“Most schools did only what the ABA … required” in reporting data on graduates’ jobs, says William D. Henderson, a law professor at Indiana U.

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By Katherine Mangan

Kyle McEntee graduated from Vanderbilt University Law School in May with $150,000 in debt and a pit in his stomach. After passing the bar in North Carolina, his home state, he began applying for the few jobs he found posted but was competing with laid-off lawyers with at least a year or two of experience.

“Everyone I talked to was beaten down and depressed about their job prospects,” he says.

Today Mr. McEntee’s career is on something of a roll, but hardly in the way he’d expected. The nonprofit group that he and a fellow graduate created to pressure law schools into releasing accurate data about graduates’ job prospects is getting national attention.

And the issues raised by their organization, Law School Transparency, are prompting a flurry of filed and threatened lawsuits against law schools accused of reeling in students with misleading data on jobs.

At a time when applications are slumping and legal and regulatory challenges mounting, law schools face questions far tougher than the ones the transparency group has been posing in their employment surveys:

Will glossing over gloomy employment statistics land more schools in court when their graduates don’t find well-paying jobs? Will a crisis of confidence among prospective students force schools to cut class sizes and forgo tuition revenue, or dangle more scholarship dollars to fill their classes?

The public backlash against law schools may just be the start, some higher-education experts say. As more prospective students question the wisdom of taking on six-figure debt to enter a shrinking job market, the consumer-protection pressures facing law schools could spill over to other professional schools, they predict.

If the litigation against law schools has “even a little success, others may be motivated to file copycat lawsuits against other targets,” says Robert B. Smith, a higher-education lawyer who has been contacted by some of the law schools threatened with litigation.

Mr. Smith, a Boston-based partner with LeClairRyan and a former associate general counsel at Boston University, points out that the Web site of David Anziska, one of the lawyers suing the law schools, alludes to plans to expand the practice “to holding other graduate and trade schools accountable for inflating their placement rates.”

Grim and Grimmer

For a while, law schools were reaping the benefit of a bad economy. Applications increased in 2009 and 2010 as college graduates sought to ride out the recession and improve their job prospects. That trend came to a halt this year, when applications dropped 11 percent.

In an informal poll taken by the Law School Admission Council, 45 percent of the 143 law schools that responded said they had fallen short of their enrollment targets this fall.

If students were skittish about applying last year, they’re likely to be even more so after a year in which disgruntled law-school grads took to the blogosphere, and eventually the courts, to air their grievances, and mainstream news sources published a flurry of exposés about puffed-up employment statistics and deflated law-school graduates.

It started in May, when the Thomas Jefferson School of Law, in San Diego, was hit with a class-action lawsuit. Three months later, separate class-action suits were filed by seven former students of New York Law School and Thomas M. Cooley Law School, in Lansing, Mich. This month, the lawyers who sued New York Law and Thomas M. Cooley announced plans to sue 15 more law schools in seven states as soon as they corral enough clients.

The plaintiffs’ lawyers predict that within the next few years, every law school in the country will be sued.

The suits, whether filed or threatened, accuse law schools of using inflated postgraduate employment and salary statistics to attract prospective students. The New York and Thomas M. Cooley suits seek “to remedy a systemic, ongoing fraud that is ubiquitous in the legal education industry and threatens to leave a generation of law students in dire financial straits.”

The main complaint is that the numbers that law schools are reporting are misleading at best, fraudulent at worst. Law schools posting employment rates of 94 percent may neglect to point out that the figure is based on only the 40 percent of graduates who report. It also lumps together all kinds of jobs, so that a part-time office clerk or a full-time coffee barista is counted as employed.

Permanent changes in the legal landscape are likely to leave their mark even when the economy improves. Big law firms are no longer willing to pay top dollar to train young associates, and entry-level jobs are being outsourced or replaced by technology.

According to the National Association for Law Placement, only about 64 percent of 2010 law graduates had jobs requiring a law license nine months after graduation.

For graduates with full-time jobs, the median salary fell 13 percent, to $63,000, from the previous year.

Over all, the legal field had a net loss of 50,100 jobs—about 4.3 percent—from January 2008 to last month, according to an analysis of data from the U.S. Bureau of Labor Statistics by the blog LawShucks. (That number includes paralegals and other legal professionals.)

At the same time, the number of students graduating from law schools continues to increase, with a record 44,004 new lawyers entering the market last year.

‘Consumerist Paradigm’

As questions about the future market for legal services rattle the profession, political pressure on law schools, and the body that accredits them, has heated up. Two U.S. senators have demanded that the American Bar Association, whose Section of Legal Education and Admissions to the Bar accredits law schools, speed up the process of requiring law schools to report more detailed employment data.

