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« Law Schools are not in Crisis | Main | How Should Law Schools Change? »

10/31/2011

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Mikey the Nail, Esq.

Generally, I think there are some law students who have unrealistic expectations regarding their earning potential after graduating and passing the bar exam.

For example, it is no stretch to assume that first-year associate jobs paying six figures are all located in major metropolitan areas, only go to the top one percent of law school graduates, preferably those who graduated from the same law schools as the senior partner (often an ivy league school), the job will require 80 hours a week with no vacations, and none of these associates are, say, 50 years of age. Like every other company, law firms prefer to hire top notch people in their 20s for high-paying positions. Older folks simply have too much baggage, which I think may be a legitimate consideration, and of course there are illegitimate considerations such as physical appearance, disabilities and gender that nonetheless are in play as well.

Moreover, one can practice law for decades in a small town or small-to-medium-sized city and never crack $50K net. In the same places, some of them could make more money tending bar – and without educational debt, stress or expenses. (And, parenthetically, people do tend to actually like bartenders.)

So, it is important to have realistic expectations and a plan for where you want to live after graduating from law school, what sort of lifestyle you want to have and what sort of jobs may be available to you given all of the above.

Armed with said realistic expectations, a law student should fine-tune their educational and personal debt accordingly. If you graduate with $100K in student loans and the highest-paying offer you have is $25K per year without healthcare, then obviously you’re going to be in a precarious position – and one from which it becomes attractive for some graduates to blame others, like perhaps their alma mater, in an effort to cash out of the situation. It is very difficult if not impossible to effectively pay down that kind of debt on a bare-subsistence-level salary. Moreover, current bankruptcy laws exclude government-backed and government-issued student loans, and there is no statute of limitations on student loan collection – just like murder.

In my opinion career counseling should begin during the application process and not after admission. Prospective law students should be counseled to determine whether their expectations comport with the rather harsh reality on the ground, and law schools should be required to perform this counseling. After all, there is no shortage of applicants and career counseling early and often would ameliorate the post-graduation blame game.

Finally, some law students actually ask me for career advice (indicating a fundamental failure on the part of their law school career counseling program!). I advise most of them to seek a federal government job – available in many locations, good pay, gold-plated healthcare, unmatched benefits, unique job security, paid vacation, an old fashioned pension and they’ll probably never have to deal with wretched Godforsaken divorce cases, including their own!

Jon

Mikey:

When a lower-tier law school advertises a 120K or 160K median starting salary and a 96% employed upon graduation figure (misleading numbers), students do not have the information they need to properly plan their debt financing. What you are saying is obvious in hindsight but not very obvious to a 23 year old law school applicant who has been told his entire life that lawyers are well paid members of the upper-middle class and more education is always a good option.

mls

Someone suggested not long ago that law firms should start operating their own law schools. Perhaps a more modest suggestion would be for those who are developing these new technology-driven practices to collaborate with law schools in designing programs geared toward these practices. From what I have seen there is a poor fit between traditional law school education and the kind of lawyers that these practices need.

Mikey the Nail, Esq.

@Jon: Agreed. That is why I propose mandatory career counseling at the pre-admission stage.

Andy Starkis

As long as law schools view "training" as a dirty word, see "practical skills" as some sort of distasteful concession to public pressure, and think the advance of "scholarship" is their principal mission, law students will continue to suffer financially and professionally.

This is no new revelation. Every ten years or so for perhaps the last thirty, the legal establishment has commissioned a high-level study that each time has come back with the same conclusion: that law schools don't train lawyers (though of course the result is never stated so explicitly).

I know from more than fifteen years of teaching (after years of practice) that students can be educated--and trained--as lawyers in the three years of law school and that it can be done for a third of what most law schools charge. We do it.

But so long as those in the legal-educational system, those aspiring to be lawyers, and those out to hire keep drinking the Kool-Aid of "tiers," rankings, and perceptions of institutional quality based solely on who gets admitted, the problems will persist, and we can look forward to the decennial lament about the status of legal education.

Mikey the Nail, Esq.

Vermont Law School has had a highly-regarded practical skills training program for about 25 years, which they call the General Practice Program.

http://www.vermontlaw.edu/Academics/General_Practice_Program.htm

Orin Kerr

Bill,

I'm relatively skeptical of your take on this, and I wanted to run the reason by you and get your reaction.

