Tuesday, October 27, 2009

GAO Report On Increased Cost Of Law School

As you may have heard from the ABA Journal or from AboveTheLaw, the non-partisan Government Accountability Office (GAO) recently released a report that has some interesting finding about the increased cost of law school.  More specifically, it identifies the following factors on slide 19 as affecting cost:
  • increased emphasis on hands-on clinical experiences, and smaller skills-based courses
  • increased diversity of course offerings–e.g., international law and environmental law; and
  • increased student support–e.g., academic support, career services, and admissions support
Admittedly these may represent some small impact, but we take a look at the bigger factors below:
As an initial matter, we note on slide 5 that the data in the GAO report was determined by interviewing 22 law schools, of which 3 were not ABA-accredited.  Consequently, the information in the GAO report may not be very representative of all law schools.  Also, the factors identified above may vary in how much they impact one specific law school as opposed to another.  That being said, let's take a closer look at the factors:

Clinical Experiences and Smaller Courses
First, we note that the report covers the years from 2001-2008.  Second, we note that while the number of such courses may be up slightly over that time, the numbers are not significantly greater.  Further, we note that most clinics and small courses are taught by "clinical professors" or "adjunct professors" that are paid much less than "tenure track professors."  How much less?  A tenure-track professor might be paid around around $150K/year, a clinical professor might be paid around $60K-80K/year, and an adjunct may get around $5,000 per course taught.  Consequently, the number of clinics may have gone up slightly, but they are cheap to run and should not increase costs much.

Increased Diversity of Course Offerings
While the course offerings may have expanded from, say 1960 to 2008, the expansion of course offerings from 2001 to 2008 has been extremely modest.

Increased Student Support
The increased student support is identified as academic support, career services, and admissions support.  With regard to academic support and admissions support, it is unknown what these are and how they benefit students.  For example, "admissions support" may be a code word for someone hired in an attempt to improve the law school's ranking - but that's not "student" support, it's "law school" support.  Further, with regard to career services, law schools do not appear to be increasing the number of people employed in their Career Services Offices.

Now, I will agree with the report that some of the increase is due to Law Schools trying to increase their ranking on the U.S. News Report.  However, from what I can see, the largest increases in cost arise from the following factors:

  • Increased advertising
  • Increased professor salaries - and willingness of law schools to pay those salaries
  • Law schools run as a profit center by a larger institution
Increased Advertising

This is one area that has increased drastically.  Law schools used to not advertise much at all.  They also did not conduct expensive mailing campaigns, make multiple glossy brochures, or conduct mutli-city "road shows" to drum up interest in the law school.  The impact of the USNews rankings may be felt here - why would a law school engage in this activity unless they wanted to up their rankings?

Increased Professor Salaries
At one point, law professors used to make considerably LESS than the average salary for an attorney.  However, the average lawyer salary is now around $115K, but most law professors make far in excess of that.  Even in most state schools, law professor salaries typically start around $150K and some upper-level professors may be over $200K.  In private schools, the salaries can be much, much higher.

Why has this occurred?  First, law professors see the reports about how much lawyers in private practice are supposedly making - like the misleading "Profit Per Partner" numbers that are often reported.  The law professors then react by saying "Gee, I'm smart too!  I should be paid more."  Second, there has been an increased reluctance to grant tenure recently and the granting of tenure is no longer the absolute protection that it once was.  Consequently, law professors are more mobile and the stigma that used to attend those who switched from one law school to another for more money has been greatly eliminated.

Law Schools Run As Profit Centers
This is the big one.  Many Universities now seem to be running their law schools as a profit center to subsidize other activities or programs.  This trend started with business schools in the late 80s.  Universities realized that they could charge a very high tuition to students, espeically because the tuition was often paid for by the employer.  The tuition charged was high enough to pay for all business school oeprations with a sizable proportion left over to fund other, less profitable, but often academically valued areas.  For example, the excess funding might go to support the English Department.

This method of charing for tuition has now spread beyond business schools and is pretty firmly entrenched in law schools.

What are your thoughts?  Feel free to comment below.


  1. I think you hit the nail on the head, but still miss the underlying point (forgive the tortured sentence). Increased administrative and academic overhead in the form of professor and administrative salaries and siphoning to the larger institution is the major driver on the cost side. But we're also seeing artificial demand (demand being a function of indifference curves and budget constraints) by the market distortion of federally guaranteed, but private, student loans.

    The removal of the budget constraint for students during the 3-years of law school coupled with widespread deflation in non-legal labor markets is fueling demand(there is legal labor market deflation as well, but that is less understood by prospective law students). Because the demand is increasing, prices are going up.

  2. 11:10 - I agree completely with your point that the availability of student loans increases demand for law school. However, the argument that the increased demand necessitates the increased price seems like it misreads the elasticity of the market - or it may be a more complicated interaction.

    For example, if I am a law school, I have a certain cost per student based on the services that I provide. If I double my class size, the cost per student still stays relatively the same - assuming the prof/student ratio is constant and the services provided are constant. In this fashion, increased demand would not lead to an increased price - it would lead to a greater overall expenditure, but that would be matched with more tuition dollars from more students.

    However, I have to agree with you that the removal of the market constraint on what law schools can charge (due to the availability of loans) has led to an increase in tuition. In this regard, it appears that the schools are not keeping their costs the same and are not realizing efficiencies by having an increased number of students. At root, it appears that because the law students have access to more money, the law schools are charging more.