Thursday, October 23, 2014

The Pied Pipeline of Scamlin.



Initiatives designed to market law school to children are often referred to as "pipeline programs." I approve of this term. It sounds appropriately impersonal and industrial, in contrast to the moralistic rhetoric used by many of the advocates of these programs. Children are the raw material designated for future transport by pipeline to factories, aka law school, where they can be processed and packaged for the financial benefit of the factory management, aka law deans and professors.

As explained by CUNY Law Dean Michelle Anderson, "Law school pipeline programs across the country attempt to make interventions early along this stream on the theory that these interventions will widen the flow of students later in the application stage." Michelle J. Anderson, Legal Education Reform, Diversity, and Access to Justice, 61 Rutgers Law Review 1011, 1029 (2009). One format is to send law students into high schools and middle schools to stage "law related educational programming," such as mock trials and "know your rights" events, with the agenda of "excit[ing] youngsters about the practice of law and interest[ing] them in becoming lawyers themselves one day." Legal Education, at 1030. For instance, "St. John’s University School of Law engages in a service day in which law students go into area elementary schools to teach fourth graders about the practice of law by staging a trial of "The Boy Who Cried Wolf."" Legal Education, at 1029-1030. Other pipeline programs are based on a "mentor model." See Legal Education, at 1030.

It makes sense for the law school industry to cultivate children. An increasing number of adults dismiss the story that law school offers a path to personal fulfillment and/ or social justice as a fairy tale told by scammers. But kids, being naive and impressionable, tend to believe fairy tales. And marketing specialists have long realized that aspirations and sensibilities formed in childhood tend to carry over into adulthood. As the "King of Advertising" Irwin Gotlieb stated: "If the first time that you saw an ad for [an expensive consumer item] was when you could finally afford it, then it is too late. You have to create aspiration. . . by the age of 12 or they won't be buying one at 35."

These pipeline programs seem to target kids from vulnerable or victimized or historically excluded communities, i.e., kids who may be especially receptive to the pitch that a law degree offers empowerment or upward mobility. I challenge the schools that participate in or host pipeline programs, especially lower tier schools with poor employment rates: You say you want to diversify the profession by recruiting kids from multicultural or economically disadvantaged backgrounds? Fine, so do I, but I do not want these kids to be scammed out of hundreds of thousands of borrowed dollars in the process.

The answer is simple: Offer full-ride scholarships to your pipeline recruits so that they will not be burdened by massive educational debt as they pursue justice for all. Otherwise your vaunted pipeline is simply an instrument of greedy deception dressed up as idealism, as exploitative and brutally ironic as Madoff earnestly promising to serve society by expanding his pool of investors to include young people of every race, color, and creed.


Monday, October 20, 2014

Gen-X as the Canary in the Coalmine

Demographically, the members of the scamblog movement are, by-and-large, from Gen-X. By most definitions, the "last" of Gen-X hit the legal market right before the 2008 financial crisis, and the "lemmings," by the same analysis, are mostly from the Millennial camp.
 
Well, of course Gen-X are the scambloggers, I hear some people say - that just fits the form. Gen-X is full of materialistic, slacker, lazy bums who got participation trophies for just showing up (amirite?), so of course they mumble and complain about law school outcomes. In fact, they've been angry people all along and they just generally hate life, so they need to just buck up and take personal responsibility for their actions whilst generally being ignored.
 
(As an aside, the exact same accusations have been leveled towards Millennials lately by Boomers, but who is keeping score, anyway?)
 
I've heard those empty accusations my whole life, and I suspect many of you have as well. Truth be told, however, Gen-X went to college in larger numbers than their Boomer forebears, and generally went further by obtaining multiple degrees and credentials. Some credit Gen-X with a now-more-than-ever-needed spirit of individual effort and business entrepreneurialism (in national hind-sight, of course). While Millennials are lauded for their volunteerism and community focus, Gen-X weren't completely "slackers" in that area, either.
 
Do you know why?  Because every generation has to work, muddle their way through, and try to make the world a better place in the process.  Gen-X in particular is "all grown up," with families, careers, and real-world responsibilities, but the unwarranted stigma and out-of-hand dismissals still persist. Yet this cohort decries the law school scam for what it is, because we don't want others to go in blind, as we did.
 