When I have asked a few peers who are in the business of practicing law if they think we are undergoing a major change in the legal market, or if we are just experiencing the usual cyclical pains of a recession, they generally respond that they think we are seeing the latter rather than the former. So that means that you as an academic are saying one thing about what is happening in the legal market, and the group I have spoken with who are actually in the legal market generally are saying another.

My question is, have you encountered the same skepticism among practicing lawyers that I have found in my (very modest) inquiries? If not, can you say more about what you have found when you talk to everyday practicing lawyers about these issues? And if so, can you give us some idea as to why you think you are right and the practicing lawyers are wrong?

Bill Henderson

Orin, you raise a fair point and something I encounter often.

I have summarized the underlying data for my structural change / new legal entrepreneur analysis several places including the ABA Journal:
http://www.abajournal.com/magazine/article/paradigm_shift/

And more recently, the Truth on the Market symposium on deregulation of legal services:
http://truthonthemarket.com/2011/09/19/william-henderson-on-are-we-asking-the-wrong-questions-about-lawyer-regulation/

Lawyers generally don't consult industry level data. When I talk to groups of practicing lawyers--and I do so regularly--and I show them trendlines and comparisons with other industries that have undergone structural change, very few continue to advance the deep recession argument because such an analysis just does not fit the industry level trendlines.

In the literature on industry change, incumbent denial and flatfootedness is a recurring theme; indeed, it is the reason for the new entrant opportunity.

When a lawyer's phone is ringing and he/she has enough work and has earned a high living over a period of decades, I can be dismissed as an ivory tower Cassandra. I understand and accept this dynamic. I encounter it all the time. But I am focused on industry level evidence and discussions I have with a wide range of practicing lawyers and entrepreneurs. Applyng Occam's Razor, I look for the explanation that requires the fewest assumptions. Structural change fits; it has happened in other industries; now it is law's turn.

I hope my comment is responsive to your question. Thank you for commenting. Bill H.

Mark D Olson

Mr. Kerr: What is happening in the law business is not just the cyclical pains of a recession. We are, like it or not, in a new era, something we have not seen before and so the usual canards and principles do not necessarily apply.

1. There is oversupply of lawyers and law graduates that will not be absorbed into the economy any time soon. Technology has been a much larger factor than older lawyers are willing to recognize. Tech has very much leveled the playing field, particularly in that smaller firms can now take cases easily that they could not have thought about taking a decade ago.

2. The cases referenced in #1 are, if the lawyer or firm has a specialty, cases that will command higher hourly rates. Our firm can charge $200/hour less than our mega-firm competition, get the same, or often better, results (we do not have the large numbers of lawyers needing to stuff hours on to billing sheets) and there are any number of clients who understand that fundamental principle.

3. With regard to your last question, the practicing lawyers you talk to, your peers, all have clients - the impact on their business and income has been the reflection of the economic issues of their client base. The economics of the new lawyer are dramatically different; they have huge debt and no clients and nobody willing to pay the dollars they really need to pay their business start-up costs.

4. What happens to the 45 year old lawyer who is "in-house" and is laid off? He is earning, say, $200,000/year with fabulous benefits. How does he/she replace that income today? He/she is lucky to find a law position at all and if he/she does - it is almost certain to pay less than 6 figures. That is not a recession, that is a depression, and that person will never ever be able to replace that income.

5. Nothing has less value in the legal community than a 40+ year old lawyer with no clients. He/she had better be doing something else because the economics of the practice of law will dictate that.

6. Finally, law schools have become cash generators. 1/3 of those in school today have no business in law school and should be weeded out through the education process, as was the case some years ago. Greed on the part of the education industry has played a significant role in what is happening in our profession. That is not going to change any time soon.

Ken Grady

Orrin - As to whether we are seeing simply cyclical activity in the market for legal services or more fundamental change, I think the statistics support the fundamental change position. According to several surveys, approximately 25% of corporate legal services in the U.S. are now structured on something other than a billable hour model (a value fee model, including fixed fees). The percentages are higher outside the U.S. As in-house legal departments become more comfortable with these value fee models, the percentages are growing. This change, along with the technology driven changes, interest in work-life balance, and inability of many firms and lawyers to demonstrate what value they provide beyond routine legal services, are driving more discussion about alternative ways to handle matters that traditionally have gone to the medium- and large-sized firms. At the recent annual meeting of the Association of Corporate Counsel, the sessions addressing issues such as value fees, process management and project management, were sold out. This strong interest plus the high demand ACC is seeing for educational materials and speakers in these areas supports the argument that "the times, they are a-changin." While revolutionary change may not happen overnight (lawyers being "slow to change" creatures of habit), I believe there is sufficient evidence to show that it already is happening and will continue.

