Indiana Tech Law School - Doing the Math

To highlight the colossal and destructive waste of money Indiana Tech Law School is, let’s run a few quick calculations. I’d appreciate any input into whether my assumptions and calculations are reasonable or hopelessly inaccurate.

Indiana Tech Law School:

• Tuition per year: $29,500

• 75% of tuition revenue used for salaries, building expenses, library, etc.

• 25% of tuition revenue used for non-essential costs, such as kickbacks to the university, art collection acquisitions, reserve funds etc.

Year One (2013-2014):

• ITLS needed 100 students to meet its goals this first year. This would have brought in $2,950,000 in revenue from tuition.

• Assuming 75% of that was needed to meet the school’s operating costs that year, ITLS would have needed a minimum operating revenue of at least $2,212,500 to stay in the black.

• Actual enrollment was (generously) 30 students, bringing in actual tuition revenue of just $885,000.

• This represents an annual shortfall of $2,065,000 from projected tuition revenue, and a shortfall of $1,327,500 from minimum operating revenue. That’s a significant hole.

• (Factoring in the large number of students on scholarships to get them in the door, the first year deficit is even larger.)

Fully Operational (2015-onwards):

• ITLS seats 350 students. This represents $10,325,000 tuition revenue per year. $7,743,750 of this would be needed to cover essential operating costs.

• Enrolling one third of that – 116 students in total – would bring in a mere $3,422,000 per year, which is $6,903,000 short of projected tuition revenue, and $4,321,750 short of minimum operating costs.

Even from a basic ballpark calculation such as this, one can see the magnitude of Indiana Tech’s screw up. The university is now left with a program that (1) draws laughter from the entire legal community, even Cooley, and (2) will cost the university between four and seven million dollars per year to support.

The writing is on the wall. Trustees of Indiana Tech, shut it down! You have some great new classroom space and lecture halls for your legitimate programs.  How about moving the business school there? Or expanding the computer science programs? You know, education that at least has some positive effect?

Right now, the law school has under thirty students. It would be most cost-effective to shut the school now and refund tuition for just those thirty students, perhaps offering assistance to get them into law schools elsewhere. Keeping the law school open merely compounds this problem; refunding tuition for sixty students, or one hundred students, would be far more expensive. The longer the school remains “in business” (or on life support), the harder and more expensive it’ll become to pull the plug.  Consider the fact that some law schools will close, so why not close yours while it's still small and has few students and no alumni to enrage?

And if those with their hands on the “off switch” are concerned that those calling for the school’s closure are just a bunch of disgruntled law grads who are fussing about a system that isn’t broken, you should consider the fact that you listened to the so-called experts and they willfully misled you.  Why on earth would you trust the so-called experts to advise you again?

Students at Indiana Tech  - not just the law school, but the entire university - should be up in arms about this extraordinary misstep on the part of its leadership.

But the bigger question is where all the missing money is coming from.  It's not growing on trees on campus, that's for sure.  Extra cash could be procured from a few places. A bank, perhaps, but that’s got to be paid back at some point, and I can’t imagine any sane banker taking a risk on lending ITLS any money whatsoever given its murky future.  Borrowing merely defers the problem too, although most academic administrators fully subscribe to the idea that as long as the problem doesn’t actually surface until they themselves have retired, it’s not a problem at all.

More likely, the money is coming from general university funds – the tuition of the other students. If you are a current student at Indiana Tech, think about this: a chunk of your tuition dollars may be going not to fund your own education, but to pay for an unaccredited law school that provides you with zero benefit.  Not only that, but the law school is making your degrees less valuable by souring the name of your institution - a double hit.  There are about 6,300 students at Indiana Tech, 1,170 of which are full-time. If the enrollment at the law school stays at its current 30% of capacity (and I see no reason why it will improve), then each student’s portion of the law school deficit will be almost $1,100 per year – each and every student, even the part-timers. If we are just considering the full-time undergrads, from whom much of the overall tuition money comes, each undergrad student will be paying almost $5,900 per year to float the useless, empty law school!  That's almost a quarter of the annual undergraduate tuition.

