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Vol. 36, No. 3

The elephant in the parlor?

by Marilyn Cavicchia

“One thing is certain,” said Paula Littlewood, executive director of the Washington State Bar Association. “Within the next couple of years, legal education is not going to look the same as it does today.”

During a frank discussion that Littlewood moderated, panelists and attendees at the Midyear Meeting of the National Association of Bar Executives, in New Orleans this past February, talked about the crisis point that many believe legal education has reached—and about what role the bar can play in helping to turn things around.

Littlewood, along with panelists Thomas Lyons, Keith Norman, and Charu A. Verma, identified a few key factors that they believe underlie the well-documented crisis. These are: the fact that law schools are profit centers at many universities, that both tuition and guaranteed student loans have been climbing unchecked, and that the rankings published by US News & World Report encourage choices that exacerbate these problems.

One panelist, Verma—a recent law school grad and a public defender—helped illustrate the individual consequences of graduating with a high debt load and no real way to pay it off effectively. The others helped bring to light the possible consequences for the bar and the profession—and why it is that, as Littlewood said, bar associations need to ask the question, “What do we want to see out of these changes in legal education for the profession?”

A look at the underlying factors

From 1989 to 2009, Littlewood said, college tuition in general increased by 71 percent. Over that same period, she said, law school tuition increased by 317 percent. In 2010, she said, 85 percent of new graduates carried law school debt, and the average amount was $98,000.

Panelist Lyons, a past president of the Rhode Island Bar Association and a former member of the Executive Council of the National Conference of Bar Presidents, noted that outstanding education debt (including, but not limited to, law school debt) now totals $1 trillion—and that this exceeds outstanding credit card debt.

Lyons believes this debt is hindering economic recovery, as “We’re now shifting a huge amount of money from the housing sector to education.” He cited Jim Chen, dean of the University of Louisville (Ky.) Louis D. Brandeis School of Law, who recently wrote that for law grads who were charged $48,000 a year in tuition, a salary of $288,000 is required to put them in “good” financial standing, meaning that they are able to easily secure loans, including home loans.

Meanwhile, the median starting salary for new law grads is about $62,000, Littlewood said, adding that even this number is likely better than reality because law schools don’t always disclose how many students responded to their employment survey. Those who are doing relatively well are more likely to respond than those who are unemployed or underemployed, she explained.

With the exception of private practice, Lyons noted, starting salaries for new lawyers have remained flat relative to inflation. This was true even before the recession began, he said, explaining that even a few years ago there were new grads making six-figure salaries and then another large group making between $45,000 and $60,000—and very little middle ground.

Lyons believes a major source of the problem is that typically, the loans secured by law students are guaranteed student loans, meaning those that are backed by the federal government. In terms of repayment, because the school itself is not out the money for the loan, “There’s no incentive for students to be successful.”  The situation would be a lot different, he added, if schools themselves gave the loans and had to rely on students to be careful about the debt they took on, and then to be financially successful enough to pay it back.

Guaranteed loans have “removed the cap on tuition,” agreed panelist Keith Norman, executive director of the Alabama State Bar. “They charge what the market will bear.”

Unrealistic expectations may also be at play, Norman said; in reviewing bar applications, he’s noticed that many graduates borrowed substantially more than they needed to in order to pay the tuition. Perhaps they do this, he said, because they want to live well while in school and are overly optimistic about how quickly they’ll be able to repay the loan. Just about everyone who goes to law school believes they’ll be at the top of the class, will make law review, and will achieve success, he noted. After all, he said, those who go to law school have often been at the top of the class all the way from elementary to undergrad, and “Everyone has told them all along that they’re the best and the brightest.”

Both Littlewood and Lyons noted that as currently structured, the US News rankings reward schools that have a high education cost per student—one side effect being that schools then feel they can’t rein in their tuition, lest they fall in the rankings. So important are the rankings, Littlewood added, that many schools will hire a number of recent graduates in order to improve the class’s employment data (a strategy that was targeted by recent changes). Many law school deans hate the rankings and the maneuvering they require, Lyons said, but some have been candid enough to tell him that, regardless of their distaste, every decision they make requires thinking about whether they will rise or fall in the list as a result.

Littlewood said both football teams and law schools are often regarded as “cash cows” by their universities—the difference, she noted, is that the expense for the football program isn’t put “on the backs of the players” in the form of large amounts of debt. Lyons added that when one university recently took over what had been a freestanding law school, in its first year under the new arrangement, the school made $900,000 in profit—and that’s a fourth-tier school that is not ABA accredited, he noted.

