Legal Education Reform: New Regulations, Markets, and Competing Models of Supposed Deregulation

This article originally appeared in The Bar Examiner print edition, December 2014 (Vol. 83, No. 4), pp. 21–30.

By Bryant G. Garth “The law school model is broken” is a refrain that we hear from many fronts, referring to already-high tuitions increasing at a rate that outpaces inflation by a substantial margin, the use of these expensive tuitions to pay professors who teach relatively few courses, and unsustainable levels of student debt. This diagnosis was evidently behind the mandate given to the American Bar Association (ABA) Task Force on the Future of Legal Education,1 which was created in 2012 to investigate problems in the U.S. model of legal education and to identify possible solutions. The Task Force was convened notably by the ABA itself and not by the ABA Section of Legal Education and Admissions to the Bar—the ABA Section was no doubt deemed part of the problem.

This diagnosis has also given license to state bar associations to push new reforms. One or two of the approaches to reform in the Task Force Report and in state bar proposals and programs take on major legal education issues—such as two years of law school instead of three, and faculty scholarship versus increased teaching loads. This view of legal education is also giving rise to alternative programs such as Washington’s Limited License Legal Technician program, which, with reduced educational requirements, authorizes limited practice by this new type of legal service provider.2

Others in legal education are clearly using the timeworn strategy of “not wasting a crisis” to implement projects desired on other grounds—such as requiring pro bono service for admission (as was implemented in New York beginning in 20133) or considering practical skills training requirements for admission (as was recently recommended in California4). And still others are simply using the opportunity to bolster the employment prospects of law graduates through early bar exams (an experiment under way in Arizona5) or even considering a diploma privilege (whereby graduates of a jurisdiction’s in-state law schools do not have to take the bar exam to become licensed in that jurisdiction—a proposal recently explored but rejected in Iowa6).

I want to use this article to describe some of the ideas and projects that are in the air today, but my larger goal is to relate these proposals to issues of regulation and markets. The discussion necessarily goes beyond requirements for admission to the bar. Education generally—including legal education—has moved from a highly regulated market characterized by muted competition to a much less regulated market with vigorous competition. The question is whether we can expect more positive change today—fixing the so-called broken model—from the reform proposals now circulating or from the workings of the law school market that we have created over the past two or three decades. At this point, I will contend, the commitment to competition is too far advanced to make a return to the full regulation model effective.

More fundamentally, we face two different deregulatory alternatives, and there are consequences in the choice between them. One is a new kind of what can be called “regulation in the guise of deregulation.” I identify this as one possible outcome of the ABA Task Force Report, and it is consistent with the prescriptions of legal scholar Brian Z. Tamanaha, who in his book Failing Law Schools argues for an emphasis on lower-cost practical training, possibly in a reduced number of years, geared toward improving access to law degrees.7 The other is deregulation that continues the path we have been on, which seems to have gotten us into so much trouble. I will argue, perhaps paradoxically, that the latter path is better for the legal profession and will accomplish in a more positive fashion what the ABA Task Force and many commentators favor—which is more product differentiation among law schools.

A Look Back at the Old Model of Legal Education

I have been dean of two different law schools during two dramatically different eras in legal education—Indiana University Bloomington School of Law in 1986–90 and Southwestern Law School in 2005–12. I speak therefore from experience, and I also believe that my account is consistent with what research shows. In the late 1980s, all accredited law schools were nonprofit. Most professors were full-time and on the tenure track. The great majority of public law schools kept in-state tuitions low. The concept of formal rankings was just beginning to take hold. Students, professors, and law firms certainly knew there was a hierarchy,8 but many students—lacking detailed information on the hierarchy of reputation and sensitive to transportation costs—did not commit to the hierarchy in their law school choice. There was not a truly national competition for students, and the general opinion was that changes in law school programs, facilities, and faculty would not change student credentials or reputation appreciably. (One axiom I was taught, for example, was that every Big Ten law school was better than any Big Eight law school.)