Further, we know what we are talking about, as evidenced by the latest report from the Pew Charitable Trust. I'll just start with the conclusion:
 
Generation X is discussed significantly less in the media than are baby boomers or millennials, the much larger generational cohorts that bookend it. Despite its small size, however, Gen X provides critical insights for researchers and policymakers into changing family balance sheets. Gen X may also be a harbinger of declining opportunity for many American families now and in the future.
 
The findings of this research are that Gen X reflects the growing divergence of economic fortunes for American families. Many Gen Xers have been exceptionally prosperous, reaping the successes of the economy and benefitting tremendously from being raised by families at the top of the economic ladder. But many other Gen Xers, like their parents, have failed to gain an economic foothold and remain stuck at the bottom of the economic ladder with few prospects of moving to the top.
 
However, across the economic diversity of Gen Xers, a common thread exists relative to the preceding generation. Although Gen Xers have outpaced their parents in terms of income, they have fallen far short on accumulating wealth. Their debt burdens and inadequate savings cause a ripple effect throughout their balance sheets. Low levels of savings mean that many Gen Xers could have difficulties weathering unexpected and costly life events such as unemployment or a health issue. An inadequate financial cushion could also put Gen Xers’ future economic security at risk, given that they are already behind previous generations with respect to their
retirement preparedness.  The drag of student loan debt could prevent many Gen Xers from providing for their
own children’s college aspirations, creating an intergenerational reach of student debt.
 
Without adequate wealth among Gen Xers, the mobility of not just the current generation, but also the next, could be at risk. Exactly how all of this will affect equality of opportunity in the future is unclear, but it indicates a strong need for policies that create wealth-building opportunities for Gen Xers and the younger cohorts who are following them into financial maturity.
 

 
Further, many continue to voice concerns about ever-increasing student loan debt along with Pew.  ZeroHedge has some interesting facts on the subject, and the CFPB has something to say as well:
 
 
CFPB PRESSES CONGRESS TO CHANGE BANKRUPTCY CODE
The Consumer Financial Protection Bureau (CFPB) is urging policymakers to reconsider how student loan debt is treated under the Bankruptcy Code, American Banker reported today. In the agency's annual report on student loans, released today, it said that there are severe roadblocks for struggling student borrowers in getting modifications or other flexible options to help them pay off their debt. As a result, the CFPB said Congress should revisit a 2005 change to the Bankruptcy Code that made most private student loan debt and other "qualified loans" exempt from discharge. The agency is also recommending more favorable tax treatment on any debt that is forgiven. "Unlike mortgage servicing, there are no specific laws or rules that require specific procedures on loan modifications and the laws we administer," said Rohit Chopra, the CFPB's student loan ombudsman. "That is something that we are going to take a very close look at . . . We are going to weigh every option to see that these problems are corrected." The CFPB noted that the 2005 amendment, which raised the threshold to discharge student loan debt, made it easier for debt collection firms to increase recoveries on defaulted private student loans compared to other types of unsecured debt. Read more. (Subscription required.)
 
 
Why do we scamblog? Because we know. Because we have been and continue to live economic reality. Because we have seen the writing on the wall for some time, but when we tried to bring it to light we were dismissed out of hand for being a smaller, "know-nothing" cohort whose only original sin was being born between the early 60s and the early 80s. Yet we still speak out, regardless.
 
Read the report. The economic trends are sobering, and I guarantee you there is a Gen-X JD or two buried in the statistics, trying to pay off massive debt while struggling to make a living. Millennials, we have already been through the wringer of false employment statistics, ever-increasing tuition, and overproduced graduates, so when we say "law school is a scam," we are saying it for your benefit. Do not go to law school, with its non-dischargeable debt in a saturated, shrinking market that is increasingly being outsourced and automated, unless you have the social means and financial backing to do so.
 
Do not rely on "wanting it bad enough." Do not rely on IBR/PAYE to see you though, as those programs are in the crosshairs. Do not rely on romantic visions you see on TV. All of this is what the Law School Cartel is counting on you to do - to "follow your dreams," to "engage your passion," to "pursue liberty" and "defend justice," while ignoring all the other important data.
 
To your detriment.

Tuesday, October 14, 2014

Race to the Bottom: Which law schools have lowered their admissions standards and by how much?

