The Business of Running a Law School

John H. Garvey

            I confess that as a faculty member I gave little thought to the business of running a law school.  Deans don’t have that luxury.  Someone has to pay attention to things like budget, payroll, physical plant, purchasing, admissions, career services, and (most important of all) the kind and quality of service that we provide to students in the classroom.  Stated abstractly, we are a nonprofit business that provides a service (legal instruction) to about 800 customers each year, and we – like all businesses – have to balance our books.  From a business point of view the most interesting challenge we face is that our costs increase every year, and they are driven by social changes over which we have no control.  I want to try to explain briefly why costs keep going up, and mention some of the strategies that schools employ to cover them.

            The biggest cost involved in running a law school is the cost of instruction.  Let us use the courses we teach as a rough index of that service.  (There’s more involved: time outside class, teaching in the library and on computers, work on journals, etc.)  When Boston College Law School opened its doors in 1929 its first-year curriculum was not very different from what it is today.  The second-and third-year curriculum looked like this:

           Here are the second- and third-year courses we offered last year:

And here is a picture showing how each of the categories I have used to clump courses have grown at 20-year intervals:

             That , in briefest form, is why legal education is more expensive today than it was 72 years ago – we have to pay more people to teach more courses.

            Of course there are other costs involved, and let me say a word about them before I say why the curriculum has grown like this.  One added cost is inflation.  But I will set that aside because the dollars students are paying have changed at the same rate as our costs.  A second and more significant one is that when the curriculum changes shape, so must our buildings.  If all students take the same courses, as they do in the first year, and as they used to in the second and third years, we can teach them all together at the same time in large rooms.  When instead we offer a large number of elective courses, classes will perforce be smaller and more numerous, and this calls for more and smaller rooms.  We also need more offices to house a larger number of faculty.  A third cost is the expense of running a library capable of serving a much larger curriculum.  (We need books on international law and intellectual property law, for example.)[1]

            Why has the curriculum grown so?  This is the interesting point, and it is one that makes us a very different kind of business than McDonald’s.  McDonald’s hires more employees as its customer base expands; it builds more and bigger stores as the demand for its hamburgers increases.  Law schools grow at a much faster rate than their customer base.  (To put it in the terms we usually employ, the student-faculty ratio is constantly decreasing.)  Here is a picture of the rate of growth in our faculty and student body, taking 1940 as the norm:[2]  The solid line denotes faculty and the dotted line denotes students.

 
                  We add faculty so that we can teach a constantly expanding curriculum.  If McDonald’s operated this     way they would hire more   employees as their menu got larger.  And they would quickly go out of business.  So why do we do it?  And how can we survive if we pay so little heed to elementary market forces? The answer to the first of those questions is actually fairly obvious.  We are in the business of educating students for the practice of law, and the law is much more complicated than it was just a few decades ago.  This is not just a matter of slicing up the same loaf of bread into smaller and smaller pieces.  There is much more law today than there was 20, 40, and 60 years ago.  One reason for this is scientific progress.  Look at the growth in Property courses over the last 40 years.  In 1960 we taught 4.  In 2000 we taught 14.  This is because between 1960 and 1980 we had an explosion in environmental law.  Congress enacted the Clean Air Act, the Clean Water Act, and the Environmental Protection Act.  We also made laws dealing with radiation, ocean dumping, noise abatement, pesticides, sewage sludge, and toxic substances.  And between 1980 and 2000 we saw the development of intellectual property: personal computers, cable TV, digital recording, the world wide web, cloning, the human genome project.  To regulate this activity we passed the Digital Millennium Copyright Act, the Audio Home Recording Act, and so on.  We can’t prepare students to practice law in these areas by teaching them about mortgages and Blackacre.