Still, competition was beginning, and each year, I had to explain to the University’s vice president how the law school was getting better and how we might measure it—applications were up, credentials were up, and so on. There were already complaints about costs and debt by such notables as David Chambers (a leading commentator on the legal profession and initiator of the well-known study of Michigan law graduate careers9) and Jack Kramer (iconoclastic dean of Tulane University Law School in the late 1980s),10 and I remember that we competed for prestige partly in the number of volumes in the library. Competition was increasing, but the model of legal education was pretty uniform—a model developed under the leadership of the ABA and the Association of American Law Schools (AALS) in part to put pressure on the urban law schools that served immigrants and the relatively less well-off.11 The ABA Section of Legal Education and Admissions to the Bar helped keep the system in place. It would have been unusual in that era for any faculty to adopt a reform proposal because it offered the promise of attracting more applications from more highly credentialed students.

Factors Leading to the Current Model

As Stanford economist Catherine Hoxby has shown, the intense competition at the undergraduate and graduate levels that we have today came from increased transparency about law school hierarchies and from the reduced transportation costs that allowed applicants to consider a much greater geographical range of schools.12 The courts and the era of deregulation helped, as courts struck down some of the regulations that had kept the system in place—for instance, banning nonprofit accreditations by the ABA and mandating shared salary information. And deans influenced by law and economics and the general rise of neoliberalism in the U.S. economy attacked other seemingly restrictive regulations.

The market for students and professors heated up tremendously. Accelerated tuition increases went to new programs, including clinics and enhanced legal writing instruction; scholarship assistance to “buy” highly credentialed students; new facilities; new services, including greatly enhanced academic support and bar assistance programs; and general support for faculty scholarship to build the reputation of the faculty. At a relatively few schools, in addition, tuition increases went toward attracting academic “stars,” which also led to reduced teaching loads at certain law schools.

Hoxby demonstrates clearly that the tuition increases were the result of more competition, not more regulation. This competitive system meant that students tended to follow the hierarchies of the rankings, and when comparing similarly ranked schools, they looked at facilities and programs, prompting schools to focus on adding facilities and developing new programs to attract students. Confident in the value of law school, even with rising tuitions, students did not shop on the basis of price—also because the large price gap between public and private schools had largely disappeared. In addition, in order to expand services and programs without shattering budgets, law schools (and universities generally) began hiring more and more professors off the tenure track.

Deans in the era of competition have very different assignments. They are supposed to articulate and improve the law school’s ranking by attracting better students and faculty. The faculty is much more likely to follow that vision today than in the past, because most law schools intensely feel the competitive pressures that U.S. News & World Report fuels and channels—but did not create—through its ranking system. Deans today are paid substantially more than faculty members. That was not true when I was dean 25 years ago.

My argument is that because of the market and competition, we evolved the “broken” model we have today. We can now look at the proposals in circulation to see what, if anything, they do to fix it. I believe that most of the proposals are part of the competitive model or are consistent with more competition. Indeed, the most notable task forces—the ABA Task Force and the New York City Bar Association Task Force on New Lawyers in a Changing Profession13—recognize that competition has fueled change and embrace this competition and the product differentiation it encourages.

A Look at the Current Reforms

Before discussing some of the ideas for reform, I should mention the ABA Task Force’s curious take on competition. The Task Force Report states that “[l]aw schools have long escaped pressure to adapt programs or practices to customer demands or to the pressures of business competition. . . . [C]urriculum, culture, and services have developed with little relation to market considerations.”14 It calls for a “reorientation of attitudes toward change, including market-driven change.”15 It sees the culture of law schools as conservative and “entrenched.”16 The reason, according to the Task Force, is that faculty members insist on seeing scholarship as “an essential aspect of a faculty’s role,”17 implying quite strongly that scholarship is done mainly for “status.”18 In fact, I will insist, the competition for status in and through scholarship is absolutely essential to understanding the intense competition in the law school world today. I will explain this aspect of the market later in this article. First, I will take a look at the main set of reforms circulating today—focusing especially on those that change admission to the bar.

Additional Admission Requirements

The State Bar of California’s Task Force on Admissions Regulation Reform recently proposed to mandate competency training, including 15 units of pre-admission competency skills training and 50 hours of pro bono service to poor or modest-means clients.19 The California Task Force insisted that the mandate would not have any impact on law school tuitions, since most law schools already could satisfy the conditions through externships if not through clinics. The proposed new regulation to some extent impedes the development of multiple models of education in the name of practical skills, and it affirms what happened before that helped to increase tuitions to the level we have today—competition in programs and services. Most law schools expanded clinical offerings (as well as less expensive externships) in order to attract students. In terms of competition, we can say that California’s proposal advantages the schools that have already built these requirements into their tuition.

