Originally published: Clayton Christensen Institute | By Michael B. Horn and Michele R. Pistone | Mar 15, 2016
Facing dramatic declines in enrollment, revenue, and student quality at the same time that their cost structure continues to rise and public support has waned, law schools are in crisis. A key driver of the crisis is shrinking employment opportunities for recent graduates, which stem in part from the disruption of the traditional business model for the provision of legal services.
Although this root problem will soon choke off the financial viability of many schools, most law schools remain unable or unwilling to address this existential problem in more than a marginal way, as they instead prefer to maintain the status quo and hope that the job market soon improves. In reaction to the growing crisis, most law schools have accordingly continued to focus their attention and energies on maintaining their existing status within the legacy model used to rank and compare law schools: the U.S. News & World Report’s annual law school rankings. In the face of the crisis, the dominant focus of law schools and their administrators has been to retain their school’s ranking so that their school can outlast competitor law schools—some of which, the argument goes, may have to shut their doors—until, in the long run they hope, the market evens out and everything returns to the pre-crisis status quo.
This is a strategy of attrition. By fixing their gaze on maintaining prestige in their juris doctor (JD) degree programs, law schools and their administrators run the risk of overlooking the longer-term impact that the disruption of traditional legal services businesses will have on the provision of legal services and, in turn, on law schools themselves. This is happening at the same time as disruption is primed to take place in legal education itself. As we have seen in industry after industry, disruptive innovations change sectors in ways that do not allow for a return to the status quo. Instead, the changes that disruptive innovations bring are so fundamental that entire products or services are marginalized or, in some cases, even displaced, never to return again.
The roots of disruptive innovation lie in the serving of nonconsumption—areas in a sector where people have no access to the existing offerings because they are too expensive, inconvenient, or complicated to use and therefore the alternative to the innovation is nothing at all. There is significant nonconsumption in the market for legal services, which disproportionately impacts low-income and disenfranchised individuals. Access to a lawyer is expensive and out of reach for many potential customers because the market for legal services is opaque, the provision of legal services has been restricted through licensure, and the services themselves have traditionally been provided on an individual, customized basis. Such nonconsumption of legal services creates opportunities for disruptive entry into the market in an effort to serve nonconsumers on the periphery of the market and out of view of embedded incumbents. Were disruptive entrants to seize this opportunity, it could dramatically change the opportunities for representation for the most vulnerable members of society.
The legal industry is now in the early stage of disruption—and there is a corresponding opportunity for disruption to emerge in legal education. Over time, law schools will only be as successful as the industry for which they train graduates. The growing misalignment between the commoditization of legal services and traditional legal education will last only so long.
Despite these changes in the broader legal services industry and law schools’ own internal challenges, some law schools likely feel immune from the prospect of disruptive entrants in legal education because of the licensing advantages that accrue to students of schools accredited by the American Bar Association (ABA). Most state bar licensing authorities require applicants for the bar examination to have a JD degree bestowed by an ABA-accredited law school upon completion of three years of legal education. This licensing advantage affords ABA-accredited schools protection from new law school competitors entering the space. But the history of disruptive innovations in countless other sectors shows that it is a dangerous illusion to imagine that these regulatory advantages will never be seriously challenged. Indeed, regulators of lawyers and law practice are themselves beginning to encourage disruption in the market for legal services.
Fortunately for traditional legal educators, the opportunities for disruptive innovation in the market for legal education and, to a lesser extent, for legal services have not yet materialized in significant ways. The time is ripe for legal educators to understand the underlying forces that are impacting law schools and the larger market for legal services and to reimagine these forces not as threats, but as opportunities to renew the promise and energy of the legal sector with a vigor not seen in years. If existing schools and legal educators do not heed the lessons from disruptive innovations and seize this opportunity, then others will.
Michael B. Horn is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a principal consultant for Entangled Solutions.
Michele R. Pistone is a professor of law at Villanova University Charles Widger School of Law. She founded LegalEDweb.com, an online repository of law-related educational videos and teaching material.