                Here is a second example – the result largely of changes in communications and travel.  In 1960 we taught 1 course in International Law.  Today we teach 16.  The world is a much smaller place than it was only a few years ago because we can deal instantly with Bonn and Hong Kong.  Fax, e-mail, portable phones, fiber optics, and satellite communications have replaced the postal service.  Containers have revolutionized international trade.  As a result we have laws like NAFTA, markets like the European Union, the World Trade Organization, and so on.  We can’t prepare students for these changes by teaching them Grotius and Pufendorf.

            Here is a third.  I am tempted to say that moral progress is also driving the growth of the law, but that’s not exactly right.  I do not believe that people are better today than they were 40 years ago.  But it is certainly true that we rely on the law much more often to enforce our moral convictions.  Look at our courses in Public and Criminal Law.  The increase in Public Law results above all from the civil rights revolution begun in the 1960’s: the Civil Rights Act of 1964, the Voting Rights Act of 1965, the Age Discrimination in Employment Act (1967), the Fair Housing Act (1968), Title IX (1972), the Rehabilitation Act (1973), the Individuals with Disabilities Education Act (1975).  And the growth of Criminal Law began with the Warren Court’s efforts to write a constitutional code of criminal procedure. 

            You get the idea.  I need to add one more point – one that concerns how rather than what we teach.  The fastest growing slice of our curriculum is our Clinical courses.  There were none in 1960, 4 in 1980, and 22 in 2000.  This actually understates the amount of faculty resources we devote to this area.  We have six full-time faculty members who teach Legal Reasoning, Research, and Writing (LRR&W) in the first year, and the various charts I have provided depict only the upper-class curriculum. 

            Our growth in this area has been more pronounced than other private schools’ of our size, but they too have grown.  The explanation for the change is different from the ones we have examined.  It has something to do with an intellectual shift in pedagogy.  In 1987 the ABA Section of Legal Education and Admissions to the Bar created a task force to study what it perceived as a growing disjunction between the academy and the practicing bar.  The product of that study – the McCrate Report published in 1992 – stressed the importance of skills like counseling, negotiation, communication, factual investigation, and the recognition of ethical dilemmas, in addition to legal research, reasoning, analysis, and problem solving.  In 1996 the ABA amended its Standards for Approval of Law Schools to require “at least one rigorous writing experience,” “adequate opportunities for instruction in professional skills,” and “live-client or other real-life practice experiences.” (Standard 302(a)(2)-(3), (d))[3] 

            This change in how we teach has altered the faculty composition even more than it has affected the curriculum, because clinical and legal writing faculty teach smaller classes, on average, than traditional faculty.  For example, we have four clinical faculty assigned to our Legal Assistance Bureau in Waltham.  Each teaches a section of the Civil Litigation Clinic that is limited to six students per semester.  The Immigration Law Practicum taught by one of our clinical faculty and a graduate assistant is limited to 15 students.  The LRR&W faculty teach almost exclusively in the first year.  Typical sections of first-year classes – like my class in Constitutional Law – have 90 students.  LRR&W faculty each teach 45 students.  The reason for this significantly lower student-faculty ratio is that the teaching of skills requires closer individual attention and more feedback, a difference not unlike the one we see in medical education when students move from the classroom to internship and residency. 

             I have been discussing the reasons for the growth in our curriculum and faculty.  The picture I have described is not unique to Boston College.  It’s the same everywhere.  And it is such a radical shift that when I first recognized it (remember I’m new to the business end of law schools) I wondered how we manage to survive, with costs continually going up and student-faculty ratios going down.  It turns out that there are a dozen strategies for coping.  We have adopted some of them.  And if the trend continues (and it will), we will have to look at others. 

1.        Stasis.  One way to cope with the problem might be to hold costs constant by freezing the curriculum in its current (or some earlier) form. The extreme form of this suggestion is out of touch with the reality of modern law practice.  We can’t ignore ERISA and teach Wills because Wills are more “basic” or “traditional.”  Pension plans are where Americans have their money.  Neither can we decline to teach Title VII, or the Clean Water Act, or the Digital Millennium Copyright Act.  They are the laws that our graduates must be familiar with in their practice.