The New York State Board of Law Examiners has mandated 50 hours of pro bono service before a law graduate is sworn in to the New York Bar.20 Other states, including Connecticut21 and New Jersey,22 have been considering similar reforms. Here, too, the impact will be to reinforce a trend that emerged through law school competition—adding new programs to attract students. And the trend also has cost impacts that are generally not discussed, since the pro bono opportunities do not necessarily appear spontaneously—although the requirement can be satisfied by internal means such as qualifying work performed during participation in law school clinics or through law-school-sponsored projects, helping students connect with external pro bono opportunities and verifying the pro bono service will presumably require internal resources.

Early Admission Options

New York’s Chief Judge Jonathan Lippman recently announced as well that there will be a Pro Bono Scholars Program (PBSP) available to certain students who will spend their last semester of law school doing pro bono service—and who will then be able to sit for the bar exam during that last semester and then potentially be admitted upon graduation.23 The pro bono requirement, again, can be seen as reinforcing competition by forcing schools that have not built pro bono into their programs to do so.

Another set of reforms, interestingly, provide the same student benefit that the New York PBSP program would offer—admission to the bar upon graduation. Iowa recently considered (although eventually rejected) the diploma privilege for law graduates in the state,24 and Arizona has enacted an experimental program that allows students to spend their last semester first prepping for the February bar examination and then taking practical courses.25 These kinds of early admission programs clearly advantage the graduates of law schools in particular states. In a tough job market, when corporate law firms are not hiring as much as in the past, many of the available positions require the applicant to already be a member of the bar. Those who graduate with bar membership have a notable advantage over those who must wait up to four months for their bar results.

What is surprising about these reforms and proposals is that they are not very numerous and they only reinforce what the market has produced—rewarding those law schools that have already moved in the desired direction and forcing those who have not to ante up. There is no effort to fix a so-called broken model.

Alternatives to the Three-Year Law Degree

There are more fundamental reform proposals and programs coming out of some states, however. One is the creation in Washington of a new kind of quasi-lawyer meant to be analogous to a nurse practitioner—the Limited License Legal Technician, trained through a combination of 45 law school credit hours and 3,000 hours of law-related work experience.26 The initial area of law to which the rule applies is family law, but there are plans to expand into other areas where there are strong unmet legal needs. This new type of legal service provider provides an alternative career for those who want to serve individuals in a potentially rewarding occupation without gaining the status of a fully licensed lawyer. The ABA Task Force also suggested more innovation along these lines.

Another more radical innovation, proposed by such notables as Daniel Rodriguez, currently president of the AALS, and Samuel Estreicher, a well-known professor at New York University,27 is to allow individuals to stop law school after two years and simply take the bar examination. In some respects, this innovation is also aligned with market trends, since two-year law schools (e.g., Southwestern, Dayton, Northwestern) are now increasing in number, even though traditionally costing the same as three-year programs. Given that the third year consists increasingly of practical skills courses partly in response to various new regulations, it may make sense for individuals to graduate after two years, take the bar exam, and then use CLE and similar programs to acquire practical skills less expensively.

We know from the After the J.D. project,28 however, that elite law graduates are more likely to say that the third year is unnecessary than are non-elite graduates,29who presumably feel that the third year helps in bar exam and practice preparation and in the acquisition of essential contacts through externships in particular. But the market may produce substitutes, as noted above. The New York City Bar Association Task Force’s thoughtful report, interestingly, favors the continuation of the third year as a way to make lawyers more practice ready and competent.

The ABA Task Force’s Position

Finally, the ABA Task Force has weighed in on these proposals and debates. Its Report did not call for major changes through new regulations, despite the sense of crisis that provoked the creation of the Task Force. The Report in fact expressly embraced the deregulation trend that has characterized legal education in the past two decades—calling for the ABA to deregulate further in the interests of more differentiation among law schools. In particular, the Report supported the idea of more low-cost law schools characterized by faculty who do not produce scholarship and have increased teaching loads, and with part-time professors playing a larger role. The Report also suggested more experimentation with quasi-lawyer degrees such as the one created in Washington.

