University of Nevada, Las Vegas law school feasibility studies

ANALYSIS OF FEASIBILITY STDDY AND BLUEPRINT FOR A LAW SCHOOL UNIVERSITY OF NEVADA, LAS VEGAS Dean Steven R. Smith Cleveland-Marshall College of Law Cleveland State University August 17, 1990 ANALYSIS OF FEASIBILITY STUDY AND BLUEPRINT FOR A LAW SCHOOL UNIVERSITY OF NEVADA, LAS VEGAS Dean Steven R. Smith Cleveland-Marshall College of Law Cleveland State University August 17, 1990 Executi i Rnimna ry The statistical evidence in the 1990 Feasibility Study argues persuasively that there is sufficient demand for legal education and need for the services of a law school in Nevada to justify starting a law school in the state. It is my judgment that this justification is complete only if the school is of high quality rather than mediocre or low quality. A law school that meets the needs described in the 1990 Feasibility Study would be relatively small and of high quality, not exceeding about 400 students. Given the demographics of the state and the need to develop a quality school, an entering class of perhaps 50 students in the first year gradually increasing to approximately 100 entering students per year (producing a student body of about 300) and more slowly edging up to a total student body of 400 might be best. Schools in what I refer to as the "first tier" are among the most elite nationally, ranking with Yale and Harvard, for example. The quality of UNLV's law school should rank in the "second tier" as represented by many of the schools from the Big Ten, UCLA, and private schools such as the University of Washington-St. Louis. In addition to a strong basic program, this law school might well develop special expertise in one or i more areas of special concern to Nevada. At the end of this report a standard timeline is presented for major activities in the commencement of the law school. These activities provide for the five major building blocks of the law school: the dean and administrative structure, the faculty and faculty support, student and student support, library, and building. Underlying all of these are the resources available to the school and the academic and governance policies of the school. A very rough estimate is that the cost of operating the school will probably be in the range of $5-$6 million per year and that a building of approximately 190,000 gross square feet will be necessary to support the school for 15 years. (All financial data are based on 1989-1990 dollars.) Next steps include determining whether the university wishes to proceed with a law school, establishing the moral and political support for it, securing funding for the school, and producing a more detailed document concerning legal education and planning for cpiality. It may be desirable to have one or more conferences to talk edjout some of the issues involved in starting a new law school. ii CONTENTS Page I. Analysis of the 1990 Feasibility Study .... 1 II. Nature of the School 5 III. A Blueprint 8 Next Steps 19 A Final Word 21 Timetable 22 iii I. ANALYSIS OF THE 1990 FEASIBILITY STUDY At the request of the officers of UNLV and a special advisory committee to study the need for a law school, I have reviewed the docviment entitled "A Feasibility Study for a Law School in Nevada" (August 15, 1990) prepared by the UNLV Center for Business and Economic Research. For reasons stated in the following paragraphs, it is my opinion that the study establishes the following propositions: — There is currently sufficient demand from qualified students within the state of Nevada to justify establishing a law school within the state. — The population of the state is growing rapidly, and there is every reason to believe that the demand for legal education will expand in Nevada in the years ahead. — The level of economic activity in Nevada is such that the demand for high quality legal services will continue to increase steadily in the foreseeable future. Nevada has some unique features such as transportation activity, entertainment, recreation, and gaming that a law school in the state could unicpiely address. Furthermore, the emphasis on natural resources and environment, water distribution. 1 rapid economic development, land use, and retirement issues involve other legal questions that Nevada should be especially prepared to address at the beginning of the Twenty-First Century. — Both the demand for legal education and the demand for lawyers suggest that a relatively small law school, not a large one, is called for. Indeed, the school should probably start very small and gradually grow to a maximum of 400 students. — The existing need seems to call for a school of particularly high quality. This should distinguish it from some of the out-of-state schools to which Nevadans have access. It also appears to be consistent with the sense of the bar in the state that any law school should be of high quality. Furthe3nnore, it is consistent with the sense of pride in Nevada that its residents have. I have reviewed earlier Nevada law school feasibility studies, including the 1980 study by Gresap, McCormick, and Paget. Much has changed during the last decade in Nevada and in legal education to warrant reconsideration of some of the conclusions reached in earlier studies. The population of the state has continued to grow and with it there has been a significant increase in the number of applications to law schools rapid economic development, land use, and retirement issues involve other legal questions that Nevada should be especially prepared to address at the beginning of the Twenty-First Century. — Both the demand for legal education and the demand for lawyers suggest that a relatively small law school, not a large one, is called for. Indeed, the school should probably start very small and gradually grow to a maximum of 400 students. — The existing need seems to call for a school of particularly high quality. This should distinguish it from some of the out-of-state schools to which Nevadans have access. It also appears to be consistent with the sense of the bar in the state that any law school should be of high quality. Furthermore, it is consistent with the sense of pride in Nevada that its residents have. I have reviewed earlier Nevada law school feasibility studies, including the 1980 study by Gresap, McCormick, and Paget. Much has changed during the last decade in Nevada and in legal education to warrant reconsideration of some of the conclusions reached in earlier studies. The population of the state has continued to grow and with it there has been a significant increase in the nvimber of applications to law schools from Nevada. Student demand for legal education has Increased nationally. Economic activity in the state has continued to grow and now more clearly warrants the special service that graduates of an in-state school can provide. The bench and bar have increased in size and complexity and could benefit from the intellectual stimulation, support, and enhancement that a law school provides. Tuition at private schools has outpaced the rate of inflation so that Nevada residents are now paying a very substantial tuition at the private schools most of them attend. The demographic trends have continued to demonstrate the demand for legal education in the state. The current economics of the legal education of Nevada residents should not be ignored. Assuming that there are approximately 500 Nevada residents in law schools in any given year (not just entering law students but students in all years of education), and that their tuition averages at least $12,000 per year (including siimmer school), then total tuition is approximately $6 million per year. In addition, if their living expenses, books, etc. average another $10,000 per student per year, they are collectively spending another $5 million in living expenses. None of this more than $10 million per year is being spent in Nevada salaries, for supplies, or services. (Nor is any of it going to Nevada in the form of taxes.) It was the conclusion of the 1980 Feasibility Study that the state could "get along" without its own law school. Wellqualified students with economic means could find legal education in other states, especially California. As noted above, I believe that significant changes since 1980 now warrant a different conclusion. Furthermore, the availability of an education in