Steven Lichtman

I have a suggestion for how law schools should retool their curricula, based on the remark made at this year's NAPLA meeting (an observation that has been independently repeated in this forum) that today's law graduates need to be more "entrpreneurial."

Fine. If that's what the field wants, then law schools need to start offering classes in Managing Business Relationships, where they teach skills such as networking, rainmaking, client interaction ... the kinds of things that get taught in business schools as a matter of course.

This is different from so-called "skills training" that only focuses on how to argue a case, negotiate a settlement (and other typical "clinical" skills). I'm not saying that those skills can be dumped - nor am I saying that the bar-prepration of the first-year courseload needs to be abandoned, either. But if entrepreneurial attributes are required to be hired in this new paradigm, then entrepreneural skills must be taught.

Steven Lichtman, J.D., Ph.D.
Associate Professor of Political Science and Pre-Law Advisor
Shippensburg University

Orin Kerr

Thanks, Bill, I'll check out your links.

In brief response to Mark Olson, I'm not sure why the evidence you assemble doesn't point to the usual cyclical explanation rather than the fundamental change explanation.

SP

Orin Kerr, do you reject the idea that outcomes for graduates have been getting steadily worse over the last decade(s)? The majority of law grads at Ohio State in 2005 when I graduated were earning less than 50K at their first job. An easy majority borrowed more than their first year salary. Has it always been that way? Is it simply a myth that there was a time when grads all pretty much found high paying jobs upon graduation? I've heard you refer to 2005 and thereabouts as a "boom" period for law grads and that absolutely was not true at Ohio State in 2005. Was it true at your school? Do you think about the lesser ranked schools?

PacRim Jim

Of what value is law when it is selectively enforced, as is the case in today's America? The law has become an obstacle to circumvent, a web that entangles the unwary, a tax on the law-abiding.

Jon

I never read a contract in contracts or a lease in property. But I sure as hell knew what would happen when a chimney sweep, pawn shop owner, and local resident all claimed ownership of a ring found while the chimney sweep was cleaning the resident's house. The whole system of teaching law school is facially ridiculous.

Corey Johanningmeier

Assuming, for the purposes of argument, the following two assumptions:

1. Law school has historically focused on doctrine and theory over practical market realities.

2. Practical market realities of the legal profession are undergoing structural change.

It does not follow that the proper response to proposition 2 is to "reform" proposition 1. That conclusion depends on the thesis that law firms are no longer willing to provide the sort of practical training that I (for one) did not pursue in law school and allegedly received during my initial years of law firm practice. (And the corresponding thesis that law schools can, or should, fill this perceived gap, at the expense of decreased doctrinal training.) But what if a solid grounding in legal doctrine turns out to be a more important enabler of practical adaptation, and career success in changing times, than does prior "clinical" exposure to the precise realities of a moment.

I do not mean to take a position on either extreme of this age-old theory/practice debate. I merely want to point out, from the perspective of someone who has recently graduated from a high-theory JD course and had success learning lawyering on the job, that even if structural adaptation is required, a good way to prepare students to adapt might be to make them really smart about doctrine, jurisprudence, and legal/professional history. The indisputable fact that the practical realities that schools might otherwise teach to are in flux is neither a new thing or a reason to focus too much attention on the moving target. If law schools didn't need to teach how to write (or get a client to pay) an hourly bill, why do they need to teach how to structure a contingency fee agreement?

