Law Schools Invest In Very Sturdy Deck Chairs

Law schools are experiencing their own version of the housing bubble.

We mentioned this morning a National Law Journal report that law schools have invested hundreds of millions of dollars in new buildings even while the market for legal education collapses around them.

I don’t really have much to add to that report, but I just kind of want everybody to internalize that information. Their business model is ON FIRE, yet they’re building new s**t. Emperor Nero had a better grasp on long-term planning than law school deans…

New law school buildings don’t just appear at a moment’s notice. These new capital projects were planned years ago, before law school applications fell off the map and prospective students wised up to the business of legal education. I’m reminded that the Empire State Building was constructed during the Great Depression. It’s hard to put the breaks on a massive project just because the market suddenly tanks.

Of course, I’m also reminded that the Empire State Building was a white elephant that wasn’t filled for years. When it opened, the tower was a monument to the gross speculation bubble of the 1920s. It stood, grotesquely, against the backdrop of suffering people desperate for jobs and opportunities. It was only later, as the Empire State Building gained its iconic stature, that the building looked like a decent investment.

Anybody want to take bets on the likelihood of Quinnipiac’s new $50 million law school building becoming a future tourist trap? Are people at Thomas Jefferson feeling good about their $90 million building? Are their bondholders?

What these buildings illustrate is just how untethered the price of legal education has been from the value provided by legal education for years. People didn’t build new, bigger law buildings based on any rational assessment of the market. They didn’t do sustainability studies. They didn’t effectively research the legal job markets in their areas. Instead, they assumed that they could continue to pack in as many students as they wanted to at whatever price they wanted to charge. These buildings are sand castles built at low tide by people who asked “can I” instead of “should I.”

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As law schools continue to increase the supply of legal education available, one can only assume that the new buildings will put additional downward pressure on the price of law school. It’s kind of the law school version of the housing bubble. The price almost has to come down.

Otherwise, we’re going to see schools employ their own graduates to clear the tumbleweeds out of their new palaces.

Law Schools Continue to Build Out [National Law Journal]

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