Or perhaps the missing money could come from the university’s endowment: as Nando pointed out over at Third Tier Reality, Indiana Tech has an endowment of just over $41,000,000. If enrollment at Indiana Tech Law School doesn’t improve, the entire endowment will be depleted in well under a decade. Sucked dry to pay the salaries of law professors and administrative staff.  The law school could literally destroy the future of the entire university.  

It takes a big man to admit a mistake, but people have respect for those who admit they were wrong and who try to do the right thing.  I guess we’ll soon see whether those pulling the strings at Indiana Tech have the backbone to do the right thing for the university.

Patient Zero - Indiana Tech Law School

I've long held the belief that it'll take the failure of just one law school for applicants to finally get the message that attending a low-ranked law school is one of the worst decisions they will make in their entire lives, right up there with marrying a hooker in Vegas or driving after drinking an entire bottle of Jack.  Once applicants see one school flop, reality will finally kick in: they'll question whether they should attend law school at all, starting a chain reaction of failures throughout the low-ranked schools, many of which are already on life support due to dwindling applications, falling student numbers, and evaporating tuition dollars.

And it looks like we've found patient zero: Indiana Tech Law School.

I'll just quote the entire press release:

Fort Wayne, Ind.—Indiana Tech announced today that Law School Dean Peter Alexander has resigned. Alexander has held the position of vice president and dean of the law school and tenured professor and he resigned both positions with Indiana Tech on May 21, 2014. Alexander cited the achievement of the goals he had established for the law school to that point in time and a desire to pursue other employment opportunities as the reasons for his decision to resign.

“Dean Alexander has helped establish a firm foundation here at the law school, which will help us achieve success now and in the future,” said Indiana Tech President Dr. Arthur Snyder. “We appreciate his efforts on behalf of students and our school, and wish him well in all his future endeavors.”

andré douglas pond cummings, associate dean for academic affairs and professor of law at Indiana Tech Law School, has been named interim dean.

Reading between the lines, it would appear Dean Alexander was given the choice of resignation or dismissal.  Why?  One can only speculate at this point in time, but my money is on the fact that this expensive failure of a law school has not only cost Indiana Tech a huge amount of money (and will continue to cost Indiana Tech a huge amount of money in the future), but has turned Indiana Tech from a once-respected regional college into the poster child of academic stupidity and greed.  Enrollment targets have been hopelessly missed, the money promised is not appearing, and Indiana Tech is left with egg (or worse) on its face.  Way to ruin an otherwise reasonable university, although perhaps those in the administration will finally taste what it's like to have their futures wiped out due to law school.

I'm sure information will leak out in the next few days.  We'd be particularly interested to hear from any insiders - rising 2Ls who are now deeply concerned that their school will collapse around them, leaving them with (at the very least) a waste of a year or two of their lives and a stain on their resumes; staff who could well be out of a job very soon; faculty who regret ever giving up their prior academic positions to end up as snake oil salespeople under Dean Alexander; applicants (if there are any) who will now withdraw their applications.

Watch this space for developments.

News Roundup: Law schools refusing to confront reality

Law school leaders are dividing into two camps: stuck v. serious
Money Quote: “This is not a P.R. problem, as the stuck would suggest; it is a reality problem—lawyers have not kept pace with modern demands to improve value, and dynamic young people see more attractive career opportunities in other fields.”

New law school graduate debt figures
Money Quote: “The schools that didn’t report were mostly places that would be shut down instantly if the federal government could bestir itself to apply even the most minimal regulatory controls to the money it shovels into law school coffers”

Law schools don't help the poor get rich — they help the rich stay rich
Money Quote: “America’s massively lengthy, expensive, and complex legal licensing regime is bad for most people (both clients and would-be lawyers).”

Is Rob Illig Worth A Million Dollars?

A few weeks ago, several emails from University of Oregon professor Rob Illig, characterized by at least one source as "wild rants", went public. In one of his emails, Illig made the following claim:

"I feel that having given up the chance at a seven-figure annual income is charity enough for the students..."

There are two issues that cast doubt on Illig's claims. First, he assumes that he would have been an equity partner. Second, the timing of his exit from Biglaw is curious. Let's see if the numbers support Illig's claim.

