Legal News

How Legal Education Today is Like Sub-Prime Mortgage Market in 2006

By Ashby Jones

If your internet browser breaks today and you’re able to only spend time on one site the rest of the day, we’d hope, for selfish reasons, that it’d be the Law Blog. But you could do worse than end up over at the Conglomerate Blog, which has been flooding the zone not only on the SEC/Goldman situation, but on the current problems with legal education.

We took particular note of a piece of commentary from Illinois law professor Christine Hurt on how the legal education system today resembles the sub-prime market around the time it fell off a cliff in 2007 and 2008.

Writes Hurt:

For a couple of decades now (and until a few years ago), the conventional wisdom was that real estate would always rise in value . . . . Home ownership at whatever cost, particularly with tax-deductible interest rates, was better than alternatives such as renting . . .

That philosophy, Hurt writes, was also true of a law degree. You just couldn’t go wrong by getting one, regardless of the cost. She writes:

Financing a law degree with student loans, some of which was low-interest and tax-deductible, was an equally good investment given the value of the law degree. Just as something about home ownership seemed intrinsically good, so did getting a law degree, from any law school.

But then, something happened to the legal market, writes Hurt.

Then, as if on a dime, the world changed and all of a sudden lots of people with law degrees were getting laid off, deferred, ignored. The legal market was shrinking or changing in a seemingly semi-permanent way. . . . But more students came, financing the journey with student loans premised on promised salaries that have de-materialized before our eyes.

For that reason, asks Hurt, is the current law-school model sustainable, especially given how freakin’ expensive these places have become — anyone paying for a fancy legal education on their own dime, through loans, are going to come out $160k in debt.

You’d think — this being the good ol U.S. of A, that the laws of supply-and-demand, would create a lower-cost, viable law-school option. But Hurt isn’t so sure:

So, what’s the future of law school pricing? Will someone create an affordable model that doesn’t depend on third-party financing? Will some law schools start to look like culinary schools or technical institutes that provide financing of $40,000 a year for a law degree few employers are looking for? Or will law schools pride themselves not on inputs (LSAT, GPAs, you know — USNews stuff) and on outputs (where our graduates actually end up working, and how much they make)?

LBers, what do you think? What would it take to convince you that you’re better off going to a second-tier law school that’s half as expensive than a top school with the $160k price tag? We’ve always been told the latter was better, as Hurt correctly writes. But maybe, were a level of less- spendy-but high-quality-schools to emerge, we’d reconsider.

Full post as published by Law Blog - WSJ.com on April 19, 2010 (boomark / email).