other states does not completely answer the question of what Nevada should do. If it did, there would presumably be no higher education available in Nevada on the theory that all Nevada residents could obtain an education at an institution out of state, such as California. Presumably, legal education is unavailable to some Nevada residents because they cannot travel to or afford out-of-state schools. Women particularly face this problem. It has been the experience of virtually every state in the United States that as its population grew and economic development became sophisticated, a law school was needed and justified. The vast majority of the states (excluding a few in the Northeast) have concluded that a state-supported school should be established. Of the 50 states, the District of Coliimbia, and Puerto Rico, only three are without law schools. They are Alaska, Nevada, and Rhode Island. Alaska presents a special case because of its population and type of economic development. (I conducted a feasibility study for a school in Rhode Island in recent years and concluded that it did not warrant a law school because of its demographic mix and close 4 proximity to so many other schools.) Unlike these other two states, the position of Nevada would seem to call for the development of a law school. The question of the quality of a law school is inextricably linked with the question of need for a law school in Nevada. This is not an idle issue because some of the weakest statesupported law schools in the country exist in small states in the West and Midwest. This question is considered in more detail in the subsequent section of this report, but it is my conclusion that a law school in Nevada can be fully justified only if it is of high quality. The citizens of Nevada, or of the United States for that matter, do not need another law school of mediocre or low quality. The special advantages of a quality law school complete the justification for a law school in Nevada. II. NATURE OF THE SCHOOL Nevada could benefit from a small school of very high quality. It should have the opportunity to concentrate on one or more of the special areas of legal concerns facing Nevada. The school should be developed with the expectation that it will maintain connections or partnerships with a number of groups or organizations. It should, for example, have a special relationship with the Nevada bar, be actively involved nationally so that Nevada may be seen as eimong the leaders of creative legal thought, and maintain a cooperative relationship with other organizations such as the Judicial College in Reno. It should be a resource for the legislative, executive, and judicial branches of the Nevada government both as critic and as a source of creative ideas. In addition to its basic programs, it should have one or more areas of special concern to the state in which it develops real expertise. The school should be of high c[uality and should be an institution in which UNLV, the bar, and the citizens of Nevada can take genuine pride. While it is impractical for the school to be viewed as among the most elite in the country (ranking with Yale, Harvard, Stanford, and the like), it is certainly practical for the school to expect to be compared with the "second tier" of law schools (such as the Big Ten schools, UCLA, and private schools such as the University of Washington-St. Louis). Schools of this quality and reputation are characterized by strong student bodies (drawn heavily from state residents), very strong faculties, scholarship published in the better journals, strong involvement in state and national governmental and professional bodies, and outstanding libraries. In terms of support, such schools are characterized by faculty salaries that are above the national average, excellent research support, good financial aid packages, strong efforts to ensure diverse students bodies and diverse faculties, a sense of intellectual excitement, and broad curricula. 6 Th.G law school that is developed to meet the needs of Nevada should from the beginning have this sense of quality. The school should have a relatively low student/faculty ratio of 10:1 (as calculated by the American Bar Association based on full-time faculty) with a clear decision that this ratio will not be exceeded. Such a ratio will permit a reasonably broad curriculum, individual attention to students, interdisciplinary work, special attention to developing student communications skills, small group instruction, clinical and skills training, and research support. The school should also offer highly competitive salaries that will attract and retain a faculty of "tier two" quality. Research support for this faculty will have to be generous. A library that provides the support not only for the instructional program but also for a full research program will be essential both to attract good faculty and to keep them productive. The physical facilities for the school should be spacious and permit the development of the school's programs for at least ten or fifteen years. The need identified and the desire for a high quality school both suggest that the long-term plans should be for a relatively small law school, approximately 400 students. Initially, the school should be much smaller than that. An example of the 7 phase-in of the school is that it begin with a class of 50 students and add 10 to 15 more students to the entering class each year. This phase-in, beginning with a very small school, is consistent with the expected growth in student demand for a law school and economic activity within Nevada. It is also consistent with the process of slowly building a faculty of real quality. The plan will require, however, from the law school, the university, the bar, and political bodies within the state a very solid commitment to provide slowly but consistently the needed resources over an extended period of time without wavering from the commitment. Ill. A BLUEPRINT A timeline is presented at the end of this report for the establishment of a law school as described in the previous section. The timeline assumes a standard pace for implementation of the school, with funding provided by the state not later than 1992 and an entering class to begin in the fall of 1994. The timeline describes in very broad form the steps that must be taken to begin a law school and in that sense they are a blueprint for establishing the school. The timeline is not a precise statement of when events must occur. The blueprint outlined in the timeline essentially describes 8 the development of the five fundamental building blocks of a good law school: — The dean and administration of the school. — The faculty and faculty support. — The students and student support. — The library. — Physical facilities or building. Undergirding all of these components, of course, are adequate funds and a series of policies and governance structures for the law school. In the following paragraphs, I very briefly describe these five building blocks plus the issues of finances and governance structures as they relate to the blueprint. These are matters that need to be fleshed out more completely as part of the detailed planning for the law school. Administrative Leadership The dean of a new school is a critical figure. Not only does the dean provide usual academic and administrative leadership for the school, but the dean is primarily responsible for early faculty appointments, the selection of the librarian, and the search for virtually the entire initial administrative staff. The initial reputation of the school is established in large part by who the dean is and what the dean does during the 9 first year or two of operation. It is important that the search for the dean begin as early as possible following assurance of funding for the school. It is important that the dean be someone with substantial experience in legal education, with a first-rate reputation for quality, and with good connections in legal education. To attract such a person it will be essential that generous funding for the school be assured before the dean is selected. It will probably not be effective to do a traditional academic search for the initial dean. Rather, the university should seek to recruit someone with these qualifications. The precise administrative structure for the school should be determined by the first dean, but it will undoubtedly include such officers as academic associate deans (probably two associate deans), an assistant to the dean, a development director, a continuing legal education (CLE) director, and a budget officer. The administrative structure will probably be phased in over the first two or three years of operation of the school. The ability to recruit excellent candidates for these positions will depend on convincing them that the school is solid and that it will succeed as a quality institution. 