Brian Leiter's Law School Reports

Brian Leiter
University of Chicago Law School

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Wednesday, October 3, 2012

Predictions about Closings of ABA-Accredited Law Schools Over the Next Decade

Alas, yesterday's poll got linked from a blog with a less academic audience, so I've decided to close it. In any case, here are the results, with over 300 votes:

How many currently accredited ABA law schools (there are about
200) do you think will close over the next ten years? (Assume that there are no
changes to federally guaranteed student loans and that there is a modest
improvement in the job market for lawyers.)

None
  15%47
1-10
  61%196
11-25
  17%55
26-50
  6%19
More than 50
  2%6
Total Votes :
323

 

A few observations of my own, and then I'll open comments.  That 15% think no law schools at all will close may be wishful thinking, but perhaps there is a sound explanation for thinking that correct.  My own opinion was that we'll see several law schools close during the next decade, but probably not more than ten--and that was the majority view among readers by a wide margin.  Most vulnerable are going to be free-standing law schools that are relatively young.  Relatively young law schools part of universities that are in vulnerable financial shape are also likely candidates.  25% of respondents expected more serious carnage, on the order of 5% or much more of current law schools closing.  I would agree with the prophets of doom at least to this extent:  I expect more than 5% of current law schools, and probably more like 30-50%, will contract in various ways over the next decade:  they will admit fewer students (we're already seeing that), and will shrink their faculties.  That, of course, would be a sensible response to the economic climate generally, and for lawyers in particular.

Of course, all of this is predicated on two assumptions:  a modest economic rebound over the next decade and, even more importantly, continued federal guarantees of student loans, which supply the operating budget of the majority of law schools.  A change in student loans--for example, shifting it back to the private sector--would have far more disruptive effects, since private lenders are, one suspects, more likely to do the due diligence on probable employment and salary outcomes that some students are not presently doing (and they are also likely to set the bar higher for what would make the loans risk-worthy).  In a world with only private lending for higher education, I would expect the number of law schools that close over the next decade to be considerably higher.  So, too, another economic collapse, or an extended period of economic stagnation, will also push the number of closures higher.

Or so, in any rate, it seems to me.  Thoughts from readers?  Signed comments only:  full name in the signature line, plus valid e-mail address.

http://leiterlawschool.typepad.com/leiter/2012/10/predictions-about-closings-of-aba-accredited-law-schools-over-the-next-decade.html

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Comments

Not to quibble, but it's a little ambiguous whether you are including mergers as a disappearance of one of the merged schools. Acquisitions of weaker schools by stronger schools seem rather likely in the circumstances, especially if there is an opportunity to pick up attractive physical or human assets. Those acquisitions could well be nominally structured as "mergers of equals" for all the same reasons that corporations play that game.

Posted by: Douglas Levene | Oct 3, 2012 5:52:01 AM

I wonder about your second assumption: So long as student loans remain difficult to discharge in bankruptcy, the private loan originators' incentive to police likely earnings would remain low. Most likely, the major consequence of re-privatization would be to raise the cost of credit to former levels by restoring what are in effect intermediation fees.

Posted by: Michael Froomkin | Oct 3, 2012 6:12:29 AM

According to the ABA's data on lawyer demographics, in 1991, 62% of lawyers were under the age of 45. In 2000, just under 48% of lawyers were under the age of 45, and by far the largest cohort was the group aged 45-54, at 28% of the total. The ABA data does not show current age demographics, but things are almost certainly even more skewed toward older lawyers today, as that bubble of lawyers enters their 60s. Those lawyers will start retiring in large numbers over the next decade.

The financial pressures on some law schools may indeed prove too much for them to bear in the short term, but it seems likely that if they can hold on, their prospects will improve as the baby boomers retire.

The ABA data (which is taken from the American Bar Foundation's Lawyer Statistical Report) is here: http://www.americanbar.org/content/dam/aba/migrated/marketresearch/PublicDocuments/lawyer_demographics_2011.authcheckdam.pdf

Posted by: Paul Kirgis | Oct 3, 2012 7:21:48 AM

I didn't answer the question because it required a prediction with little empirical support (not that this ever stops law professors). I suggest a survey asking how many new law schools opened in the last decade? If the respondents don't look it up, how many will get it right?

BL COMMENT: It's fair not to answer if you feel you don't have any empirical or analytic basis for the prediction. There's no empirical evidence, however, that others do not have such a basis.

Posted by: Robert Rosen | Oct 3, 2012 7:26:48 AM

I agree that free-standing law schools with no big university safety net are particularly vulnerable. However, I'm not sure that relatively young law schools part of universities are as likely to fold. I think that many university administrators would hesitate to throw in the towel so soon after making a major outlay and fundraising push to start the law school. Of course, this reasoning applies less to universities that have new administrations that can blame past administrations for poor expansionist decisions.

Posted by: Jason Marisam | Oct 3, 2012 11:11:36 AM

Taking the hypothetical as stated--that there is no change in the federal student loan program--I would not expect any law schools to close. A relatively expensive school (~40K annual tuition, ~20K living expenses) with a relatively low LSAT median (http://www.law.georgetown.edu/admissions-financial-aid/office-of-financial-aid/loader.cfm?csModule=security/getfile&pageid=61621 --it lets you select various tuition levels and expected salaries, and shows what loan payments would look like with and without IBR. It only shows the ten-year IBR program for public service, but it is not hard to extrapolate from there). I believe the current situation (combining unlimited federal lending with income-limited repayment) is unsustainable, but as long as it exists, I don't see schools closing.

Posted by: Cassandra Robertson | Oct 3, 2012 12:35:14 PM

Sorry, I badly edited the last comment--what I left out is that I think a student at an expensive school but unranked school is unlikely to be price sensitive once total debt is greater than ~150K, as payments under the current IBR program would remain capped. So such schools can likely continue to increase tuition to offset the lower number of applicants, and I wouldn't expect to see them close.

Posted by: Cassandra Robertson | Oct 3, 2012 12:55:07 PM

Picking up on what Douglas Levene said, I think renegotiation of a costly arrangement (i.e. lowering the amount of tuition revenue rendered to the central administration) or a shift in the corporate form short of closing will be the way law schools respond when their managers feel they can't go on as before. Mergers, state takeovers, and transfers of units to other universities (like the move of University of Puget Sound law school to Seattle U. a couple of decades ago) are just some of the possibilities. I didn't vote but would have gone with the low single digits of 1-10, mainly because decisionmakers won't want to be reviled for shutting down a law school.

Posted by: Anita Bernstein | Oct 3, 2012 7:21:44 PM

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