New Works in the Field / Philanthropy and Education

The enrollment Crisis and Financial Isomorphism in Legal education, 1890-2018

Editors’ Note: This post, from Bruce A. Kimball and Daniel R. Coquillette, is adapted from their book, On the Battlefield of Merit: Harvard Law School, the First Century (Harvard University Press, 2015), which was awarded the Peter Dobkin Hall History of Philanthropy Prize by the Association for Research on Nonprofit Organizations and Voluntary Associations in 2017. The succeeding volume will be published in 2019.

In 2018, applications to Harvard Law School jumped 32 percent over the prior year, and many university law schools have recently experienced similar, extraordinary spikes in applications. Across the nation, applications to law school increased by a robust 8 percent in 2018. Indicating growing interest in the profession and rising demand and competition for admission, this jump would normally cause celebrations at university professional schools. But for most law schools, including Harvard, the increase has prompted only a sigh of relief because the number of their applications has merely returned to the level from which they plummeted after the Great Recession of 2008.

And this resurgence of applications may actually exaggerate the resuscitated interest and demand for admission, since most law schools have employed a number of new tactics to encourage applications. Like other schools, Harvard has begun accepting GRE scores in lieu of LSAT scores, which eliminates the most difficult hurdle to applying to law school. Now any applicant to PhD programs or to business schools (which have also begun accepting GRE scores) can also submit applications to law schools without having to prepare for and take the LSAT. While this doubtlessly boosts the number of applications, the ease of applying means that some of those applicants likely have marginal interest in law school, so the yield from the increased applicant pool may be less than in the past.

In addition, Harvard Law School, like others, has started accepting applications from college juniors. This may actually yield only a temporary bump in applications for a year or two, because junior applicants will not be applying as seniors, so the overall pool of applicants may not significantly increase. Overall, the recovery from the post-2008 crisis in applicants to law school seems precarious—and possibly inflated.

The crisis itself stems from the vulnerability in law schools’ financial model that can be traced, paradoxically, to the great success and influence of Harvard Law School during the nineteenth century.

It has often been observed that, at the beginning of the twentieth century, Harvard Law School “decreed the structure and content” of legal education in the United States, as Yale historian Robert Stevens remarked. This influence exemplifies what social scientists have called “isomorphism”: the process by which new or reforming institutions in a social domain tend to replicate the organizational structures and policies of the dominant or preeminent institutions. This replication results in organizational homogeneity among institutions throughout the domain.

What has not been recognized is that the isomorphic influence of Harvard Law School commenced early in the nineteenth century. Indeed, that influence extended more broadly to university professional schools in all fields, concerning not only the academic structure and content but also the financial policies of university professional schools. Evidence for this extensive influence lies in the fact that Harvard Law School became the first university professional school to draw students from across the nation. Its only rival in national reach was the U.S. Military Academy at West Point, which was not located at a university.

The academic isomorphism originating in Harvard Law School was based upon the school’s “new system” of education, which aimed to assess students’ professional merit in terms of their academic achievement. This system included a number of new educational policies and practices that eventually became standard in national university schools for leading professions: the admissions requirement of a bachelors degree, a multi-year course of study, written examinations, rigorous grading, tiered coursework with advanced electives requiring introductory courses, and an inductive system of teaching through Socratic questioning about original sources, which became known as the case method.

Equally important, Harvard Law School introduced four financial innovations during the nineteenth century. In that period, the great majority of professional schools in law, medicine, and other fields operated on a proprietary basis, that is, as if they were the property of the faculty. In many cases, this was technically true. The professional school was owned and operated independently by the instructors, who collected all the receipts, paid the expenses, and reaped the profit. Sometimes such proprietary schools affiliated with a university or college so that each would benefit from the publicity and status of the other, but their finances were kept separate. In other cases, some universities owned their law school but formally leased it to practicing lawyers who collected all the receipts and paid the expenses. In 1875 Vanderbilt entered such a lease agreement of twenty-five years. This arrangement was effectively proprietary.

Finally, some universities, including Columbia University through the 1880s, owned the law school and hired the faculty, but paid the tuition receipts to the faculty after deducting the expenses of the school, such as rent, utilities, maintenance, and so forth. This, too, was effectively a proprietary arrangement. In 1817 Harvard Law School started on these terms, but soon introduced four innovations that moved away from that model and became attributes of financial isomorphism among national university professional schools.

First, the school adopted a new mode of compensating faculty beginning in the 1820s. Remuneration of faculty shifted from a proprietary model—whereby instructors’ compensation came directly from students’ tuition—to a salaried model, whereby students paid tuition to the institution, which then paid a set annual salary to the faculty. This dramatic change severed the direct link between faculty income and academic policies, prompting faculty of university professional schools to attend increasingly to academic achievement in making educational policies concerning admissions, curriculum, teaching, graduation, and so forth.

This antebellum shift to a salary model of compensation then directly influenced a second innovation in the 1870s, when Dean Christopher C. Langdell (1870-1895) proposed that the faculty of a university professional school devoted to academic achievement should consist predominantly of scholars, not practitioners from the bench and bar. Harvard Law School therefore began to hire stellar young scholars to the faculty rather than distinguished professionals.