10 Faculty Developing a good faculty is a problem for almost all new schools. The really good candidates for teaching are generally actively pursued by established law schools, and it is generally difficult for a new school to get really good new faculty. As a result, many new schools have hired faculty with whom they were unhappy several years later. It will be important to develop creative mechanisms to avoid this problem. For example, very heavy use of visiting faculty should be considered for the first couple of years. The law school might seek a two- or three-year commitment from several well-estciblished, senior faculty to help start the school. Their service would have to be seen by them, in part, as a contribution to legal education and, in part, appeal to a pioneer spirit. They would also have to be well paid. Because senior faculty often make plans 18 to 24 months in advance, the efforts to locate those who would be at the school would have to start very early, probably before a dean is selected. As the quality of the school becomes recognized, a large number of permanent faculty will have to be appointed, but every effort should be made to spread these appointments over a period of years so there is not an unhealthy tenure "bunching" of faculty. As with the recruitment of administrative officers, a strong, solid commitment of the resources necessary to establish 11 an excellent school will be critical in recruiting good faculty in the early stages of the school's development. Students Attracting students to a new, unaccredited school is difficult because there is no track record for the school, and unless the school is accredited its graduates cannot take the bar exam in most states. Some "first students" at a new law school are attracted to a new school by the spirit of adventure or of starting something new. Others have a pride in location or are unable to travel to distant schools. The recruitment of students for the first few classes will require substantial efforts. Scholarship funds will be essential to attract top-notch students during these years. The experience of many schools is that there is a "pent up demand" for a new law school in almost any location. It is in the second and third years of operation that recruitment of students can be especially difficult. This is one reason that it is fairly critical to receive ABA approval at the first opportunity. It should be the clear policy of the school during these initial years not to accept marginally qualified students for the purpose of filling a class. Rather, the school should be willing to accept smaller classes if necessary to maintain high quality. The first classes to enter the school will also be the 12 to take the Nevada bair examination, and they will help establish the reputation within the state concerning the guality of the instructional program. Student services available at law schools has increased substantially in recent years. In addition to admissions offices, all law schools now provide placement offices and many have their own financial aid offices. A number of co—curricular activities are essential. These include law review (often more than one within the school), moot court, and other competitions such as mock trial or client counseling. Some support is necessary for all of these activities. Students also commonly establish a large number of extracurricular activities. Although there is usually very modest financial support for these activities, they do recpiire building space. Library A library is critical to the development of a strong law school program. The library staff generally consists of a law library director, one or two associate law librarians, several professional librarians, and clerical assistants. Law schools also hire a nvimber of student assistants to work in the library. Most libraries now depend on an automated system for cataloging, acquisitions, and circulation. Most law librarians prefer a system to handle the special problems of a law library 13 collection. Law libraries are a part of the law school, reporting to the dean and faculty of the law school rather than to a university librarian. The funding for the law library should be part of the law school budget. There is no magic number of books that a good law library should start with. Indeed, it takes several years to build a library collection. It is probably safe to assume that a good library should expect to begin with funding sufficient to purchase and process 250,000 to 300,000 volvimes and volume equivalents (microforms) in addition to its annual acquisitions budget. The price of materials can vary greatly, and it is essential that the law librarian and librarian consultants be used to keep costs down as far as possible. Electronic databases such as LEXIS and WESTLAW are important parts of law library collections. Most libraries have found that these cannot be substitutes for hardcopy, but rather they are adjuncts, serving as indexing tools. The future of library technologies for law schools is extremely hard to predict. It is important that library facilities be built with flexibility to be able to accommodate these changes as they occur. Building The planning of a law building is a critical part of the 14 school. In addition to the instructional, library, faculty and administrative space, there are a number of specialized functions in the law school, such as a moot court room, that must be considered. The size of law buildings varies considercibly from school to school. As a very rough estimate, a building of 135,000 net square feet, or 190,000 gross square feet, is needed. This is based on the assumption that the school will ultimately have about 400 students; 40-45 full-time faculty; additional part-time faculty and visiting scholars; clinics; a "start up" library collection of 250,000 to 300,000 volumes; excellent classrooms and seminar rooms; a wide range of student activities; moot court, hearing, and mock trial rooms; and the usual lounges, administrative and secretarial offices, and the like. The school should seriously consider a number of additional offices for jurists, scholars, and practitioners in residence and space for institutes and special projects. Such a building could be expected to meet the needs of the law school for approximately 15 years. A detailed statement of building needs should be part of subsequent planning for the school. It would be possible to build the facility in two stages to spread the cost of it over several years. Such an approach would require very careful progreimmatic and architectural planning and an absolute commitment to complete the second phase of the 15 building on bime. Through careful planning, it might be possible to keep the additional costs of such an approach to reasonable levels. Under such a plan, part of the library and part of the instructional and academic spaces would be added to the initial building during Phase II of construction. Approximately twothirds (63,000 gross square feet or 47,000 net square feet) should probably be built in Phase I under such a plan. Budget The annual operating expenses of the school described in this document would probedaly be between $5-$6 million (excluding building maintenance, operations, and overhead expenses). (All costs here are stated in terms of 1989-1990 dollars. No effort is made to take into account inflation or cost increases in this report. Obviously, such costs will occur and must be factored into the real funds required for the school.) There are special start-up costs associated with the school in the initial years that would be phased out, but at the same time operating costs would increase as the size of the school expanded. Again, the cost estimates provided here are very rough and subject to modification when detailed financial plans are developed during the next stages in the