Excerpt from the Introduction for Law Mart

Introduction

“Good intention” is a hall pass through history, a sleeping pill that ensures the Dream.

—Ta-Nehisi Coates

Ever since she was eight years old, Melanie had wanted to go to law school. But life after college, as she puts it, “took a little detour.” Married to an injured veteran with a child on the way, she took a health-care job to secure benefits for her family. Years later she herself was diagnosed with a tumor and, faced with her own mortality, recommitted to her professional dream. “I applied to Big State University and was rejected,” she says. “[I] then applied to New Delta because it was the only other law school I could geographically manage with two kids and a disabled husband.”¹

Keshia received an unsolicited email from New Delta School of Law (NDSL) after taking the Law School Admissions Test (LSAT) in 2008. “They kept pestering me for a long time,” she says. “I got into a law school in Mississippi and on a couple of wait lists. Then, due to my extremely dysfunctional family and my parents’ divorce, I ended up living with friends in Chicago and then my brother, who is a lawyer, in Dallas. . . . My brother and I were at odds, and I picked law school over living in my car.”²

In legal education, students like Melanie and Keshia might be considered “nontraditional.” Enrollment was a last resort or an afterthought to other life events. But for New Delta they were typical; the institution caters to working students by maintaining flexible admission standards and degree completion schedules. Melanie and Keshia are also Asian American and African American, respectively, and therefore ethnoracially “diverse.” NDSL embraces student and faculty diversity as a distinguishing feature in a crowded legal admissions field.³ More importantly, it markets this as part of a concerted effort to increase “access to justice” by affording racial minority and low-income students—groups historically known for nontraditional paths and lower academic indicators—the unique opportunity to become attorneys. School executives suggest these students will “return” to marginal communities to set up small firms in needed practice areas such as family law or wills and trusts. But this suggestion is not strictly charitable. New Delta School of Law is a “for-profit” institution whose ability to gain access to untapped markets of prospective students serves a vital business function.

In this book I ask what marketing justice in this fashion says about contemporary ties between law and economics. Does the grafting of a social justice mission onto finance capitalism materialized through professional higher education make justice itself another commodity? And do failures of policy to adequately protect the vulnerable in this sector say something new about the ordering of economics, law, and morality? These questions are addressed in an ethnographic narrative assembled from nearly three years of participant observation at one for-profit law school and from dozens of interviews among its participants: students, staff, and faculty. It describes the business model in global context, recruitment of students and employees, idiosyncratic organizational culture, and a series of governance shifts occasioned by wider transformations in the legal services industry and law school regulatory establishment. Above all, it offers the reader a glimpse beyond numerical inputs and outcomes into the hearts and minds of people who attach their fortunes to these complicated institutions.

New Delta School of Law is one of six for-profit law programs stamped with American Bar Association (ABA) accreditation⁴ and one of three owned by a corporate entity I will call Law Corp. Law Corp, in turn, is owned by a $5 billion private equity firm whose thirty-one other holdings include medication monitoring, senior care, and mortgage-lending firms, among other things. As a private equity property, Law Corp is designed to draw in “capital commitments” from large and institutional investors—including among them Ivy League university endowments—in exchange for high rates of return in the range of 20 percent. But the equity market is a competitive one, and investors can place their money in any number of different funds and industries. Therefore, Law Corp goes to great lengths to publicize its especially liberal mission. “[Our] mission,” its website reads, “is to ‘establish the benchmark of inclusive excellence in professional education for the 21st Century.’ This mission is supported by three key pillars (1) . . . ‘serving the underserved,’ (2) providing an education that is ‘student-outcome centered,’ and (3) graduating students who are ‘practice-ready.’” Law Corp might best be described as having two missions—one socially just and public; the other capitalist and occluded. As in other recent examples of “financial morality,” these operate in concert, not in conflict. Writing about Wall Street culture prior to the economic collapse, anthropologist Karen Ho emphasizes that “moral imbrication with larger American understandings of what constitutes economic righteousness . . . has enabled the financial sector to fight back challenges to its power.”⁵

