Profs Predict Law School Closings as More Grads Earn Less than Break-Even Pay
As large law firms continue to hire fewer highly paid associates, law school applications will eventually drop and the number of law schools will likely contract, two professors predict in a recent article.
The most prestigious “super elite” law schools will remain, according to the article by University of San Diego law professor David McGowan and academic fellow Bernard Burk of the Center for Corporate Governance at Stanford. Outside the super-elite, schools attracting more applicants will have good placement records, lower tuition because of state subsidies, or will be in regions less served by other institutions.
The article notes outgoing Northwestern law dean David Van Zandt’s estimate that the break-even starting salary for law grads—the point where the cost of law school is a good investment—is $65,000. For many students the break-even may be even higher, McGowan and Burk say.
The article notes that law school tuition has risen at a rate higher than inflation, forcing students to borrow ever-greater sums of money. But the recession has reduced the number of highly paid associate positions, making law school a bad economic proposition for more and more people. Although many law schools are seeing more applications, “the lessons of hard experience will eventually seep into the market,” the article says.
The profs’ predictions are part of a larger article analyzing “two seemingly contradictory observations,” McGowan writes at the Legal Ethics Forum. One the one hand, firms are getting bigger. On the other, they seem more prone to rapid collapse.
McGowan and Burk argue that law firms operate as referral networks, and partners with well-connected colleagues get more business, creating financial incentives for law firms to get bigger by adding more successful partners to the network. But partners with the most business will move to a different network with better referral opportunities, making law firms more fragile.
The article is available for download at SSRN.