Portrait of a new lawyer

Illustrating how a law student accumulates debt, and the kind of burden it represents, was Charu A. Verma, who graduated last year from Suffolk University Law School in Boston. Verma’s tuition was $42,250 a year; she now has $167,000 in law school debt, without interest. She currently makes $40,000 a year as a public defender. Because she’s on what she jokingly called “the 30-year plan,” she will end up paying $427,000 for her legal education.

Verma said she lived “very frugally” while in law school and did not take on debt in order to live well. Still, she said, the expenses quickly added up, even over and above tuition and the loans to cover it. Her journey began with a law school fair, she recalled; every school seemed happy to see her and eager for her to attend. Even Harvard encouraged her to apply—and to pay the $150 application fee.

“I don’t recall seeing anyone from a bar association,” she said, noting that there was no impartial person at the fair who could give her realistic information about whether law school was a good choice for her and what she would end up paying. If she could go back, she would still make the same choice to become a lawyer, she said, but she does wish she had received more unbiased guidance.

Along the way, there were many expenses she had not anticipated; for example, she said, one book that she used in one class cost her $300—and then she couldn’t resell it because it had become obsolete. She spent $2,500 on a BARBRI course, which she said she needed because a lot of the classes she’d taken seemed to be based on the professors’ interests, which left her lacking in information that would be on the exam. It cost her $815 to take the bar exam. Fortunately, she said, her bar dues have been waived. She wonders how her peers across the country can afford to pay their dues, especially if they have no job.

“Before you know it, you have no money for food,” she said. “Really.”

Indeed, food is an issue even though Verma is employed. Though she does not live with her parents (as many of her peers do), she does live very close to them. “That’s how I survive,” she said, noting that she eats at least five meals a week at their house.

In many ways, among her class, Verma is one of the lucky ones; she has heard informally that eight months after graduation, less than half of her class was employed. When she applied for her job, she recalled, she was one of 6,000 applicants for 53 positions.

Networking and taking clinical courses are often prescribed for law students who are feeling nervous about the economic realities they’ll face down the road. Both Littlewood and Lyons mentioned clinics and other practical classes as being essential, especially now that many large firms no longer do much training, and many other firms are small enough that it’s difficult to do so. “As a small firm,” Lyons said, “it’s very helpful when a new associate says, ‘I’ve already argued a motion. I know how to do this.’ ”

Verma “started networking on day one,” she said. As for clinics, there were 414 people in her graduating class and only eight slots—one of which she got—in the defenders clinic. Overall, she said, there were 43 clinic slots available and 1,600 students.

She loves being a public defender and believes in the work she’s doing, but isn’t sure how much longer she can hang in there. Regarding law school and her career path, “I don’t regret my decision,” she said, “but I do fear for my future financially.”

Fallout for the bar

The Alabama State Bar has been studying issues along these lines for the past few decades, Norman said. In a recent survey, he noted, new lawyers expressed a lot of anger at the debt they carry and the lack of jobs that pay well enough that they can repay it. They’re angry at their law schools for having misrepresented their job placement rates and other data, said—and they’re angry at the bar, too.

A population of angry, stressed lawyers whose quality of life is being sapped by debt is “an ethics time bomb waiting to blow up,” Norman believes. His bar has not seen this play out yet, he said, but data from the American Bar Association suggest that there’s a correlation between money problems and defalcation (also known as misappropriation) of client funds.

Littlewood said she has seen disciplinary problems lately that prompted her to talk to law school deans about what can be done—and the fact that the law school is often in the best position to flag potential problems. The character and fitness evaluation for the bar only takes a couple of hours, she noted, whereas law school personnel and faculty see students much more regularly. Also, she said, the consequences of passing along someone who really shouldn’t be a lawyer can last for decades. “You deal with them for three years,” Littlewood tells deans. “I deal with them for the next 50.”

Multiple panelists mentioned “the law school trap”—that is, by the time a student realizes he or she is not at the top of the class and is unlikely to secure a job that is lucrative enough to cover the debt, he or she is far enough along that dropping out doesn’t seem like a good option, either.

If law schools identify someone who is unfit to be a lawyer, or if a student wants to drop out, Littlewood believes it would be best to let the student go—and to rebate the tuition. In fact, she said, “Let them go. We’ll pay back the tuition.” Why would the bar consider doing this? Because the costs in discipline and potential harm to clients are greater than the tuition, Littlewood believes.