As noted above, the Report has great difficulty with faculty scholarship, suggesting that it may help to promote “public value” and “improv[e] law as a system of legal ordering” but generally characterizing scholarship as the product of an “entrenched culture” and a seemingly unproductive and overly expensive search for “status.”30 The general embrace of faculty scholarship within law schools led the Task Force to state that law faculties are conservative and too insulated from the market, which presumably would favor lower tuitions at the expense of scholarship. Insulation from the market, according to the Task Force, led to the general faculty emphasis on scholarship and prestige.

Supposed Deregulation: Disadvantages to the Law School Market

The ABA Task Force Report’s deregulatory message, in my opinion, comes with a potential regulatory bite—what I referred to earlier as “regulation in the guise of deregulation.” I can imagine, for instance, ABA accreditation site evaluation teams strongly suggesting to lower-ranked law schools that they should back off their efforts to promote scholars and scholarship. The message of the ABA Task Force Report—and of many commentators, particularly Brian Tamanaha—is that the key to fixing the broken model is to severely cut down the number of law schools competing in the scholarly marketplace.

This approach goes hand in hand with the idea that two years of legal education is enough for legal service providers who serve individuals, possibly with the support of new quasi-lawyers. These careers would be more affordable and accessible than careers that pass through the elite three-year law schools and culminate in employment at corporate law firms. The no-frills education, according to this approach, is plenty good enough for most jobs serving individuals. The result of this somehow institutionalized division of labor would be reminiscent of the “two hemispheres” depiction of the bar originally posited by John P. Heinz and Edward O. Laumann in Chicago Lawyers: The Social Structure of the Bar, published in 1982.31 At that time—and from at least the turn of the 19th century—corporate lawyers came from different religious and ethnic groups (primarily WASPs—White Anglo-Saxon Protestants) than lawyers who served individuals, and they went to different law schools (Ivy League schools, Michigan, Northwestern, and University of Chicago producing corporate lawyers, versus mainly Chicago Kent, John Marshall, DePaul, and Loyola producing lawyers who served individuals). The current proposals for regulated deregulation would tend to divide the law school market in the same way. The relatively privileged would be taught by scholars in elite three-year law schools and would gain jobs in corporate law firms. The less privileged would attend the lower-ranked law schools with fewer scholars and perhaps a two-year degree leading to employment in solo and small-firm practices serving individuals.

The rankings hierarchy would also be frozen in certain ways since the ambition of rising through faculty prestige would be severely circumscribed. As a recent dean at Southwestern, I naturally react to this proposal—promoted as deregulation but meant to impose a model on schools not high in the existing hierarchy—as one that unduly limits those who today come from relative disadvantage and tend disproportionately to attend the schools that are not highly rated. The progress since the publication of Chicago Lawyers in fact means that top students from the urban law schools have had the opportunity to cross the divide and become partners in corporate law firms.32

Allowing the Current Competition to Continue

More fundamentally, I want to contrast the kind of deregulation advocated by the ABA Task Force Report with allowing the current competition to continue. There are two elements to the argument for allowing the current competition to continue. First, I believe we need to recognize that scholarly competition is an essential feature of the role of law in our society. Second, I suggest that, based on Hoxby’s economic analyses of undergraduate education presented above, the deregulation that is already in place is likely to further fuel the differentiation between elite and non-elite law schools. The attack on faculty scholarship will not help much and may do considerable damage. These points are largely missing from the debate.

An Argument for Faculty Scholarship

The first point requires some sociology. The legal field in the United States comprises a set of related practices that, we can posit based on established sociological theory or even economics, work together for the prosperity of the field. Law and economics scholars have made careers out of finding the economic efficiency justification for social and organizational practices, arguing perhaps too simply that there must be a justification or the practices would not continue.

Sociological or organizational theory is a little more complex. It posits that the practices of a field may not be the very best or most rational way to operate, but they do serve the interests of the field or they would not have survived and become relatively entrenched—sustained by incentives and hierarchies within the field.33 Following this line of analysis, it is not difficult to see what the legal profession gains from this far-ranging competition for professors and scholarship throughout the hierarchy of law schools.

