September 09, 2011
ScamLaw: Victimhood vs. Responsibility
Posted by Jeff Lipshaw

I approach this with some trepidation, given I don't think you can win in a debate on the proposition "RESOLVED: law school is a scam."  Also, to the extent it bears on the issue, I indeed practiced for a long time (26 years) in a law firm and the business world.  I have hired, fired, retained, supervised, and managed a lot of lawyers and law firms.  I want to make two points, one about the macro issue of legal education, and one about the notion of being hoodwinked into going to law school.  (And I'm going to try to avoid being a baby boomer curmudgeon despite the fact I've been AARP eligible for seven years.)

Slide1 On the macro issue, I think legal education is about as flawed as most other social institutions, given that we rarely design them from scratch.   The legal academy has developed as a hybrid of professional school and social science or humanities department.  It's not the barber college.  Law schools have been able to maintain relatively large and well-paid faculties because they have the leverage of large numbers of professional students who do not aspire to academic jobs.  On the other hand, the integration of law schools as departmental peers with the social sciences and humanities in first-tier research universities has pushed the scholarship interest of most faculties away from “mere” professional training and into sophisticated doctrine, theory, and policy. There's an intractable, yet manageable, polarity in that unique academic environment. But it can, just like lots of polarities, continue to coexist.  Faculties (at least at all but the most "elite" schools) are going to need to accommodate the concerns and needs of students or their raison d'être is going to disappear; students and alumni are going to have to acknowledge the driving forces of academic prestige and advancement, in part because they want the patina that comes with having attended a highly ranked law school, and in part because it's unlikely we are going to the barber college model any time soon.

On the "hoodwinking" issue, I think Brett McDonnell has it right in questioning the effect of disclosure where the issue involves not a calculable risk but the radical uncertainty inherent in major life decisions.  Like Usha, I'm not endorsing lying.  It's not just wrong; it's stupid.  But if you are inclined to look after-the-fact for the reasons why things didn't turn out the way you wanted, that is indeed a lawyer's game in which the aim is to find actionable reasons for victimhood among all the but-for causes of the misfortune, and argue those reasons are proximate.  Disclosure has to inform the disclosee's action, and that action is still the disclosee's responsibility, and as to which the disclosee has to exercise judgment.  (I wrote about this in connection with the financial crisis in a little essay called "Disclosure and Judgment:  We Have Met Madoff and He is Ours."  I was pondering the value of information in my own personal decision-making at the depths of the financial crisis.)  In other words, if you are applying to law school, and you can see that the law school reports a 90% placement rate, how does that really factor into your judgment before the fact?   After the fact, you could litigate that till the cows come home, but we'll never know. (That's called a counter-factual.)

Indeed, we were wrestling last week in my very real world securities regulation class about a materiality concept called "truth on the market."  (Larry Ribstein and his cohorts didn't invent the term.)  "Fraud on the market" is a concept under which courts eliminate the requirement of a showing of individual reliance in a securities fraud case if a public company's false statements have been baked into the share price.  "Truth on the market," on the other hand, is a materiality concept that says even if a statement was false, no reasonable investor would have considered it to be significant in the total mix of information.  I tried to capture the tension between investor victimhood and investor responsibility that you see in the cases in the above diagram.  It seems to me that if there are no false statements, it's all about investor responsibility.  The hard cases only arise when there are false statements that could either be argued the basis for legitimate victimhood or as inconsequential in the total mix. 

This is the curmudgeonly part.  I'm sorry for all the bad stuff that happens to people, but I'm not thrilled with a world in which you have a moral or legal right to be considered a victim where nothing was false, but you made a judgment for which you were responsible and now regret.

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