Return on Investment: The Core Challenge for Legal Education and the Legal Profession

By Martin Pritikin 

The legal community is facing a myriad of serious challenges ― historically low law school enrollments and bar passage rates, exploding tuition costs and associated student debt and a stagnant job market ― that, if not addressed, will put it in peril.

One seemingly attractive solution would be for a quarter of law schools to just close their doors. This would reduce competition for existing law jobs and reduce pressure on remaining schools to enroll less-qualified students to keep the lights on.

But this would only exacerbate the national crisis in access to justice. Tens of millions of Americans need lawyers but cannot afford the prevailing rates that lawyers charge, or live in areas where there are too few lawyers to adequately serve them. It is not enough to say the country needs fewer lawyers. It needs more of them ― if they can offer modest-means clients reasonable rates and still service their educational debt.

Martin Pritikin, Dean of Concord Law SchoolThis is not just bleeding-heart talk. If recent law graduates’ only option is to compete with more seasoned attorneys for the clients that can afford to pay $200+ per hour, they’re going to continue to struggle. By offering reduced rates and tapping into a market of people who would otherwise likely forego legal services altogether, recent graduates will not simply be fighting for a bigger slice of the pie; they’ll be expanding the pie.

The big problem is return on educational investment, as those who would most logically serve the middle market can ill afford to do so. Annual tuition is about $50,000 at top-tier private law schools, where many graduates land $180,000 starting salaries. But the tuition is roughly the same at so-called “fourth-tier” law schools, where those lucky enough to secure employment typically make between $60,000 and $80,000. There’s a name for this economic model: it’s called broken.

Consider this: of the 205 law schools accredited by the American Bar Association, 199 are exempt from Department of Education requirements to report graduates’ debt-to-earnings ratios. Why? Because they operate as not-for-profits. As reported by the ABA Journal on January 11, 2017, of the six for-profit schools that recently reported their data for the first time, two failed outright and three others were found to be in the “zone,” that is, at risk of failing. Yet, based on available data, if the not-for-profits were subject to the same debt-to-earnings test, it appears at least half of them ― 100 schools ― would have failed as well.

The Great Recession highlighted the misalignment of law school cost and return, but it didn’t create it. Both before and after the economic downturn, only about one-fifth of law school graduates landed high-paying jobs at the largest law firms. Most law grads have long joined smaller firms, opened solo practices, or gone into lower-paying government jobs. So while the Harvards and Stanfords can continue to justify charging $50,000 per year, most other law schools should be far cheaper. If they were, representing the little guy would be a more economically viable option. (Causing graduates’ incomes to rise would also improve return on investment, but that’s obviously a taller order for law schools.)

Several years ago, University of California, Irvine School of Law Dean Erwin Chemerinsky opined that it just isn’t possible to offer a high-quality legal education for less than what schools currently charge. But this assumes that the existing model of well-compensated tenured faculty and elaborate physical facilities is essential to train lawyers (it isn’t), or that such a model is sustainable outside of the elite schools (it’s not, as discussed above).

Unfortunately, the odds of the necessary change happening from within are small. Tenured faculty are not going to willingly forego their protections, and the ABA requires faculty tenure as a condition of accreditation. Plus, until the ABA removes its bar to accreditation of online law schools, expensive buildings and grounds―the other single biggest item in most law schools’ budgets―will continue to be the norm. Compounding this is the fact that most states’ boards of bar examiners allow only graduates of (costlier) ABA law school to sit for their bar exam immediately upon graduation.

Daunting as all this may seem, instead of raising the white flag, let me raise some possible practical solutions. Ironically, it is practicing attorneys who may be in the best position to pressure their law schools, state bars, the ABA, and others to make meaningful reforms that help both law school graduates and those they would serve. For example, they can:

1. Ask their law school to make a law practice management course a requirement for graduation, with a focus on strategies to lower overhead and reach untapped middle markets.

2. Ask the ABA to revisit its accreditation standards regarding faculty tenure and limits on online learning, both of which raise the cost of legal education.

3. Ask their state bars to adopt the Uniform Bar Exam (over half already do) to increase the portability of law licenses and eliminate the monopoly that they give to ABA-accredited schools regarding access to their bar exam.

4. Write the Department of Education to ask that the Public Service Loan Forgiveness Program be expanded to include private practitioners who offer “low-bono” services or establish practices in rural or other underrepresented areas.

5. Write to U.S. News & World Report to ask that return on investment be a primary focus of their law school ranking system, as opposed to the current (circular) emphasis on “reputation.”

Understandably, lawyers may be reluctant to endorse changes that lower barriers to entry for those who might compete with them. But if the profession can serve more people and do so more effectively, it is likely to benefit the profession itself: a classic case of doing well by doing good.

Martin Pritikin is the Dean of Concord Law School at Kaplan University (concordlawschool.edu), the nation’s first fully online law school, with tuition at under $12,000 per year. He can be reached at martin.pritikin@kaplan.edu.