Ethics

Like many people, I've been thinking about how the economic crisis will affect my industry (in my case, legal education). From what I can tell, law schools will weather the storm reasonably well, but there are at least three plausible scenarios that could cause problems.

First, prospective law students might have more difficulty borrowing enough money to attend law school.  Apparently, the loan market for law students is generally sound because a large portion of the loans are backed by the federal government.  But a certain portion of borrowing still comes from private lenders.  If that lending dries up (as it already has to some extent) and the government decides not to fill the gap, some increased percentage of prospective law students will be unable to attend law school, especially law schools with tuition and expenses that exceed the federal student loan cap.

Second, some people might decide not to go to law school because of changes in the legal job market. Granted, law schools usually do well during a downturn because some people decide to ride out recessions in law school, hoping that the economy improves before graduation.  But if the legal job market is bad enough for a long period of time, applications would eventually drop.  This type of concern -- prospective students concluding that the costs of legal education outweigh the benefits -- has worried commentators even before the current crisis. 

The third scenario is specific to state law schools -- dramatic funding cuts due to state budget crises. These cuts could be especially problematic if they coincide with the first two scenarios.

Most tuition-driven schools would respond to these problems by digging deeper into their applicant pools to maintain a stable student class size and a steady stream of tuition revenue.  That probably would lead to a drop in average LSAT scores and GPAs at many schools, but most of these schools would survive.

At some point, however, the applicant pool could dip so significantly that schools would have to cut class sizes (with corresponding cuts), lower tuition (again, with corresponding cuts), or in the worse case scenario, actually fold.  Dean Richard Matasar has written about an inevitable shakeout among law schools, and it seems to me at least plausible that such a shakeout could result from the current economic crisis. Put another way, legal education may be in a soon-to-be-bursting bubble of its own.

Of course, a lot of other industries will face worse prospects if we have a serious economic downturn, and many of our graduates will face more difficult circumstances than most of us in legal education.  Ultimately, I think that most law schools will do relatively well in the foreseeable future, but it's too early to tell just how bad it will be for us and our graduates.  Does anyone have a clearer crystal ball?