The sharp decline in applications over the last few years is forcing law schools to tinker with student quality, class size, and tuition while they wait and hope for a revival in demand for their toxic product, the JD.  Stated generally, the following strategies are available to law schools:
Strategy One: Maintain admissions standards-- which almost certainly creates the necessity of reducing class size, cutting tuition, and/or offering more tempting scholarships to attract quality students. It also creates the prospect of a fiscal shortfall that will become more serious over time.
or 
Strategy Two: Lower admissions standards, with not-so-long-term disastrous implications for the school’s reputation, the profession itself, and for the poorly qualified matriculants,  aka lemmings of average and below average intelligence, who are less likely than brainier members of their cohort to bounce back after taking the plunge. 
Of course, these two approaches are not quite mutually exclusive-- a law school can lower admissions standards marginally while simultaneously reducing class size, ect. I imagine Strategy Two as a big barrel (or barros) filled to the brim with intoxicating scam. A law school can abstain, sip lightly, or guzzle with shameless abandon, and the choice it makes says much about its character. 

Data on median LSAT scores for incoming students over the past three years is available at the Law School Transparency site. Comparing the 2013 with the 2011 data yields an answer to the question: Which schools have lowered the median LSAT of their incoming class between 2011 and 2013, and by how much? 

While I am sure most of our readers know this, an LSAT decline of two or more points can be quite substantial when the score is expressed as a percentile of test takers. The following LSAT score-to-percentile conversion table spells it out.  


Change in median LSAT for incoming class, 2011-2013.

Median LSAT up by 4 pts.
      1
Median LSAT up by 3 pts. 
      1   
Median LSAT up by 2 pts.
      0
Median LSAT up by 1 pt.
      4
Median LSAT unchanged
    26
Median LSAT down by 1 pt.
    56
Median LSAT down by 2 pts.
    50
Median LSAT down by 3 pts.
    37
Median LSAT down by 4 pts.
    16
Median LSAT down by 5 pts.
      5
Median LSAT down by 6 pts.
      2


Friday, October 10, 2014

Vapid VAPs and Delusions of LawProf Grandeur

Following on the heels of dybbuk's excellent story about LawProfs mocking their students because they had not already achieved the pinnacle of legal nirvana, I am about to extend an invitation to Ray Campbell to just come on over and join OTLSS:
 

[A] conversation I had the other day made me think a bit about whether the shift to VAPs [Visiting Assistant Professor. -Ed.] as an entry point is good either for some candidates or for the legal academy. The conversation started with what Brian Tamanaha has skeptically called the "law professor mantra" that law professors should be paid more than other professors because they could make more in law practice. I wondered whether this has any validity given the modern world of practice. I reached out to Larry Latourette, a former big law partner who now is a principal in the legal headhunting firm of LateralLink, to see if law professors these days really have any options in private practice.
 
As I suspected, there wasn’t much of a story there. "Law professors are not marketable," Latourette said. "If they think they are they are kidding themselves."
 
For law firms, the main reason is that no one gets hired as a partner without a portable book of business. "About 98 percent of getting hired is the book of business," Latourette said.
 
 
Wait, what? Somebody call Brian Leiter! Clearly this Latourette character has a Tourette Syndrome problem of his own - namely, bad-mouthing legal scholars wantonly and uncontrollably. Haven't we heard for years that the only reason LawProfs teach is due to humble abasement and self-sacrifice, and that BigLaw would fall all over themselves in order to make a legal scholar Partner if only given the opportunity? LawProfs are like legal Paul-the-Apostles, longing to be with BigLaw-Christ, but staying behind solely for our benefit as believers in the law school pipe-dream, don't you know. 

 
He did note there were exceptions...[p]rofessors with active consulting or expert witness practices might persuade firms their marketability was proven. He also argued that people with the capabilities of your average law professor should find a role somewhere, even if the structure of the legal field made finding a private practice job difficult...[h]e acknowledged that at the outset of a teaching career the pay scales of private practice matter – the pay has to be enough to justify foregoing the higher pay of private practice. Even there, Latourette said, "Law schools could pay less." [emphasis added]
 
No, I'm sorry, those open road narratives are worth every penny...! We've been told so. Many times. By LawProfs...heywaitaminute...
 
 
His point was that many professor candidates weren't giving up that much because even in a pool of those with the very best academic records the odds of making partner were long. By the statistics, most law firm associates with law professor level credentials do not make partner. The skill sets and mindsets of teaching and practice are very different, and unblinking desire for the brass ring of partnership is a critical factor. "You have to want it very badly without thinking about whether it is worth having," he said.
 
