Should the U.S. Close Its Graduate Law Schools? 

In business, when something is overproduced, it gets discounted in a “clearance sale” or abandoned, scrapped, put in storage, or “mothballed.” Old manufacturing plants close down, they are absorbed, they may merge, or get replaced with something entirely new, due to obsolescence and new technology.

In environmental management, pollution can be controlled by stopping it at its source: an old plant may be demolished, or it may be reengineered to filter, treat, or purify its output, like clean coal or nuclear-powered steam generation.

Pollution is also taxed, but that doesn’t stop it or even reduce it unless there are substitutes. Carbon tax is an example: no amount of tax will reduce carbon on a net basis because there are no substitutes yet; our global economy runs on oil. Moreover, tax diverts investment in new technology. Law is somewhat like oil: necessary, but old, dirty, and expensive. The law is also itself an economic tax on productive capital.

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So, if we say that our legal system is overproducing an obsolescent legal product, made up of obsolescent lawyers charging for obsolescent legal work, what are the substitutes to law? And how much is law costing us in foregone investment alternatives? That is precisely what makes up the most important aspect of “law and economics:” the economics of law itself. (The so-called law and economics school is usually attributed to the University of Chicago and, to some extent, to Yale Law. As in most things in academic law, it reflects a tendency to link law to some other discipline in order to extend its university research claims. Anthropology and sociology are two other prominent examples that feed the university system with area studies.)

Unfortunately, the law academy has found a way to rebrand law and economics by calling it “law and political economy” or LPE. This doesn’t mean political economy in its classical sense from John Stuart Mill, David Ricardo, Adam Smith, or David Hume, but rather, political economy as progressive socialism. Markets, by contrast, don’t deal in progressivism—law does. That is because law trades on the enforcement mechanism: no one voluntarily seeks to make another party better off at their own expense.

That is partly what Adam Smith meant by the “invisible hand:” self-interest tends to create an equilibrium among market participants because trading involves bargaining. Law takes away bargaining in most cases and replaces it with burdensome trade-offs that skew outcomes to favor one party over another. Law and markets can be different ways of bargaining, but they are not equally effective, efficient, or optimal, even in “Pareto” terms of social welfare. Indeed, when “law” steps in to try and make a policy of equality and redistribution, the last party to benefit usually winds up being the one that was declared a victim or discriminated against.

Law schools call wealth redistribution “economics” only because it masks the real nature of that social policy: government administrative growth and special interest promotion and market interference by government fiat. But law schools also generally misunderstand how actually to benefit the constituents they claim to serve: actual improvements in standards of living, if measured by disposable income, stem from tax relief, not redistribution; that is, lower-income classes can gain more disposable income by lowering their marginal tax rates, not by raising someone else’s, then sending that to government, and then trying to re-direct it to an abstract group. Most of all, law schools fail to make the connection between legal access—its proxy for democracy—and legal cost. American law as an industry, is itself a taxing mechanism that diverts wealth from productive to non-productive interests and simultaneously erodes justice by pricing it out of the market. This is why I’ve argued for shutting down our antiquated graduate law schools: they over-produce an over-made product that over-burdens society. Closing law schools, like closing many courts, also helps stop runaway government growth, fraud, and waste, as House Speaker Johnson has argued (indeed, the ABA or American Bar Association, is now also being officially targeted due to its political corruption and systematic legal interference, including as an intellectually corrosive law school regulatory body).

The limited, productive principles of basic private law can otherwise be maintained and efficiently transmitted in undergraduate formats, and by doing so, be forced to limit its scope to principles like contract, and do so at a fraction of the cost.  This also tends to remove or reduce the excesses of academic law and faculty “research,” which is confusing law students with unrealistic expectations and burdening consumers with unnecessary legal complications. In an ideal setting, all wealth redistribution otherwise would be converted to individual tax relief through the tax code, and law would be priced at its marginal cost, which approaches zero.  The law school industry doesn’t yet realize that what it does is unsustainable unless it is subsidized and enforced by the state: there is no actual free market for law per se.

Let’s look at some numbers.

In 1951, there were 221,000 lawyers in the U.S. In 1991, that number rose to over 800,000. Today, there are more than 1.3 million and counting, a far greater proportion relative to the population than that in any other country. According to Stanford legal historian Lawrence Friedman, lawyers have “multiplied second only to rabbits and the prison population.” In litigation alone, the U.S. spent nearly $23 billion on lawyers in 2020, and among households and businesses, we spend over twice the global average.

Within the federal government, rank-and-file “general attorneys” number over 26,000 and counting, costing U.S. taxpayers over $3 billion per year—since 2007, the total bill has exceeded $26 billion. Runaway legal abuse has contributed to over 100 million lawsuits being filed in U.S. state courts every year, plus an additional 400,000 federal lawsuits, costing taxpayers over $6.2 billion annually. Legal advice now costs American businesses and families over $71 billion each year, and that number will grow to over $100 billion in the near future. In higher education, we have over 200 American Bar Association-regulated law schools that are feeding this corrupted system.  Together, they churn out over 100,000 legal graduates yearly, including paralegals and others.  It is an unnatural monopoly.  Part of this phenomenon can be attributed to several factors, including government growth in general; massive expansion in regulations in the federal register; enlargement of the administrative state, and waste and burdensome complexity in reciprocal foreign law regimes such as the EU, including their over-reach in antitrust law (See Pashigian, The Market for Lawyers: The Determinants of the Demand for and Supply of Lawyers).

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More specifically, our effective vertically integrated law industry is an insulated unnatural monopoly—meaning it has no true scale efficiencies from high fixed costs, nor are there network effects; its costs are variable and its network effect is tightly bounded by jurisdiction, national sovereignty, culture and civil systems. In the U.S., legal overproduction has created a collusive response that seeks to establish an effective single “monopsony” buyer—government, state administration, and related public affairs, litigation, and engineered regulatory capture. That is, because the market is over-saturated, law schools look to an ever-expanding administrative state, as a jobs program.  In law school, government growth itself, has become their raison d’être. It nearly mimics France, and its civil service culture, as an ideal.

As in air transportation, deregulation however, may be the most effective way to untangle our legal system’s problems, placing law back within the larger economy where “bottom-up” expertise can supply the knowledge and experience good law requires. A deregulated market will find a more efficient equilibrium through better understanding of actual business sectors operating in markets. Nothing rivals competition, market access, entrepreneurialism, and capital for solving problems while sparking the invention and creativity our legal system lacks. This is why law schools are ideally housed within business schools focused on trade, commerce, and new ventures.

Indeed, one critical area demanding U.S. leadership—where Russia and China currently outpace us—is space law and policy, a field our law schools lack the expertise to shape intellectually (Andersson, “Aviation to Aerospace,” DePaul Law, Issues in Aviation Law and Policy, Autumn 2018). As I’ve argued, integrating technical, legal, and economic insights could forge a new aviation regulatory code (Andersson, “From Deregulation to Network Integration,” TRID, 2023). Historically, law education thrived when anchored in business training, a point well-made by Presser and Kmiec in The History, Philosophy and Structure of the American Constitution (1998).

Image: “UC Irvine law school” by Mathieu Marquer on Wikimedia Commons