The anger is spreading to the general public, Littlewood noted:  There’s a “glut of lawyers” and yet vast numbers of consumers who lack legal services—in part, because those lawyers are deep in debt and can’t afford to take public service jobs. What’s ultimately at stake, she said, might be the profession’s ability to regulate itself. In several countries, she noted, the legal profession either has lost self-regulation or soon will. Losing self-regulation erodes the rule of law, she said, and it can easily happen here if enough consumers believe that the profession can no longer be trusted to manage its own affairs.

The role of the bar

Some panelists and attendees alike either alluded to or mentioned outright some tension among law school deans and bar leaders, bar examiners, and other relevant parties over their respective roles and particularly, who should be the “gatekeeper” for the profession.

Bar associations have a decision to make, Verma said:  They can either put pressure on the law schools to address some of the problems that have been identified, or they can think of themselves almost as non-government organizations, which are United Nations-designated nonprofits that step in to help with various critical needs. There is a particular need for mentoring at law schools, she believes, adding that bar associations should have “an increased presence on campus.”

Whether through mentoring or some other means, bar associations could help fill an important gap, she noted; though she excelled in it, “A lot of students don’t understand networking at all.”

Norman said his bar has realized that keeping students out of  “the trap” needs to start earlier. “The fact is that once they get to law school, it’s too late,” he said. As early as high school, he noted, “the seed has been planted” in terms of aspiration to become a lawyer.

The Alabama bar has decided to be proactive, he added, by sending its brochure “Law as a Career: What You Need to Know Before Applying to Law School” to high school and college counselors across the state. The brochure doesn’t outright discourage students from pursuing a law career, but it does talk very frankly about such things as tuition and other costs, the average amount law students borrow, and the average amount in outstanding loans for the class of 2011.

Lyons would like to see more efforts like this; he believes bar associations should help publicize the data that are readily available through the Association for Legal Career Professionals (widely known as NALP, derived from its former name).

Littlewood acknowledged that it can be tough to navigate the relationship between the bar association and the law school; solving the problems at hand will require both pointed conversation and cooperation.

“It takes the bar saying, ‘We’re fed up—now, how can we work together?’ ” she said.

The discussion continues

Judging from the energy in the room, those at the legal education panel appreciated that NABE broached this topic and were eager to discuss it further. (At press time, NABE had decided to follow up on it in its Annual Meeting programming.) Below are some points raised by audience members.

“We’re past the point of arguing over whether it’s a problem,” said John Berry; he believes bar leaders should act now to help guide the legal profession toward a better future. The work of improving legal education goes beyond bar associations and law schools, he noted, adding that the state supreme courts need to be involved. Berry, director of the Legal Division at The Florida Bar, said he left his previous job as executive director of the State Bar of Michigan expressly to work more closely on these issues.

“I think we all know what the problem is,” said William Weisenberg, assistant executive director for public affairs and government relations at the Ohio State Bar Association. “The question is, are we going to do anything about it?” It will take “backbone,” Weisenberg added, for bar associations to initiate difficult, but necessary discussions involving the bench, bar, profession, and law schools.

Weisenberg, who is also NABE’s delegate in the ABA House, noted that beauticians and barbers are required to have clinical training that involves supervised work with a client. He finds it distressing that there is no similar requirement for law students or young lawyers, especially since with legal matters, personal liberty is often at stake. Weisenberg would like to see the legal profession move toward “the medical model,” in which there is mandatory clinical training—and rewards for taking public service jobs.

“The deans have a problem,” Weisenberg added, “and that’s faculty.” Under the current tenure system, he explained, professors hold the power and are able to resist change and to teach according to their own interests.

Law schools that continue to graduate many students who are ill prepared and deep in debt should face having their accreditation revoked, Weisenberg said. Berry believes the accreditation standards should be revised to put more emphasis on practical knowledge and professionalism.

Donnie Long, executive director of the Akron (Ohio) Bar Association, said his background is in counseling, for which there is a stringent requirement for clinical and practical training. He was “shocked,” he recalled, when he realized that there was no such requirement for lawyers. Bar associations can help fill some gaps, he said, noting that his bar meets with law students at Akron University “from the very beginning.” But law students tend to skip optional events, he added, which means bar associations are somewhat limited in what they can do through programming.

To provide clinical training and improve access to justice, Long would like to see the legal profession adopt a model similar to one currently being used in education, in which some new teachers’ student loans are partially forgiven if they agree to start their careers in schools where they are critically needed.