As the Market Struggles to Recover, Midwest Law Schools and Their Students Adapt to New Realities

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As the Market Struggles to Recover, Midwest Law Schools and Their Students Adapt to New Realities

Katie Weber graduated from Ohio University in 2010 with a Bachelor of Fine Arts in Acting. She then worked for two years as a salesperson and high school drama coach before realizing one day while sitting in her cubicle that she was unhappy with her job prospects. So she decided to go to law school.

"I decided getting a J.D. would give me the most bang for my buck," she says. "I knew that the legal job market was struggling, but I saw it as flexible and you can use it to go into business, policy work or politics."

Weber was under no illusion that she'd be guaranteed a spot at a big law firm earning six figures after she finished her three-year degree. In fact, her base salary as a new lawyer would likely be around $50,000, a respectable wage but a distant cry from what some first-year lawyers expect to make at small and midsize firms. On top of that, she'll be paying off her law school debt for a couple decades.

"I knew it would allow me, with the student loan payment, to have the same standard of living I had previously, but I'd be happier with a more rewarding career," she says.

This past May, Weber graduated from Cleveland State University's Cleveland-Marshall College of Law and is now clerking at Moore Yourkvitch and Dibo, a small boutique firm started by fellow Marshall grads, while awaiting her bar results. She hopes to land a full-time job there.

"I'm walking out of law school with $120,000 in debt, all federal, which allows you to pay on an income-based repayment plan," she says. "I believe my payment will be around $400 a month. I chalk it up to reality – it's the tax you pay for not having a college fund."

While the top 10 percent of this year's class has landed full-time associate positions at big law firms, some of Weber's friends have taken on temp work or teaching gigs to pay the bills while trying to find a full-time job. "We're competing with people who have been laid off and have five to 10 years of experience," she says.

Even as the economy improves, the entry-level job market remains tight for new law school grads. According to a recent article in Bloomberg News by Kyle McEntee, director of the advocacy group Law School Transparency, 59.2 percent of 2015 graduates found long-term, full-time jobs as lawyers within 10 months of graduation, up from 58 percent a year ago. This figure has improved the last four years, creeping up about 1.35 percent a year.

Law schools are also admitting far fewer people now than during the recession, when young people applied in droves only to find out the job market still sucked when they graduated. Yet there are still more lawyers than full-time jobs. There were 37,000 law grads in 2015 – way down from 52,000 in 2010 – yet there were only 23,687 long-term, full-time law jobs waiting for them, according to the American Bar Association. That's a 6.8 percent decline from last year and just 14 more jobs than in 2011, the year considered the bottom of the market.

"The trend of fewer legal jobs should concern law school administrators," writes McEntee. "The evidence does not support plans at the vast majority of schools to increase enrollment to stave off deep financial trouble."

Cleveland-Marshall professor emeritus David Barnhizer recently published a paper arguing one or more law schools will close in the coming years. With declining population, a shrinking legal services market and a limited pool of applicants, Midwestern law schools are particularly at risk, he argues. "Some law schools should – and will – close," Barnhizer says. "But none have. It would be healthier for the market if they did."

Financial Death Spiral

Barnhizer's paper, "Competitive Data Trends for Great Lakes and Midwest Law Schools, 2012-2015," argues that law schools are still deeply troubled despite an improving legal services market. They're pumping up their numbers by admitting less-qualified students, he says – the very ones who rack up loans and may have trouble finding jobs when they graduate.

"The systematic pressures on law schools trying to survive ... will create a sort of financial 'death spiral' in which law schools rely on greatly expanded financial aid packages in an effort to 'buy' students," he writes. "This creates an incentive to admit marginal students at the lower end of the scale who pay full tuition in order to fund the subsidies and scholarships given to more highly qualified applicants."

As evidence, Barnhizer cites the fact that both Case and Akron law schools no longer have minimum GPA requirements for their scholarships. While Case has had this policy for a number of years, Akron changed theirs more recently.

Many law schools are also offering steep tuition discounts to woo students. For example, Case Western Reserve University is one of nine law schools in the country with tuition discounts in excess of 50 percent. Barnhizer says other law schools have become heavily dependent on foreign students paying full tuition to complete an LLM degree (equivalent to a master's in law).

David Lat, founding editor of the legal news site Above the Law, says Barnhizer's analysis is true of law schools generally. "There's definitely been a trend in the direction of law schools admitting students with weaker credentials in order to keep their class sizes either the same or not shrinking as much as they otherwise would," he says. "One manifestation of that is that average LSAT scores have been going down."

According to Law School Transparency, 2014 LSAT scores at 37 law schools were so low that half of incoming students were considered to be at high risk of failing the bar. In 2010, the same could be said for only nine schools. "We're not aware of a time when so many law schools had something like an open enrollment policy," the study's authors wrote, concluding that the percentage of graduates who pass the bar "will drop significantly over the next three years, leaving thousands deep in debt with few prospects for employment that will enable them to pay off their debts." While it may serve as an exceptional example, Indiana Tech law school in Fort Wayne saw only one member of its inaugural graduating class pass the July bar exam.

