Professor Campos is shocked, shocked….

Completely shocked that his attack on the American law school has something in common with the Cato Institute and the Koch Brothers after taking an all expenses paid trip to be feted at their Hayek Auditorium and present his views on, well, yes, the American law school, Professor Campos is shouting to the high heavens anywhere he can that this conclusion should be dismissed as “conspiracy” theory.

The Cato event was chaired by nationally known law school critic Walter Olson hired at Cato in 2010 to lead their effort at legal reforms, including the targeting of law schools. The announcement of the 2013 event, which was constructed around the Failing Law Schools book by Brian Tamanaha (also at the event), claimed that “creative efforts to reduce the cost of law school were stymied by an accreditation process that closely constrains the format of legal education.” It touted the Tamanaha book as “a devastating critique of what went wrong with the American law school and what can be done to fix it.” It concluded that “none of the key contributors to the problem — faculty self-interest, university administrators’ myopia, cartel-like accreditation—escape unscathed in his analysis.”

It was a love fest all around as the video here makes clear.

That such a rhetorical flourish follows so soon on the heels of Campos’ accusation that his opponents are akin to “holocaust deniers” suggests that Campos and his merry band of followers have reached new heights of anxiety as the economic news continues to improve and employment outcomes for lawyers and law students continue to improve. I am beginning to wonder if Campos has been channeling the late Joe McCarthy who grew ever more aggressive in his accusations as the country began to realize his true nature.

Unfortunately, Campos is not content to be accurate in his representation of at least this opponent’s views. He cut and pasted a comment of mine about the Cato Institute and then added material to it in brackets that suggested a viewpoint that I do not hold. He did this at the blog for law school deans. I sent them the following comments:

For the record, Professor Campos is just inventing the idea that I suggested there is a conspiracy. But there is a shared agenda at work.

The comment Professor Campos refers to included a link to a long blog post that I wrote at the outset of my entry into the Great Law School Debate. It explores in depth my concern about the impact of the critics’ attack on the law school and the rule of law.

You can read it here.

The essence of the concern is that Professors Tamanaha and Campos have helped feed the agenda of the Cato/Koch crowd aimed at “de-regulating” law school including gutting tenure and other protections of academic freedom. My more specific critique of Tamanaha’s views can be found here.

Of course those are the protections that enable Professor Campos to engage in the kinds of whacky extramural speech that he uses to cover up the very weak case he makes about the alleged role law schools played in triggering the greatest economic downturn since the 1930s. Ironically when Professor Campos’ colleague Ward Churchill engaged in similarly absurd extramural speech in the wake of 9/11 and lost his job as a tenured professor at Colorado, Professor Campos went on Fox News to throw him under the bus (see here).

In addition to inventing the word conspiracy, which I never used, Professor Campos places the names of Professors Merritt and Tamanaha into brackets at the start of the second paragraph of the comment he clipped from Prawfsblawg (the original full and accurate comment can be found here.)

But that changes what I actually wrote and is therefore inaccurate, at least with respect to Professor Merritt. I said that the critics were either collaborating in the Cato agenda (such as supporting the weakening of tenure) or were naïve about how that agenda works. I do not know Professor Merritt’s views on this issue and it is inappropriate for Professor Campos to have suggested otherwise.

“Where have all the lawyers gone?” for beginners

Professor Campos and his colleague Professor Scott Lemieux at their blog (once dismissed by liberal journo Glenn Greenwald as a “cesspool” – after mistakenly spending a few minutes today interacting there, I know now what he meant) profess not to understand the nature of supply and demand in the market for lawyers. Clearly that is true. Their confusion appears to be shared by several of the commenters on the blog as well their fellow opponents of American law schools, Ohio State’s Professor Merritt and Washington University’s Brian Tamanaha.

So here is a simpler version of the description of that market I provided here in a prior post.

We produce approximately 32,500 newly law school graduates each year who both want to practice law and who gain a license to do so by passing the bar. Of course there are more JDs who graduate each year from both ABA and non-ABA schools. But not all of them want to practice law and not all of them pass the bar. (I get that number by looking at an average of 40,000 graduates from ABA law schools and then subtracting a certain percentage who do not pass the bar and who do not want to practice law, but then adding back in some from the non-ABA schools. See the earlier post for details.)