2.        Course loads.  There is a trend among elite schools to reduce the teaching load for faculty from four to three courses per year.  This allows more time for scholarship, which is another form of service to the academy, the profession, and the public.  Resisting this trend is a way to get more courses per dollar of income.  And for some faculty it is a good match with their skills and interests.  But as a comprehensive solution it has serious drawbacks.  One is that scholarship is itself the most important means of education for faculty, who are paid with tuition dollars to be on the cutting edge of their fields.  A second is that scholarship is itself a form of public service – in the long run perhaps our most lasting contribution to the practice of law.  A third, related to the second, is that the reputation of our faculty (the single most weighty factor in rankings polls) is established on the basis of what they write.  A fourth is that the market for teachers is an efficient one, and if we want to attract the best faculty we need to keep an eye on what the competition is offering.

3.        Tuition.  There is a little room for increasing tuition, but not enough to solve the problem.  We already charge $25,854.  If we increased that by 10% we would be at the high end of the market.  10% more tuition revenue would buy about four more associate professors.  But it would also have side effects.  We might scare away poor but well qualified students.  There must be some relation between price and demand. 

4.        Student body size.  We could increase this.  We aim for a student body of 810. Georgetown has 1964.  Suffolk has 1708. Harvard has 1655.  That would give us more income, and more customers, for more courses.  But it too would have side effects.  One would be a need for more space.  A second would be an impact on our ranking.  We get the best students we can attract, so additional students would come in at the lower half of the class.  In this regard it pays to be small.  A smaller student body gives us a better student/faculty ratio, better GPAs, and better LSATs.  A third consequence is intangible, but maybe more important. Boston College is a very happy school where the faculty know the students and the students are pleased with their educational experience.  This might be less true if we were bigger.

5.        Faculty tracks.  The sector of our faculty that has increased the fastest lately is the long-term contract faculty – those who teach clinical courses or Legal Reasoning, Research, and Writing (LRR&W).   In 1960 there were no such people.  Today there are 12 – six of each.  Clinical and LRR&W faculty are regular full-time faculty members, but they are hired on a long-term contract basis.  They do not get tenure, although after six years of teaching and a faculty review process they are given a form of job security that is reasonably similar.  Neither clinical nor LRR&W faculty are expected, as a condition of their employment, to do published legal research (though they may do so if they wish).  Because they do different work than tenure-track faculty, and come with credentials and experience appropriate to their roles, most law schools pay them less than tenure-track faculty who graduated the same year.  This is a common method of hiring more faculty at a lower cost.  It too has side effects — in this case on job satisfaction.  At Boston College we have attempted to ameliorate these differences, though doing so forecloses one common route to cost savings.

6.        Adjuncts.  An even better way to save money on teachers is to hire adjuncts.  Last year we had 30 in the Fall and 35 in the Spring.  This is something that schools in big cities do.  BU last year had 59 and 48; Columbia had 51 and 74; Northwestern had 104 and 42.  It’s harder for schools located in small towns (Cornell had 9 and 15) because there are not as many qualified lawyers practicing there.  This practice is understandable and useful.  Like all part-time employees, adjuncts cost less than full-time workers because they are not paid benefits.  Adjunct teachers at law schools come even cheaper because most earn a substantial income from the practice of law.  Many are alumni who offer their services at sub-market rates out of attachment and a feeling of gratitude to their alma mater.  Staffing courses with adjuncts rather than regular faculty costs about one-fifth as much per credit hour, figuring in only salary and benefits.  If we add the savings on office space, staff support, and so on, the difference is more impressive still.  Adjuncts are not just cheaper than regular faculty.  At some things they are better.  We offer eight sections of Trial Practice, and all are taught by adjunct faculty who are judges or practitioners.  The reason is that the class prepares students for jury trials – jury selection, opening and closing arguments, and direct and cross-examination. On the other hand, though, there are reasons to be careful about overdoing it with this solution.  Our regular faculty provide students with benefits no group of adjuncts, however able, could hope to offer.  If we hire right, our full-time faculty will be the real experts – often internationally renowned experts – in what they do. They are not just really smart.  Life in the academic world gives them the freedom to develop their expertise to an unusual degree.  It is the rare practitioner who has time to write the definitive treatise on Environmental Law, or The Federal Law of Attorney Conduct.  Moreover, the full-time faculty are here all the time.  This is their job.  And much of the job of teaching takes place in the office, at lunch, and before and after class.