Barnhizer says it's not a matter of "if" but "when" law schools close. Great Lakes and Midwest law schools will shrink another 10 to 25 percent, he says, with regional schools like Marshall, University of Akron and University of Toledo at risk of further decline. Over the past five years, Ohio has seen a 40-percent decrease in students taking the LSAT, for example, and data shows a leveling of that number over the past three years.

Historically, law schools have been seen as the cash cows of the university system, and Barnhizer says deans milked that opportunity for all it was worth during the recession. Yet those days are over, and today schools like Ohio Northern and Akron are facing a major budget crunch. Of course, law schools are prestige operations and universities have a built-in incentive to keep them no matter how poorly they're performing. Those most at risk are probably stand-alone schools not attached to a university.

"Many law schools in the region are in 'survival of the fittest' mode," Barnhizer says. "Several are likely to simply wither away."

Lat is not so sure any university-affiliated law schools will close. "The university may keep the law school afloat on the theory that in good times law schools are cash cows, and that if we can get through these tough times, it may end up paying off for us," he says.

Law school deans refute Barnhizer's argument, arguing that they've battled back from the brink by reducing class sizes while maintaining high standards.

Andy Strauss, dean of University of Dayton's law school, says his 2016 class is 113 students, up from 90 in 2015. "At the same time, credentials are up – the median LSAT score went up from 148 to 149," he says. "It had been at 148 for the previous three years. In terms of GPA, last year we were at 3.04 and this year we're at 3.14."

Strauss also takes issue with Barnhizer's argument that law schools need to reduce operational costs by cutting faculty – Dayton already did this several years ago, he says.

Austen Parrish, dean of Indiana University's Maurer School of Law, says it's important for law schools to give opportunities to lower-scoring students. "Where I disagree or think it's more nuanced is that there's a big question of whether law schools should be elitist institutions," he says. "No one argues you should close a bunch of colleges because English majors aren't getting jobs."

"There are tremendous unmet legal needs in our society," adds Benjamin Barros, dean of University of Toledo's law school. "A lot of ordinary people can't really find affordable legal services. There's a good argument to be made that we need more lawyers in our society even right now."

Moreover, after years of decline, enrollment and scores are trending up at many schools. Wayne State saw a 15 percent enrollment increase and higher LSAT scores in the past two years. University of Akron saw a two-point increase in its bottom quartile LSAT scores. Scores stayed strong at Marshall despite enrollment dropping from 110 to 100 in the past year.

"We're coming off of a bubble," says Jeffrey Standen, dean of Northern Kentucky University's law school. "It's a little misleading to look at the last five or six years and point that trend line in the future and conclude that things are bleak."

Not every school is seeing an uptick. Ohio Northern University's first year law class is 59, down from 69 a year ago and down 51 percent from 2010's 120. LSAT scores there have tumbled four to six points from 2010 to now.

Barnhizer's argument that law schools will close is bogus, Barros says: "It hasn't happened yet and we're in year six of a pretty tough market for law schools. If anyone would have closed, I would have thought they would've by now."

Making Law School Relevant Again

Even if enrollment isn't declining at law schools, they certainly are changing. While law schools traditionally placed students in large lecture hall classes until the third year, today's law students receive more individual attention and are involved in clinics, externships and practical programs from the get-go.

"From day one, we think about when students get practical experience," says CWRU law school co-dean Jessica Berg, citing the university's capstone program where students spend 1-2 semesters practicing law. "We've pushed hard on increasing the number of credits for skills classes."

Jocelyn Benson, dean of Wayne State law school, says her school prepares students for careers in business, government and the nonprofit sector as well as law. "We're not just having law firms come to our campus anymore," she says. "Last year was the first year in a number of years that students had multiple job offers."

One growing area is "JD-advantaged" fields where a law degree provides a leg up but is not a requirement. University of Akron has increased the number of clinics it offers while adding specialties like corporate compliance. Northern Kentucky offers courses in corporate risk management and multiple joint degree programs. Indiana has a niche in intellectual property and is part of the United States Patent and Trademark Office's Law School Clinic Certification Pilot Program.

One of the most innovative programs in the region is at Cleveland-Marshall. The law school's solo-practice incubator program offers affordable office space, conference rooms and a reception area for new grads. It also offers reduced-cost health and liability insurance. The incubator is the first of its kind in Ohio.

Marshall interim dean Lee Fisher says he believes the market for legal services in Northeast Ohio is coming back. "I don't believe you can cut your way to survival," he says. "The only way to be a sustainable organization is to invest in the organization and raise revenue. I'm cautiously optimistic, particularly about the Cleveland and Northeast Ohio market."

The percentage of law graduates finding full-time jobs is also trending up at many schools. Berg says CWRU posted a 90 percent employment rate for law graduates in the past two years after they'd been out of school for 10 months, while University of Akron law school assistant dean Barbara Weinzierl says 93.5 percent of the school's graduates found employment within nine months. Of course, not all of these graduates are finding work in their chosen fields. One law student, Anna Alaburda, even sued her university, Thomas Jefferson School of Law, for using misleading statistics to lure students to enroll. Eight years out of law school, Alaburda has yet to find a full-time job as a lawyer.