Each year we add, according to the BLS, approximately 10,000 net new positions for employed lawyers. Currently there are approximately 600,000 people employed as lawyers. This does not include partners, solo practitioners, judges and a number of other JD-required positions.

Those who oppose the American law school claim there just aren’t enough jobs for those 32,500 new JDs. At first glance that appears to be true but keep in mind that the 10,000 is a net figure. Each year, however, employed lawyers get promoted to partner (where they make more money, of course), start a solo practice (very common here in Silicon Valley), retire, die or just plain quit.

We would require approximately 20,000 of these shifts out of the “employed lawyer” category to occur each year to absorb supply. That may seem like a lot and maybe it is. But from a base of, on average, about 500,000 employed lawyers going back some 20 years, it’s only about 4%. (I’m neither a labor economist nor a demographer so this last figure is subject to debate.)

There is likely a lot of variation in all these factors every year and in fact the credit crisis and dotcom/telecom crashes likely wrecked havoc on historical averages in variables like retirement ages for employed lawyers. And that likely is why we have had an overhang of supply in the last few years.

The assumptions I make here could be wrong but when asked about it (my positing a 4% exit rate is purely a working hypothesis, for example), the critics have not come up with significantly different numbers.

Lawyers have done well financially, too. While not outstripping GDP growth (as I originally and mistakenly suggested) they have outstripped inflation. Factor in higher paid partners and likely they have stayed comfortably ahead of inflation. This suggests lawyers have solid market power, able to defend and even increase their income in an intensely competitive marketplace.

This is the logic that underlies the significant positive net present value (a concept I tried, patiently but I think unsuccessfully, to explain to Professor Campos in an earlier post here) of the JD as explained by the research of Simkovic and McIntyre. And this suggests that lawyers remain in demand. Society may be willing to allow lawyers to beat inflation because demand actually outstrips supply. That is of little comfort to new JDs but it points to the eventual solution to the temporary mismatch in the market.

This will no doubt not end our great law school debate but I hope the confused folks over at Lawyers, Guns and Money can now see how the world of supply and demand actually works.

When news no longer fits, make it up – myth making about law school in The New York Times

The picture The New York Times paints today about recent law school graduates sure sounds bad. Struggling 2010 Columbia JD who hoped to become a law firm partner appears to be barely surviving in life. But wait, he makes “more than $100 an hour.” The Times’ Elizabeth Olson, without any evidence, concludes that is “far less” than what he would be making as a lawyer.

But that $100 an hour would translates into $200,000 p.a. if the former law student worked full time at it (although it is not stated how many hours he actually works) and is in fact far more than most if not all fifth year associates at law firms make. In fact, the highest average salary in any one region for ALL lawyers in the country is only 195K! And it is far less in New York.

And while that Columbia student may not be doing what he had hoped to when he entered law school that is true of many graduates and always has been. Very very few graduates of law schools end up as partners at major law firms. One friend of mine who did make it was one of 35 law students hired as first years at a leading NY law firm. He was one of only 8 left by the time his partner year came up seven years later and he was the only one of those 8 to make partner. And that was a result of the glory years of the late 80s. In fact, 40% of all licensed lawyers do not practice law at all.

Finally, The Times ignores the alternative – what if their profiled Columbia graduate had left his undergraduate school without going to law school? Would he be better off or worse? The peer reviewed and published data we have by Simkovic and McIntyre says clearly that he would be worse off.

Instead of turning to readily available and widely known peer reviewed and published data, The Times strangely relies on information from a single state (Ohio) collected by a law professor widely known to be a harsh opponent of law schools who specializes in evidence and criminal law. Professor Merritt’s “study” has in fact not yet been “published” as The Times stated, much less peer reviewed (in fact, her peers have critiqued the article in detail as here), but has only been self-posted on the open source Social Science Research Network. (One of those posts at SSRN suggests the article will soon appear in the Michigan State Law Journal, which is not a peer reviewed journal. Interestingly Michigan State is one of the kinds of lower ranked law schools that critics like Merritt think should shut down because of the poor outcomes for their graduates.)

This is the second time in recent days that The Times has published a seriously flawed piece on higher education. One has to wonder what has happened at our so-called “paper of record.”