planning process. Part of the total cost of the school can be offset with tuition income, although that will probably be a relatively small 16 part of the total expenditures of the school. Most of the funds will have to come from state support. Because Nevada uses funding formulas, it is important to emphasize that funding formulas for law schools in other states have proved to be a problem. They are often based on faulty or outdated assumptions concerning legal education and the costs of legal education. For example, most formulas using student credit-hour bases for calculations assume a constant variable cost per student when in fact law school fixed costs are very high. Especially in a state system with a single law school, a very strong argument can be made for programmatic funding rather than a formula based on student credit-hour production. Great caution must also be exercised in using as benchmarks state institutions in several states that may be seen as comparable to Nevada. Three or four states in the region have ctmong the very weakest state-supported law schools in the country. Benchmarks for funding must be established on the basis of the Qualitv the school wishes to achieve. Furthermore, the use of a low student-faculty ratio means the school will be leading the rest of the country in some areas and will not be fully comparable to many other law schools. Private fund-raising should provide an important supplement to the basic budget for the law school. In a state-supported law 17 school, however, it is unrealistic to expect private donors to fund the basic program. Donors should be sought to provide funding for chairs, professorships, lecture series, scholarships, special research grants, and law school amenities. Most law schools have found that it is best to have a law school development officer who reports to the law school dean. The natural constituency to provide private funds for the law school is the bar, and most in the bar feel more comfortable dealing with someone from the law school. Law schools generally do not raise significant funds from grants or contracts. There are limited federal funds for clinical programs and very limited research funds available for the law school. Governance Policies The academic and personnel policies for law schools are developed by the faculty and dean of the law school. Accreditation standards require that the law school have a good deal of autonomy in these areas. The timeline suggests that initial policies for the law school be developed before the faculty is appointed. The purpose of this is to provide some working dociuaents for the school as it begins. It should be clear that such documents are temporary and may be changed by the law school faculty as the faculty is appointed. 18 It is important to emphasize from the beginning that once a faculty is chosen, the curriculum, admissions, retention, personnel, library, and similar decisions must be vested in the faculty. The bench and bar, advisory committees, and university officials must be prepared to step back from the governance of the school once this school is underway. Accreditation requirements, the tradition of legal education, and sound law school governance practices all emphasize the importance of this level of academic autonomy for a good law school. NEXT STEPS The most important next step is for the university to decide whether it wishes to undertake the establishment of a law school of the general size, type, and quality described earlier in the report. Work toward assessing the support from the Nevada bench and bar, the university community, and the political structure of the state has been undertaken, and these steps should now be ratified with more formal discussions and decisions. Of critical importance will be the commitment of sufficient resources to provide for a building and operating funds for the school. As noted, the commitment must be for sustained support for the school over a period of years. If the decision is to go ahead, the timeline provides the 19 general sense of the next steps to be undertaken. Part of the process should be to ask the consultant for the development of a more thorough description of legal education and the planning for quality. A more detailed budget and physical facilities descriptions should also be developed. Beyond that, the next step will be to begin development of detailed operational plans for establishing the school. Perhaps consideration should be given to holding a small conference to deal with the process of esteiblishing a good library at a new law school. There are several librarians around the country who have started libraries, and they might have some interesting suggestions. If they produced papers, it would be possible to put together a book on the process of establishing libraries that included these papers plus discussions at the conference. Such a conference would obviously be quite small, but it would help establish some national attention for the UNLV law school before it began. Another conference involving the general process of faculty development and the like would be possible, although the experts for such a conference are not as readily available as they would be for a library conference. 20 A FINAL WnPD I would finally like to note the critical importance of b^osd support for a law school from the bench, bar, university officials, and political leaders of the state. This will be an undertaking of some magnitude that will require a long-term, sustained effort to establish a high quality school. It is critical that long-term commitments for building, funding, and support, once made, be absolutely adhered to, even though there may be some changes in personnel in the institutions making the commitments. In short, the commitments regarding the establishment of the law school must be institutional and not individual. 21 TIMETABLE Fall 1994 Entering Class UNLV Law School Summer 1990 Fall 1990 The university decides whether to proceed based on internal review, bench and bar support, and public support. The process of developing very broad support for a school of real quality begins. Fall 1990 Preliminary program planning begins for the initial and permanent buildings. Fall 1990 Detailed report on legal education and general plans for a law school are developed (this continues through Spring 1991). December 1990 Fairly firm figures are established for financial operating and building costs (fine tuning will continue). Fall 1990 Consider organizing a small national conference on the process of establishing a first-class law library to be held in the Fall of 1991. 22 Spring 1991 Planning for the building begins in earnest. Fall 1991 Basic law school docviments and policies are developed (subject to change when a full-time faculty is hired). Summer or Funding is informally assured for operating Early Fall expenses and building. 1992 January 1993 Temporary facilities (pending completion of permanent building) plans are finalized. Jam.-Feb. Funding is formally approved by the state. 1993 January 1993 Several senior faculty are invited to visit the school for 2-3 years beginning Summer or Fall 1994. Feb.-May 1993 Dean selected (following funding appropriation). Spring 1993 Search begins for associate dean. 23 May 1993 Dean begins duties. Initial office facilities must be available. May 1993 Dean's staff selected. June 1993 Admissions/recruitment started (admissions director and recruitment officer selected). June 1993 Associate dean begins duties. May-Jime 1993 Librarian selected and begins duties ASAP. June 1993 Librarian staff selection begins. July 1993 Library acquisitions begin. August 1993 Initial facilities for library must be available. Aug.-Sept. Selection of faculty begins in earnest (process 1993 will continue through Spring 1994). Fall 1993 Development director selected. Nov.-Dec. Additional visiting faculty for Fall 1995 1993 contacted. 24 January 1994 Placement, Student Records, Financial Aid personnel added. Spring/ Faculty begins arriving as their schedules permit. Summer/Fall Initial offices must be available. 1994 Spring 1994 As much of the library collection as possible is delivered and catalogued. June 1, 1994 Most admissions activity completed for Fall 1994, but rolling admissions continue. July 1, 1994 Library completes core acquisitions and has substantial portion of expanded collection. July 15, 1994 All facilities needed (until building is finished) are occupied. August 1994 First class enrolls. Sept. 1994 Additional experienced visiting faculty are recruited for Fall 1996. 