Lawyer Salaries versus Law School Tuition: Are Law Schools Nearing the End of a High-Tuition Era?

The media and blogosphere have been abuzz with news that while many young lawyers have high incomes, many more struggle to pay off astronomical student debt with middle-class ($40,000-$50,000) salaries or with "temp document reviewer" jobs offering "no room for promotion" (and not even health insurance) that consist entirely of the "tedious, time-intensive grunt work ... [of] sift[ing] through electronic documents."

With no pot of gold at the end of the law school rainbow, the price of legal education may be approaching a breaking point; the interesting questions are when and how that breaking point will arrive.

High Pricetags, and Increasingly Few Bargains to Be Had

Most law schools are private and have raised tuition substantially in recent years, yielding a current three-year pricetag of $100,000 or more. Compounding the problem, the once-popular alternatives - public law schools, and scholarships at lower-ranked private schools - are no longer the escape hatch they once were.

Leading public law schools, to avoid falling behind private schools in resources, have raised tuition to 50-90% of private school tuition. Private law schools no longer cost much more than elite public schools like the Universities of Virginia (with tuition of almost $100K even for in-staters), Michigan (over $110K), and California-Berkeley ("just" $75K, but due to rise to about Michigan's level in a few years).

Another option for cost-sensitive students is to seek a scholarship. A New Yorker with good enough GPA and LSAT scores to get into first-tier Fordham, for example, likely could get a nice scholarship from less elite but still solid nearby schools like Hofstra or St. John's. But scholarships may be a siren's song, seductive but a bad long-term deal, because the highest-paying law firms "still generally restrict their recruiting at lower-tier schools to students at the very top of the class," and most federal judges doling out prestige clerkships are even more school-name-driven.

Is There a Limit? The First Possibility: Market Forces Respond to Excessive Prices

There may seem to be no end to law school tuition hikes, but at some point there will be a limit. I see three ways law school tuition might backfire on law schools unless they start self-imposing limits.

First, market forces may respond. Just to pick an extreme: Were tuition $100,000 per year, most applicants would be scared off, leaving only the extremely affluent, those unusually dedicated to the law, and those too clueless to troll the web for tuition data. It's basic economics: Price hikes shift consumers to substitutes. There are no "substitutes" for law schools as a way to become a lawyer, but there are substitute alternative careers.

For those who see law school as a path to financial comfort, there are alternative careers like accounting, finance, or (for the less mathematical) consulting. For those who want legal training for a public service career, alternatives include labor organizing, social work, politics, environmental or civil rights nonprofit organizations, or any number of paths to saving the world without a J.D.

I don't know where the breaking point is - $150K for three years? $200K? - but we may be nearing it: the number of law school applicants plateaued in 2004 and then began dropping. In a booming economy, rising lawyer salaries delay law schools' day of reckoning, but if the economy is sluggish for several years, continued tuition hikes will get increasingly out of line with lawyer salaries, and the number of law applicants might spiral downward.

The Second Possibility: Declining Applications Yield Declining Student Quality

Were applications to drop, elite schools might escape the brunt of the impact. Yale Law School, with half its students in the top 1% of LSAT takers, could weather a significant drop in applications without losing student quality; 25th-ranked Fordham, with half of its students scoring in the top 5% (and 75% in the top 10%), also could weather a decline better than most.

Where a decline in applications would really hurt is at the non-elite schools that already struggle to fill their classes with qualified students. Schools already admitting mediocre applicants would have to admit weaker students who are likely to struggle with law schools' intense academic demands.

Moreover, were law schools to relax their rigor to accommodate weaker students, those students likely would flunk their state bar exams; already, many schools see half their students fail their bar exams, yielding yet another problem.