The elephant in the room spooks Colorado Law’s Paul Campos

Atteberry-elephantRoom721Consider for a moment, if you have the fortitude, the dismal plight of anti-law school gadfly Paul Campos, who somehow still collects a very comfortable salary from the oh-so-tolerant taxpayers and law students of Colorado despite his oft stated personal belief that he is engaged in scamming them.

Having imploded in spectacular fashion – as detailed by Brian Leiter here and by me here – on the pages of The New York Times he is now frightened that even his diehard followers in the anti-law school blogosphere will abandon him.

After all, among those who pounced on Campos for his disastrously wrong-headed critique of higher education were liberal sites Slate (“one of the worst explanations”), Crooked Timber and Demos (“terrible explanation”), not to mention Nathan Brostrom, the CFO of the University of California and Sandy Baum of the Urban Institute. In fact, it is safe to say this column generated more attention to the limited capability and insight of Professor Campos than anything he has written to date. Unfortunately for him his misguided effort all but guarantees that he never again plays any credible role in the major debates about this important and complex institution.

His fix? Ignore the elephant in the room and, instead, distract or coddle his dwindling band of followers by drudging up two year old exchanges about alleged problems with the employment data compiled by law schools more than four years ago. This despite the fact that both logic and the law made it quite obvious that that data did not cause the ups and downs in law school enrollment any more than the data collected by scientists about the weather impacts climate change.*

Oh, and while Campos was at it he threw in a few ad hominem attacks along the way.

This all may be emotionally satisfying to Campos and his gang but it won’t have much impact on the fact that he has demonstrated once again his inability to understand the basic economic principles that govern higher education and the wider labor market.

There is a final unfortunate aspect to the most recent comments of Campos that he shares with at least one other prominent leader of the anti-law school blogging world. Namely, his persistence in attacking his opponents by attacking the schools at which they teach. Campos’ comrade in arms, Deborah Merritt of Ohio State University’s Moritz College of Law, recently attempted the same gambit when she clearly realized her feeble efforts to undermine the solid, peer reviewed and published research of Michael Simkovic (Seton Hall) and Frank McIntyre (Rutgers) had failed. Merritt’s own “research” in this area has not survived this kind of assessment but that has nothing to do with where she teaches (even though it’s not Harvard.)

Behind this base and crude tactic appears to be an assumption that if you teach at a lower ranked law school (where employment outcomes are often weaker than those at higher ranked schools) it says something disabling about your research. The implications of this kind of argument for the integrity of academia as a whole should be readily apparent. Of course they may not be to the kind of follower that Campos and Merritt aim to recruit and so they continue this approach. In my own field, I wonder what would have happened to some of our most important theoretical insights if, for example, the world had derided the research of Michael Jensen on agency theory because when he published his landmark article while at the University of Rochester (with William Meckling also at Rochester), long before he ended up at Harvard.

In any case, I was pleased to see Ted Seto, of Loyola Marymount School of Law, call out Merritt stating he thinks “it regrettable that Prof. Merritt feels compelled to go after Simkovic’s law school. This kind of ad hominem attack has no place in respectable academic scholarship.”

It is, of course, too much to ask that Campos change his stripes but perhaps a few more of those so new to his gambit that they are tempted to adopt his views on law school will instead look for objective and reliable sources of information in the future. Those sources, including the important work of Simkovic and McIntyre, make clear that for most law students earning a JD makes more financial sense than going through life with the BA as their terminal degree. In fact, this is true even taking into account the cycles of the labor market as the most recent research straightforwardly demonstrates.

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*Of course, in theory, behavioral biases of potential law school applicants might impact decisions about whether to apply to law school. “Short termism,” for example, or bounded rationality, can prejudice decision making even though the objective data on outcomes in terms of lifetime earnings have not changed. The critics of law school like this possibility since they like to invoke it to demonstrate that their minor impact on the debate about law school data changed the dynamic of the legal education market place. I have not seen any serious data to back this up, however.

Washington Post feeds the anti-law school myth making again

Above the Law’s David Lat was let into the pages of the Washington Post today in an attempt to feed the beast of myth making about law school. This is becoming a bit of a habit at the Post which recently allowed one of its own columnists to mislead the public about law schools as I explained here. Perhaps it’s the influence of their new owner, Jeff Bezos, known to lean libertarian.