In the mid-90s, engineering grads like me were getting paid $50-100K to write code that, it turns out, a high school kid can and will write for free, or an engineer in India will write for $10K. This problem was not redressable by teaching graduate students more coding skills. Similarly, in the mid-00s, law grads were getting paid $160K to click through e-discovery, a task so mind-numbing that to be honest, I have trouble doing it well. This is the sort of work that is now being centralized, discounted, and offshored. Of course it does less good now than ever to teach JD students e-discovery. I read the more serious reform proposals to be directed to training students to the next level of firm practice: writing motions, arguing in court, trials... but this level of practice is not structurally changing. Such proposals would only accomplish a transfer the time and expense of apprenticeship from partner to professor. I don't doubt that firms would enjoy this cost savings in our leaner economic times. A cynic might even say firms' disinclination to hire recent grads is designed to encourage such a subsidy. I do doubt law school's ability to perform this function as well as a firm, and I worry that such an approach will actually narrow the adaptability of students, based on the need to choose a specific model of law practice to teach to.

In short, I see a compelling case for doctrinal law schools to charge less, and enroll fewer students. Perhaps there is even a good argument for a second tier of (cheaper) "vocational" law schools to train e-discovery and e-research contract attorneys. I do not however see a good business case for dramatic curricular reform. I submit that, putting arguments about what to charge aside, the correct response to this new reality is to continue to teach law students law, so that whatever law jobs emerge in this brave new world, the students will know law.

Corey Johanningmeier

And again, lest anyone accuse me of incumbent denial... I am operating under the assumption that structural change in firm lawyering is afoot. This is my second career and my second mid-career sea-change, I know them when I see them. Law, however, is not changing structure. (Law, arguably, has been slowly growing more conservative since Nixon began appointing Justices.) Law becomes obsolete at a glacial pace compared to lawyering practices.

Big firm lawyering is often more business than law, and its only primacy claim over small firm, government, and public interest lawyering is economic. It seems appropriate to suggest to firms that they should seek out JD/MBA or second-career students if they require more business acumen. It seems inappropriate to re-write the curriculum to match their particular needs at the expense of general knowledge.

Some think that the big firm model already has too much influence over what is taught. Also, pricing all 200 law schools at a level only repayable at the upper mode of law jobs was, and is, a market failure. That failure mechanism is only compounded by re-aligning the curriculum to that specific job category. Presumably, instead of graduating with broad knowledge of law and no specific vocational focus, students will graduate with narrower understanding of law and vocational training specific to a job they cannot get. Because for the same reason all 200 schools priced themselves for the $160K job, all 200 schools will choose that job model as the special focus of their new specialized vocational training. If we cannot stop schools from 1) gaming US News, or 2) charging $40K+, or stop students from 3) believing they can be the one, then what hope do we have that reform efforts won't run down this same hole?

Bill Henderson

Corey, Nice posts. Very formidable logic.

Response: remember what the title of the post is: "Hard Business Problems Facing U.S. Law Faculty." The problem here is that the value of the JD many not be worth the cost at many law schools, getting worse rather than better over time. And for the record, the lower value is not, for the most part, due to what is taught; the value accrues because some schools have an strong brand that attracts high credential students. The value is a function of sorting. [Why aren't more law professors bothered by this?]

When faced with the following problems, what should a law school do?:
--high fixed costs
--shrinking traditional employment prospects for grads
--mobilization of student groups asking for transparency and reform
--the prospect of Congressional hearings that could curtail student loans to law schools
--the encroachment of non-lawyer MBAs investing heavily in law-tech businesses, poised to take most of the profits of emerging big economies-of-scale opportunities.

If this were private industry, some owners would wind down and reinvest capital in other opportunities. But law schools are university based non-profits. There is not a good parallel anywhere to what we are now facing. Doing nothing and keeping the same cost structure is not a good option. Reducing the cost structure through technology is, to my mind, one form of retooling.

My own opinion--arguably at the extreme end among law professors--is that law schools have not, in the last 75 years, made professional education their sole #1 priority--and this is an opportunity. I think three years and $100K properly allocated to high quality content/methodology is a sufficiently transformative experience that it trumps the value of the IQ sorting machine that currently exists. But no one will know for sure until we try.

High quality legal education is valuable, but it is extraordinarily rare. Law firms used to invest in it, but the leverage model completely bastardized it. And the virtue of the case method from its inception was the economies of scale to teach doctrine. Anything requiring one on one feedback was relegated to post-law school (clinics have partially addressed this, but at significant expense). So we have a whole generation of law professors and partners who decry how expensive it is to give feedback and have zero concept what the value of that feedback is really worth. It can't be monetized immediately, but it can be harnessed for valuable organizational goals.

