Brian Leiter's Law School Reports

Brian Leiter
University of Chicago Law School

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Wednesday, October 31, 2012

Anon Business Law Professor Takes on "Scam" Bloggers

I just happened upon this exchange in the comments at TaxProf blog from late August, but it is quite something.  At some point, Deborah Jones Merritt, an actual scholar at Ohio State (though perhaps not one with terrific judgment) joined the Campos blog.   Blog Emperor Caron, being an equal opportunity linker (i.e., he has no standards!), has linked to several of her items, but now a reader of his blog has taken to replying.   Here's the first volley from the anonymous professor in reply to a Merritt piece to which Caron had linked:

Again with the nonsense.

Is DJM simply incapable of honestly looking at the data and understanding  what it means? There is no crisis in law. We're doing better than most fields in a recession, just not as well as we were back in 2007.

The *unemployment rate* for lawyers and law grads is much lower than the  unemployment rate for workers with only a bachelor's degree and for recent college graduates in liberal arts fields. And the median and mean income for lawyers are much higher.

Because unemployment rates for those who have attended law school are lower than unemployment rates for comparable individuals who have not, the data suggest that attending law school reduces the risk of unemployment. The argument that attending law school causes unemployment or increases the risk of unemployment is implausible.

Default rates for law grads are lower than overall student loan default rats. The same debt repayment options that apply to law grads apply to other educational programs, so the default rate data should be comparable. IBR and extended repayment can't explain the low student loan default rates of law grads *relative* to those of students in other programs. If anything, the default rates for law students should be higher, because they are less likely than undergraduates to enter deferment by continuing their education.

DJM has yet to respond to this in any intelligible way. Same for Tamanaha. To his credit, Campos has actually acknowledged that law school is many people's best option because the economy is even worse elsewhere.

Census Bureau data on unemployment rates for those with professional degrees--not just those working as professionals--shows that the unemployment rates are much lower than for bachelors degrees and labor force participation rates are higher.

There is no crisis, but if we really want to give our students an advantage, we can increase the value of a law degree further by replacing the DJMs of the world with tax or other business law faculty--people who can teach things that high paying employers value.

Here's what I think may be happening.

DJM may genuinely feel guilty because *her* students--the ones who study poverty law--go on to make next to nothing, while she earns $200K+ per year.

However, business law faculty routinely see their former students go on to make more money than the business law professors. Almost all of us know we are paid less than people who do similar work outside academe, while the DJM's are paid far more than they would make anywhere else.

Same for Tamanaha and Campos. They know *their* students are struggling. They know that *they* are not capable of helping them. The only solution they can see is to cut the price.

The rest of us see our students succeed, make plenty of money, think there is no crisis, and think we're in fact underpaid. The data is on our side, but the scam bloggers are no doubt overwhelmed by their own personal experiences.

So lets make everyone happy. DJM & Co. can take pay cuts. We can use the money to increase resources for business law faculty and career placement.

The value of the law degree goes up, student employment prospects improve, costs stay the same, and everyone can get paid around what they think they are worth.

DJM can stop compulsively blogging out of a sense of guilt or a pathological desire for attention. She can spend some time educating those students she claims to care so much about and finding them jobs in poverty law, while explaining IBR to them.

Various other anonymous commenters "respond" to this heresy (heresy, at least, if you get all your "information" from the likes of Campos), and then the anonymous professor posts in reply:

This data actually confirms everything I said.

It shows that at graduation or shortly thereafter ~85% were employed and only ~9% were unemployed. These statistics compare very favorably to recent college graduates with liberal arts degrees, who in turn have lower unemployment rates and higher incomes than high school graduates of the same age.

And 2011 was one of the worst years in the last decade for law graduates.

Employment at or shortly after graduation in one single year for one class-2011--in a time of recession--doesn't suggest that a law degree ins't valuable. To the contrary, it suggests that those with law degrees do better than those without, even in a rough economy.

If you look at the census bureau data, which tracks people over a lifetime, and over many years, it's clear that lawyers (and those with law degrees) have been doing very well for a very long time. 