Lat implies there are too many lawyers (a favorite meme of the right, of course). Apparently he is ignorant of the laws of supply and demand. Law school applicants have declined significantly in the wake of the credit crisis, continuing a decades old pattern of cyclicality in the market for legal education. If there is an oversupply then the market has a way to deal with the problem. The availability of federal aid has not stopped the steep drop off in applications since the credit crisis anymore than it likely created the steep increase in the several years prior to the bubble’s burst.

He also implies that the fact that “only 57%” of recent law school graduates obtained full time legal jobs is indicative of the oversupply problem when, in fact, that outcome is broadly consistent with the proportion of licensed lawyers actually working as lawyers over the past two decades (according to data from the BLS and ABA). Only about 60% of licensed lawyers work as lawyers. I explored this issue in greater detail here.

While the manner in which law students fund their education can be a problem, the long term value of a JD remains positive for most law school graduates as recent peer reviewed research by Professors Simkovic and McIntyre concludes even when the current cost of law school is taken into account.

When you combine the actual data about what JD holders do with their degrees and what they earn over a lifetime – particularly relative to the alternative of going through life with just a BA as one’s terminal degree – it is not a surprise that law school remains an attractive option to tens of thousands of college graduates.

UPDATED – The Paul Campos higher education column fiasco – what was The New York Times thinking?

Professor Paul Campos thinks of himself as a kind of liberal (despite taking up the anti-lawyer rhetoric of the reactionary right wing Cato Institute – at an event held in the Hayek Auditorium no less – and serving as an “expert” for the Federalist Society). After all, he is a leading blogger at a website that touts a traditional far left line at almost every point, with endlessly boring posts about, for example, a labor history that has long been forgotten in post-industrial America. (And I say this as someone who has been a strong supporter of organized labor for many years.)

And since Campos has generated a small but dedicated following among disgruntled former law students with his vituperative but often wrong headed attacks on law schools (including the one he teaches at), it probably occurred to the liberal editors at The New York Times to task Campos with the responsibility of analyzing what ails all of higher education.

Big mistake.

Campos wanted, it seems, to argue that recent conflicts between state governments and University officials are misguided because the real problem is not a decline in state funding of education but an increase in the salaries paid to “administrators.”

It is, of course, true that there has been a significant increase in non-teaching professionals hired by colleges and universities over the last few decades. It is also the case that often (though not always if one includes community colleges, for example) the salaries paid those professionals have increased significantly and at rates higher than the increases awarded to teaching and research faculty and non-professional staff.

But it is not at all clear that these trends are linked to a decline in the quality of education provided by colleges and universities (an issue Campos ignores). And it is, in fact, quite clear that when one moves beyond the absolute numbers that Campos oddly relies on to more meaningful per student expenditures the picture changes. As Sandy Baum of the Urban Institute pointed out in response to the Campos column:

After adjusting for inflation, state appropriations per student were 18 percent lower in 2013-14 than they were thirty years earlier, and 29 percent lower than their peak in 1988-89. Over the past decade, state funding per student declined by 14 percent.

In contrast, institutional expenditures per student rose by a total of 6 percent at public doctoral universities over this ten-year period, and by 3 percent at public master’s universities. Community colleges spend 7 percent less per student in inflation-adjusted dollars than they did a decade ago. So there has not been a rapid rise in spending on public college campuses that could be the primary driver of tuition increases.

It is not rising expenditures, but declining state revenues that account for most of the pressure on state institutions to raise tuition.

In other words, it is far too simplistic to conclude that the battle ongoing between liberal Democrat Janet Napolitano, the President of the University of California, and liberal Democrat Jerry Brown, the Governor of California, is simply about Napolitano trying to defend the turf of her administrative team.

The furor over the article soon spread beyond the comments section of the Times, as Brian Leiter of the University of Chicago noted on his blog, to the Chronicle of Higher Education, Inside Higher Education and Slate. Now the criticism has spread to blogs like Crooked Timber, a home for liberal academics that one would normally assume would be supportive of criticisms of “administrative bloat” in higher education.

At every turn the Campos piece was criticized for being badly written, incoherent, and not fact checked. It is a bit of a mystery, then, why the Times would sacrifice very valuable real estate on such a critical issue of public concern for an individual who has no serious background in the field. As Professor Leiter noted, Campos has trouble with long division. Those of us who have tried to disentangle Campos’ often convoluted and thoughtless comments on the law school world already know about his limitations particularly when he tries to handle data. A bit of diligence by the Times might have saved them the embarrassment this piece has caused and perhaps a responsible contribution to this important and complex issue could have been made.