For the record, nothing in my analysis suggests that any law school curriculum be retooled for large firm practice. Large firms are poised to become less important, or no more important. Corey, think about the stressors on your old firm--their internal economics are changing dramatically, which has second order effects on training opportunities and how rewards get allocated. The firm is fighting over market share--that is new; that is structural. The firm may look prosperous, but the instability of the current incentives make them vulnerable.

You are a forceful intellect who pushes for better answers. Many thanks for writing. Bill H.

Orin Kerr

SP,

Yes, it was true at my school. The majority of graduates had jobs at big firms, and big firms had starting salaries much much higher than they had in the past (even adjusted for inflation), generally $160k a year for the first year, plus bonus. More broadly, biglaw layoffs were almost unheard of, and most major firms were expanding.

Things went south around 2008 or so, as best I recall, when it seemed like at least 10-20% of lawyers I knew lost their jobs. Major law firms stopped giving automatic offers to summers soon after, and then dramatically shrunk their summer classes. That's my sense of it, at least.

Corey Johanningmeier

I was focusing on the normative quesion of what should be taught. On the economic questions you raise:

I have always thought the fixed costs of law school were lower than engineering or other things which require research labs, though of course law teacher salaries (the primary cost element) are more dependent on tuition than salaries in fields where billions in research grants are available. Law professors can't use IP law to monetize their research product as easily as science and engineering professors can, and I suspect it would creep people out to have law review articles sponsored by Kirkland & Ellis. To the extent that legal articles (or clinical projects) serve the public interest, it would be appropriate for government to subsidize them. I imagine that more grants could be lobbied for with some concerted effort by reform-minded professors. This might send legal academia down an overwhelmingly empirical road, but worse things have happened.

Instead of directly subsidizing public law, the government has regulated all of the default risk out of student loans, such that upward price moves in tuition were not met by typical elastic demand pressure. Kids could borrow 40K a year as easily as 20K... if you charge it, they will pay. Whether to blame sallie mae, regulators, law deans, or gullible students for this bubble is an interesting but irrelevant question. It happened, and honestly I don't view the prospect of a Congressional course shift from indirect regulatory subsidies to indirect regulatory price controls to be all bad or scary. As you point out, this is not private industry ruled by the invisible hand, it is public or quasi-public/non-profit education and we can see the hand.

The transparency movement will end when the recession does. It isn't like the class of 2007 failed to appreciate the ill effects of nested hierarchies, gaming of rankings, and the value of brands. The jobs were largely there, so the critique remained academic. Current disaffected students would do well to read Duncan Kennedy's "Legal Education and the Reproduction of Hierarchy," and realize that it is: 1) remarkably topical, and 2) approaching 30 years old. Personally I tend to agree that schools should throw open the books and let students make more informed decisions. At the same time, I make a point of having no more sympathy for law grads who feel duped than law grads show for regular people who "should have read the contract" and noticed the dispositive arbitration provision or reservation of rights. I hope I do not sound flippant, I have a mortgage-sized debt myself, and feel very fortunate to have graduated in the last good year and gathered some experience to keep me above the current fray.

I agree with you that professional education is a wonderful thing to offer, provided of course that it be broad and not biased toward any one model. And provided it doesn't overwhelm core doctrinal messages.

Bill Henderson

Corey, this is a great line I will use and attribute to you:

"[T]his is not private industry ruled by the invisible hand, it is public or quasi-public/non-profit education and we can see the hand."

Another issue you raise: this topic is "hard" for law professors because it affects us. From a student or practicing lawyer perspective, however, changes forced on us from external forces are not a big deal--indeed, it very well might be a better deal for the public at large.

One more truth you wrote: A better economy would forgive all these sins. I agree. The go-go times of 2007 did not help all students, but there was a sense of forward momentum economically (yes, the legal press played/plays a role here). I just don't see any reason for those go-go times to reappear. The clients who financed it are looking for more for less. And they have huge supplier capacity, including new vendors, to get what more of what they want at better prices. It is a structural change because the drivers aren't present to get us back to 2007. Best regards, bh.