Blasphemy!
 

I think this trend has systemic costs for the academy as a whole. As schools move to [the white-shoe VAP fellowship prior to faculty-hire] model, it has to reduce the diversity of the candidate pool. Not everyone can move temporarily to a job or take the pay cut for an uncertain future, and those who cannot suffer in comparison to those who can spend two or three years polishing an academic resume. Candidates from wealthier backgrounds thus have an edge.
 
Yep, law grads have been dealing with this very same preftige and social/financial backing disparity problem for decades now, but, funny, No One Cared at the time. Welcome to the world. 
 

While Latourette knows the current big law market better than I ever will, I think there may be some counter examples out there. Latourette also does not profess to speak about other kinds of legal employers, which may be of much more interest to many potential VAPs. I know one Climenko fellow who turned down teaching offers to go as an associate to a top Wall Street firm. I know another case, a veteran lawyer with the proven ability to develop and try big cases, who moved from several years of being a VAP to being a partner with a small firm.
 
Maybe these turned-down VAPs will land on their feet, but the numbers don't look promising. Maybe Partner with a small firm is just-as-good as partner at a BigLaw firm, just like law grads go from wanting to save the dolphins and argue before SCOTUS to accepting work at a PI mill for $35k and no benefits (if they can get the work, of course). Regardless of how it turns out, however, there is one thing I know that we will certainly see - more and more LawProf Butthurt as the Law School situation worsens.

 
http://www.thefacultylounge.org/2014/10/the-vap-trap.html

Wednesday, October 8, 2014

What are law professors whispering about their students?


Here are two interesting quotes, followed by some stats about the decline of admissions standards at a certain poorly-regarded law school.
1. "It’s whispered by colleagues in the law school halls. It’s lamented in faculty lounges, Incoming law students aren’t “what they used to be.” No one seems to define “what they used to be”—only that once upon a time, a better time, students were more prepared for law school, spent more time studying, and didn’t need so much support. Criticism of lackadaisical, underprepared, or unmotivated students has long history, but recent research suggests that incoming law students are less prepared than previous generations of law students." Flanagan, Rebecca C., The Kids Aren't Alright: Rethinking the Law Student Skills Deficit (June 1, 2014). Brigham Young University Education and Law Journal, Vol. 15, No. 1, 2015, Forthcoming. Available at SSRN:
2. "I worked with some people from Harvard and Yale who just couldn't practice. They were useless as lawyers. . . I disagree with the insinuation about the abilities and prospects of people from lower-ranked schools. By the way, I never said anything about large firms filling out the ranks with students from lower-tier law schools. Large firms are very credential focused. I think this is a mistake. But there are a lot of people out there (like you?) whose derive a great deal of their self-worth from their LSAT score. [sic] That will likely never change." -- Widener Law Prof. Ben Barros.  
http://www.thefacultylounge.org/2014/08/the-coming-lawyer-shortage/comments/page/3/#comments  (comment at August 22, 2014 at 11:39 AM)
3. For the Class entering Widener Law (Delaware campus) in 2010, the median LSAT was 154 and the 25% percentile score was 150. For the class entering in 2013, the median LSAT score at Widener was 150, and the 25th percentile score was 147. The significance of this decline is illustrated by expressing these scores as a percentile rank of test-takers. A 154 is at the 59th percentile. A 150 is at the 43rd percentile. A 147 is at the 33rd percentile.  

Saturday, October 4, 2014

Cooley to close Ann Arbor Campus

Link to Taxprof.

According to TaxProf, the Ann Arbor Campus will go offline after this Fall semester.  Students at the defunct campus will get some stipends and be able to continue their legal education at Cooley's other campuses.


Friday, October 3, 2014

A Tale of Two Scams.



