How did more than 30 law schools survive class actions concerning allegations of misrepresentations in employment statistics?

The third in an occasional series I call “dire predictions.”

March 2012 was a turning point for law schools. 14 law schools were facing consumer protection class actions on allegations that they misrepresented their employment statistics, deceiving prospective law students and current law students on the value proposition of a legal degree.

From a feature in February 2012 in New York Magazine’s “Intelligencer”:

“We believe that some in the legal academy have done a disservice to the profession and the nation by saddling tens of thousands of young lawyers with massive debt for a degree worth far less than advertised,” David Anziska, wrote in a statement today. “[I]t is time for the schools to take responsibility, provide compensation and commit to transparency. These lawsuits are only the beginning.”

So do Anziska, Strauss, and Raimond actually have a shot at making these lawsuits stick? Well, yes, says Paul Campos, a professor at the University of Colorado Law School — particularly if the law schools are compelled to turn over their internal job placement data, which could prove so embarrassing that the law schools would decide to settle with the plaintiffs.

From a lengthy feature in March 2012 by the same author in New York Magazine:

It’s not yet clear whether the lawyers have proof that NYLS and the other defendants are cooking their numbers. What they do have is at least one favorable precedent: Last year, San Francisco’s California Culinary Academy was sued for misleading applicants about their chances of landing gainful employment in the gastronomic arts, leading to a settlement under which the school reportedly issued tuition refunds to as many as 8,000 students. Anziska, Raimond, and Strauss hope to use the discovery process to compel their targets to turn over all their internal data on their graduates’ livelihoods and to see how that data squares with the claims posted on websites and in recruiting literature—or, barring that, to show that the schools aren’t really trying to keep complete, accurate figures to begin with.

“In that case, the schools will have to disclose a lot of potentially embarrassing information,” predicts University of Colorado law professor Paul Campos, a prominent skeptic of law schools’ self-reported placement numbers. That is, if the schools don’t cut deals to make their cases go away. As you learn in Intro to Civil Procedure, lawyers can win without going all the way to trial.

As of March 15, 2012, the plaintiffs announced they’d file claims against “20 more law schools,” in addition to the first 14.

But that never happened. Those 20 schools were never sued.

And by March 21, 2012, a decidedly different result came from a New York court:

A state judge on Wednesday threw out a class-action lawsuit against New York Law School, one of the first of 15 schools hauled into court for allegedly inflating their job-placement and salary statistics to attract applicants.

The sweeping ruling, which could have an effect on the 14 other lawsuits filed since last summer and 20 others that have since been threatened, was issued by Judge Melvin L. Schweitzer, of the Supreme Court of the State of New York (a trial-level court in spite of its name).

In a 36-page ruling, the judge found that the plaintiffs had failed to prove that the law school had misled them "in a material way." Judge Schweitzer also said applicants to New York Law School had plenty of information available to them about their realistic chances of getting a job.

Courts continued to reject these claims. None of these lawsuits “stuck.”

Winning the press release (i.e., the filing of a complaint) is quite different from getting to the merits—much less surviving the motion to dismiss stage. And it turns out that legal education is quite different as a value proposition than, say, culinary school.

That’s not to say all schools made it out of the recession unscathed. Many closed. But losses in the class action domain never materialized.

How did Big Law survive the "Death of Big Law"?

The second in an occasional series I call “dire predictions.”

In 2010, Professor Larry Ribstein published a piece called The Death of Big Law in the Wisconsin Law Review. Here are a few of the more dire claims Professor Ribstein made:

• “Big Law’s problems are long-term, and may have been masked until recently by a strong economy, particularly in finance and real estate. The real problem with Big Law is the non-viability of its particular model of delivering legal services.”

• “When big firms try to expand without the support structure they are prone to failure. Big Law recently has been subject to many market pressures that have exposed its structural weakness. The result, not surprisingly, is that large law firms are shrinking or dying and smaller firms that do not attempt to mimic the form of Big Law are rising in their place.”

• “These Big Law efforts to stay big are not, however, sustainable. Hiring more associates makes it harder for firms to provide the training and mentoring necessary to back their reputational bond.”

• “In a nutshell, these firms need outside capital to survive, but lack a business model for the development of firm-specific property that would enable the firms to attract this capital. These basic problems have left Big Law vulnerable to client demands for cheaper and more sophisticated legal products, competition among various providers of legal services, and national and international regulatory competition. The result is likely to be the end of the major role large law firms have played in the delivery of legal services.”