Mr. Illig graduated from Vanderbilt Law School (which he attended for free!) in 1996. He immediately went to work for Nixon Peabody in New York City and remained there until 2003. Per Paul Campos, the going rate for a first year associate in 1997 at a New York City Biglaw firm was $116,000. So let's assume that was Illig's starting salary. I reviewed a 2012 study by recruiting firm Major, Lindsey and Africa. It states that equity partners in New York City firms received an average of $896,000, while non-equity partners made $338,000 on average. Corporate partners made an average of $847,000. Since Illig is a securities law professor, I am assuming that he fits here.

The timing of Illig's departure from Nixon Peabody indicates that he was not going to become an equity partner. Equity partnership is increasingly reserved for the very few. Instead, non equity partners are added to maintain long tenured employees' sense of career progression. It comes with a bump in pay, but not to the levels Illig claims he would have reached. According to the earlier referenced study, non equity partners made an average of $335,000 in 2012. This is still a significant amount of money, but nowhere near what an equity partner makes. I have no way to know if Illig had the book of business and/or the "superstar" status to warrant being made an equity partner. Biglaw makes it clear to associates starting in their sixth or seventh year at the firm whether they will make partner. At that point, the individual is either expected to leave the firm or continue on an explicit non-partnership track. Given the obsession with status and prestige in law, amplified in Biglaw, many choose to leave. The fact that Illig left after seven years at Nixon to take a position at the University of Missouri does not speak well of his prospects to become an equity partner at Nixon.

Illig is the textbook law professor. He does not seem like the kind of person who would be able to sit by and watch others who came to Nixon at the same time or after he did make a lot more money and enjoy much higher status than him. At Oregon, he is a big fish in a small pond. He has a salary that enables him to live comfortably, and works less than ten percent as much as he would have at Nixon. There are legions of sychophantic students hanging on his every word. It's a good life, and not one he would enjoy as a lawyer. Never mind that he makes his money off the backs of students who will flounder for the rest of their lives. Illig can get a chosen few jobs at Nike. But by sending this email, Illig reveals how a great number of law professors view students: annoyances who must be tolerated so that the professor can live comfortaby and enjoy many creature comforts their students will never experience.

Patience

Given the overwhelming list of reasons not to go to law school (including, but in no way limited to: few jobs, high unemployment, outrageous cost, lost time, incompetent and unqualified faculty, irrelevant teaching, low career satisfaction, zero “prestige” and respect, low pay, etc.), it still amazes and frustrates me that so many people continue to blindly enroll in law school – and throw away their lives – year after year after year.

So today, let’s try a different tactic. I’m going to suggest that if you’re reading this and you’re dead set on attending law school – yes, I know you’re different from everyone else and you’re certain to succeed – then go ahead and attend.

Just not this year.

Jim Saska has an excellent article on Slate right now, entitled “You Can Do Anything With a Law Degree.” Well worth reading. Saska quotes Casey Berman (whose “Leave Law Behind” blog I’ve added to the links on this site – see the RHS of the page):

Berman believes that more college kids should focus on finding their “unique genius.” (“I know it sounds really California new age-y,” he says, adding, “what can I say, I went to Berkeley.”) If you find that specialized skillset outside of law, there’s no reason to get a J.D. “If I had the patience at 22 [for self-reflection], I wouldn’t have gone to law school,” he says.

One word stands out: patience.

Nobody needs to attend law school this year. Have a little patience. Even if your heart is set on law school and you’ve dreamed about being a lawyer ever since you were small, have a little patience. Law school will be there for you this time next year. You won’t look like the dummy who was held back a year – it’s not a race to see who can graduate the quickest and be the youngest qualified lawyer.

Once you graduate from law school, as many have pointed out, you’re pretty much locked into a career. Your debt will be so high and your qualifications so narrow that you can’t do much else other than hammer the pavement looking for some kind of job related to law. That, or eat the lost three years and the student debt and move on with your life, crippled financially and with your resume branded with one of the most useless and despised qualifications you could have obtained.

Particularly this year, with the legal education system and the economy still in turmoil, have a little patience. Sit it out, see where the dust settles. Try that other path in life – you know, the one you really dream of taking, but don’t have the courage or self-confidence to pursue. The one you think is kinda dumb and unrealistic. Stand up to your parents or whoever is pushing you into a JD. It’s just for one year. And it’s the last year you’ll be able to do this, because once you get that JD, it’s highly unlikely that you’ll ever have the freedom to pursue something you’ve always wanted to try.