In its early years of operation, New Delta, along with its fellow Law Corp consortium schools, appeared to offer a win-win opportunity for students, faculty, staff, administration, corporate officers, and off-site private equity investors. As higher learning became a safe pathway to upward mobility, for-profit education catering to marginalized communities grew in popularity. In the early 2000s, the private equity market was booming, and capital flowed rapidly into education companies aimed at this audience. Officers and administrators worked under conditions of financial fluidity uncharacteristic of the nonprofit higher education sector. In a post–New Age context emphasizing increased work–life balance, staff were hired from other rigid corporate work environments to join the seemingly laid-back and intellectual milieu of a freestanding graduate school. Law faculty were recruited to join the well-compensated, respected, and “elite” world of legal academia.⁶ And students were granted the opportunity of professional upward mobility after virtually no other school had accepted them or had done so with comparable financial aid incentives.

But, in the Great Recession of 2009, the U.S. financial sector nearly collapsed, bringing down with it much of the legal services industry (see Figure I.1). As lucrative law jobs evaporated, so did student employment outcomes and, in turn, a significant portion of law school enrollments. In this climate, law schools near the bottom of the national rankings felt the greatest pressure.⁷ After growing explosively from 2005 to 2012, NDSL saw its admissions projections cut in half; by 2014, it had laid off roughly one-third of its faculty.⁸ As bar passage rates fell rapidly in this period, the decline was experienced disproportionately among minority students—themselves overrepresented in this unique institution. Yet, the school continued to bill students at premium tuition rates. And on the advice of outside consultants attempting to help the company maintain financial sustainability, NDSL rearranged its academic calendar, core curriculum, and faculty contracts to squeeze greater value out of dwindling resources. Throughout all of this, equity investors promised high returns at the height of the private equity boom still had to be paid their contractual share of revenues, and those revenues continually flowed from federal public financing under Title IV of the Higher Education Act (HEA).

Figure I.1. Rise and fall of legal services employment and total nonfarm employment in millions.
SOURCE: U.S. Bureau of Labor Statistics, Current Employment Statistics survey.

How had this situation come about? In 1995, the ABA, sole national regulator and accreditor of U.S. law schools, was faced with a dilemma.⁹ Prior to this, the modern U.S. legal education establishment had dismissed the idea of for-profit ownership. As Bryant Garth, then-president of the American Bar Foundation, told me,

I remember it well, because I remember that everybody in legal education pretty much, including me . . . did not want the for-profits to come. We all thought it would undermine some of the values that we think are fundamental to legal education, but as I recall . . . they sued as an antitrust violation and forced the ABA to capitulate.

The ABA Council of the Section of Legal Education and Admissions to the Bar (Council) accredited its first proprietary law program in 1999, followed by five more over the next twelve years. Since that period, the Council has in its regulatory capacity appeared to treat these six schools no differently than the other 200-some nonprofit programs operating under its purview.¹⁰ Further still, as this book illustrates, the regulatory body has until very recently leaned toward “letting the market decide.” Rather than applying stricter or differential standards to law programs using Title IV student loan moneys as the nearly sole basis for private profit, the ABA has taken marketization one step further.¹¹ What, then, are the implications of this growing faith in market rationality in the crucible of legal expertise and lawyer socialization?

Moral Hazard in the Production of Legal Expertise

For-profit law schools heighten and draw attention to wider problems of moral hazard in legal education. Moral hazard, as it is generally understood, is the separation of risk-generating behavior from its harmful consequences.¹² In the context of New Delta and other private equity and corporate controlled institutions of higher education, moral hazard describes the condition in which schools are paid up front (thanks to Title IV funding) but the high risk of attrition or failure to find sustainable employment is borne by students well into the future. This separation gets its moral dimension from a long-held belief in Western philosophy that actors should be held responsible for injuries resulting from risks they produce.¹³ With rising tuition costs and falling student outcomes, the legal education sector has witnessed an increasing separation of this kind. This has been cogently observed by others who suggest that overregulation by legal educators acting in their own self-interest may be greatly to blame.¹⁴ Partial or complete deregulation of the law school accreditation process, they say, would permit greater differentiation. This would allow schools to innovate and diverge from the one strict model traditionally expected by the ABA. That model, which typically required faculty research, security of position (such as tenure), prescribed credit hours for legal doctrine and skills courses, a maximum student–faculty ratio, and specific bar outcomes, has prevented schools from specializing in niche areas and catering to practitioner-only training.¹⁵ To some scholars, this has precluded the rise of lower-cost trade school law programs.