Those few among our readers who are amateur numismatists, as well as those many who have a bleak view of human nature, might appreciate the tale of Rocco Marini and his friend Harold Adamo Jr., as set forth in Marini v. Adamo, 995 F. Supp.2d 155 (E.D.N.Y. 2014).

http://www.leagle.com/decision/In%20FDCO%2020140207B67

As a young man, Marini made millions of dollars selling sweaters to flea markets. Subsequently, Marini and his wife became close friends with the Adamos. The Court briefly sketches the relationship:  
"Mrs. Marini met Mrs. Adamo in May 1992 when they both lived on the same block in Manhasset Hills, New York. The Marinis and the Adamos became close friends, they are godparents to each other’s children. The families spent a considerable time socializing with one another and traveling together. In 2002, approximately 10 years after they became friends, the Adamos surprised the Marinis by unexpectedly joining them during a Caribbean vacation."  
Marini, 995 F. Supp.2d at 165 (internal citations omitted).  
Adamo was a coin dealer and suggested that Marini invest in coins through him. Displaying less acumen as a coin buyer than he did as a flea market sweater wholesaler, Marini bought coins exclusively through Adamo over course of six years to the tune of 12 million dollars, and relied solely on Adamo regarding which coins to buy. Friendship notwithstanding, Adamo’s mark-ups were substantial. "[T]he highest markup of all occurred when Adamo purchased a 1888 $1 Morgan Silver Dollar in April 2003 for $200 and then sold the exact same coin to Marini in December 2003 for $100,000." Marini, 995 F. Supp.2d at 168. 

In 2008, after finally consulting another coin dealer about the true value of some specimens in his collection, Marini sued Adamo for common law fraud, as well as for securities fraud, breach of fiduciary duty, and unjust enrichment, and prevailed at trial. But wait! After trial, defendant’s alert counsel notified the Court of some recent authority in his favor as to the element of "reasonable reliance"-- namely, an opinion dismissing a class action fraud lawsuit against a law school. The Court, however, was not persuaded.
"After post-trial briefing in this matter was complete, defendant[ ]. . . direct[ed] the Court's attention to a recent opinion . . dismiss[ing] a lawsuit by law school graduates claiming that the law school's publication of misleading statistics was an act of fraud because, inter alia, reliance on such statistics was "not justifiable as a matter of law, given the other sources of information that were available to plaintiffs." However, as the Court has noted, plaintiff[ ] reasonably relied on Adamo's misrepresentations because valuations for these coins was not readily available to an unsophisticated investor such as Marini; this information was certainly far more difficult to find than statistics on employment following law school. In any event, even if coin valuations were more widely available, Adamo is still liable under New York common law because, as discussed infra, he had a broader duty to speak because of his fiduciary relationship with Marini."
          Marini, 995 F. Supp.2d at 198 n.28 (internal citation omitted)

I do not want to address the murky subject of fiduciary duty as it bears on a common law fraud claim other to echo Paul Campos’s opinion that it seems odd and unjust that, although courts are willing to deem all manner of relationships to be fiduciary, they invariably find that a student-University relationship is merely contractual. 

Rather, I note the Court’s statement that, during the relevant time, coin valuation was less readily available than accurate placement statistics for law grads. It is one of those very dubious distinctions that courts sometimes make to reach a just or desired result.

I mean-- during the time frame when Marini was buying all those coins (2002-2008) what sources of information on placement did law students have besides the law schools themselves and US News & World Report (which obtained much of its data from the law schools)? A coin collector, by contrast, had access to the famous "Red Book," "Black Book," and "Blue Book"-- three annual publications that estimate the value of every U.S. coin by date, mint, and condition. Plus there are are coin dealers galore that offer free appraisals. These sources may not provide the precise or reliable valuation for rare coins that harder-to-discover recent auction prices might, but they certainly offer ballpark figures.

Why did courts find that law students should have been more skeptical and informed, but not this coin buyer? Who is typically more naive and vulnerable-- a 22 year-old recent college grad or a multi-millionaire businessman? Maybe the court believed, without quite saying, that the behavior of the coin dealer was more depraved than that of the law schools. But is selling a coin worth $200 for $100,000 any less cruel or damaging than using inflated and misleading placement stats to peddle a non-first tier JD degree for $100,000+ --a degree that turns out to be worthless to a very substantial number of its buyers and that comes with huge opportunity costs and a real stigma in addition to the purchase price?

Adamo was a businessman and his goal was profit. Law schools, on the other hand, are mostly publicly supported institutions. Law students, and taxpayers too, should have been able to trust that these institutions would act in accordance with their expressed educational mission by modeling, as well as teaching, professional values and responsibility. Instead, law schools have demonstrated that the professional values that they really embrace, in contrast to their highfalutin’ mission statements and their cynical classroom and commencement day yapping, are those of a con artist.