In what may be the first such success outside the state of California, a federal judge in late March denied a motion to dismiss by Widener Law School against a claim by several graduates the School defrauded them. Senior District Judge Walls’ full opinion can be read here.

As with other suits, the students claim that aggregate employment statistics suggesting that more than 90% of Widener graduates were employed nine months after law school fooled them into borrowing more than $100,000 to attend law school.

The decision is notable because it makes clear how much money may be at stake in these lawsuits. In this case, the plaintiffs are seeking $75 million in “disgorgement and restitution.” If cases like this were to be successful on a national scale, class action attorneys might be looking at a payday in the hundreds of millions of dollars.

In his opinion, Federal Judge Walls makes clear he buys the idea that law school brochures, admittedly literally accurate, could be the basis for such lawsuits.

I argued here that it is a myth to think that law school brochures could be considered responsible for the flood of students into law school in the mid-2000’s any more than they were responsible for the drop in law school enrollment in the early 2000’s. Something more powerful was at work, namely rational students making rational decisions about when and whether to attend law school in response to changing macroeconomic conditions. I explore this issue more fully in my review essay on Brian Tamanaha’s book here.

Nonetheless, Judge Walls concluded:

“Here, an employment rate upwards of 90 percent plausibly gave false assurance to prospective students regarding their legal employment opportunities upon investment in and attainment of a Widener degree. While the thread of plausibility may be slight, it is still a thread. At this motion to dismiss stage, under New Jersey’s broad remedial statute, Plaintiffs have sufficiently pled an unlawful affirmative act under the NJCFA.”

Where the case may run into difficulty over the long run is the way in which Judge Walls attempts to differentiate his conclusion from those of several other courts in New York and Michigan. I discuss one of those lawsuits more fully here.

He admits “there was a wealth of information outside the Widener website that would have indicated that the employment rate portrayed by Widener referred to an aggregate employment statistic.”

But the standard required by the statutes in question – Delaware and New Jersey Consumer Fraud Acts – does not require law students to look beyond the material on the website. Widener has a campus in each state.

Judge Walls writes: “The NJCFA recognizes ‘the fact that the [advertisements are] literally true does not mean they cannot be misleading to the average consumer.’”

And therefore, “it is not implausible that a prospective law student making the choice of whether or which law school to attend, would believe that the employment rate referred to law related employment.”

As examples of the way in which labeling can mislead the “average consumer” Judge Wall cites to cases involving soup can labels and magazine subscription solicitations.

Are recent college graduates who are aspiring lawyers to be considered “average consumers” no different than consumers of soup or readers of mass-market magazines? Are they incapable of reading a law school brochure or website with anything more than the potential gullibility of the average consumer? Somehow I doubt the drafters of these consumer protection statutes, many lawyers themselves, had law students in mind when they put them on the books.

At the motion to dismiss stage a court may feel it has some obligation to bend over backwards to see if there is any reasonable basis to allow a fraud claim to move forward, but one has to agree with Judge Walls that indeed the “thread of plausibility” here appears to be “slight.”

Newly released data from the ABA suggests a sharp turnaround is underway for recent law school graduates with those able to secure “long-term, full-time positions where bar passage was required [rising] 7.6 percent to 26,066 from 24,149″ over the previous year.  The increase was sustained even in the face of the absolute size of the graduating class, one of the largest in recent years.

As the impact of the economic crisis took hold subsequent classes have shrunk and so there will quite likely be an improvement in job outcomes for grads this year and in the next few years, barring an unforseen problem in the wider economy.

This result will come as cold comfort to the law school critics who have been claiming law school is a failing institution. But it is entirely consistent with trends over many decades where legal employment responds cyclically to the macroeconomy.

My critical assessment of the case made by one of the leading critics, Brian Tamanaha, can be found here. That case “relies on very generalized data sets that do not provide persuasive evidence of misbehavior by any individual school, fails to test for counter-factual explanations, and draws conclusions that are only one among several possible explanations for the current situation.”

Other less comprehensive data prepared by Ben Barros at Widener Law suggests improved outcomes for 2010 and 2011 grads, too, as the economy has begun to pick up some momentum.

ABA Releases Class of 2012 Law Graduate Employment Data – ABANow – ABA Media Relations & Communication Services.

Ben Barros at Widener has completed a short but very helpful paper examining the debate about employment of recent law school graduates.

Ben diligently tracked down the vast majority of Widener (Harrisburg) graduates from the 2010 and 2011 classes to see how they were doing now, not just 9 months after graduation. His results show significant improvement, particularly in the much discussed JD/Bar Passage Required category.