25 u The Center for Business and Economic Research University of Nevada, Las Vegas A Feasibility Study for a Law School at the University of Nevada, Las Vegas Prepared by R. Keith Schwer, PhD Director May 29,1996 j 4505 Maryland Parkway Las Vegas, Nevada 89154-6002 Telephone: (702) 895-3191 A Feasibility Study for a Law School at the University of Nevada, Las Vegas Prepared for President Carol Harter University of Nevada, Las Vegas Prepared by R. Keith Schwer, PhD, Director May 29,1996 TABLE OF CONTENTS Page LIST OF TABLES ^ LISTOFHGURES ABSTRACT ^ I. INTRODUCTION ^ n. THE UNIVERSITY MISSION STATEMENT AND THE PROPOSED LAW SCHOOL 2 m THE NEED FOR A LAW SCHOOL IN NEVADA 3 rV. GENERAL POPULATION AND ECONOMIC TRENDS 3 V. NEVADA'S ECONOMIC TRENDS AND FORECASTS 7 A. Summary Economic Indicators 8 B. Personallncome Estimates 10 C. The Forecasts of a Nevada Economic-Demographic Model 11 VI. SERVING NEVADA'S LEGAL ENVIRONMENT 12 Vn. SUPPORTING THE LEGAL PROFESSION 18 Vni. ESTIMATING THE STUDENT DEMAND FOR LAW SCHOOL ADMISSIONS AND THE NEVADA APPLICANT POOL 19 A. The Resident Applicant Pool Attending Out-of-State Law Schools 19 B. Resident Applicant Pool Using the Age-Cohort Method 22 DC. THE 22-YEAR-OLD AGE-COHORT PROJECTIONS FOR NEVADA 22 X. THE REGIONAL APPLICANT POOL 26 XI. THE DEMAND FOR LAWYERS IN NEVADA 28 Page Xn. ESTIMATING DEMAND USING THE RATIO METHOD 30 A. Demand Estimates Using the Population-to-Lawyer Ratio 31 B. Demand Estimates Using the Income-to-Lawyer Ratio 33 Xm. DEMAND FOR LAWYERS USING AN ECONOMETRIC MODEL 35 XIV. ECONOMIC IMPACT 37 XV. CONCLUSION 38 XVI. BIBLIOGRAPHY 39 ii LIST OF TABLES Page Table 1: Selected Nevada Trends: 1986-1995 ^ Table 2: Number of Nevada Residents Applying for Law Schools 21 Table 3: Projected Nevada Law School Applicant Pool Using the 22-Year-Old Age-Cohort Method: 1996-2006 24 Table 4: Population, Population Growth Rates, and the Presence of a Law School: Western States 29 Table 5: Resident Population and Number of Lawyers: United States and Nevada; 1970,1980, and 1991 and Projections for 2000 and 2010 32 Table 6: Personal Income in Billions of 1987 Dollars and Number of Lawyers: United States and Nevada; 1980,1990, and 1991 and Projections for 2000 and 2010 34 iii LIST OF HGURES Page Figure 1: Nevada Population (Historical and Projected) in Thousands: 1969-2035 13 Figure 2: Nevada Employment (Historical and Projected) in Thousands: 1969-2035 14 Figure 3: Nevada Real Personal Income in Billions of 1987 Dollars: 1969-2035 15 Figure 4: Nevada Per Capita Real Personal Income (Historical and Projected) in 1987 Dollars: 1969-2035 16 Figure 5: Nevada Real Gross Regional Product in Billions of 1987 Dollars: 1969-2035 17 Figure 6: Projected Nevada Law School Applicant Pool Using the 22-Year-Old Age-Cohort Method: 1996-2006 25 Figure 7: Projected Acceptance Rate for a Nevada Law School Assuming 100 Applicants Accepted Per Year Under High and Low Application Assumptions: 1996-2006 27 Figure 8: Demand for Nevada Lawyers and Judges (Historical and Projected): 1969-2035 36 iv ABSTRACT Nevada, one of only two states without a law school, has grown rapidly since the 1960s. With more than 1.5 million people, Nevada now ranks 38th in population. Ten states with law schools have smaller populations. Moreover, Nevada is projected to continue growing at a rate exceeding all other states. Using conservative, but realistic assumptions, we project an ample demand for law school admissions. Evidence suggests that there will be approximately three applicants for each law school admission. This student demand would make a new law school economically viable. A state law school would supply only a part of the future demand for additional lawyers in Nevada. Lastly, the additional 240 jobs (both direct and indirect) created by a Nevada Law School would have a decidedly positive economic impact. V A FEASroiLITY STUDY FOR A LAW SCHOOL AT THE UNIVERSITY OF NEVADA, LAS VEGAS I. INTRODUCTION This study addresses the economic feasibihty of the establishment of a proposed law school at the University of Nevada, Las Vegas. A feasibility study measures the economic payoff of a proposed course of action by weighing the benefits and costs. In so doing, one reaches an assessment of whether or not the project should be undertaken from an economic perspective. The scope of this feasibihty study rests on establishing facts in conformance with economics fundamentals, to be sure, but it also addresses useful information desired by major stakeholders, the legal comnnmity and state policymakers. As such, we give special attention to the procedures and guidelines promulgated by the American Bar Association (ABA) for the study of legal education and the procedures for securing approval and accreditation of a law school.' The overarching questions are: Can a credible program be initiated? Does a financial base exist which is capable of sustaining a credible program of instruction? This study, following the outline of the 1990 Law School Feasibihty Studyidentifies the goals of the proposed law school within the context of the University's mission statement, the location of the proposed law school in relationship to existing law schools; enrollment and financial projections; and analyses of demand and supply for legal services. Of course, 'American Bar Association. Riile 5. Eules of Procedure for Approval of Law Schools. ^Schwer, R. K. (1990). A Feasibility Study for a Law School in Nevada. University of Nevada, Las Vegas: Center for Business and Economic Research. 1 establishing a market niche could further the economic viability of the proposed enterprise. Such a course of action, though under discussion, is not considered here. Rather our calculations reflect a law school with broad appeal. In short, we reach the same conclusion in 1996 as in our 1990 study—sufficient demand exists for establishing a law school in Nevada. n. THE UNIVERSITY MISSION STATEMENT AND THE PROPOSED LAW SCHOOL UNLV has recently completed a year-long, campus-wide strategic planning process. The resulting public agenda for the decade 1996-2005 proposes that UNLV will strive to become a "Premier Urban University." A law school would coincide closely with several key features of this agenda. By meeting demonstrable educational and work force demands, a law school would help fulfill UNLV's "lurban" mission to work responsively and collaboratively with the local and state community. By aiding the Nevada bar and judiciary and by facilitating legal reform, the research and scholarship generated by a law school would also conform with UNLV's goal of generating "applied" research that benefits Las Vegas, Nevada, and the Southwest. This research and scholarship and the law school's interaction with the remainder of the campus would advance UNLV's overall pursuit of quality—another central objective. And, a quality professional school would be consistent with the objective of selectively adding graduate programs that enhance institutional prestige and advance UNLV toward "premier" academic status nationally. 2 m. THE NEED FOR A LAW SCHOOL IN NEVADA Onty two states (Alaska and Nevada) do not have a law school. Unquestionably, the presence of a law school within the boundaries of 48 states reflects the presence of a sufficiently sizeable population demanding legal education, state economies sufficiently productive to support law schools, and a public commitment to the preservation of political and legal institutions. The minimiun threshold of a state's population size for establishing a law school must be rather small, since the smallest state, Wyoming, has had a law school for some time. Wyoming currently has a population of about 470,000; but, the state has had a law school since the 1920s with a population in the post-World War 11 period as small as about 300,000.