Professor Merritt then replies to the Anon professor as follows:

Anon, The ABA employment data are for 9 months after graduation, not "at graduation or shortly thereafter." Nine months after graduation, 9% of law graduates had no job at all--not even babysitting. Only 55% had a full-time job requiring bar admission that would last at least a year. That category includes all judicial clerkships and one-year fellowships; those are considered "one-year" jobs even if they last less than a year.

Other law graduates held part-time jobs, temp jobs, or jobs that did not require a law degree. For many of the latter jobs, there is little hard evidence that the JD conferred any advantage in obtaining the job.

Also, your estimate of starting at $60,000-80,000 is way too high. The median reported salary in 2011 was $60,000--but only 52% of students reported salaries.
http://www.nalp.org/uploads/NatlSummChart_Classof2011.pdf

The 52% is not a random sample; it is a voluntary sample compounded by selective additions by the law schools. It is very well accepted that, for these particular figures, almost all unreported salaries fall below the median. That's because part-time and short-term jobs aren't counted at all for salary purposes (and they are very unlikely to pay more than the median); graduates are more likely to report high salaries than low ones; and career services offices can fill in unreported salaries if they are available from another source (true of higher-paid firm jobs, not other jobs).

So $60,000 is the best possible number you could give for an average graduate, not "$60-80,000." And almost everyone would agree that, with only 52% reporting, that $60,000 is more like the 75th percentile than the median.

Do you teach securities law? What result if a company reported in its prospectus that a relevant number was "around $60k-80K per year" when the actual number was $60K--and even that was the product of skewed accounting? And what result if a company said a product would be available "on May 15 or shortly thereafter" and the company knew the product would not be available until the following Feb 15 (nine months later)?

By the way, I have also taught patent law and statistics for lawyers; happy to talk numbers with you any time. But I'm going to do the rest of my talking over on [the Campos blog]--more people read those posts than these comments.

Anon professor then responds to Professor Merritt:

$60K is the median. $80K is the mean. $60K to $80K is therefore an appropriate range for the "typical" outcome since either mean or median can be used as a measure of central tendency. This is Statistics 101. Come on DJM. You've taught statistics for lawyers.

"It is very well accepted . . ."

How do you know the selection bias runs in a particular direction? Have you tracked down a representative sample of people who law schools couldn't track down and determined definitively that those who are working but did not report earn less than those who reported? The exact same selection bias issues apply to the salaries of undergraduate liberal arts majors, so none of this affects the wage premium (the difference in wages) between those with law degrees and those without.

The issue isn't how much people make. It's how much *more* people make with a law degree than they would have made without the law degree.

And if you're concerned about the law schools playing games with the data, just use the Census and BLS data for long term outcomes, which show those with law degrees doing very well.

Another pseudonymous poster then interjects (with the classic "condescension from below" tone that is the lifeblood of the Internet): 

Anon, I'm going to explain to you as simply as possible. Less than 55% of the c/o 2011 had legal jobs nine months after graduation. You keep harping about "business law" like it is some magic field that is going to save everyone from unemployment as long as they are smart enough to see how valuable it is. I've asked you repeatedly to give me information on this supposed boon in hiring in "business law" and despite supposedly being an expert in the field, you've failed.

The Anon professor replies:

Wrong. 55% is *full time* *permanent* jobs that *required* a JD, which excludes many great non-permanent jobs (clerkships), and many great jobs that don't require a JD (business, politics / government), etc. ~85% had jobs, and only 2% were in "nonprofessional" jobs. Only 9% were unemployed.

Professor Merritt then re-enters the fray:

Anon, the "mean" you are referring to is $78,653, not $80,000. I'm not a tax or business professor, but I don't think the IRS or SEC are amused when someone engages in that type of rounding. "I had $78,653 in business expenses--I'll deduct a round $80,000!"

But that's a minor point. Even NALP doesn't use the $78,653 figure (other than reporting it among other raw numbers), because they acknowledge that the selection bias is so severe. NALP calculates an adjusted mean to account for some of the bias. For the class of 2011, the adjusted mean is $73,984. See the graph on this page: http://www.nalp.org/salarydistrib.

