The Learned Hand Test

The Judge Hand Test, also known as the Learned Hand Test takes into account of cost-benefit efficiency as a decision rule.  The rule focuses on the question of whether something is worth doing from a legal standpoint.

The Judge Hand Test is used a lot in Torts cases, such as (insert case here, as I don't remember their names).  The Hand Test looks like this.

B < P x L
B = Burden (the cost of taking care)
P = Probability of Loss
L = Cost of Loss

Could one use the test to see if law schools were negligent in their business practices?  How about if students did not take due care in enrolling in law school?  Were the schools negligent in their advertising methods, which are sometimes said to be 'shady' at best? 

The burden of a law school in being truthful in advertising their numbers would be the lost revenue in less people enrolling.  There is no doubt that some students enroll in a certain law school at least partly because of the brochures which tout high incomes.  During periods of high unemployment and economic stagnation, law school enrollments (and graduate school enrollment in general) rises.  The burden of a law school in being forthright on employment data, pointing out that results are not typical, that all students are not accounted for, that 'other' means possibly working at Starbucks, McDonalds, or Pizza Hut, or that those who went back to graduate school could not find legal jobs, would be minimal.  Of course, the law schools would miss out on some money, and the demand would not as greatly outweigh the supply, therefore driving prices downward somewhat.

Next we look at P, the probability of loss.  The student has a decent probability of not finding a job after law school.  The student enrolled with the idea that they would be hired shortly after graduating (within 9 months at least) and make the average salary (somewhere around $70, but anywhere as high as $160,000).  However, looking at current employment trends, which law schools do not point out, the probability of finding such a job is very low.  Therefore, the probability of the student entering law school and losing tuition and loan interest is quite high.  Oftentimes people move cross country (ever hear of the Cooley migration? -- It's a beautiful sight that is often seen in Michigan three times a year, in which vehicles with a myriad of license plates arrive at the Cooley Campus.  It's been likened to the Monarch Butterfly migration, but is not as pretty).  That is one of the costs of law school.  Another one may be the higher cost of living in a new area, such as for students attending New York Law School because their hometown school would not take them (or did not promise them as high of a return).   Looking at the probability of loss, the student is likely to lose a great deal of money on this risky venture.  In fact, the student may find a job that didn't even require law school in the first place.  Hell, the student might not even put the JD on their resume and find a job!

The L, cost of loss, is extremely high.  At some schools, with tuition above $40,000, multiplied by three, the cost of loss for a student without scholarships (going at cost) will be around $120,000.  While many say this is foolish, the student probably figured that as a result of the information they read, regarding incomes up to $160,000, $120,000 can be paid easily in 2 years.  However, the student generally finds out within the first six or so months that their school isn't as prestigious as they imagined, and that the law school world is a brutal world with competition for unpaid internships where one scrubs a wall for experience is ultra-high.  And summer jobs that pay above $15 an hour are coveted.  Especially for a first year student.  The reality is, the cost of loss for the student is ultra high. 

The Burden (B) of the law school to change their marketing strategies is INSANELY lower than the the P (probability of loss) times L (cost of loss).  In fact, in a court setting using the Learned Hand methodology, the schools would be destroyed by this negligence standard.  If nothing else, this gives one something to think about as they make their way through those hallowed halls of law school, on the way to a Torts class, on a day when they could be doing something more profitable, such as a singing for tips on the subway.