• “The death of Big Law has significant implications for legal education, the creation of law and the role of lawyers. First, a major shift in market demand for law graduates ultimately will affect the demand for and price of legal education. Big Law’s inverted pyramid, by which law firms can bill out even entry-level associate time at high hourly rates, has created a high demand and escalating pay for top law students. The pressures on Big Law discussed throughout this Article are ending this era with layoffs, deferrals, pay reductions, and merit-based pay.”

The late Professor Ribstein’s piece is only one such article in a movement of pieces that arose in the 2009-2010 reaction to the financial crisis. But large law firms appear to be thriving and continue to hire associates at ever-increasing clips among new law school graduates. Two charts to consider.

First, the number of law firms with gross total annual revenue exceeding $1 billion has climbed swiftly over the last decade or so. There were just 13 such firms in 2011, but 52 in 2021 (and down to 50 in 2022). True, inflation can account for rising total revenue. But it also reflects large law firms staying large—or becoming larger. (Figures from law.com AmLaw annual reports.)

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Second, law student placement in those jobs. For the Class of 2011, nearly 4700 graduates ended up in those positions, just over 10% of the graduating class. Since then, graduating classes have shrunk by several hundred students, which has helped the overall placement rate as a percentage of graduates. But raw placement has nearly doubled in the last decade, too, to over 8500 for the Class of 2022, or nearly 25% of the graduating class.

Of course, one could find ways that “Big Law” is changing, whether that’s through the use of technology, the relationships it has with clients, its profits and salary structure, whatever it may be.

But “Big Law,” despite the dire predictions in the midst of the financial crisis, does not appear anywhere close to dead. To the extent there are large firms aggregating attorneys, with partners sharing significant profits among themselves and hiring a steady stream of associates for large and sophisticated work of large corporate clients, the model does not appear dead, but growing. Perhaps other types of disruption will appear in the future to change this model. But the financial stability of the model appears largely intact.

How did law schools survive a decade of "statistically zero jobs" for their graduates?

The first in an occasional series I call “dire predictions.”

In 2012, the Washington Post published a dire indictment of legal education. Under the headline, Will law school students have jobs after they graduate?, the piece included ominous projections for the future:

The U.S. Bureau of Labor Statistics forecasts 73,600 new lawyer jobs from 2010 to 2020. But just three years into that decade, about 132,757 new lawyers have hit the job market.

While not every new JD seeks employment as a lawyer, it is safe to say that planning to work as an attorney is not rare among law students. But perhaps it should be. Data from the National Association of Legal Career Professionals indicate that since 2010, about 75,000 new law grads have found full-time jobs a lawyers.

So, in theory, all of the BLS-forecasted job openings through 2020 have already been filled, and 59,157 new lawyers are still looking for “real” law jobs.

… But the scale of the imbalance over a decade gives some indication of just how tough it is — and will be — as armies of newly minted JDs rise every year. By 2020, about 300,000 additional grads will join those 59,157 in a hunt for jobs that, statistically, are not to be found.

…

In [the] Law School Tuition Bubble blog, [the author] estimates that 2010 law school graduates took on $3.6 billion in loans, and that students over the next decade (for whom there are statistically zero jobs) will borrow $53 billion.

So how did legal education survive between 2012 and 2020 when there were “statistically zero jobs” for graduates?

Part of this is basic reporting error at the time. There may have been “statistically zero” new jobs, but it assume zero retirements or deaths among existing attorneys—that is, filling in existing jobs. Despite the fact that law school graduates did yield around 270,000 between the graduates of the Classes of 2013 through 2019 (and will likely cross 300,000 by 2020), total “resident active attorneys” increased just 106,822 between from 2012 to 2019.

(The piece also acknowledges that some law school graduates do not end up practicing law, but such “J.D. advantage” positions are a decidedly mixed bag.)

Another is that the BLS projections were wrong. In 2010, there were 728,200 lawyer jobs, projected to rise by 73,600 by 2020 for a total of 801,800 jobs in 2020. But projections are just projections. Total lawyer jobs were up to 823,900 in 2018 alone, 22,000 more than the projections estimated, even before 2020.

And law school graduates ultimately did okay (!). The Classes of 2013 to 2019 landed about 170,000 full-time, long-term, bar passage-required positions—despite “statistically zero” positions open to them, as reported.

Law schools could still do better. But the market rightly responded in a few respects—virtually all schools got smaller, and a higher percentage of graduates ended up in “high quality” legal positions, from 58% of the Class of 2012 to 69% of the Class of 2018. Debt loads have decreased for the bulk of law school graduates. But the dire predictions in this 2012 piece concerning “statistically zero jobs” just never panned out.