And when you're looking at that graph, you'll see why it's statistically incorrect to say that the "average graduate" has an outcome between the median and the mean. That's true for some distributions, but not all: You've got to look at the shape of the distribution. (That's Statistics 202--things are a little more complicated than they teach in that 101 course.) For a bimodal distribution, neither the mean nor the median is particularly informative--and it's particularly misleading to look at the area between them.

People knowledgeable about the business of law have understood that bimodal distribution--and written about it--since Bill Henderson first published on the issue a few years ago. You either are unfamiliar with that work or are deliberately ignoring it. If you hold yourself out as an expert on these issues, as you seem to do here, I'd be careful about that.

I have looked at *all* the grads from my school with unreported salaries--not just a random sample. You can do the same with the grads for your school; I think you will find it very instructive. Unless you are from Cooley, which loses track of a truly alarming number of graduates, your law school knows the employment status and (if employed) job title, employer, and PT/FT status for almost every grad. Ask your dean's office to give you a list of the jobs and employers of students who didn't report salaries. They can leave the students' names off; those aren't necessary. But be sure they include the unemployed students and the ones with part-time jobs. Go down the list and figure out how many of those jobs could possibly pay more than $60,000. I think you will see the bias. This isn't speculative selection bias--this is a bias that NALP and others have tested very concretely. Again, people who are writing and analyzing this area are familiar with that.

If you have an economic interest in encouraging people to attend law school (e.g., if you draw your salary from a law school), I would be careful about making uninformed or misleading statements publicly--while claiming expertise in the area. The identity of "anonymous" internet users is discoverable in litigation. I'm certainly not going to sue you--I just enjoy correcting your errors now and then. But a prospective student who relied upon your representations here and later learned the truth might feel differently.

She then follows up with:

Anon, you just keep getting these facts wrong. The ABA and NALP specifically define clerkships as full-time, "permanent" jobs that require bar admission. Yes, those definitions are somewhat squirrelly, since there are clerks who take the bar exam after their clerkships, and clerkships are not "permanent" in the everyday sense of the term. But the definitions are heavily influenced by law
school administrators.

It's bad enough that we use Humpty-Dumpty language in defining these categories--don't make it worse by misrepresenting what the categories mean. The 55% (56% by some computations) *includes* all clerkships. If you don't know the facts, don't represent them publicly.

Anon business law professor is unfazed (an advantage of being anonymous, you needn't be fazed ever!) and fires back, pretty effectively I should add:

Now you're just quibbling because you know you've lost the argument. And trying to intimidate me with litigation threats to boot. You're a real piece of work, DJM.

Your entire argument--that college grads are worse off with law school than without, that the debt burden is unsustainable--is wrong, and it doesn't make one bit of difference whether the mean starting salary in 2011 is $73,984, $78,653 or $80,000. Being overly precise is misleading. We know estimates from samples are never that precise (You've heard of a confidence interval? Or is that statistics 303?) Not to mention the fact that the numbers were higher in 2010 and 2009, etc., and a multi-year average is more reliable than a single data point if you're trying to forecast, especially in labor markets with cobweb cycles.

In fact, even if we use the $60K median--and I am rounding--a law degree more than pays for itself relative to the median for a liberal arts degree. And we can pick almost any point in the distribution--the 25th percentile of law graduates vs. the 25th percentile of liberal arts graduates with no grad school, the 10th percentile of each--and the law degree will still pay for itself, especially with IBR.

You keep talking about selection bias in law school data while ignoring other data sources and ignoring the fact that undergraduate salary surveys presumably have *THE SAME SELECTION BIAS* issues, so they cancel each other out and we can safely use the unadjusted reported figures to calculate the wage premium. Can you prove that there is no selection bias in reported undergraduate salaries? Do you think this is an issue unique to law schools?

Of course you are also placing undue emphasis on the starting salary and the distribution of starting salaries for a single, exceptionally bad year (2011)--while ignoring all of the historic data on both starting salaries and lifetime income streams. Have you checked salary distributions 5 or 10 or 20 or
30 years out? Or do you think you can evaluate a law degree that will last 50-55 years (at current life expectancy for 25 year olds) based on a single year of data for a single cohort?