I think his study has several important implications:

1) It highlights the significance of macroeconomic factors in outcomes as opposed to problems with law schools per se. As the economy has improved so have job results. This is entirely consistent with the cycles of the past several decades.

2) He notes something of particular importance to California law schools: because of our relatively lower bar passage rate the traditional 9 month after graduate employment rate weighs heavily on the national ranking of California schools.

3) He points out that while many law school critics rely on BLS projections of a mismatch over the next decade between legal jobs and law school graduates, if one goes back a decade or so in the BLS data one finds that the Bureau significantly overestimated employment potential for future graduates. In other words, while critics use current pessimistic data from the BLS to bolster their case for law school austerity programs the same data likely helped contribute to the law school bubble a decade ago.

Reconsidering the Conventional Wisdom on the Legal Job Market by Benjamin Barros :: SSRN.

Brian Tamanaha is now taking on the law school left in the latest stage of his general attack on the law school world. Most likely Tamanaha understands that the left is likely to be the strongest source of support for tenure standards that are now under direct attack by not only Tamanaha but his friends at Cato and among some in the ABA, the major accrediting agency for law schools.

The core of Tamanaha’s argument is that those of us on the left who teach in law schools should be front and center in discussing ways to reform legal education. Who could disagree? Yet what evidence is there that the left is not involved in these efforts? I not only blog on this subject – to the point of tedium in the eyes of Tamanaha – but actively participate in my role as a faculty member in ways to reform legal education in what I assure Tamanaha are exhaustive faculty discussions.

In fact, our law school invited Tamanaha to discuss his ideas for reform at Santa Clara University this spring. But Tamanaha abruptly withdrew from the long planned event. I was asked by Tamanaha not to discuss the contents of his email explaining his withdrawal publicly, however, it occurred just after my critical assessment of his book on law school reform was posted on line at SSRN.

Now in his latest jeremiad, Tamanaha claims I “never talk” about the problem of debt that plagues law students. This is so absurd it beggars belief. Not only do I blog about the problem of debt here but I have debated the problematic situation facing law students exhaustively on other blogs like Prawfsblawg and Faculty Lounge. I was credited by Paul Caron at TaxProf with sparking a major debate about law school reform because of those blog posts. Friends of Tamanaha in this debate panicked that their views were being disputed at all and attempted to muster an attack across the web, including specious personal attacks from Campos and others.

There was even an effort to have me dismissed from my teaching position. Of course, most students at SCU are smarter than these types and easily grasp the value of learning something about securities regulation and corporations, so that effort didn’t go very far.

Tamanaha now says he was not talking about my blogs when he said I never “talked” about debt, but about the fact that I never “wrote” about the debt problem in my review essay about his book, the very same one that was posted on SSRN just prior to his cancellation of an event that was organized to talk about these very same issues!

Well, what did I write?

On page one of the paper I wrote:

“One readily available test of the lack of rationality of the ‘scam’ idea is to take notice of its supporters’ apparent disinterest in concrete proposals for debt relief and other forms of assistance available to law school graduates caught in the economic downturn.”

In fact, I can’t find any reference to Tamanaha himself supporting debt relief programs for the current victims of the economic collapse. Instead, he dismisses the programs that do exist, like IBR. Ditto for his partner in crime, the bad cop of law school reform in the words of their hosts at the Cato Institute, Paul Campos. Nowhere can I find any suggestion that Tamanaha or Campos are willing to surrender a substantial part of their incomes to help with debt relief.

Now Tamanaha says he missed my proposal for debt relief because he stopped reading my “tedious” blog. But he repeats the claim that no such “talk” of debt relief appeared in the SSRN paper. In fact, not only did a reference appear on page one to the general idea of debt relief but on page 20 of the review I wrote specifically about the debt relief program Tamanaha “missed” on my blog:

“My proposal for a combined debt relief and post-law school training program is aimed at dealing with both the job situation as well as that need. See ‘Lawyers for America: A modest proposal,’ available at http://stephen-diamond.com/beyond-the-scam-debate-about-law-schools-lawyers-foramerica-a-modest-proposal/.”

Now perhaps Tamanaha will claim that these comments only appear in the footnotes of the paper. True enough. But what does he tell law students in his classes who do not pay attention to the footnotes in cases?

In any case, isn’t it richly ironic that Tamanaha is publishing his essay in a journal housed at that populist bastion, Stanford Law School? Tamanaha argues that law school is too expensive yet at places like Stanford law school is a huge bargain – tuition pays for only a fraction (as little as a third) of the total cost of a JD. Far from being ripped off, students at these schools are getting a tremendous bargain.

