Measuring the downside risk of law school attendance

I am very grateful for the opportunity to present comments to the American Bar Association’s Task Force on the Future of Legal Education, in a session at at the midyear meeting of the ABA in Dallas, Texas, on February 9, 2013. The task force has been "charged with making recommendations to the American Bar Association on how law schools, the ABA, and other groups and organizations can take concrete steps to address issues concerning the economics of legal education and its delivery." The following paper, Measuring the Downside Risk of Law School Attendance, provides the technical background for my comments:

Legal education has come under severe political pressure, both external and internal, for its perceived failure to deliver tangible economic benefits to law students. In fairness, legal education is not alone. The financial crisis of 2008 and the economic recession triggered by it have forced many other industries, including the private practice of law, to reevaluate their balance of costs and benefits. Many institutions, even entire industries. must now endure stress-testing in the form of debt-to-income or debt-to-capital ratios. In this document, I shall focus on student welfare, especially the core economic question of whether law school attendance delivers a valuable return on students’ investment. I shall also describe the tools, drawn from quantitative finance and econometrics, that I would use to evaluate downside risk and inequality within any cohort of law school graduates.

Formal citation: Jim Chen, Measuring the Downside Risk of Law School Attendance, available at http://ssrn.com/abstract=2214337 or http://bit.ly/DownsideRiskLawSchool.