"These types of numbers often are concealing the fact that the jobs being attained by grads are not the jobs they went to law school to get," says Lat. "The gold standard is a full time long term job requiring a law degree. You have stories of law grads working at Starbucks or a restaurant, and there are a lot of people like that out there." Which is how school's get to champion numbers like 90 percent employment while nationwide data shows only about half of that employment coming in the legal world.

Stephen Veltri, dean of Ohio Northern's law school, says despite declines in enrollment and credentials his school is not going anywhere. "Our students come from county seat towns in Michigan, Ohio and Pennsylvania, and they return to those towns," he says. "There are still crimes to be prosecuted, crimes to be defended, wills to be written. We've been at this for over 130 years."

Some deans take it one step further and argue that law degrees are increasing in value. "I think JDs will become the all-purpose degree for executive employment," says Northern Kentucky's Standen. "The MBA was created to be the all-purpose graduate degree for executive level employment, but the JD is coming alongside the MBA and perhaps might supplant it."

Lat says this kind of thinking is what got law schools in trouble in the first place. "I'm a little skeptical of the argument that people should go to law school even if they don't end up practicing as lawyers," he says. "The issue is it's three years and $200,000 and you're giving up the income you'd be making during that time. The cost is too high these days for it to be a finishing school for liberal arts grads."

The New Partner Track

Although law school deans paint an increasingly rosy picture of the legal job market, recent grads say they've had to adjust their expectations in order to find full-time employment. Most of them did not have jobs when they graduated and were still sending out applications while studying for the bar.

Catherine Donnelly was one of the "lucky" ones. First in her class at Cleveland-Marshall, she graduated in 2010 with an associate-level position in the public finance practice at Squire Sanders (now Squire Patton Boggs), one of the top law firms in Cleveland. Nine months later, however, she was laid off in one of the worst job markets in 80 years.

Donnelly ultimately landed on her feet, working at a labor law firm for four years before accepting a position at Moore Yourkvitch and Dibo, where Katie Weber also found work. She's very happy with the move. Her billable hour target is two-thirds of what it was at Squire Sanders, plus she can dedicate more time for pro bono work and take vacation.

"The legal services market is broken," she says. "The billable hour model does not work for lawyers and it doesn't work for clients. It creates unattainable expectations where the only way you can increase your bottom line is to increase the hours of employees or by raising rates, so you end up overworking people."

Many recent grads have had to make do with part-time work. In his article "The Oversaturated Job Market for Lawyers Continues, and On-the-Side Legal Work Grows," Joshua Davis writes: "Hiring has mostly been stagnant coming out of the recession ... take away full-time, salaried positions and the real growth in the lawyer job market has come from those working on the side in part-time arrangements."

One encouraging aspect of this trend is the rise in entrepreneurial activity. Like most of his classmates at Marshall, Moore Yourkvitch and Dibo founder David Moore didn't find a job right away after graduating in 2010. Instead, he used his nonprofit community development clinic experience to start own practice out of the school's incubator program.

"The economy was starting to rebound, and there was a demand for services but no way to pay for them," he says. "There was an opportunity for us to come in and fill the gap, and that meant really doing a lot of free and low-cost work. We'd essentially do the work for what they could pay us. At the big firms, alternative fee arrangements were still just a theory. They were laying people off."

Today, Moore has seven attorneys working for him, including several Marshall students. "It's not just an alternate fee arrangement but an alternate business model," he says. "We just listened and tried to figure out what the clients wanted."

Community developer Anthony Trzaska graduated from the University of Dayton law school in 2009 and is now working part-time as a "craft counselor" helping Cleveland Bagel, Cleveland Flea and other startups negotiate leases and other business documents. Eventually, he hopes to scale up his development business on Fleet Avenue, where his family also owns a funeral home.

Sam O'Leary graduated from Marshall in 2013 and bounced around for several years before finally landing a full-time position at Matty, Henrikson and Greve. He also serves as president of Lakewood City Council. He says going to law school is still a good value proposition, but you have to know what you're getting into. "I definitely feel like my legal education helped afford me the opportunity to get elected to city council," he says.

Marshall class of '16 grad Brooke Hamilton recently started an associate-level position at Gallagher and Sharp, one of the few people in her class to land a job at a big firm. "I've noticed that even if you don't go to one of the top 10 or top 15 firms in the city, the other midsize firms are still looking for people who have had some kind of work or clerking experience during law school," she says.

Donnelly says it's a myth that there are too many lawyers. Instead, she argues, the cost of legal services needs to come down across the board so that more people can afford them.

Her advice to new grads? "Go to law school because you want to help people," she says. "Keep your debt low. If you aim for the market above legal aid eligibility but below the $250 per hour mark, you probably will be able to make a living."

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