Delayed reaction? As students shy away, law school profitability tumbles

November 22, 2013

bubblepopAll of a sudden, law schools are having a tough time of it.

Prior to the economic collapse of 2008, the gilded image of law schools as rest stop on the path to a six-figure job was not being significantly challenged.

Once the legal market cratered, however, the blame came thick and fast.

There were too many law schools, it was alleged, and they were churning out too many graduates. Because of this, the shrinking legal market is saturated.  Recent law graduates cannot find jobs that justify the expense of their education, so they are working menial jobs (if any at all) and adding to our nation’s $1 trillion student loan balance.

Oddly enough, the backlash against law schools did not result in a downturn in new student applications — at least at first.

Recently, University of Colorado professor Paul Campos estimated that between 80 and 85 percent of law schools are losing money, largely because law school enrollment has fallen 25 percent since 2010. That has prompted schools to dip into their coffers to pad financial aid packages in an effort to lure more students; a game Campos clearly thinks they are not winning. Campos called law schools “fiscally reckless institutions that charge prices for their outputs that bear no relation to (their) actual economic value.”

One has to wonder whether this is a temporary quirk in long-term enrollment numbers or an indication that some larger and more landscape-alerting change is afoot. The answer to that question probably depends on the legal industry itself, which we all know is heaving and contracting painfully, especially at the Large Law level. Once (or if) the legal market “right-sizes” itself, then we will be able to turn to law schools with a better idea of what we can expect, since there will be a more accurate sense of demand for their output.