students’ money in exchange for a profoundly substandard legal education. Certainly the emergence of for-profit schools in other areas of higher education does not give much cause for optimism.

Posted by: Reuel Schller | Jun 2, 2012 9:21:23 AM

The problem is there is already a much lower cost option, that is, public law schools, whose average tuition is perhaps half that of the private and PINO (Public in Name Only) Law Schools that dominate legal education. The further problem is that the more expensive schools, including Prof. Tamanaha's, use their resources aggressively to try to taSke students and faculty away from those very schools. It's hard to avoid that what is really being called for here is a two-tier system, under which "elite" schools continue to do more or less what they always have and the rest of us are "liberated" to offer a second-rate education that prepares students for second-rate jobs or none at all. Somehow this is not especially attractive to me.

Posted by: michael livingston | Jun 2, 2012 10:16:04 AM

Increasing teaching loads, and eliminating faculty research leaves, would lower the cost of legal education at existing law schools only very slowly, with little effect in the short term. Those changes have the potential to lower law school costs, in theory, because they'd enable law schools to offer the same number of courses with fewer (and cheaper) teachers. But an existing law school can’t get that cost savings without getting rid of some of the teachers it has now. If a school increases faculty teaching loads without simultaneously firing faculty, it will get more courses taught, but it won’t get lower costs. And the problem there (from a cost savings perspective) is that law faculty size is really sticky. The best-paid law school faculty have tenure. A law school will be reluctant to fire even untenured faculty, because of the huge hit that would impose on morale and the school’s public image – if prospective students learn that a law school is laying off untenured faculty, they’ll conclude that the school is on the brink of bankruptcy, and they’ll enroll somewhere else. So the most important cost reduction these changes might secure for existing law schools is that some schools might freeze *new* tenure-track hiring, reducing faculty budgets slowly by attrition. As Brian L has pointed out, that's happening anyway. The changes would allow new law schools to spring up with lower cost structures, but -- as Reuel Schiller points out -- the effectiveness of that isn't clear either.

Posted by: Jon Weinberg | Jun 2, 2012 11:37:02 AM

I've been following BZT's work in this area on Balkiniztion, and I am looking forward to reading the book. I think he is right to advocate for loan limits, but I don't think it is strictly a matter of choice: I think loan limits are coming one way or another, and law schools need to be prepared. For many schools, I think that loan limits will be a significant economic shock. I would recommend reading the presentation by UC-Hasting's CFO, available here: http://www.uchastings.edu/budget/docs/SPI8%20Presentation%204-20-2012.pdf

Among other interesting facts, it shows that of Hastings' $63 million in annual revenue, $43 million comes from student loans ($23 million from Stafford, $20 million from GradPlus). As I read it, only $3 million comes in from "cash money" tuition payments. ($46 million in tuition revenue, of which $43 million was paid in the form of student loans, presumably meaning that about $3 million was actually transferred directly from student to school). $13.1 million was reallocated as student aid, leaving the school with a net $33 million in tuition revenue. Only $8.5 million comes from the state (I love the term PINO, and think it fits quite well here).

But unlike Michael Livingston, I am less worried about a two-tier system--I believe that loan limits will go a long way toward making prospective students much more price conscious, and I think this will benefit those schools that have managed to keep tuition at a lower level. (I made the argument at greater length here: http://www.legalethicsforum.com/blog/2012/02/after-the-student-loan-arms-race-the-disruption-of-hierarchy.html )

Posted by: Cassandra Robertson | Jun 2, 2012 12:44:49 PM

Oops -- I realize that I wasn’t thinking sufficiently creatively in my last post. There's a second scenario for increasing teaching loads: the enterprising law school administrator, unable to shrink the faculty, can achieve the same results by increasing the size of the entering class. The law school would need to lower tuition sufficiently so as to attract a lot more students without trashing credential levels. If the law school can do that, though, it can substantially increase enrollment and gross revenue, and -- by imposing a heavier teaching burden on individual professors – achieve all that while holding costs constant. Now, these new students will have to come from somewhere – the total pool of law applicants certainly isn’t increasing. So other lower-tier law schools will end up shrinking, and, suffering from the diseconomies of small scale, failing. Given path dependence, thus, the final scenario of this reform is one of consolidation: There would end up being fewer lower-tier schools (which is to say, a bunch of them will shut down), and the ones that remain would have much larger student bodies and mostly teaching-only faculty.