There is, in other words, a disingenuousness at work in the work of Tamanaha. A macroeconomic crisis that has made hundreds of millions miserable is being used, exploited really, by him to push an irrelevant agenda centered on the destruction of a valuable public institution. Tamanaha insists now that he is in fact some kind of liberal. Indeed, some kind of liberal. The kind that finds a welcome place at the Cato Institute and is touted on the pages of the Wall Street Journal.

Brian Leiter reports on a threat to tenure standards at Brooklyn Law School. A review of the board of trustees at the school indicates there are no academics on the board. This can lead, as those at the University of Virginia can attest, to an overly narrow and market oriented view of academic culture. Add to this the strong dose of deregulatory politics at the heart of the agenda for law school critics like the Cato Institute and their friends Brian Tamanaha and Paul Campos and one can see the problem: exploitation of macroeconomic crisis for crass political purpose.

Tenure remains a vital component of modern academic culture. While there may be a basis to extend elsewhere the California model of allowing non-ABA law school graduates to take the bar that is not a reason to weaken tenure standards at ABA accredited schools. In fact, the California experience proves the value of these standards: aspiring law school applicants can decide for themselves whether to apply to ABA schools where tenure is a core value or opt for the vocational school approach offered at non-ABA schools. In other words, the ABA standard of supporting tenure serves as a source of information about choices available to students. It is not an insuperable barrier to choice as the Cato folks blithely assume.

Leiter Reports: A Philosophy Blog: Academic freedom (and due process) under threat at Brooklyn Law School?.

A New York court has tossed out a lawsuit against Brooklyn Law School over allegations that employment statistics were somehow responsible for causing students to attend law school. This is the third New York court to toss out such a claim. Earlier suits against Albany Law School and New York Law School were dismissed last year. Three other lawsuits in other states, two in Illinois and one in Michigan, have also been thrown out. Several lawsuits against California law schools making similar claims, however, are still active.

The opinion as summarized by the Wall Street Journal made two important points: 1) law school applicants could have engaged in diligence and determined likely employment and salary outcomes upon graduation from Brooklyn Law School; and 2) the larger problems of the macroeconomy were responsible for the challenging job market for law school graduates not law schools.

With respect to the first conclusion the Journal quotes the judge as concluding that “the school’s own data was sufficient to ‘enable a reasonable person to determine that most graduates were earning modest incomes.’”

With respect to the second conclusion, the Judge wrote:

“Whatever plaintiffs’ allegations, the court simply cannot overlook the effect the severe downturn in the economy — a significant supervening event — had on plaintiffs’ employment prospects….Regardless of the effect BLS’s Employment Reports may allegedly have had on plaintiffs’ decision to enroll and remain in school, plaintiffs graduated into what is universally recognized as one of worst job markets in recent memory….Given the staggering loss of jobs across and at all levels of the entire legal sector, plaintiffs’ claim that the damages they suffered were a result of BLS’s conduct, is simply not susceptible to proof.”

The full opinion can be read at Bevelacqua v Brooklyn Law.

In earlier posts here and on blogs like Faculty Lounge I argued in the face of obstreperous objections from proponents (some of whom went so far as to advocate that I be fired) of the theory that law school is a “scam” and a fraud, that law school brochures that tout post-graduate employment opportunities could not explain the impact of a world wide economic calamity.

To me this kind of argument is akin to suggestions that global warming is man made. Of course, pollution is a problem for the world that should be confronted but to suggest that humans are significant enough force in the world to cause global temperature change is absurd.

And it is true that some law schools did engage in bragging about the success of a relatively small number of their students  but rarely, if ever, without also providing data that could easily explain to students likely outcomes upon graduation. And certainly no law school (or law student) should be blamed for remaining optimistic about the economy in 2007, for example, when the credit crisis was simply a figment of the imagination in the minds of some academics.

I, for example, was by then a longtime advocate of the view that the global economy was headed for a “meltdown,” the title of an online discussion group I helped found in the late 1990s. But our group’s ideas remained outliers until the collapse of major financial institutions began in 2007-08.

In law and economics we discuss such phenomena as an example of “hindsight bias” – the idea that after an unusual or low probability event occurs it is easy to think that somehow it should have, ex ante, been considered more likely and thus warnings should have been issued.

That approach, fortunately, has yet to convince any of three New York courts.

Judge Tosses Lawsuit Against Brooklyn Law School – Law Blog – WSJ.

I guess we all have to find friends somewhere in the debate over the future of legal education. In my case, it is heartening to have Nobel Prize winning economist Gary Becker come to the same conclusion I have been stating for some time now: the downturn in demand for lawyers is cyclical and will turn upward again.