In protest, the great majority of the school’s alumni, faculty, and students argued vigorously that a leading professional school should recruit its faculty from the ranks of eminent professionals, as proprietary schools had done. “A school where the majority of the professors shuns…contact with actual facts, has got the seeds of ruin in it and will…go to the devil,” argued John C. Gray, a senior professor who also practiced law in Boston. The relative value of academic learning and practical knowledge was debated intensely, but the controversy was ultimately resolved on purely financial grounds in the 1880s and 1890s.

Initially, Harvard President Charles W. Eliot (1869-1909) was persuaded to hire successful professionals, notwithstanding the law school’s “new system” of academic merit. But attempts to hire such practitioners largely failed because accomplished professionals could make much more money in their practice than even Harvard could afford to pay in salary. Given the failure to recruit distinguished professionals, the university leaders resignedly decided to hire young scholars, who commanded less remuneration. Finally, the university rationalized the decision publicly in terms of promoting academic achievement, although this principled rationale had been rejected at the outset.

Third, the Law School introduced a new financial strategy for university professional schools. The prevailing proprietary strategy for schools of law, medicine, and other professions in the nineteenth century was to maintain low cost and low standards. With few exceptions, proprietary schools charged relatively low tuition, had few admission requirements, and required scarcely any academic work or evaluation. The underlying financial logic was that professional study demanded little investment in money or work from students but provided some value. The poorly prepared graduates could open a practice and make a living, since licensing standards were so low. Meanwhile, the faculty could profit from running a school as an adjunct to their practice. Given these incentives, there was no way to change this arrangement, according to the financial reasoning at the time.

But Langdell and Eliot conjectured that a high-cost, high-standards model would be financially viable because better trained graduates would be more employable, leading more ambitious and talented students to enroll. During the 1870s, Harvard Law School made the gamble and introduced higher admission standards and academic requirements while tripling tuition. Students had to work harder to get in and stay in and pay more to do so. Most observers in the legal profession believed that this approach was financial suicide. “Running the School” on this model “would wreck it,” wrote a leading alumnus to Eliot. But in the 1880s Harvard Law School graduates began to get the best, highest-paying jobs in the leading urban law firms and emerging corporate law practices. Talented, hard-working students flocked to the school.

Fourth, the high-cost, high standards model not only worked, but led to prosperity, as revenue flowed in from the growing student body paying high tuition and produced a sizeable annual surplus. In the proprietary model, this would have gone into the pockets of the faculty, but under the salaried model, the surplus accrued to the School. Hence, Harvard Law School had the largest endowment and financial reserves of any university professional school in the nation by 1895.

During the twentieth century, these financial policies proliferated throughout university professional schools. In all professional fields, leading schools began hiring recent graduates with sterling academic records rather than eminent practitioners, paying faculty set salaries, raising academic standards for admission and graduation and increasing tuition to support the attendant costs, and, finally, becoming prosperous departments of universities. Professional schools further down the prestige hierarchy attempted to adopt these financial policies as best they could. Constituting financial isomorphism, these attributes stemmed from the example of Harvard Law School during the nineteenth century.

Yet these financial policies, which were adopted throughout the realm of legal education, paradoxically became detrimental to it. Harvard Law School during the twentieth century became extremely dependent on tuition income because it could not convince philanthropists, donors, or the university administration to subsidize it. In order to support its growing expenses, the school had to raise its enrollment and student-faculty ratio, which then required more physical plant and more expense. The cycle amounted to a syndrome of tuition dependence.

The syndrome proliferated throughout the nation due to Harvard Law School’s preeminence within the field. If Harvard Law School depended so heavily on tuition reaped from huge classes, how could other law schools justify appeals for endowment, philanthropy, or subsidies at their universities? Harvard Law School thus initiated a detrimental financial isomorphism in legal education, whereby high tuition, high enrollment, and high student-faculty ratio and heavy dependence on tuition became the norm among law schools.

Only a few exceptions to this syndrome of tuition dependence existed in legal education. For the great majority of law schools, surviving required an abundant and growing number of smart, well-educated, and hard-working applicants. Law schools were vulnerable to a significant decline in the number of such applicants at some future time.

These schools could scarcely imagine such a moment throughout the twentieth century. But they were highly vulnerable just the same, and the crash came during the recession of 2008 when the demand for lawyers and the applicant pool for law school contracted sharply. Some law schools closed, and nearly all retrenched. Now, a decade later, that applicant pool has nearly reached its former size. But the vulnerability remains, rooted in the financial isomorphism of legal education that was planted at Harvard Law School in the nineteenth century and cultivated during the twentieth.

-Bruce A. Kimball and Daniel R. Coquillette

Bruce Kimball is a professor in the Philosophy & History of Education Program at Ohio State University and a former Guggenheim FellowDaniel Coquillette is J. Donald Monan, S. J., University Professor at Boston College and Charles Warren Visiting Professor of American Legal History at Harvard Law School.

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