UPDATE: The Washington Post has joined the list of critics of the Campos piece while the digital media site Talking New Media says the Times is “taking it on the chin” for the piece.

UPDATE 2: Even academics who profess to like Campos found the piece “misleading.” Other commentators have been less, well, friendly. The AAUP’s Academe blog weighed in as well saying it would be generous to say Campos gets the story “half-right.”I did, after a diligent search, find a single solid fan of the Campos post here at a blog called International Liberty run by Dan Mitchell, a senior fellow at – you may have guessed it – the Cato Institute. Mitchell is proud that the UK Guardian calls him “a high priest of light tax, small state libertarianism.”

UPDATE 3: Campos may not be able to retain his liberal credential after this assessment of his column by the think tank Demos. They called the op-ed “terrible,” “unbelievably misleading,” “badly wrong,” “irresponsible” (for ignoring per student expenses), and, finally, “outside” of “evidence-based reality.” No wonder they ask the same question I did and that, as of yet, has gone unanswered: how did this piece get by the Times’ fact checkers?

UPDATE 4: The Times has run several letters, mostly critical of Campos, here. This hardly makes up for their mistake but perhaps the Public Editor will take a closer look at what led to this debacle, as I suggested to her yesterday.

Compelling new paper on Kant demonstrates relevance of legal scholarship

imagesOnce again a leading legal scholar, this time Orin Kerr of George Washington University, has demonstrated the relevance and power of legal scholarship.

Responding to a dramatic challenge to academia from none other than Chief Justice Roberts, Professor Kerr tackled a longstanding open question in legal history: what, exactly, was the contribution of the philosopher Immanuel Kant to the law of evidence in 18th century Bulgaria?

Relying on original research into the question including contact with the Library of Congress, Professor Kerr concludes that in all likelihood Kant’s influence in Bulgaria was non-existent.

The posting of this paper on SSRN (here) is significant in and of itself. Ordinarily research with what is called a “non-result” is quickly buried in the back yard of academia, never to be heard of again. Recently, however, there have been calls for non-result research to receive greater attention. This may explain why the widely followed Legal Theory blog managed by Professor Larry Solum gave the paper the attention it did earlier this week.

Chinese state cracks down on Berkeley labor education effort

A major blow to the idea that there can be engagement with the Chinese state unions as described in the Wall Street Journal.

Another account here:

Chinese state cracks down, but workers keep fighting | REDFLAG.

Sadly, some in the law school world operate under the same illusions as some in our democratic labor movement. See my exchange with NYU professor Rick Hills here and here.

New research by Simkovic and McIntyre delivers another blow to law school critics’ case

Exhaustive analysis by law professor Michael Simkovic and finance professor Frank McIntyre demonstrated conclusively that earning a JD provides a lifetime earnings premium relative to going through life with just a BA degree. That paper, The Economic Value of a Law Degree (but known widely as “The Million Dollar Degree” paper because that is the present value of the premium earned (pre-tax and pre-tuition) at the mean for JD holders), was recently published in a leading peer reviewed journal.

The results of that research undermined the credibility of the attack on law schools by a range of figures inside and outside the academy. That attack rested largely on anecdotal information, weak assessments of the small amounts of data that was examined as well as outright bluster, so the appearance of rigorous empirical research was jarring to the critics. Some tried a range of unfair personal attacks on the authors or floundered around in a futile attempt to undermine their methodology. These attacks reflected badly on the collegial culture that is so essential to the academic enterprise.

Now Simkovic and McIntyre have extended their earlier work posting a new research paper to SSRN that reaffirms their earlier conclusions from a new angle. While still a working paper, the authors conclude that efforts to time one’s decision to go to law school relative to the ups and downs of the economy are not worthwhile. The idea that someone who wants to earn a JD should consider delaying that effort because of a downturn in the economy is only likely to reduce the lifetime premium one can accrue by earning a JD.