But for-profit programs like New Delta effectively are trade schools. They make significant choices about student programming, faculty scholarship, and security of position to save on fixed costs. Problematically, these savings are not passed on to students or taxpayers. On the contrary, with the benefit of Title IV student loans and a hands-off regulatory approach, these schools and their shareholders have remained relatively shielded while passing the risk of market fluctuations to students and their creditors. The primary argument of this book, then, is that for-profit law schools reveal key problems of allowing unfettered marketization to resolve today’s complex problems in legal education.¹⁶

Proprietary law schools are a proverbial “canary in the coal mine”—not just for legal education but for higher education more broadly.¹⁷ They focalize the key issues we should be concerned about today: subjection of student learning to global market forces, opening of academic governance to moneyed influence, and conversion of security of position and social protectionism into (unequally) bargained-for casual contractual relations. All of these may be grouped under the broader heading of neoliberalism.

Meanings

Neoliberalism, here as in much ethnographic work today, forms the contextual backdrop for the story told about New Delta.¹⁸ For purposes of this text, more properly an ethnography about the policy workings of neoliberalism, I employ a simple definition: It is a form of market fundamentalism that determines judgments over governance.¹⁹ Under its guidance, policy actors seem to believe that the rationality of the marketplace—a fictional web of interconnected free economic exchange—exerts normative authority strong enough to displace the need for substantial state regulation. For some, the market fundamentalism of neoliberalism is not normative at all but merely a condition of possibility for the dominant normative value of “wealth maximization.” In my view, however, informed by the policy landscape surrounding the for-profit law school subindustry, neoliberalism is normative. As an overarching philosophy holding that less regulation is always better, it exerts normative weight from higher to lower levels of authority. This approach most closely resembles that taken by Wendy Brown, who writes that “neoliberalism transmogrifies every human domain and endeavor, along with humans themselves, according to a specific image of the economic.”²⁰ In this story, a hands-off approach at the Department of Education influences policy actors at the ABA Council of the Section of Legal Education, which in turn influences the approach of accreditation site visit teams, and so forth. Once state regulation becomes viewed as an enemy of efficient socioeconomic activity, subsidiary authorities may also be deterred from acting in their full regulatory capacity.

In this book, marketization will be understood as the exposure of a good, service, organization, or process to market forces. Corporatization is an evolution into a hierarchical workplace organization with separations among labor, management, and executive officers.²¹Financialization refers to the conversion of an institution or organization into an apparatus for financial investment. This generally introduces a new set of stakeholders—the shareholders—and the restructuring of the corporatized entity for value maximization in their name. If corporatization describes internal organization, financialization describes submission of that to off-site investor demands. And neoliberalization, although it may include each of the preceding developments, refers to a rearrangement in values such that these same economic mutations become disembedded from social and moral constraints.²²

Consonant with these mutations is neoliberal access—a concept borrowed here from researchers who have examined Australia’s variable approach to incorporating marginal groups into higher education.²³ As they have said, neoliberal access is

Social inclusion viewed in terms of increased opportunities to access education and employment . . . based on neoliberal theories of economic growth through investment in human capital to address skills shortages. These theories propose that social inclusion is facilitated by access to the social capital of the dominant culture.²⁴

For these writers the term seems to carry descriptive weight only. Here, I develop it as a more critical notion that describes social inclusion devoid of social protectionism.

Early last century, the economic anthropologist Karl Polanyi saw the future of capital as a battle between free marketeers and social protectionism.²⁵ The former could be envisioned as the “robber barons” of the American Gilded Age and the latter as the trade unionists of the New Deal era. This opposition, Polanyi said, resulted in a kind of “double movement” or oscillation in the evolution of capital.²⁶ But although he was accurate in predicting the ongoing battle this would result in, Polanyi was ultimately wrong in suggesting it would result in an eventual reconciliation for capital.

