Law School, Economics, and the NYT

The NYT had an article that purported to look at the economics of law school (Law School Economics: Ka Ching!).  It is a good subject that deserves debate.  The piece in the NYT, however, did not do justice to the issue.  It mostly focused on New York Law School and its dean, containing a mish mash of points that were not all well defended.  

First, the article notes that "law schools toss off so much cash they are sometimes required to hand over as much as 30 percent of their revenue to universities, to subsidize less profitable fields."  True.  But its not a secret, open or closed.  Its in the open.  It explains why law schools continue to open.  Were they unprofitable and not supportive of the university setting them up (the common model is to have law schools attached to a university), it is hard to understand why new schools would open. 

Having said that, the article starts with this point but then promptly spends most of the text describing NY Law School.  As the article describes:  NY Law School is a "PRIVATE, stand-alone institution located in the TriBeCa neighborhood of downtown Manhattan".  In other words, it is a free standing law school, not part of a larger university, and presumably does not pay the tax to anyone.  So much of what follows is unrelated to this point.

Second, the article suggests that the dean of New York Law School, Richard A. Matasar, is somehow saying one thing but in practice doing something else.  Dean Matasar is supposed to be someone who contends that law school should put students first.  Yet at the same time, he has grown the size of the law school.  The implication is that these two approaches are inconsistent.

While it is true that every student admitted by NY Law School provides an income stream, this does not mean he is working against the interests of students.  In fact, the one statistic not mentioned in the article is that there are thousands of students every year who apply to law school and do not get in, mostly because they have low test scores.  Yet a low test score does not meant that these students will make bad lawyers.  By opening the doors, Dean Matasar arguably gives more students a shot at a career in law, some of whom would probably not matriculate to any other law school. 

Third, the article suggests that there is something wrong with increasing the number of students just when the job market was imploding.  For one thing, those admitted would have at least three years before they hit the job market.  Presumably, as already appears to be the case, the job market would be on the mend. Thus, the article instead notes that, with respect to the 2009 class, "if the experience of recent N.Y.L.S. graduates is an indication, many are in for a lengthy hunt."  But those students graduated during the recession.  While the students graduating in 2012 may have difficulty, it is not likely to be as difficult as those looking for work during the recession. 

In general, articles that point to the relationship between the number of newly created legal positions and the number of graduates usually omit to discuss thos positions that while not entirely legal benefit considerably from a law degree (dean of students at a university; head of HR in a corporation; member of the police force seeking officer status).

Fourth, the article asserts that the explanation for the rise in tuition at law schools is US News.  As the article notes, the "most bizarre" explanation for the increase "comes courtesy of the highly influential US News rankings."  It is true that US News ranks law schools in part based upon the expenditures per student.  But it is something altogether different to suggest that this drives law tuition upward.  There are plenty of reasons that drive of tuition unrelated to US News. 

Take NY Law School.  Perhaps NY Law raised tuition because of US News (rather than say because it is located in a high cost area).  But if ranking in US News was such a driving force, NY Law would likely have not admitted so many additional students (736 students in 2009, a 30% increase, according to the article, something the dean attributed to unexpected yield).  The surge in additional students does not help with US News.  They pay the same tuition and at best leave the per capita expenditures unchanged.  So while they provide additional funds, it does not generally help with the rankings.     

On the other hand, additional students can very much hurt US News rankings.  Unless there is massive hiring to compensate for large increases in the number of students, they hurt the faculty student ratio, another factor in the rankings.  Larger classes also put downward pressure on the median LSAT, the median GPA, and the acceptance rate, statistics that make up 25% of the US News rankings. (I've made no attempt to look at what actually happened in the case lf NY Law). Finally, when the students hit the job market, the hiring statistics are likely to suffer. 

US News does not, therefore, benefit schools that admit large numbers of students.  Quite the reverse.  In other words, what ever upward pressure US News puts on total tuition, it does not put equal pressure on class size.    

There are serious issues to discuss in this area.  Tuition has risen; the number of students are increasing; law jobs are likely harder to obtain.  But the article in the NYT makes too many disparate and often disconnected points in the context of a single law school to really advance the discussion.