Correction, 7/12/13, 2:14 p.m. EDT: The original version of this article referred incorrectly to the "Task Force on Admissions Regulation Reform" in California as a creation of the California State Bar Association. It was actually created by the State Bar of California. The story has been revised throughout to reflect the correct information. We regret the error.
Over the last four years, bar authorities in at least five states (in California, Illinois, Massachusetts, New York, and Ohio) have convened task forces charged with investigating the underemployment of newly minted lawyers, failings in legal education, and student loan debt. Distressingly, the reports and recommendations these task forces have produced have actually decreased in quality over time, culminating most recently with the State Bar of California's Task Force on Admissions Regulation Reform, which published its "Phase I Final Report" [PDF] on June 11, 2013.
Two topics in particular have occupied the attention of state bar authorities: the impact of student loan debt on lawyers, clients, and the profession, and whether additional skills training in law school would yield better employment outcomes for new lawyers. In addressing these two problems, the task forces usually misunderstand the consequences of lawyers' student debts, and they zealously believe that better training will create jobs that do not exist.
Law School Debt
Hearing reports about high law school debt burdens, the Illinois Bar Association convened a Special Committee on the Impact of Law School Debt on the Delivery of Legal Services, which produced its "Final Report and Recommendations" on March 8, 2013 [PDF]. The State Bar of California's task force quietly adopted most of the Illinois committee's reasoning, making that two of the five state bar task forces to discuss the topic.
As part of its fact-finding effort, the Illinois Special Committee heard testimony from individuals all over the state, and its report declares, "Excessive Law School Debt Decreases the Quantity and the Quality of Legal Services Available to the Public." The report claims that the salaries small law practices offer are too low for new lawyers to sustain their debts, in turn causing high turnover as lawyers seek higher-paying work. In a more effective example, public interest organizations, which according to the special committee apparently pay $40,000 to $50,000 annually, are forced to raise their salary offers to attract talented, indebted lawyers, which reduces the total number of lawyers that can be hired and hence the total quantity of legal services they can provide.
Dramatic though these examples are, they confuse the consequences of low wages with those of debt. Lawyers who leave small practices for higher-paying work show that law practice doesn't pay very well, not that debt creates a surplus of overpriced lawyers and underserved clients. The public interest example is even more farfetched. According to ABA employment data, 247 class of 2012 graduates from Illinois's law schools were unemployed nine months after graduation. Many others were underemployed in low-paying service sector jobs or in small practices. Presumably, they'd gladly work for $40,000 to $50,000 per year in positions that fully take advantage of their educations.
Although I regularly criticize the Income-Based Repayment plan as a protracted, bureaucratic chapter 13 bankruptcy repayment plan, the special committee is essentially saying that lawyers are scared to use it, even though arithmetically it would be nearly impossible for many recent graduates to repay their five- to six-figure loans without it. The committee's "Final Report and Recommendations" also make factually incorrect assertions about the program, including the claim that unpaid interest is capitalized onto loan principal. It adds that funding for public interest positions is "unstable," even though such employers claim to be unable to find lawyers willing to accept even $40,000 salaries.
The special committee does deserve praise for recommending curbing the federal loan program, but the recommendations contained in its report are based on the flawed assumption that student loan debt raises a price floor on legal services. It then fits testimony around that assumption, raising questions about the actual need for more lawyers and whether the problem is really that poor people are too poor to afford legal services.
Unemployment and Skills Training
All five of the reports produced by the state bar authorities' task forces recommend modifying legal education or revising licensing requirements to add more skills training, but only the New York State Bar Association's Task Force on the Future of the Legal Profession [PDF] criticizes law firms that demand more skills training yet stubbornly prefer hiring students from elite law schools over those with substantial clinical experience. To be up front, increased skills training at the expense of some of the theory-heavy courses law schools are criticized for offering would benefit law students because theoretical courses aren't as practical in small practices.
Benefiting law students does not, however, mean that lack of practice-readiness causes lawyer unemployment, as the aforementioned California task force and the Massachusetts Bar Association's Task Force on Law, the Economy, and Underemployment [PDF] claim. Similar to the Illinois Special Committee on student loan debt, the Massachusetts task force also uses faulty logic to explain lawyer underemployment. Comparing the legal education model to the dental and medical school models, the Massachusetts task force concludes that those two professions' skills training practices promote the full employment of their graduates. Like the Ohio State Bar Association's Task Force on Legal Education Reform [PDF], the Massachusetts task force recognizes that medical professionals' skills training is subsidized by the government and that health insurance helps shield those professions from business cycles. The Massachusetts task force concedes that the medical professions restrict the supply of their practitioners, but it does not admit that there are more law schools than necessary. Instead, it recommends limiting licensing reciprocity and dumping its excess law school graduates on other states.
The California task force makes even more outlandish claims about skills training. For example, its report states on page 44: "For many years before the recent downturn in the economy, there was widespread concern that the cost of training new lawyers was being foisted onto clients, which played a significant role in driving up legal costs." Reading this, one might think that it should be possible to walk into a coffee shop and demand a discount because they "foist" the cost of training baristas onto their customers. In truth, the lack-of-practice-readiness theory of lawyer unemployment is identical to the one the Illinois Special Committee makes about student loan debt, except it substitutes debt with training costs and claims they raise prices beyond what clients can afford.
Rather, the discussion of skills training is really about distributing the risk of legal education. Firms might lose money as a result of training lawyers versus law students possibly paying to train for jobs that don't exist. The current system is designed to place this risk on law students, and they've neither been provided with sufficient information to make good choices about paying for legal education nor have made them. The result has been law school overbuilding, law graduate oversupply, and law school debts that aren't payable without hardship repayment programs. The California task force proposes to increase this risk on law students and asserts it would create jobs, which it won't because increasing productivity tends to destroy jobs, not create them, as Britain's Luddites of the 1810s would happily point out if they were around today.
Poverty and Income Polarization
Dogging the state bar task forces is an unfounded anxiety that lawyers are cheating their clients. They "foist" costs onto them, whether in the form of student loans or training costs. True, much of law school pedagogy avoids training people for small-law work, but better preparation will not create jobs. Supply does not create demand.
Demand for legal services, however, is not something state bars wish to discuss. Doing so would require admitting that many small-law jobs pay less than entry-level work in many other industries, and that economic depression combined with income polarization has reduced Americans' ability to afford legal services at any price. Instead of trying to internalize external causes of lawyer underemployment, state bars need to recognize that poor people are in fact poor, and throwing debt-free or better-trained lawyers at them will not solve the problem of poverty.
Matt Leichter is a writer and attorney licensed in Wisconsin and New York, and he holds a master's degree in International Affairs from Marquette University. He operates The Law School Tuition Bubble, which archives, chronicles, and analyzes the deteriorating American legal education system. He will present on student loan debt on September 27, 2013, at the Henry George School of Social Science in New York City.