We take for granted that lawyers should be social engineers and leaders in solving social problems, but it takes sustained scholarly effort to provide potentially credible solutions in the normative language of law. Credibility does not come from the formal law, but from the link of the formal law to the most credible science, including social science. Scholars compete in part by importing work from elsewhere on the campus into the law, and that importation has become central to the credibility of law—hence the demand for J.D.-Ph.D.s. The Legal Realists in the 1930s imported from the social sciences to help serve the New Deal. Activists in the 1960s imported from criminology and sociology especially. Sometimes the importation is irrelevant to current concerns or very poorly done, but the mass of articles produced out of scholarly competition sustains the role of law. More recently, the rise of law and economics gave lawyers a key role in the economist-led deregulation, and the invention of Originalism—the claim that the original intent of the framers of the Constitution dictates today’s conservative interpretations—provided a legal doctrine that judges could use to help enact the agenda of the conservatives. In each case new doctrines in the law reviews provided avenues for lawyers to play a central political role as political agendas changed.

There are countless examples of innovative legal doctrines providing the basis for law-based solutions to social and economic problems. They include the invention of sexual harassment as a legal wrong and the invention of much of the architecture of globalization, including trade law and corporate governance. The incentives that produce this scholarship are such that professors at virtually all law schools wish to gain recognition as scholars, and—whether U.S. News rankings existed or not—peer respect is central to the reputation of law school quality and the position of law schools in the hierarchy. The competitive market in scholarship, in short, builds individual careers and the reputation of law schools while it leads to the production of legal scholarship that makes law and lawyers central to the solution of social and economic problems.

It is true that productive scholars—because of the structure of the market—cost more, and incentives to retain top scholars, such as reduced teaching loads and research support, also are potentially costly. My own educated guess is that even in the recent era of high tuitions, however, most of the increase in revenue was going to academic support and other new expanded programs and services, with a relatively few law schools going to the extreme of paying diva salaries to the most prestigious scholars.

How the Market Differentiates Law Schools without New Regulation

What happens with academic markets, Hoxby contends, is that the top of the hierarchy can keep raising tuition and put the revenues—augmented by alumni contributions—back into programs, facilities, faculty, and scholarships. Law schools without the same reputation and resources, however, will have to hold down relative tuition increases at some point, and apparently that time came with the current economic crisis (even if masked by tuition discounting).

Because of the questioning of the value of the law degree that came with the Great Recession, price has become an issue for consumers. Law schools such as Brooklyn recognize this change and are now—as part of the regular competition—marketing through lower (but still pretty expensive) tuition. We can predict that those law schools that cannot keep up the revenues in the future will be hiring relatively fewer tenure-track professors, devoting fewer resources to bid for potential academic “stars,” and relying on more part-time faculty as well. The differentiation between elite and less-elite liberal arts colleges foreshadows what is happening in law schools.

Conclusion

What will the result be? One hypothesis is that we will end up in a world not too dissimilar to what the ABA Task Force Report posits—increasing differentiation among law schools and a vast gulf between those law schools with seemingly unlimited resources, top scholars, top students, and top opportunities and those law schools with severe resource constraints, no ability to keep raising tuition more than the cost of living, perhaps a few scholars, and much weaker students in terms of credentials. We might have been better off if the era of intense competition had never started, but there is no turning back now.

The advantage of this recognition and support of the real competition—not the one that many want to impose on law schools—is that those law schools that are able to compete—perhaps with exceptional good luck in alumni support or alumni self-help and networking or innovative programs—may continue to do so. And the neglected but crucial competitive market for legal scholarship will continue to operate at all levels, with innovation often coming from those who are hungriest. Even though the gap between the haves and the have-nots in legal education will grow, the line between those who serve individuals and those who serve business—which defines the lawyer hierarchy—will not be rigid and impermeable.

This potential future suggests a much greater spread in tuition, and some law schools may become as affordable as the California law schools that do not have ABA accreditation. Mainly students who cannot get into more prestigious schools will attend the bottom of the hierarchy, because they will want to have some shot at the brass ring of a corporate law job. But the process will continue (whether schools remain smaller in response to less demand or expand again). Competition helped to produce a market with steep tuition increases for a time, but competition will also make relative adjustments even as the intensity of the competition remains very high.

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