And if all else fails during that year off, at least you tried. And then you can go to law school refreshed, happy in the knowledge that you’ve scratched something off your “things to do in life” list; one less regret. Law schools will still be around, and I promise they’ll still be more than happy – maybe even desperate – to take your money.

And you never know, you might find that your year off turns into the career you really wanted, rather than the one you’ve been told you should want.

News Roundup: "We're Not Going Back To 2006"

Legal Jobs Picture: 'We're Not Going Back to 2006'
Money Quote:”Nearly 9 percent of associates at U.S. law firms were laid off in 2009 and some of them are still trying to make their ways back into fulltime law firm work.”

Bright Spots Amid Glum Jobs Outlook
Money Quote: “Law school enrollment was nearly 40,000 in the most recent year. The current entry-level legal market cannot support such large classes.”

Three Florida Law Schools Make Top Ten for Grads With Most Debt
Money Quote: “According to Elio Martinez Jr., a lawyer representing the students, the Florida Coastal grads are upset because they took on upward of $200,000 in loans under the mistaken assumption — propagated by Florida Coastal — that after they graduated, they would quickly gain employment in the legal profession.”

"Can You Give Some Quick Advice On Something?"

Being a lawyer was a universally horrible experience for me. Besides not understanding the fact that lawyers are paid for their time, lay people don't understand that being a lawyer does not mean that I want to give you advice on whatever petty problem you are having. The moment I told someone I was a lawyer, I often heard the nine words that I still despise to this day: "Can you give me some quick advice on something?" A lot of these people were friends of my parents. So, when I eventually started telling them to schedule an appointment to see me (for a fee, of course), they would inevitably tell my mom how rude I had been to them. "Why couldn't MA just give me some basic advice?" they asked her.  "Why is MA so focused on money?" they would say. My mom, not understanding why I couldn't just help her friends, would also give me the 3rd degree once she heard about what happened.

The worst occurrence of "give me some quick advice" was on an occasion when I decided to go to my parents' place for lunch after a long day at the office.  As I sat down with my plate, my mom rushed over and thrust the phone in my hand.  She silently said, "Just talk to him.  It's my friend's husband!" So after spending a whole day at the office, I was forced to listen to a man rant and rave about how he was unfairly terminated in a state where I was not licensed to practice. To get him off the phone, I explained the process to file his complaint with the EEOC. But, the man kept pushing me to tell him what state remedies he had.  I finally told him to go hire an attorney in that state and leave me alone to eat dinner.

Law school is terrible, but the pain doesn't stop once you've been sworn in. People all around you who have no appreciation for the fact that lawyers get paid for their time can't fathom why you can't be a pal and tell them exactly what to do so that they can turn their misfortune into a windfall or at the very least, get revenge on those who have wronged them.  Law school will ruin you financially, but will also greatly affect your social life. It is not for you unless you're one of those people who loves talking about the law every moment of every day and don't mind working for free after hours.  I just know that I couldn't do it.

"JD Advantage," Briefly Reconsidered

 

 

Long-time readers of OTLSS know that I am not a fan of the "JD-Advantage" claim that is often spouted by the increasingly-desperate Law School Cartel.  In fact, I find many of the so-called advantages of a JD, outside of straight-up legal practice, to be riddled with half-truths, conveniently ignored caveats, and full of information asymmetry.  And, of course, this blog and others regularly warn about the fact that a JD is not so great for actual legal practice these days, either.

 

Neither am I a fan of what I call the "not-JD" varietals that seem to be popping up.  This is "anything for a buck," as far as I'm concerned.

 

However, to be fair, I'm grounded in the scamblog movement and so my bias is, um, fairly high, these nine years out of law school at 40-something-something years old, with miles to go before I pay off my student loans.  I did come across this comment by onehell over at JDUnderground, though, and I think it bears repeating:

 

 

My experience has been that the JD actually IS an advantage in a lot of jobs, and is pretty quickly recognized as such. BUT, what it does NOT do is open the door to those jobs. The JD is neither necessary nor sufficient; you need to demonstrate experience and interest independent of it.