^ Furthermore, Wyoming's population projection for the year 2010 is less than 600,000. On the other hand, Nevada (using U.S. Census projections which have consistently underestimated Nevada's population growth) should reach two milhon by 2010. Thus, population size, cited in the past as a limiting factor in establishing a law school in Nevada, no longer seems a meaningful constraint. IV. GENERAL POPULATION AND ECONOMIC TRENDS Nevada entered the union during the Civil War with a small popxolation. People, for the most part, lived in ephemeral mining camps. These mining camps, bom to instant glory, prospered with the richness of the earth, but faced the near certain outcome of a ghost town ^U.S. Bureau of the Census. (1995). Statistical Abstract of the United States: 1995. Washington D.C., p. 28. 3 when the mines played out. As a consequence, people moved from camp to camp in a sequential search for their livelihood. Nevada's economy remained subject to the vagaries of mimng well into the 20th century. With the coming of the Colorado River Projects, the building of Hoover Dam, the establishment of military bases and other national defense mstallations, the legalization of gaming, and the development of a comprehensive tourism industry, the modem Nevada economy evolved into a fer more stable one. The modem era of the Nevada economy began in the post-World War n period. Setting 1950 as a base, the population of Nevada grew at a compoimd rate of 5.1 percent over the 45-year period (1950-1995), from 160,083 to 1,582,390. This strong momentum of growth also pyortends future growth. The growth process (difficult to initiate, subject to stagnation after long-time periods, and likely to face reversals from implanned events), however, generally proves supple to impediments during rapid expansion. Once an economy passes through the take-off phase of development, that is, the first stage of development in which entrepreneurs overcome encumbrances to change, there is a marked tendency for growth to continue over long periods. In most cases growth continues virtually unabated on a 75- to 100-year trend. Thus, by aU standards, Nevada, having experienced sustained rapid growth since World War 11, seems destined to fulfill a long period of growth. Maturation of the Nevada gaming economy will iiltimately occur. Other regions and other industries have experienced similar growth patterns, for example, steel and automobile. Gaming in the United States has previously experienced two complete periods of long-term 4 growth.^ Having experienced industry maturation twice before, evidence suggests gaming is now enjoying the expansion phase of the third wave of long-term growth. The growth process begins with the opening of new markets, the development of new products and services, new production processes, new discoveries and new ways of doing things. The initial change, which finds a supportive environment, causes a cascading effect of change which transmits confidence and energy, thus creating an economic boom which may last for some time. Currently, Nevada (especially Clark County) is experiencing a hotel and casino construction boom. The economic gains of rapid growth will, after time, plant the seeds of inefficiency. Steel and automobile, having experienced industrial maturity have gone through periods of inefficiency and slow growth that have not been experienced by Nevada's gaming industry. As a consequence, Nevada's rate of growth will ultimately dow. New products, new markets, more effidftnt production and management elsewhere, and changing consumer preference will ultimately change Nevada's economy. The popularity of gambling is a relatively recent event. Yet, change will bring future conqjetition that supplants the region's earlier comparative trade advantage. These changes, however, will occur in the future (perhaps in the first half of the 21st century) and at a time in which the state's population will be larger. In short, economic diversification, supported in large measure through human capital development at the state's umversities, will have had the opportunity to improve economic transition. "^ose, I. N. (1991). The Rise and Fall of the Third Wave: Gambling Will Be Outlawed in Forty Years. In Gambling and Public Policy. Reno, Nevada: Institute for the Study of Gambling and Commercial Gaming. 5 One does not know for certain the time life of the phases of economic development. Although research only points to the overall shape of the growth curve with any confidence, the timing of the phases of development remains an unsettled issue. Not knowing the future path of Nevada's economy, we can, however, identify with some assuredness a few major relationships for decision making regarding the establishment of a law school. These include the following: 1. A growing economy creates additional demands for legal services, and therefore a derived demand for legal educational services. -2. Increased demand for legal services creates increased demand for legal educational services. 3. Growth also creates a demand for greater specialization in legal training and education. 4. An expanding economy increases the likelihood of the availability of resources to support legal education. 5. Students (as well as their parents) living in a growing state will tend to have more money available for educational services. 6. More money will be available to help finance student education. 7. More money for gifts and grants will also be available to support a law school. Therefore, a growing economy provides a favorable environment for the establishment and maintenance of a law school. 6 V. NEVADA'S ECONOMIC TRENDS AND FORECASTS Estimating the demand for law school admissions, at best a difficult task, places in greater relief the feasibility of the proposed law school. Estimates of future law school admissions, however, rest on the state's future economic and demographic condition. The Nevada economy has shown unsurpassed vigor in recent years. Not siirprisingly, the media tout Nevada:^ Nevada is the niimber one state in the nation for business climate. Top ranked Las Vegas— and surrounding Clark County—are exploding. Inc. Magazine Nevada, spurred by Clark County's rapid growth, enters 1990 as the fastest growing state in the nation. U.S. Census Bxireau Residents in only four states are taxed less than Nevadans. Nevada—A "tax haven." Money Magazine Economy watchers are beginning to wonder if the economic statistics from the Silver State have been injected with steroids. The Western Blue Chip Economic Forecast Las Vegas, with a flourishing tourism industry and a burgeoning trade catering to retirees, is the hottest game going in the Movmtain West right now. The Washington Post ^Las Vegas Perspective. (1990). Las Vegas Review Journal, Nevada Development Authority, First Interstate Bank; of Nevada, p. 3. 7 The employment rate shows Nevada as one of the bright spots in the U.S. today. Economic Report Federal Reserve Bank of San Francisco With 101 fast-growing companies, Nevada is the most entrepreneurial state in the United States. Inc. Magazine Las Vegas ranks number 30 in a survey of America's 300 best places to live; an impressive leap over last year's rating of 180. Money Magazine Las Vegas is the hottest housing market on a per capita basis. U.S. Housing Markets Nevada banks are among the nation's top performing of the year. Sheshunoff and Company Nevada ranks fomth in manufacturing climate of the 21 states in their category. Grant Thorton National C.P.A. Firm The University of Nevada, Las Vegas is one of the top up-and-coming universities in the West. U.S. News & World Report ... And the list goes on. A. Summary Economic Indicators One may easily glean the recent record of Nevada's robust economic expansion from the summary economic indicators shown in Table 1. While year-to-year variations occur, and they should be expected, one easily concludes that Nevada's key indicators show that the state 8 Table 1 Selected Nevada Trends: 1986 - 1995 Personal Inconne (Millions $) Real Personal Income (Millions $) Wage & Salary Employment Retail Sales (Millions $) Gaming Revenues (Millions $) Housing Permits Housing Units Population Unemploymt Rate (%) 1986 $15,726.0 $14,358.0 506,167 $7,518.0 $3,533 10,613 15,655 993,220 5.99% 1987 $17,230.0 $15,162.0 539,339 $7,495.0 $3,982 10,849 16,345 1,035,040 6.33% 1988 $19,253.0 $16,288.0 577,877 $7,947.0 $4,429 14,290 30,769 1,096,130 5.13% 1989 $22,031.0 $17,779.0 624,374 $8,030.0 $4,748 17,657 29,253 1,162,340 4.99% 1990 $24,682.0 $18,906.0 664,621 $9,630.0 $5,440 15,685 25,096 1,236,130 4.96% 1991 $26,771.0 $19,649.0 671,605 $9,826.0 $5,580 15,939 20,986 1,297,910 5.49% 1992 $29,250.0 $20,855.0 682,049 $10,988.0 $5,863 13,997 17,284 1,343,940 6.57% 1993 $31,640.0 $21,894.0 715,404 $12,390.0 $6,248 20,025 23,323 1,398,760 7.23% 1994 $34,702.0 $23,423.0 786,087 N/A $7,006 23,939 31,071 1,494,230 6.17% 1995 $38,273.0 $25,113.0 821,400 N/A $7,369 23,696 32,756 1,582,390 5.55% Source: Center for Business & Economic Research, UNLV has grown at rapid rates, in fact, decidedly better than the national economy. B. Personal Income Estimates Personal income is one of the most useful economic data series. Personal income measures the general purchasing power of a region, that is, the ability of its citizens to buy goods and services. Nevada ranks among those states with higher levels of personal income. Moreover, recent data show the rate of growth in personal income for Nevada among the highest in the nation. Nevada's recent personal income average rate of compoimd growth (8.89 percent) over the period 1990 to 1994 exceeds the 5.09 percent rate for the nation.