Here is the abstract from the new paper, entitled “Timing Law School”:

“We investigate whether economic conditions at labor market entry have persistent effects on law graduate earnings. We find that unemployment levels at graduation continue to affect law earnings premiums within 4 years after graduation. For law graduates entering the labor market in strong economies, early outcomes are particularly good. However, the effect quickly fades as law graduates gain experience and the impact on lifetime earnings is relatively small. Outcomes data available prior to matriculation do not predict unemployment or starting salaries at graduation. Earnings premiums are not predicted by either cohort size or projected job openings. Even an effective “timing” strategy would likely be outweighed by the opportunity cost of a two-year delay in law school completion.”

Relying on Census Bureau data, the authors track the earnings of new JD holders (80% of a larger group of professional degree holders other than those in medical fields) and find that even those unfortunate enough to graduate into the worst financial crisis in American history have out-earned their college colleagues who decided to stop their education with a BA. Here is a table demonstrating those results (the vertical black line demarcates 2008):

New S M paper

As the wider macroeconomy improves, the market for JDs is also improving as discussed here, here and here. Combined with the longterm and in depth research of these authors, this development does not augur well for the few remaining critics of law school.

Much of the effort by the critics to persuade students not to go to law school revolves around a peculiar obsession with the short term. Perhaps that is understandable for people in their 20s and it may go a long way to explaining the volatility of the rate of applications to law school. Those applications cycle up and down even though the actual number and incomes of employed lawyers has increased steadily for many years. In light of this new research, however, it borders on professional irresponsibility for experienced legal academics and lawyers to feed into the short term meme.

I asked co-author Michael Simkovic to summarize the key takeaways of the new paper. He responded with the following list:

1) If the decision is between going to law school and entering the labor market with a bachelor’s degree, most people will be much, much better off financially over the course of a lifetime with a law degree, whether they graduate into a good or bad economy

2) The luck of timing (graduating into a good or bad economy) matters for the first few years, but in the long run, doesn’t make much of a difference

3) Short term indicators like employment or earnings 9 months after graduation from NALP or the ABA are not very useful. These short term fluctuations don’t predict what you can expect 3 or 4 years in the future when you graduate. Better to focus on long term historical averages rather than recent short term fluctuations (i.e., read The Economic Value of a Law Degree).

4) You can’t “time” the market by waiting for the “right” time to go to law school, so don’t try. The best time to go to law school doesn’t depend on entering class sizes and it doesn’t depend on what’s currently going on in the economy.
(there might be an exception if law school is particularly inexpensive at a particular point in time because of more scholarship money, and the quality isn’t any lower, but that’s a cost issue, not a value issue).

5) The best time to go to law school is the earliest point possible after which you make the decision that you’d eventually like to go. By waiting, you’re spending more of your limited working life working for lower wages, and you aren’t changing your chances of graduating into a more favorable economy.

6) There’s no evidence that young law graduates in recent years are doing worse, relative to bachelor’s degree holders, than would be expected based on the historical data and the recent economic downturn. In other words, there is no evidence that structural change has reduced the value of a law degree; if anything, it seems to be increasing over time as the earnings of highly educated workers keep increasing in real terms over the long run.

7) You probably won’t become a partner in a big law firm and that’s okay. You’ll probably still earn a lot more over the course of a lifetime than you would without a law degree.

8) You probably won’t get a job at big law firm; most people don’t now and most people haven’t in the past. That’s okay. You’ll probably still earn a lot more over the course of a lifetime than you would without a law degree.

9) You don’t need to practice law to benefit financially from a law degree; around 40 percent of law graduates do not practice law, and they still generally earn substantially more than they would have with just a bachelor’s degree

10) If you’re deciding between law school and another type of graduate school, stay tuned; we hope to have better information on this question soon; What little information is available suggests that a law degree probably compares reasonably well to most alternatives other than a medical degree in terms of the boost to earnings and the cost.

Among the most telling of these points is that a very substantial number of JD earners do not practice as lawyers and even among those that do very very few end up as partners of major law firms. Yet, much of the attack on law school has centered on nine month employment rates in JD required jobs. That kind of focus is misguided and has been for many years. What might be more useful would be a debate about aligning what we really know to be the case about JD earnings and the cost of going to law school. There may be a mismatch in assets and liabilities – in other words, debt repayments should be structured to allow young JD holders time to get established in the work force. IBR and other payment plans may have this effect but this area could likely bear closer scrutiny. Insulting law schools and law professors will not move the needle very much.

