Law schools across the United States are confronting a deep financial reckoning after years of prioritising prestige over sustainable economic foundations.
Cooley Law School, once ranked second nationally, has cut three-quarters of its full-time faculty and continues to operate at a loss despite those dramatic measures.
The situation at Cooley is not an isolated case, with institutions across the country facing varying degrees of financial stress following a prolonged period of decline.
Professor Paul Campos has spent years documenting financial irregularities and questionable practices at law schools across the United States.
In a new paper, Campos examined the finances of nearly every ABA-accredited law school and compared their current position against where those same schools stood 16 years ago.
The findings are stark, with the data suggesting upwards of 40 percent of law schools are in severe financial distress, and another 30 percent sitting somewhere between wobbly and precarious.
Campos identifies 2010 as “Peak Law School,” the point at which both total JD tuition revenue and per-student JD tuition revenue simultaneously reached inflation-adjusted highs.
Since that peak, aggregate JD tuition revenue across US law schools has fallen by 41 percent, representing a collapse in the financial model that sustained the sector for decades.
Roughly 24 percentage points of that decline stem from schools collecting less money per individual student, reflecting the competitive pressure schools have placed on tuition pricing to attract applicants.
The remainder of the revenue decline is attributable to a shrinking pool of law students overall, compounding the per-student pricing pressure that schools have struggled to manage.
The crisis reflects the long-term consequences of institutions spending decades engineering their finances and admissions practices to perform well in U.S. News and World Report rankings rather than building durable economic models.
Schools that chased rankings by offering scholarships, manipulating employment statistics, and expanding enrolment during boom years now find themselves trapped with bloated cost structures and insufficient revenue to support them.
The broader legal education market has shifted considerably since 2010, with fewer prospective students choosing to pursue a JD and increased scrutiny on the value proposition of a law degree given high tuition costs.
Campos’s research adds significant weight to longstanding concerns among legal education observers that the structural problems facing law schools have been building quietly for well over a decade.
With a substantial portion of ABA-accredited institutions now in fragile financial condition, the question facing the sector is whether consolidation, closure, or fundamental reform will ultimately define the next chapter of American legal education.