The Third Possibility: Loss of Accreditation for Schools Admitting (and Graduating) Lesser Students

Law schools have little hope of thriving without American Bar Association ("ABA") accreditation, without which their graduates cannot take most states' bar exams. The ABA regularly threatens to de-accredit schools with low bar exam passage rates based on two of its accreditation rules. Standard 301 examines each school for "the rigor of its academic program, ... and the bar passage rates of its graduates." Standard 303 disallows law schools from enrolling any "student whose inability to do satisfactory work is sufficiently manifest so that the student's continuation in school would inculcate false hopes [or] constitute economic exploitation ..." - which means that schools must "assure each student a satisfactory opportunity to complete the program, graduate, and become a member of the legal profession."

If even a modest percentage of a school's students drop out, and then only half of graduates pass bar exams, that means fewer than half of enrolling students "become a member of the legal profession," yielding problems under Standards 301 and 303.

Market Exit + Accreditation Jeopardy = Fewer Law Schools or Falling Tuition

If high tuition yields fewer applicants, which decreases average student quality, which yields lower bar passage rates, there are two likely results. First, schools with dropping bar passage rates could lose ABA accreditation and then be forced to shut their doors (or eke out a lesser existence as an unaccredited school, at least in the few states allowing unaccredited law schools' graduates to take their bar exams).

Second, schools might seek to stave off a decline in student quality by dropping tuition. If non-elite schools lose applications due to high tuition, one school could grab those deterred applicants by lowering tuition, and surely some other schools would follow suit. High prices yield fewer customers, which yields lower prices to draw back those customers. This is the simple way excessively high prices eventually drop in free markets.

Falling tuition at non-elite schools, though, would change the law school world substantially. Today, most law schools today provide an essentially similar education and essentially similar faculty conditions. For example, with only minimal differences, I have done my teaching and research the same way, with the same materials, and with the same technology at 97th-ranked Marquette Law School and 36th-ranked University of Colorado Law School. While some lower-ranked schools have less to offer - worse student-faculty ratios, lesser research resources, or inferior faculty compensation - the differences usually are minimal. Aside from a few elite schools providing stratospheric faculty salaries, most law schools vary only mildly as to student-faculty ratio, faculty salaries and teaching loads, and course offerings.

Non-elite schools can afford about the same offerings as elite schools because they charge similar tuition - but those days may be coming to an end. Non-elite schools forced to charge less in tuition would be less able to provide quality facilities (including expensive libraries), to maintain a low student-faculty ratio, to attract and retain faculty with competitive salaries and teaching packages, and to keep up to date with ongoing advances in educational and research technology.

In short, if we are nearing a "breaking point" of too-high tuition, that breaking point would not arrive simultaneously for all schools. There could be no tuition drop at all at the many elite schools that would still able to draw highly talented students despite a tuition-driven application drop. There might be a mild tuition drop, and therefore a mild resource loss, at middle-of-the-pack law schools with plenty of talented students but also with some trouble filling up the last quarter or third of their classes with qualified students. The largest tuition drop would be at the schools already struggling to find enough qualified students; those schools can only hope that the drop in tuition helps them maintain student quality more than the resource loss hurts their educational quality.

The Silver Linings

This article paints a dark picture, but one with a few silver linings. First, unless I am horribly incorrect about market forces, law school tuition will not rise forever; once it gets sufficiently out of line with lawyer incomes, it will level off or decrease.

Second, the resulting disparities in law school tuition might make law school more affordable for many; after all, can we really defend the status quo of similarly high tuition at elite law schools (whose graduates overwhelmingly pass bar exams and often find high-paying jobs) and non-elite law schools (whose graduates have 50/50 shots of passing bar exams and extremely low odds of earning six-figure incomes)?

Third, perhaps legal academia has been stagnating with a status quo of similarly-funded and similarly-operated schools. Law schools forced to survive with much less money might respond with innovative educational reforms, much as several law schools recently rebounded from low bar passage rates with innovative educational measures. If law schools' need to economize drives them to experiment with ways to make do with less, then some of those experiments may well lead the way to improved legal education everywhere, to the benefit of all law schools and the legal profession.