Some of the law schools whose employment numbers are being scrutinized have begun consulting higher-education lawyers like Mr. Smith. He warns against what he calls “the creeping influence of America’s consumerist paradigm,” an attitude that he says is perpetuated when higher-education institutions describe students as consumers, and when regulators require them to publicize outcomes-based data for prospective students.

“College students are not ‘entitled consumers’ whose success in life is somehow to be guaranteed by the schools they attend,” Mr. Smith argues. Society shouldn’t be a “guidance counselor” for adults. When they apply to professional schools, he says, they should be aware of economic forces working against them.

“There’s a notion that they’re wrapped in a cocoon of ignorance, and yet we still expect them to be qualified to become my heart surgeon or my lawyer,” Mr. Smith says.

Not surprisingly, the deans on the receiving end of lawsuits agree. “A law degree is not like an insurance policy or a warranty on a lawn mower or a new car,” says Don LeDuc, president and dean of Thomas M. Cooley Law School. Law deans who have been accused of gaming the numbers point out that, until now, the bar association hasn’t required them to specify what kinds of jobs their graduates land. If the numbers are fuzzy, they say, blame the accreditor, not them.

“Most schools did only what the ABA and NALP [National Association for Law Placement] required them to do,” says William D. Henderson, a professor of law at Indiana University at Bloomington whose research focuses on legal education and the legal profession. “The courts will have to decide whether that was sufficient” from the standpoint of consumer protection. (The ABA’s Standard 509 requires law schools to publish “basic consumer information in a fair and accurate manner reflective of actual practice.”)

Mr. Anziska, one of the two lawyers behind the latest lawsuits, says blaming the bar association is a cop-out. “Law schools have an obligation to disclose accurate information,” he says. “For them to say that all of these students who have taken on tens of thousands of dollars in loans are just screwed, and should take it up with the ABA, is irresponsible.”

Many legal experts say plaintiffs will face a tough fight persuading the courts that their schools intentionally and fraudulently misled an entire class of students, especially if the schools can prove that the information they were providing was all their accreditor required.

The Bottom Line

So how is all of this controversy likely to affect law schools’ bottom lines?

Brian R. Leiter, a professor of law at the University of Chicago who runs a popular blog about legal academe, says that if applications continue to drop, as many legal educators are predicting, schools will be faced with difficult choices: They can lower their admissions standards to fill their classes, but then their bar-passage rates and national rankings could suffer, and they might even lose their accreditation. (In June, the ABA revoked its provisional accreditation of the University of La Verne College of Law, largely because its first-time bar-passage rate last year was only 53 percent, compared with a statewide average of about 70 percent for graduates of ABA-approved law schools in California.)

Alternatively, schools could cut their class sizes and maintain their standards but lose tuition money.

Either way, they’d take a financial hit. As a result, Mr. Leiter predicts, “barring an enormous turnaround in the economy, which is unlikely, some law schools may fold, and the ones that are most vulnerable are the new, free-standing schools that don’t have university resources to draw on.”

Brian Z. Tamanaha, a professor of law at Washington University in St. Louis who has written and blogged about the crisis of confidence in law schools, predicts that as the number of applicants drops, law schools will offer scholarships to larger proportions of their classes, creating a “de facto tuition drop” that will further strain institutional finances. Schools that are clustered in weak legal markets will be particularly vulnerable.

Meanwhile, some nonelite law schools are resorting to creative tactics to entice students to apply. Thomas M. Cooley devised a ranking system that rated itself as second only to Harvard Law, based in part on the size of its library and the size of its student body.

Atlanta’s John Marshall Law School unveiled an application that allows prospective students to apply from their smartphones or tablet computers. “We want students to be able to come to a law-school forum, tour our campus, talk to us, and apply immediately,” Alan Boyer, associate dean for recruitment and marketing, explains in a news release. “If they have to wait until they get home and turn on a computer,” he said, “they may not apply.” The school also waives the $50 application fee for iPhone applicants.

Rudy Hasl, dean of the Thomas Jefferson School of Law, has overseen law schools for 30 years. While some legal analysts question whether a free-standing law school with a first-time bar-passage rate of just over 50 percent and a lawsuit hanging over its head can survive in this climate, he says that Jefferson’s graduates are persistent, and are finding jobs in small firms, representing middle-class people. He thinks both his law school and legal academe will be just fine.

“Every 10 years we hit a trough in which doomsayers predicted that enrollments would decline and that law schools would go out of business,” he says. “We always bounce back.”

Correction (10/18, 11:10 a.m.): This article originally referred incorrectly to the location of John Marshall Law School. There are two law schools with that name, and the one mentioned in this article is in Atlanta, not Chicago. The article has been updated to reflect this correction.