® In 1994 Nevada ranked 7th among the states in terms of the rank in per capita personal income measured in constant dollars, and is expected to hold this favorable rank in the years ahead.' Thus, Nevada's higher-than-average ranking among the states in personal income gives the state more possibilities to consider in its decisions than states with lower income levels. Using one's current position as a point of reference may prove to be a mistake when moving at a fast pace. To be sure, solely reporting ciurent economic and demographic parameters could inadequately capture the relevant conditions for developing and supporting a law school. For example, a community would double its population in slightly more than 14 years if it grew at a 5 percent rate. On the other hand, it would double in 24 years with a 3 percent growth rate. Therefore, seeking to avoid possible shortcomings of relying on ®U.S. Btureau of the Census. (1995). Statistical Abstract of the United States: 1995. Washington D.C., p. 461. 'U.S. Bureau of the Census. (1995). Statistical Abstract of the United States: 1995. Washington D.C., p. 461. 10 siiT5)le growth-rate forecasts, we used an economic-demographic model for forecasting the state's future. C. The Forecasts of a Nevada Economic-Demographic Model We projected Nevada's economic future using an econon^tric model® We have foimd that the economic and demographic forecasts using this approach offer a more objective basis for evaluation than current or past data.' Thus, the evaluation of the need for a law school may reflect the future demands and needs of both the economy and the population. The model uses historical information from 1969 to 1993. The year 1993 is the last year for which a full set of data is available. However, we simulated the current southern Nevada boom and rebased om projections for the 1993 to 1996 period, thereby improving our long-term projections. We ran model simulations to 2035 using conservative assumptions about the future near-term boom and the long-term maturation of the state's economy. The historical data and projections for the key economic and demographic factors most likely to describe the environment for the proposed law school are as follows: ®Treyz, G. (1993). Regional Economic Modeling: A Systematic Approach to Economic Forecasting and Policy Analysis. Boston: Kluwer Academic. 'Schwer, K., & Thomas M Carroll (1990, Spring). Nevada Regional Models: Forecasting and Simulations. Nevada Review of Business and Economics, 10-18; Rickman, D., & R. Keith Schwer. (1993). A Systematic Comparison of the REMI and IMPLAN Models: The Case of Southern Nevada. Review of Regional Studies, 23,143-161; Rickman, D., & R. Keith Schwer. (1995). Multiplier Comparisons of the IMPLAN and REMI Models Across Versions: Dlmninating Black Boxes. Environment and Planning A, 27,143-151; Rickman, D., & R. Keith Schwer. (1995). A Comparison of the Multipliers of IMPLAN, REMI, and RIMS n: Benchmarking Ready-Made Models for Comparison. The Annals of Regional Science, 29, 363-31 A. 11 1. Figure 1 Population Forecasts for Nevada 2. Figure 2 Employment Forecasts for Nevada 3. Figure 3 Real Income Forecasts for Nevada 4. Figure 4 Per Capita Real Income Forecasts for Nevada 5. Figure 5 Real Gross Regional Product for Nevada The economic forecasts point to a growing and maturing Nevada economy. As the state grows it will become more like the national economy. More importantly, these forecasts suggest future favorable trends. VI. SERVING NEVADA'S LEGAL ENVIRONMENT Events remind one daily that the United States rests upon the principle of the rule of law rather than the rule of man. Our laws and legal institutions (the bedrock of our freedoms), however, need frequent attention to keep abreast of the increasing complexities of a changing environment. Thxis, one might conclude that Nevada's reliance upon other states for legal education and upon the legal expertise of a law school outside of the state reveals weakness in the state's fulfillment of its obligation to serve the needs of Nevadans for nurturing our democratic heritage. Our federal system calls for participation by each state. Typically, a state's law school performs in a significant way the function of facilitating the establishment of laws and a legal environment to accommodate local circumstances. As a result, the staffs of the Legislative Counsel, the Attorney General's Office, and the Nevada Supreme Court have taken on this role in Nevada in place of a law school. These organizations, however, can only provide limited support. Their primary mission is not to further legal research. They have performed comprehensive legal reviews 12 u> *0. o (U PLH 4,000 3,000 0 2,000 1 . ' a ;2i 500 0 — / Projected I'll l-l 1! II 1 1 1 M 1 1 1 .1. 1 1 1 1 1 1 1 1 1 1 1969 1975 1981 1987 1993 1999 2005 2011 2017 2023 2029 2035 Year Source: Center for Business & Economic Research, UNLV| Figure 3 Nevada Real Personal Income in Billions of 1987 Dollars: 1969-2035 Year Source: Center for Business & Economic Research, UNLVl Figure 4 Nevada Per Capita Real Personal Income (Historical and Projected) in 1987 Dollars: 1969-2035 ON $24,000 $22,000 $20,000 § $18,000 o Q S $16,000 ON $14,000 $12,000 Actual r— / Projected LLUJ 1 1 1 1 1 1 1 i-U-J 1 1 M 1 M 1 1 1 1 1 1 M 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1969 1975 1981 1987 1993 1999 2005 2011 2017 2023 2029 2035 Year SourcejjCwiter^rBusiness^^ Figure 5 Nevada Real Gross Regional Product in Billions of 1987 Dollars: 1969-2035 $80 J $60 "o Q 00 On o CO a o PQ $40 $20 $0 — Projected Actual 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1969 1975 1981 1987 1993 1999 2005 2011 2017 2023 2029 2035 Year on an intermittent basis.'® Therefore, Nevada's current arrangement represents ' at best, an inadequate patchwork substitute for the continuing attention a collective group of legal scholars can provide Nevada's legal system."" Vn. SUPPORTING THE LEGAL PROFESSION Law schools contribute to the inqirovement of the legal profession. One obvious way in which a law school can contribute is through fostering participation in continuing educational professional programs, acting as resource persons, and participating in the furtherance of legal education and instruction. In addition, Nevada's increasing pace of future economic development will result in an environment of increased legal development. Currently, no law school fully prepares and enhances the continuing educational and training of lawyers in areas of special concern to Nevada, for example, water, mining, nuclear waste, and gaming.'^ These circumstances afford significant opportunities for a law school to contribute to the Nevada legal profession. ^°Board of Regents, University of Nevada System, Law School Feasibility Study [a report of the firm Cresap, McCormick, Paget, Inc.]. (June 1980). "Pedrick, W. H., & Lome Seidman. (1978). Law School Study for the University of Nevada, Las Vegas. Southwestern Nevada Law Review, iO(Special Issue), 2115-2220. '^Strate, L., & Lome Seidman. (1985). Public Policy Considerations Supporting a Nevada Law School. Southwestern University Law Review, i5(l), 91-100. 