Posted by: Jon Weinberg | Jun 2, 2012 1:16:57 PM

I agree that something has to change with respect to the affordability of law school but I am afraid I must respectfully disagree with BZT's proposals. First, although "accountability" seems attractive in theory it only works if it is attached to factors which the subjects control. Law schools did not cause the collapse in the jobs market and I think holding them accountable for placement and repayment is not likely to work but is likely to fall disproportionally on those students from working class backgrounds and/or at lower ranked schools. Caps similarly make simply make it more difficult for those who do not have family money to assist them in obtaining a legal education. I suspect, as other do, that caps are coming anyway, but I don't think that is the right way to go. Going to 2 years or 2 and half years may be better. In terms of the subsidizing scholarship argument, I think trying to blame the cost of legal education on the cost of producing scholarship is a straw man. (Faculty also have no role in tuition increases.) The actual cost of producing scholarship is (with the exception of reduced class loads) relatively trivial. And despite the popularity of the claim that legal scholarship is mostly useless, I think there is a great deal of evidence that it has had a great deal of influence on the law in many areas: commercial speech, civil rights, domestic violence, rape shield, theories of jurisdiction, Confrontation Clause, originalism, law and economics and now behavioral law and economics. There are couple of problems with respect to seeing that influence. First, courts maybe influenced by and yet not cite the work in question. Second, there may be a very significant lag between the scholarship and the legal change. Martin Redish published his landmark piece on commercial speech in (I think) 1971, yet I don't think the Court cited it in Virginia Pharmacy in 1976 and I think you could say that that his theory hadn't really been fully accepted by the courts until the last few years. And as to the value of the rank and file work versus the stars, perhaps we need to produce a great deal which will not be of enduring significance in order to produce the few great works. But I fear a part of the equation is simply the echo chamber effect that work that is published in elite journals often has more impact than that published elsewhere simply because of "brand" and that it is dangerous to assume that nothing of value is being produced outside of elite institutions. Like Prof. Livingston I also am skeptical that BZT's proposal with respect to the ABA standards won't simply mean that we will exacerbate the ills imposed on legal education by the US News rankings system by formalizing a two-tiered system. Those at elite institutions will continue what they have been doing, but those at lower ranked institutions will be pressured to do give up scholarhsip. I think the scholarship/teaching dichotomy is a false one. I am similarly skeptical of the supposed theory/skills training distinction. In my experience in practice you need theory regularly. I agree that the ABA accrediting standards probably need to be revised, but I don't think it is along these lines. I don't know if there might be some savings that could be achieved by changing the standards related to library holdings, on-line offerings, etc. that might hold down some costs. But I would note that the administrative staff necessary to collect all the data that we must now collect and track in response to calls for transparency and "accountability" and for US News are also a significant cost which did not exist a couple of decades ago.

Posted by: Tamara Piety | Jun 3, 2012 11:32:26 AM

I think Brian is a fascinating legal scholar but his lack of experience in the private sector legal market weakens his position in this debate considerably. Law firms - and I think today's government and non-profit sector too - do care about the intellectual training that law students receive. That in turn depends heavily on the intellectual depth and character of law school faculty. Law schools have labored mightily over the last thirty years to move beyond "practitioner" level analysis of legal and social problems to the point where many if not most accredited law schools are considered legitimate departments in university settings despite the dearth of PhD's on most law school faculties. There is an emerging mantra uttered by law school reform advocates that attempts to distinguish between "research" and "training." This reminds me of the scene in that movie about Anna Wintour where Meryl Streep explains to the Anne Hathaway character where her sweater really came from. Does Tamanaha think law students taught by a torts professor who has actually thought through the implications of the concept of the "cheapest cost avoider" for a published article are no different than a practitioner who thinks learning torts is about memorizing the comparative negligence rule for their particular jurisdiction? His approach throws away decades of accumulated value that the entire legal profession benefits from and risks turning accredited law schools into bar passage training courses. That would be a significant destruction of social value.

Posted by: Steve Diamond | Jun 4, 2012 9:34:27 AM

Just based on the short excerpt presented here, I would describe Brian's proposal as supply side cost containment. The proposals may curb increases in tuition that we have observed that are the result of many factors, not just the allegedly lavish salaries and perks that research oriented law faculty enjoy. Other sources of cost increases: administrative salaries in many places (how many deans do we actually need?), costs of running clinics, university level costs. But cost containment may often just be ways of rearranging the deck chairs. From what I have seen, law schools still are less costly than other professional schools. Relative costs are what matter. The proposals may slow down the growth of costs (and perhaps tuition) for law schools, but law school is still a more attractive option than other professional schools (medical, business, engineering, PhD programs). The demand for legal education will still be there, and demand strikes me as the source of the problem. While the cost containment issue should be discussed, as Brian does, we should also ask whether law school should be the default option for everyone seeking professional and personal advancement and what options are we creating for those who go through legal education. I look forward to reading Brian's complete argument.

Posted by: Shubha Ghosh | Jun 6, 2012 9:56:28 PM

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