7.        Partnerships.  Boston College offers 21 courses in Business Law (loosely defined) – tax, corporate, and commercial law.  But we can increase our course possibilities through a partnership with Boston College’s business school (the Carroll School of Management).  We offer a joint JD/MBA program which opens up the Carroll School’s curriculum to our students.  And there is room for expansion and efficiency here.  I think we could make better use of these resources, and perhaps achieve some economies, if we put our minds to it.

8.        Graduate programs.  LLM programs allow law schools to add tuition-paying students who will use the building in off-peak hours, who will not count for U.S. News rankings purposes, and who will help to pay the cost of additional faculty.  In some kinds of programs classes can be offered at night because many students work downtown during the day.  And because these are not JD students, their GPAs and LSAT scores do not figure in the rankings numbers.  At Boston College we have historically frowned on the idea of graduate programs.  But from a business point of view they might be worth a look.  The challenge is to build in a way that capitalizes on and reinforces the intellectual and community culture already in place.

9.        Executive education.  Business schools do this and make a great deal of money on it.  Law schools traditionally have not.  Once again we might ask why not.

10.     Endowment.  This is obviously an important component of any solution.  What it really amounts to is getting our most successful students to help pay our rising costs after they graduate.  The most attractive aspect of this solution is that it has none of the side effects of solutions 1-6, and can be implemented without program changes, unlike solutions 7-9.

11.     Foundations. The Hewlitt Foundation just gave Stanford University $400 million dollars. There are others – the Soros Foundation (the Open Society Institute’s Program on Law and Society), the Olin Foundation, the Keck Foundation, the Lilly Foundation – that give money to law schools.  Like most law schools, we have not done much of this in the past.  We should look at areas of the school that might attract such support.

12.     Government.  It is surprising to me that the training of lawyers is not more generally understood as a public good.  Part of the explanation for this is that the media are fond of portraying the plantiffs’ bar in an unfortunate light.  But the legal profession bears the burden of making and enforcing rules that allow our increasingly complex society to function smoothly, and of counseling people about how to live within them.  If the cost of education for this work outstrips the resources of students to pay for it, society will be the loser.  We understand that government should bear part of the burden of training people to provide other public goods (like medicine).  And we willingly provide tax support for legal education at state universities.  Private schools provide public benefits in equal measure.  They have some reason to ask for public support. 

        I don’t think that there is a “right” combination of these solutions.  I’m pretty sure that standing still (1) is a mistake.  And most people would agree that gifts and grants (10-11) are particularly appealing because they have fewer side effects than other solutions.  It is this – and of course the need for new infusions of capital – that explains the explosion of fundraising activity at law schools in the past twenty years.  These are now things that every law school has to do. Government help (12) offers the prospect of almost unlimited support.  But it would come with strings attached, and some schools would rather not pay that price.  As for the others (2-9), different ones will appeal to different schools.  The balance of course loads (2) and scholarship is a zero-sum game.  Schools that want to hold an elite position must give their faculty time to write, and this means smaller course loads.  But not everyone cares about rank in the polls.  The amount of tuition (3) a school can charge varies somewhat with rank.  The ability to use adjuncts (6) depends on geographic location.  It also affects the teaching environment in a variety of ways.  The formation of partnerships (7) is easier at universities with other strong graduate programs.  I don’t have recommendations about how to balance these various factors; the decision is one that people close to the school can make best.