Suing Over Jobs

Three law schools are now being accused of fraud by graduates who question the accuracy of placement rates.
August 11, 2011

For the last year, the Education Department and Congress have debated measures of "gainful employment" for graduates of for-profit vocational programs. And media outlets have competed for the best stories about unemployed liberal-arts graduates. But the question of whether higher education can be held responsible for failing to warn would-be students about the poor job prospects of graduates may really be taking off with regard to law schools.

On Wednesday, a New York City law firm filed class actions against two law schools -- New York Law School and Thomas M. Cooley Law School -- charging that the job placement information they released to potential students was sufficiently inaccurate as to constitute fraud. Those suits follow a similar one filed in May against Thomas Jefferson School of Law. All of the suits argue that students were essentially robbed of the ability to make good decisions about whether to pay tuition (and to take out student loans) by being forced to rely on incomplete and inaccurate job placement information. Specifically, the suits charge that the law schools in question (and many of their peers) mix together different kinds of employment (including jobs for which a J.D. is not needed) to inflate employment rates.

All three law schools deny the charges. And Cooley has already filed a defamation suit against the lawyers suing it. But the litigation comes amid a broader debate over whether the American Bar Association and others are doing enough to promote the release of accurate information, and whether there are too many law schools for the current job market.

While legal experts were still examining the lawsuits and were generally not ready to weigh in on whether or not they will succeed, several said that the litigation points to longstanding problems with how job placement has been tracked, and that changes currently under consideration are overdue.

"The fact that you have some serious class action law firms filing suit should give anybody pause," said William D. Henderson, a professor of law and director of the Center on the Global Legal Profession at Indiana University, and a frequent author on job placement issues. "The whole industry hasn't released useful numbers for consumers," he said.

Henderson said that he strongly backed current moves by the American Bar Association (likely to then be adopted by U.S. News & World Report for its rankings) to shift from a standard of being employed nine months after graduation to being employed in a job for which a J.D. is needed. Those suing today (and those in recent years who were disappointed by their success at finding jobs) relied on statistics that didn't exclude those whose "jobs" were fellowships paid for by their law schools, who were in part-time or temporary jobs, or who were in jobs they could have gotten before they went to law school, he said.

Several years ago, Henderson started noticing and writing about the seeming oddity that bar passage rates were declining at a time when law schools were reporting increases in employment of graduates. For this to be true, he speculated, more people were getting jobs that didn't require them to go to law school. "You are counting people who are selling insurance," he said. "Anybody can find a job to pay the rent."

The New Lawsuits

The new lawsuits are class actions on behalf of three graduates of New York Law School and four from Thomas Cooley. (Both are freestanding law schools.)

Jesse Strauss, one of the lawyers bringing the suits, said in a briefing for reporters Wednesday that he was not denigrating the quality of the legal education provided by the law schools, and that he knew good lawyers who were graduates of each institution. But he said that the information about job placement rates was deceptive. "This is more like a false advertising claim than a product liability claim," he said.

Strauss said that the deceptive information about job placement rates is "distorting the market." With better information, he said, some students wouldn't go to law school, and the population of new lawyers would shrink.

The lawsuit charges that the schools' methods of reporting their placement rates gave would-be students an inaccurate view of their likely outcomes.

"[T]he school during the class period claims that a substantial majority of its graduates -- roughly between 75 and 80 percent -- secure employment within nine months of graduation. However, the reality of the situation is that these seemingly robust numbers include any type of employment, including jobs that have absolutely nothing to do with the legal industry, do not require a J.D. degree or are temporary or part-time in nature," the suit against Thomas Cooley says. "Rather, if Thomas Cooley was to disclose the more pertinent employment statistic -- i.e., those graduates who have secured full-time, permanent positions for which a J.D. degree is required or preferred -- the numbers would drop dramatically, and could be well below 30 percent, if not even lower."

The suit against New York Law School states that it "blatantly manipulates" its placement statistics (which suggest that 92 percent of last year's class is employed). The suit says that the law school engages in numerous efforts to "pretty up" its statistics, such as including part-time work, and including the 5.6 percent of its employed graduates who are in temporary fellowships funded by the law school -- not in real jobs.