Present-day neoliberalism sidesteps this tension. As the philosopher Nancy Fraser explains, capital’s ingenuity was to co-opt the social movements that emerged in the wake of the 1930s.²⁷ Whereas trade unions and Marxists had once sought social protection, identity-based social movements of the 1960s sought “emancipation.” Emancipation, meanwhile, could be construed variably from revolutionary fragmented subjectivity to free market “full” participation—entrepreneurial citizenship, to put it more crudely. More conclusively, she writes, the ingenuity of neoliberalism has been to resignify emancipation as entrepreneurial citizenship and suggest that this requires free markets to enfranchise all. Emancipation, in other words, is to come not from protection but from “access.”

Notes

1. Emphasis added. All faculty, staff, and student informant interviews were conducted by the author in confidence, and informant names have been changed by mutual agreement. Interviews with public figures in legal education have retained original informant names. Changes to direct quotations are denoted by brackets except where the true identities of New Delta School of Law, Law Corp, or Venture Partners Group were originally referenced.

2. Emphasis added.

3. For more on “diversity” in neoliberal education policy and practice, see Bonnie Urciuoli, “Neoliberal Education: Preparing the Student for the New Workplace,” in Ethnographies of Neoliberalism, ed. Carol Greenhouse (Philadelphia: University of Pennsylvania Press, 2010): 170–175.

4. All mentions of the American Bar Association in relation to accreditation here refer to the American Bar Association Council of the Section on Legal Education and Admissions to the Bar—an entity related to, but separate from the main ABA professional organization. Although scholarly and popular texts refer consistently to “ABA accreditation,” it is the Council and not the ABA itself that administers the accreditation process. This process includes a school site visit, a report from the site visit team to the accreditation committee, a recommendation from the accreditation committee to the Council, a hearing including school representatives before the Council, and finally an accreditation decision from the Council.

5. Karen Ho, “Finance,” in A Companion to Moral Anthropology, ed. Didier Fassin (Oxford, UK: Wiley Blackwell, 2012): 414.

6. Elite here and throughout is intended ethnographically to denote the way in which participants saw themselves relative to the outlying legal community. Among law schools, there would be another hegemonic sense of elite to describe the “top ten” JD programs in relation to all other law schools.

7. All references to school rankings throughout this book should be understood ethnographically and critically. U.S. News, the predominant authority referenced on law school rankings, has changed to using the term ranking not published (or RNP) for the lower-ranking tiers in recent years. Ry Rivard, “Lowering the Bar,” Inside Higher Ed, January 16, 2015; retrieved on October 27, 2015, from www.insidehighered.com/news/2015/01/16/law-schools-compete-students-many-may-not-have-admitted-past.

8. Although technically formed as contract buy-outs and framed locally as cases of voluntary retirements, these were generally understood in light of the company’s own stated policies on “reductions in force.” See, for example, Chapter 6.

9. Henry J. Reske, “One Antitrust Battle Over: Judge Approves Consent Decree between ABA, DOJ,” ABA Journal, August 1996: 44.

10. Though not specifically aimed at for-profits, the ABA did begin to propose new requirements in 2016 that would discipline consistent low bar passage performance.

11. As of this writing, however, the U.S. Department of Education has elected to freeze Title IV student loans for attendance at at least one for-profit law school leading in turn to accusations of institutional misfeasance and a student class action suit.

12. For a history of this term emerging out of the insurance industry of the nineteenth century, see Tom Baker, “On the Genealogy of Moral Hazard,” Texas Law Review 75 (1996): 237–292.

13. This belief can be traced back to at least the writings of Aristotle. See Richard Posner, The Economics of Justice (Cambridge, MA: Harvard University Press, 1983). See also Ken Cooper-Stephenson and Elaine Gibson, Tort Theory (York, Ontario: Captus Press, 1993): 30–31.

14. See, for example, Brian Tamanaha, Failing Law Schools (Chicago: University of Chicago Press, 2012); and William D. Henderson, “A Blueprint for Change,” Pepperdine Law Review 40 (2013): 494–495.

