Law Schools and Liberal Arts Colleges

As a former law school dean and now college president, I have been following the collapse in law school enrollments closely enough to see it as a warning sign for liberal arts colleges.

Here are the three lessons we can learn from the collapse in law school enrollment.

1. By definition, collapse is quick. The number of students taking the Law School Admissions Test (LSAT) is down 45 percent from 2009. First-year enrollment in law schools is down 25 percent since 2010. Professor Paul Compos, from the University of Colorado, estimates that law school revenues are down about 15 percent in real terms from three years ago, although it’s telling that costs have not decreased. As a result, Compos estimates that 80 to 85 percent of law schools are incurring significant operating losses.

Enrollments at many small colleges are decreasing as the schools experience declining yields. Is this merely a temporary phenomenon or the start of a longer decline? Most in the law school world thought the decline in interest in law schools was a temporary result of the recession. The decline has continued, but since most law schools are affiliated with universities, their operating losses have been underwritten by larger institutional budgets. Small colleges don’t have that backstop, and can rely only on themselves.

2. Bubbles are burst by a lower perception of value. Law school applications have plummeted due to the perception that there is less value in attending law school. Meanwhile, law school tuition increases, like those at most small colleges, have exceeded the rate of inflation. And this while the job prospects for law school graduates have dimmed considerably.  

Perceptions of value are also important for college students. Eighty percent of adults think the quality of education students from American colleges and universities are receiving is not worth the price they’re paying for it (TIME/Carnegie Corporation). And the primary reason first-year students give for going to college is “to get a better job.” Similarly, 54.5 percent of the same students said that “this school’s graduates get good jobs” was a reason for choosing their college [CIRP Freshman Survey].

Many families wonder about the value of small colleges, particularly with majors in the humanities. They wonder if employers will consider hiring English majors or Classics majors.

Law schools rested on the laurels of relatively high placement rates, but when those placement rates were more closely scrutinized, it was soon revealed that law schools were reporting students as “placed” even when they took jobs not requiring a law degree. College placement offices often do the same thing — report high placement rates, but not necessarily in jobs requiring a college degree. With students and families much more concerned about the rate of return on their education, college placement rates will be scrutinized. As with law schools, a closer look could spell trouble for many small colleges.

3. A lack of imagination can make any problem worse. Law schools are reacting as might be predicted. The first instinct of many schools is to redouble marketing efforts. “Let’s do the same thing, but tell more people about it,” has not proven a fruitful strategy. Some are relying on universities to subsidize their losses, without any real plan for addressing what most believe is a deep shift in the legal landscape. Others are slashing costs by laying off faculty or reducing administrative costs, often cutting into their ability to deliver the same quality of education.  

Notably absent are creative methods for addressing the issues facing law schools. Little has been done to increase the value of a law school education by lowering costs or improving outcomes. Law schools are not considering mergers or joint operating agreements to reduce costs. Little attention is paid to offering online alternatives where appropriate. And we are lacking in national discussion about reducing the cost of legal education by moving from three years to two years, perhaps with a required internship. And while some law schools are starting to identify and measure student learning outcomes, many resist, citing inconsistency with a traditional “academic” law school mission.

Should small colleges expect better results from the better-marketing strategy? Should they ignore imaginative responses to problems that are trending from “vexing” to “chronic”? Should they avoid a serious look at a changing landscape in hopes of insulating change-resistant constituencies? The experience of law schools would indicate downward spirals follow each scenario.

There are obvious differences between liberal arts colleges and law schools. Liberal arts colleges do not occupy the narrow niche of law schools; they provide instead a wide variety of skills for both first jobs and last jobs. Likewise, law school is generally more expensive than undergraduate institutions after taking financial aid into account. And while the demand for lawyers is dropping precipitously, demand remains high for employees with analytical, teamwork and communication skills.

Some liberal arts colleges will be fine. But for those with endowments under a billion dollars (i.e., most of us), surviving the current round of skepticism about the value of a liberal arts education will be easier if we take these steps:

• Maintain a relentless focus on providing value to students. Small colleges that can demonstrate strong graduate school admission rates and top placement rates into jobs that require a bachelor’s degree will be better able to show the R-O-I students (and their parents) demand.  
• Focus on reducing costs and enhancing quality through process improvements. At Augustana, we have saved about $1 million in consolidating dining operations, and we’ve substantially reduced health care costs through self-insurance and wellness programs.  
• Consider partnerships and other models to provide better results at lower costs. Colleges can reduce costs, without reducing value, by considering partnerships with other institutions to offer low-enrollment classes, sharing faculty appointments between schools, experimenting with certificate programs and adding majors in high demand areas consistent with the liberal arts.

Those dismissing the experience of law schools do so at their own peril. The lessons from the meltdown of law schools are instructive – when prospective students do not perceive good value, they will not enroll.

Steven Bahls, President
Augustana College