Mike Madison

Continuing the dialogue between Orin Kerr and Bill Henderson:

I, too, have asked lawyers about the major structural change/cyclical change question; I've been doing it for a couple of years, and I've collected anecdotes from several dozen practitioners. A decent range of seniority levels are represented in my sample, although most of my conversations have been with peers, and a decent range of practice areas are represented. Most of the lawyers I have consulted are in private law firm or law office practice. Some are in-house lawyers; a few are former practitioners who are now clients rather than legal service providers. (My most interesting conversations are often with clients rather than with law firm lawyers.) Larger law firms and clients predominate over smaller law firms. Many are in the Boston/New York/Philadelphia/DC corridor. Some are on the West Coast. Several practice abroad, or spend much of their professional lives abroad working for US-based firms, on behalf of non-US-based clients. Some are in Pittsburgh, where I live and work.

I have yet to talk to a single lawyer who subscribes to the cyclical change explanation.

Orin Kerr

Mike,

That's fascinating: You seem to be talking to different people than Bill and I are. Can you tell us more about what people you have spoken with say?

Ani Bright

I am tired of hearing that law schools have somehow done these graduates a disservice. One of the main attributes of a lawyer is the ability to research all possible positions/courses of action and their results. If a supposedly intelligent 22 year old can't do some checking on their own, they are bound to be disappointed by the process.

I also think that good old American greed and consumerism are playing a role here. People shouldn't go to law school to get rich; they should go because they believe they will genuinely enjoy law practice. The only thing I blame my school for is admitting these overly starry-eyed neophytes.

I earn about 1/3 of what my loans are, but I also realize that there are more important things in life than money. Like reasonable hours, likeable colleagues and interesting work. If every law student believed that same thing, fewer would strive for that rare six-figure salary and more would be satisfied with the profession.

Daniel Martin Katz

If you are paying attention to the data - Bill Henderson's position is obviously correct.

From the standpoint of legal education reform -- the question of what to do about - is a harder one.

See my thoughts on the matter here:

"The MIT School of Law: A Perspective on Legal Education in the 21st Century"
http://computationallegalstudies.com/2011/10/13/the-mit-school-of-law-a-perspective-on-legal-education-in-the-21st-century-presentation-slides-version-1-01/

Check out this article in Slate:
Will Robots Steal Your Job? Software could kill lawyers. Why that's good for everyone else.
http://www.slate.com/articles/technology/robot_invasion/2011/09/will_robots_steal_your_job_5.html

See the Symposium from TOTM:
http://truthonthemarket.com/unlocking-the-law-symposium/

See my contribution "Legal Informatics, Corporate Law Firm Ownership and 21st Century Legal Education"
http://truthonthemarket.com/2011/09/20/dan-katz-on-legal-informatics-corporate-law-firm-ownership-and-21st-century-legal-education/

The question really is not whether this is happening but what sort of novel alternative business / service delivery models will develop. In a related vein, one should ask … "how can we help position our students to survive (thrive) in this new environment"? Embracing the status quo is probably not the correct answer.

One thing I think it is important to say is that we are likely to look to the UK because the new models (ABS, etc.) are going live in the coming days.

As Larry Ribstein has recently put it -- "Who is going to be the Steve Jobs of Law?" -- I would just add one small addition to this "which institution is likely to produce that individual"?

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About the Blog

  • Rising tuition. Misleading employment statistics. Inadequate skills training. Law schools have faced plenty of criticism for their role in the struggles of young lawyers today. The National Law Journal has assembled a panel of legal educators and law graduates to discuss whether law schools are facing a crisis, and how they should respond to their mounting problems.

Law School Review Contributors

  • Brian Tamanaha
    A professor at Washington University in St. Louis School of Law who writes about law schools on the blog Balkinization
  • Erwin Chemerinsky
    Founding dean of the University of California, Irvine School of Law
  • John F. O’Brien
    Dean of the New England Law, Boston and chairman of the Council of the American Bar Association’s Section on Legal Education and Admissions to the Bar
  • Kyle McEntee
    A 2011 graduate of Vanderbilt University Law School and the executive director of Law School Transparency, a nonprofit group advocating for legal education reform
  • Lucille Jewel
    Professor at Atlanta’s John Marshall Law School who has written about the problems faced by recent law school graduates
  • Michael A. Olivas
    A professor at the University of Houston Law Center and the current president of the Association of American Law Schools
  • William Henderson
    Professor at Indiana University Maurer School of Law—Bloomington who studies the legal profession

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