But once you're actually working, I have found that having the JD often results in moving up pretty quickly. People respect you more, they like the way you can write and clearly explain things, they really do respect the credential if you carry yourself like you know what you're doing. But again, it absolutely does not get your foot in the door. But once your foot is already in the door, it opens up a lot of opportunities to move up and around. For that reason, I say that for people with an existing connection, the JD can really be an advantage and give the employer an excuse they already were looking for to move you up or whatever. But yeah, don't go to law school thinking that it alone is a qualification that will open the door to a JD advantage job.

Applying to a JD advantage job with no connections and no experience, the JD can actually work against you for all the usual reasons (being seen as a flight risk or "just a failed lawyer", etc.) But once you're IN, then it really is an asset I have to admit.

Well said.  Friends, there are a lot of ways to demonstrate good analytical skills, good communication skills, and all-around smarts that don't require a graduate-school investment of $200k.  Do not buy the Cartel line of "a JD opens doors," as the Cartel is counting on you to mentally add "right after graduation" to that statement.   It, in fact, does not, and you will get many, many quizzical looks and doors slammed in your face, trust me.

 

When I finally did land a job, through connections, my JD was viewed as a valuable* asset.  To be honest, it was only a justification to hire that was one of many, including my prior STEM degrees and job experience.  The heavens did not part and the JD did not lift me to higher realms all on its own, to the "surprise" of many a ScamDean and their glossy brochures, I'm sure. 

 

By the way, Simkovic & McIntyre, from my personal perspective your paper is bunk, once you factor in the severe costs of law school.  Trust me, I know, because (1) I'm a grown-up, with a family, a mortgage, and other real life responsibilities, and (2) I had a real STEM career prior to law school, thanks.  Shame on you guys for helping scam kids straight out of college, let alone people like me who should have known better than to trust the Ivory Tower.  

 

(Yeah, yeah, anecdotes are not data, I've said that myself while looking at Monte Carlo simulations.  But it is also mathematically impossible for all of us to go to Harvard and land cushy LawProf gigs, for that matter.)

 

So, 0Ls, non-trads, heed these warnings.    A JD can "help" you land a non-lawyer job - if many, many things are already in place first.  DO NOT go to law school thinking a JD will do something for you on Day One in its own right, just about the time when Sallie Mae comes knocking.  I made this mistake, and this fact is one of the places where the Cartel lies the most to prospective lemmings.  This is tragic, because the current asking price for a JD is just to much to bear for the mere mortals of the 99%. 

 

But those who live in the Ivory Tower "bubble" repeatedly ignore this fact, as that cuts into (non) profits, you see.

 

 

 

 

*  Sort of.  Not to the tune of $100k+ back in the early 2000s, and costs have only gotten worse since then. 

Georgetown Law Class of 2014 grads get big money job offer, no paperwork required.

Times may be tough for recent law grads generally, but not for those whose JD diplomas glitter with lower T14 prestige. Graduate with a law degree from super-prestigious Georgetown and you will be deluged with lucrative job offers, such as the one that a correspondent has shared with OTLSS, and which is reposted below.

After spending $228,000 on three years of law school and living expenses-- that is, without factoring in interest on student loans-- Georgetown Law grads are assured of the following economic return: $3,000 per quarter for up to one year, courtesy of their very own scama mater.  That, of course, adds up to $12,000-- about half of what Georgetown itself estimates as the cost-of-living for a year in DC. Yes, these are the vaunted law school funded positions, which Georgetown calls its "Entry into Practice Program," or "EIP." All the fortunate grad has to do is volunteer 25-40 hours per week somewhere, and also meet quarterly with his or her career services benefactors for mock job interviews and other such tasks designed to make useless law school functionaries feel important.

Note the interesting phrase in paragraph four--"No paperwork is required from host organizations." Why not, one may wonder? Should not the law school, as a matter of quality control and as part of its professional mission, gather sufficient information to assure itself that the host organization is providing grads with useful training and professional contacts, as well as a realistic possibility of paying employment when the stipend money runs dry?  Because a cynic might claim that these law school funded positions are not really meant to provide "entry into practice," but simply to artificially boost nine-months-out employment statistics and provide good PR for the school. 

Oh, and a cynic might ask one more thing: With "no paperwork...required from host organizations," how is one to trust the information that Georgetown provided to the ABA survey that 76 out of the 83 law school funded positions held by graduates of the Class of 2013 nine months out were in "bar passage required positions"?