15. Several of these standards, student–faculty ratio expectations for instance, have already been altered in response to these critiques.

16. Admittedly, not all differentiation is created equal. For Tamanaha, the Massachusetts School of Law (MSL), with its more austere faculty model and course offerings resulting in lower tuition for students, is closer to the ideal type. If more new law schools were to adopt this model, he writes, students might be able to receive the practical training a lawyer needs without the unnecessary bells and whistles of faculty research or policy discussions. MSL has never attained ABA accreditation and is rather endorsed only by the regional New England Association of Schools and Colleges (NEASC). Thorough discussions about the impact of the MSL model on legal education should therefore consider how the status change from regional- to ABA-accredited (and thus Title IV–eligible) law program and new availability of public finance income streams might alter the seemingly populist value structure of currently unaccredited programs. For-profit law schools like New Delta are already ABA accredited, and they already result from a move toward differentiation following the landmark antitrust investigation, lawsuit, and settlement previously referenced. Although not the kind of differentiation Tamanaha envisions, NDSL and its ilk instantiate the limits of a deregulatory differentiation when left up to the disciplinary forces of the free market.

17. See, generally, Henry Giroux, Neoliberalism’s War on Higher Education (Chicago: Haymarket Books, 2014); Eric Gould, The University in a Corporate Culture (New Haven, CT, and London: Yale University Press, 2011); and Stanley Aronowitz, The Knowledge Factory: Dismantling the Corporate University and Creating True Higher Learning (Boston: Beacon Press, 2000).

18. I am mindful of its roots in the political economic thinking of Hayek and Friedman, of its popularization in the policy wars of Reagan and Thatcher, and of theoretical critiques of it by David Harvey, Aiwa Ong, Pierre Bourdieu, and Henry Giroux, among many others. David Harvey, A Brief History of Neoliberalism (Oxford, UK: Oxford University Press, 2005); Aihwa Ong, Neoliberalism as Exception: Mutations in Citizenship and Sovereignty (Durham, NC: Duke University Press, 2006); Pierre Bourdieu, “The Essence of Neoliberalism,” Le Monde Diplomatique, December 1998; and Giroux, Neoliberalism’s War on Higher Education.

19. I thank Richard Gilman-Opalsky for reminding me that “market fundamentalism” as such is not particularly unique to neoliberalism, and I specify that I am interested in the marriage between market fundamentalism and contemporary regulatory theory and action.

20. Wendy Brown, Undoing the Demos: Neoliberalism’s Stealth Revolution (Cambridge, MA, and London: MIT/Zone Books, 2015): 9. I thank Jothie Rajah for prompting me to assimilate this line of thought.

21. Although many decry the “corporatization of the university” in recent decades, some have said we are now well past that phase into an era of university financialization.

22. Adoption of neoliberal thinking belies an historical sleight of hand. The economic liberalism of Euro-American centuries past—embodied most notably in the policy approaches of Franklin Roosevelt—saw economic exchange as “embedded” in social relations. Corporate governance and securities exchanges were then kept subservient to the needs of social cohesion such as public health, democratic legitimacy, and civil rights. The neoliberal philosophy of today—so widespread as to be almost invisible to young people coming of age under its purview—does the opposite: It finds the legitimacy of social relations in their compatibility with the “free exchange” of economic life. For a more critical view on the “embeddedness” approach to economics in social science see Ho, “Finance”: 425.

23. Jennifer M. Gidley, Gary P. Hampson, Leone Wheeler, and Elleni Bereded-Samuel, “From Access to Success: An Integrated Approach to Quality Higher Education Informed by Social Inclusion Theory and Practice,” Higher Education Policy 23 (2010): 123–147.

24. Sue Kilpatrick and Susan Johns, “Institutional Responses to Social Inclusion in Australian Higher Education: Responsible Citizenship or Political Pragmatism?” Widening Participation and Lifelong Learning 16 (2014): 27–46.

25. Karl Polanyi, The Great Transformation (Boston: Beacon Press, 2001): 76.

26. Ibid.

27. Nancy Fraser, “A Triple Movement?” New Left Review, June 2013: 128–129.