In the joint blog he maintains with his University of Chicago colleague Judge Richard Posner, Becker notes: “…I am optimistic that the demand for lawyers will pick up again once the American economy returns to long-term growth levels. The US remains a litigious society, and the number of laws and regulations to be litigated are increasing, not decreasing.”

Of course as a transactional lawyer I also know that we live in an increasingly complex economy that requires the skills of transactional lawyers not just litigators and demand for transactional lawyers picks up rapidly when an economic cycle turns up.

The next few years will, nonetheless, be tough for many in the legal field but the doomsayers who predict an end to law school or, absurdly, claim it is a failed institution are missing the larger picture.

Higher Education is Still a Very Good Investment-Becker – The Becker-Posner Blog.

A law professor who actually practiced law begs to differ with Georgetown center report on alleged dire straits facing law practice and impliedly legal education.

Legal Ethics Forum: The Georgetown/Peer Monitor Report on the 2013 Legal Market.

The Wall Street Journal reports here on a letter to the ABA (which sets accreditation standards for law schools) signed by what it describes as “academic heavyweights” endorsing law school reform. What seems to tie together this ideologically disparate group (the list includes “Crits” like Lawrence Friedman, liberals like Walter Dellinger, and “law and econ” figures like Richard Posner) is their uncritical adoption of the Campos and Tamanaha school of law school critique including a call for weakening of what they say are the ABA’s “expensive” accreditation standards to encourage “diversity.”

Of course anyone paying attention to law school battles of the last 20 years will recall that some on this list only yesterday were complaining of too much diversity in law schools. And in fact if there is one thing the American law school has gotten right it is diversity, whether of the ideological, methodological, ethnic or gender variety. And despite what the letter implies, the diversity is structural as well, with a wide range of low and high cost options available for students.

But the slightly hidden gem in the letter is their apparent endorsement of what is at the heart of the “good cop/bad cop” show (as they were introduced at the Cato Institute recently) put on by Tamanaha and Campos: the weakening of tenure and therefore academic freedom and faculty’s role in shared governance of the university. As I explain in my review essay on Tamanaha’s book, Failing Law Schools, a central plank of his proposal to reform law schools is the elimination of tenure as a requirement for accreditation.

Tamanaha falsely claims this is a critical step to unleashing diversity in law schools. He provides no evidence of how this could be true (or how tenure undermines diversity), fails to examine the rich diversity already present in law schools and ignores the important protections that tenure provides to those attempting to conduct research and engage in teaching on controversial, and therefore inherently diversifying, ideas.

The letter claims, as does Tamanaha, that the current accreditation standards are “expensive.” There is no basis to think this is true, and it has not stopped the creation of a wide variety of law schools already, from those that are able to pay professors $300,000 a year down to those that pay them $75,000 per year.

In fact, tenure has been a stable part of the university environment for many decades, long before the very recent increase in the cost of law school. The lack of correlation is notable given the emphasis on economic analysis in a letter titled: “the economics of legal education.” Despite the presence on the list of several people who claim some familiarity with economics, they do not seem to have thought very carefully about this lapse.

As I have pointed out here several times law school faculties engage in frequent and careful, even exhaustive, internal debate about the proper balance between cost and revenue generation. These debates result in frequent changes to the way law schools work. I think the current cyclical downturn in the economy represents a good chance to think about new ways to improve law schools such as the adoption of MOOC-like courses to save costs and free up faculty time for research. I outline several other ideas in my essay on Tamanaha.

But the signatories of this letter would seem to wish to go far deeper: by addressing themselves to the ABA and raising the canard that universally recognized accreditation standards like tenure are too expensive, they undermine the integrity of the law school itself. It is remarkable how only a few years ago these “academic heavyweights” in law schools were fighting for recognition as academics by their social science and hard science colleagues. Now they seem content to return law school to its early 20th century place as a mere trade school.

The barbarians are not just at the gates, they are inside the compound.

While the bleeding has stopped in the wake of the recent credit crisis, as the smoke clears this study argues that the landscape has shifted (how’s that for mixing some metaphors?). The report by a Georgetown center is an attempt to get at the question whether the recent crisis is cyclical or secular. This study is biased in the secular direction.

There is very little serious empirical research here to demonstrate why that must be the case. It is mostly a survey at a fairly 30,000 foot level of current law firm practices. But there is no assessment of what happens if, or when, economic recovery becomes more robust.

Nonetheless, it would be prudent to take into account their conclusion that while recovery is happening, it is taking place very slowly. That means there are opportunities now to remodel both legal practice and legal education. As I have suggested here, for example, now is a very good time for law schools to think about going MOOC.