The continuing disconnect between law school critics and market reality

I just happened to notice that the law school critics continue to distort the findings of the Simkovic and McIntyre paper on the economic value of earning a JD. This paper sends a chill down the spines of the critics because it lays waste to their argument with straightforward data. This requires them to engage not just in mental gymnastics that lead to the kinds of absurd confusions about valuation found here and here but now to outright falsehoods posted to one of the most important law school blogs in the country.

One egregious example is found in the comments section at Paul Caron’s blog, TaxProf. There one finds another anonymous (and ubiquitous blog) commenter named “Unemployed Northeastern” (UNE) who thinks that he has a better grasp on the economics of legal education than that provided by the exhaustive research of S&M.

UNE states, for example, that the paper is not peer reviewed. But the Journal of Legal Studies which just published the S&M paper is a peer reviewed journal published by the University of Chicago. As it states on its web page: “Manuscripts are reviewed in a single-blind process: the identities of authors are revealed to referees, but referees remain anonymous.”

UNE makes other false or misleading statements as well such as a claim that:

“The study does not include any salary information for law school graduates from the classes of 2008 through 2014, which is a period about 40% as long as the cohort in their study (mid-90’s through 2007). *Coincidentally,* that is when law school grads’ prospects and salaries fell off a cliff.”

The clear suggestion is that S&M purposely cut off their data at a point when new data would contradict their initial conclusion. This is baseless and unfair. It is also just plain wrong.

First, the paper relied on data from four year panels produced by the Census Bureau. The authors begin their work with the 1996 panel and the last one available to them when they conducted the analysis was for students who graduated in 2008. They then track what happens to all JD holders in those panels through 2013. This includes, therefore, the entire period of the recent recession. It does not include someone who earned a JD after 2008 but S&M make clear that it is all but impossible to conclude that this would change their result.

As they write (p. 273):

“Although our sample does not include those who graduated after 2008, it includes 2008 graduates who, as young and inexperienced workers, are likely vulnerable to many of the same shocks. Our sample also includes individuals who graduated during previous recessions, and the long-term impact of early-career recessions on subsequent earnings is therefore averaged into our results. Future research could explicitly consider cohort effects.”

There is certainly no basis for the insinuation made by UNE that the authors were fixing the data.

Their logic is simple: they are measuring career earnings for JD holders relative to holders of a BA. Earnings in the early years of a career as a JD holder are lower and rise over time. In fact, JD holder earnings peak nearly 20 years after law school, much later than those of BA holders.

Fig. 1:

The Economic Value of a Law Degree Fig 1

As S&M write (p. 271):

“Another limitation of the NALP data and of studies that focus on starting salaries is that earnings of professional degree holders, including law degree holders, typically grow rapidly and peak in middle age. First year earnings represent a small fraction of the present value of lifetime earnings—roughly 2 percent for law degree holders—and are imperfect predictors of subsequent earnings.”

In addition, earnings of lawyers are cyclical, as their data make starkly clear.

Fig. 2:

The Economic Value of a Law Degree

As S&M write: “we investigate changes in the law school earnings premium from 1996 to 2013 and find a cyclical pattern….Although the earnings estimate declined from its 2008 peak in recent years, the estimate remains close to the long-term historical average. Indeed, the estimate was lower in the late 1990s and early 2000s than in the last 3 years. The estimate today is about the same as it was in 1996.”

The impact of the recession caused a downturn in the earnings of JD holders but the effect was short lived as the data I summarize below indicates (with only one down year – 2008 – in lawyer incomes since 1997). UNE also ignores the fact that the value of a JD is relative, as S&M make abundantly clear: “The economic value of a law degree turns not on whether law school graduates practice law but rather on how much more readily they find work with the law degree than they would have without and how much more they earn with the law degree than they would have without.” (p. 252)

The alternative for most law school applicants is life without an advanced degree or certainly life without one as valuable as a JD. Thus, the question that always must be posed is whether one is better off with a JD, even in the middle of an economic downturn.

The S&M answer is unambiguously yes: “The unadjusted log earnings gap of .67 between the general population of bachelor’s degree holders and law degree holders translates into an average earnings premium of 95 percent.” (See Table 2.)