According to a recent Kaplan Survey, many, many college grads who go to law school never intend to practice law--they want to go into business or politics, and that's what they end up doing. But if you want to compare apples to apples, lets look at the percent of undergraduate liberal arts majors who are employed in a job that is closely related to what they studied. It's a lot lower than the percent of law graduates who end up in JD required or JD preferred jobs. As for your claim that "The ABA and NALP specifically define clerkships as full-time, "permanent" jobs that require bar admission"--even you admit they are often not going to be coded that way, so my argument remains correct, whatever the official definitions may say. But please, go ahead and link to the official definitions where you claim it says that, and point out exactly where.

And as for your references to securities law--

You do know that most investments--bank loans, commodities, real estate, partnership interests--are not regulated as securities, right? And that there are specific reasons why the scope of securities regulation is limited? And that a non-transferable law degree available only to "sophisticated" college graduates looks a whole lot more like the kinds of investment that don't fall under securities regulation than those that do? And that no court on earth is going to find that a law degree is a security? And that no court on earth is going to find that a law student "reasonably relied" on an anonymous blog post about general industry trends on a message board intended for tax professors (not for law students), or that anything I've said is substantially misleading?

I'm glad you're trying to track down data for Ohio State grads, but keep in mind, you're at one school, and it's not a strong performer. NLJ 250 does a great job tracking law grads who end up at big firms and *your school* (Ohio  State) doesn't seem to be be doing nearly as well as would be expected based on US News and SSRN rankings.

So when you're on your disclosure kick, I hope you'll point out the NLJ250 top 50 law schools to your Ohio State students, let them know that Ohio State is over-rated by U.S. News, and suggest your students consider transferring to one of the top 50 NLJ 250 schools.

I hope you'll also let them know that there is very little money in criminal law and they'd be better off financially if they dropped your class and studied a business law subject.

If you really care about your students, don't you want them to have the best chance in life? Even if it means they go to a school other than Ohio State and study something other than what you have to teach?

Overall, I call the anon business law professor the winner of this debate, even if some of what he says is dubious.  He, in effect, admits that it might be a mistake to borrow a huge sum to go to certain law schools, and he overstates the correlation between the courses one takes and employment outcomes; the correlation is much stronger between the academic reputation of the school (which is a function of the scholarly reputation of the faculty in all areas, not just business law) and the employment outcomes, as he, in effect, notes with respect to Ohio State.  On the other hand, the anon professor is surely right to point out the weirdness of drawing dramatic conclusions from a limited data set, in the middle of a recession, and of failing to draw meaningful comparisons between JD outcomes and other professional outcomes for those who forego a JD.

UPDATE:  Professor Merritt, I guess bothered by my verdict on who won this particular debate, now has a much-too-lenghty post, which mostly changes the topic, but at least argues on firmer ground than she did with the Anon Business Law Prof.  The most pertinent statistic adduced is the BLS projection about the number of openings for new lawyers, and the gross mismatch of that with the projected number of new law graduates.  That's the point she should have pressed originally, in the exchange above, but did not.  The rest of her new post is mostly bloviation, aimed at an unknown target.  I started writing years ago about Professor Henderson's work suggesting that the changes in the legal market are systemic, rather than merely cyclical, and that still seems to me correct, though how correct (i.e., the scope of the change) is still very unclear.  That also doesn't change the fact that recent job statistics aren't very meaningful metrics for drawing melodramatic conclusions.  The real question, as Anon Business Law Prof emphasized, is still what the options are:  for some students, considering some law schools, they are better off not getting the JD; for other students, and other law schools, the opposite conclusion should be drawn.  But in the general hysteria (and infantile moralizing about individual acts of charity [take a salary cut!] and institutional self-sacrifice [lower tuition!}) that dominates these discussions, these realities are systematically obscured.

 

http://leiterlawschool.typepad.com/leiter/2012/10/anon-business-law-professor-takes-on-scam-bloggers.html

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