The law schools released statements that did not offer point-by-point rebuttals of the suits, but defended the integrity of their statistics. "To the extent the lawsuit challenges our post-graduation employment and salary statistics, we stand by our reporting to the National Association for Law Placement, and any claims that prospective students or our graduates have been misled or legally harmed by our reporting are simply baseless," said the statement from Thomas Cooley. (Even as the law school is being questioned over its job placement record, Thomas Cooley is expanding -- and this week announced plans to open a campus in Florida.)

A statement from New York Law School said: "These claims are without merit and we will vigorously defend against them in court."

The Broader Debate?

What's next in the debate over law placement and these legal cases is the subject of much debate. Officials from the ABA, the Association of American Law Schools and NALP: The Association for Legal Career Professionals did not respond to requests for comment on Wednesday. Privately, two law school officials expressed doubts about whether the class actions would succeed in court, but indicated that defending against them might be embarrassing for the law schools involved and for legal education generally.

For an example of the potential public relations challenges, consider the response of Thomas Jefferson to its class action. As reported in the blog Above the Law, Thomas Jefferson defended itself by noting that the U.S. News job placement figures on which the plaintiff relied were adjacent to figures in the magazine for the law school's bar passage rate. The law school's bar passage rate was lower and Thomas Jefferson's rate many years was "significantly lower" than the employment rate, the law school argues in its brief. So "any reasonable reader" would know that meaningful numbers of the law school's graduating classes were not working as lawyers. The blog's headline for the post: "Is the Answer Worse Than the Allegations?"

While the three law schools that have been sued are not among the nation's most prestigious, the lawyers who sued on Wednesday stressed that they saw the issue as going well beyond those institutions. At the news conference, they pointed to a recent article in The New Republic that analyzed data from an unnamed "top 50" law school, suggesting that one-third of graduates reporting themselves employed are in part-time positions -- meaning that well under half of graduates of a recent class are employed in full-time permanent positions, not the healthy majority that the official statistics would suggest.

Kyle McEntee, executive director of Law School Transparency, a group that has critiqued job placement rates at many law schools, said he was not surprised by the lawsuits. "I think we are going to see more of them," he said.

He said that the moves by the ABA are in the right direction, but that his group wants to see even more information. Law School Transparency urges law schools to release, graduate by graduate, exactly what happens to each new lawyer (without their names). That way prospective students won't get deceived by averages that may be skewed by a few well-compensated lawyers, and will be able to distinguish between true stepping-stone positions (judicial clerkships, for example) and volunteer work that doesn't put someone on the fast track.

Will the ABA Reforms Work?

The proposed ABA surveys on employment deal with many of the criticisms that have been made of past data. For instance, they would ask specifically about whether positions are funded by the law school, whether positions are long term or short term, etc.

But there is controversy over whether these efforts will work. NALP, which has been the primary source of law school placement data, has expressed fears that law schools will no longer collect data for its surveys, and that it is better able than the ABA to analyze the data. (A limitation of NALP's data is that they are not available institution-by-institution, which is why U.S. News's rankings, which include institutional data, have become so valued by law school applicants and so important to law schools.)

Henderson, of Indiana University, said that the ABA may unintentionally supplant NALP, and leave the law school world without anyone capable of truly analyzing the data. The ABA, he wrote in a recent column for The National Law Journal, "has a long track record of releasing mountains of data in a format that makes it very difficult to analyze the industry or make meaningful school-to-school comparisons."

With truly good data, he predicted, the law school market would change, with some law schools forced to improve their programs and with others disappearing.

But Henderson added that he's not certain that -- even with better data -- there won't be disappointed (and impoverished) law school grads in the years ahead. "You've got 22- and 23-year-olds who have an image of lawyers made by popular culture," he said. "They've never bought a house before, and now they can get a loan of over $100,000 to go to law school. This is not a group of people who are going to do rigorous due diligence on the decision to borrow."


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