UNE continues his baseless attack on S&M with a suggestion that the authors lack the training to carry out the project, suggesting that one of the authors, law professor Michael Simkovic, is not as highly credentialed as another leading law school critic named Stephen Harper. Harper spent his entire career as a litigator for a major Chicago law firm and has been criticized by me and others for his failure to understand the basics of valuation as it applies in the law school debate. It borders on silly to suggest Harper is more capable of analyzing the JD labor market than S&M.

UNE also attempts to minimize the fact that the S&M paper was widely circulated in advance of its publication in a peer reviewed journal and was read favorably in advance by a wide range of leading figures in labor economics. This is a standard part of the academic vetting process and is intended to test the results and methodology of a research project. UNE seems unfamiliar with this aspect of scholarship. I detailed the results of this process in a blog post at the time because a similar kind of attack on the paper was made by Brian Tamanaha who quickly folded his tent. As I wrote then:

“Their research was reviewed in advance of its posting on SSRN by a large array of respected senior scholars in law, economics and business. It was also peer reviewed prior to its acceptance at the American Law and Economics Conference held at Vanderbilt earlier this year, prior to its public posting on SSRN. As a test, without telling the authors, I wrote to one of those reviewers [fwiw, a very senior figure in labor economics] who, in fact, is a fan of the work of Tamanaha and asked him for his view of the research. He sent me the copy of the comments he originally sent to the authors in which he concluded their paper to be ‘very careful and well done’ although he reserved judgment on whether what is happening in the market for JDs is ‘all cyclical or at least partially structural.’ This is hardly the reaction of a reader who believes the work he is considering is sloppy much less faulty or misleading.”

Suffice to say that while Professor Simkovic is a young scholar he is more than capable of carrying out the research and UNE (whose academic credentials remain a mystery) has failed to identify a serious flaw in the work. It is not a surprise that it was published in a leading peer-review academic journal published by the University of Chicago.

(Professor Simkovic also, of course, had the assistance of a co-author, finance professor Frank McIntyre. This is a standard form of co-authorship in the academic world where specialization requires collaborative work across fields. I make no apologies, for example, for the fact that I rely heavily on my co-author, an economist, for our work on the structure of stock markets. UNE simply ignores this, no doubt because it weakens his position.)

In fact it is clear that the law school critics have a very weak understanding of labor economics and of the particular nature of market for lawyers. They also make the mistake of conflating the market for law schools and the market for holders of a JD and for lawyers. The latter markets have been very stable over time, consistent with the S&M results.

Below are several charts that indicate the disconnect between the “market” for law schools in terms of numbers of law school applicants and enrollees, on the one hand, and the market for lawyers. As a comparative metric, I have included a chart showing US GDP growth. The picture one sees is a very volatile market for law schools and a very stable market for lawyers and GDP growth, the recent downturn notwithstanding.

US GDP 1997-2013:

GDP

Working Lawyers 1997-2013 (BLS):

Working Lawyers US 1997-2013

Licensed Lawyers 1997-2013 (ABA):

Licensed Lawyers 1997-2013

Lawyer Incomes 1997-2013 (BLS):

Lawyer Incomes 1997-2013

First Year Enrollment 1997-2013 and Law School Applicants 2005-2013 (ABA and LSAC):

Enrollment Applicants

Because the available LSAC data begins only with the recent downturn, compare this chart from an LSAC memo which shows in the top black line LSATs administered and in the green line first year admits and then most relevant for this blog in red the number of applicants going back to 1980-81.

ABA data

Note the prior peaks and valleys in applicants. We have seen this picture before.

Finally, here is JDs granted 1997-2012 (ABA):

JDs granted

The conclusion one draws from this picture is that the labor market for JDs remains stable, healthy and continues to grow. Law schools are producing licensed lawyers and JD holders in a pattern that is fairly consistent with the growth in the market for those graduates, and, importantly, with the earnings premium they will accrue over a career compared to going through life with only a BA degree (the only realistic alternative for most law school applicants).

The more volatile swings up and down in law school enrollment and applicants remain to be explained. I have suggested elsewhere that several factors impacted the current situation including the steep rise in enrollment in the wake of the crisis due to the “law school as hideout” factor linked in turn to the fact that the economy did not recover in time to provide immediate employment to graduates at the rate they desired. But for those bitter-end critics still hoping to see widespread closures of law schools (for reasons that seem more ideological than logical) they are likely to be sorely disappointed. The data stacks up against them.