18 Vm. ESTIMATING THE STUDENT DEMAND FOR LAW SCHOOL ADMISSIONS AND THE NEVADA APPLICANT POOL The 1980 UNS Board of Regents' law school feasibility study reached its findings assuming the following national trends: (1) law school enrollments are leveling off, (2) the number of unfilled law school seats is increasing, and (3) the number of law school applicants is projected to decline." But trends and conditions had changed by the time of the last feasibility study. For one, the number of law school applicants at the ABA-approved law schools trended upward, having increased by 36.8 percent from 1985-1986 to 1988-1989.'^ At the national level, the number of applicants peaked in 1990-1991 at 99,237, and has since trended downward. The Nevada pool of interested applicants for law school admissions, however, has continued to increase. The number of Nevada applicants comes from two groups—the resident pool (Nevadans) and the nonresident pool (out-of-state residents). We now tum to review the available information for both of these groups, to consider the factors that relate to the admissions pattem of each, and to estimate the number of applicants that the proposed law school might reasonably expect to receive. A. The Resident Applicant Pool Attending Out-of-State Law Schools Each year Nevada students go out of state to receive an education in the legal field. With no in-state law school option and with rapid population growth, increasing numbers of "Board of Regents, University of Nevada System, Law School Feasibility Study [a report of the firm Cresap, McCormick, Paget, Inc.]. (June 1980). '"Strate, L., & Lome Seidman. (1985). Public Policy Considerations Supporting a Nevada Law School. Southwestern University Law Review, i5(l), 91-100. 19 Nevadans have gone to out-of-state law schools. Historical infomiation on attendance at law schools, although informative, does, nonetheless, underestimate interest in legal education. The number of Nevada students attending law school would be greater if there were an instate law school. One measure of the historical demand for a legal education is the number of Nevadans taking the LSAT. The number of Nevada residents taking the LSAT and applying to at least one ABA-approved law school between the years 1975 and 1995 ranged between 135 and 265. See Table 2. In more recent years, as interest in law as a field of study has waned, the number of Nevadans in the prime age categories for attending law school has increased and the size of the law school applicant pool has also increased. Between (1983-1984) and (1994-1995) the number of Nevadans taking the LSAT almost doubled, increasing 96.3 percent—a substantial upswing.'^ The past niunber of applicants, however, might imderestimate the future applicant pool, since no ABA-accredited law school has over operated in Nevada. Without a resident school of law the opportumties for a legal education have been more limited for Nevadans than for students in other states. In addition, the number of Nevadans attending ABAaccredited schools cited does not include individuals who attended the Old College Nevada School of Law (an xmaccredited ABA institution which operated between 1981 and 1988). As reported by the Old College Nevada School of Law, approximately 63 students per year applied during the first five years of this unaccredited program, even though the school had Official Guide to U.S. Law Schools. (1994-1995). Law School Admissions Coimcil/Law School Admission Services. 20 Table 2 Number of Nevada Residents Applying for Law Schools N) Academic Number of Year Applicants 1975-76 155 1976-77 144 1977-78 187 1978-79 142 1979-80 151 1980-81 160 1981-82 163 i 1982-83 157 % 1983-84 135 < 1984-85 162 •s 1985-86 178 1 1986-87 192 i 1987-88 206 z 1988-89 236 1989-90 221 1990-91 244 1991-92 262 1992-93 231 1993-94 264 1994-95 265 300 250 200 150 100 1975-76 1978-79 1981-82 1984-85 1987-88 Academic Year 1990-91 1993-94 Source: Data Services Group, Law School Admission Council a tenuous basis for sustained operations.'® B. Resident Applicant Pool Using the Age-Cohort Method One may get another view of the demand for legal education in Nevada by estimating the admissions enrollment pattern that might be expected using the age-cohort method of demographic analysis. Typically, most students enter law school after completion of the bachelor's degree at the age of 22 years. This method identifies the admissions applicant pool as the number of 22-year-old persons and then applies an expected capture rate. The consideration of only the 22-year-old age-cohort may face some limitations in its application to Nevada. In particular, we know that both UNR and UNLV have a relatively large percentage of students outside the traditional college age population of 18 to 22 years. The average college-going population for these universities exceeds 24 years of age. Therefore, we analyzed alternative assumptions with respect to the average age of the law school applicant, but found no significant difference in the estimated size of the applicant pool vmder these alternative assumptions. We present here estimates of the applicant pool using the often-applied 22-year-old cohort approach. IX. THE 22-YEAR-OLD AGE-COHORT PROJECTIONS FOR NEVADA The capture ratio used in age-cohort projections has varied over time in response to the ebb and flow of career selection preferences and fundamental economic conditions. We used capture rates ranging fi-om 1.5 percent to 2.5 percent, including the nationally observed range of 1.75 to 2.09 percent. The resulting Nevada law school applicant pool using these ^^Feasibility Study of the Nevada School of Law, Old College. (September 1986). 22 assumptions may be foimd in Table 3. The estunated applicant pool ranges from a low of 332 (assuming a 1.5 percent capture rate) to a high of 700 (assuming a 2.5 percent capture rate) for 2004. Thus, one might reasonably expect the applicant pool in 2006 (when maturation would begin for a new law school) to range from 410 to 683. See Figme 6. The evidence we present reflects a wide range of capture ratios. Even if Nevada's capture rate were at 1.5 percent, less than the lowest national rate of 1.75 percent, one might conclude that there already exists a sufficient number of willing applicants to a Nevada law school to ensure an entering class of 100 students per year with an acceptance rate of about 30 percent. Even lower acceptance rates would be expected with higher capture rates. Thus, one might reasonably expect that Nevada could attract sufficient nxunbers of applicants to justify establishing a law school. The traditional method of estimating the applicant pool represents only an approximation because of the wide range of ages that law schools actually draw from when admitting students. That is, the size of the population between the ages of 22 and 45 will grow in the years ahead. We already know from the national age profile data the number of individuals who will enter these age-cohorts in the years ahead. The U.S. Bureau of the PfwaiR has projected a cumulative increase in the population of individuals between the ages of 25 and 44." Thus, the pool of prospective students is likely to exceed the one used in the traditional estimation method-suggesting that sustaining law SC1K>O1 enrollment does not seem "U.S. Bureau of the Census. (1990). Statistical Abstract of the United States: 1990. Washington, D.C. 23 Tables Projected Nevada Law School Applicant Fool Using the 22-Year-Old Age-Cohort Method: 1996-2006 Capture Ratio Assumption Year 1.50% 1.75% 2.00% 2.25% 2.50% 1996 332 388 443 499 554 1997 322 376 430 483 537 1998 323 377 431 485 539 1999 324 378 432 486 540 2000 337 393 449 506 562 2001 368 429 490 552 613 2002 379 442 505 568 632 2003 400 467 533 600 667 2004 420 490 560 630 700 2005 414 483 552 621 691 2006 410 478 546 614 683 Source: Center for Business & Economic Research, UNLV Figure 6 Projected Nevada Law School Applicant Pool Using the 22-Year-Old Age-Cohort Method: 1996-2006 1990 1992 1994 1996 Source: Center for Business & Economic Research, UNLV | I 1 I I I i_ 2000 2002 2004 2006 to be a problem. An applicant pool of more than 200 per year and an entering class of 100 per year result in acceptance ratios of less than 50 percent. Acceptance ratios of these levels suggest that a Nevada law school might aspire to a higher-than-average quality level for a newly established school. The issue of the desired size of the proposed law school has been addressed in Dean Smith's 1990 study.'® Nonetheless, our findings suggest that the expected growth of Nevada portends that a law school of increasing quality should be expected if the size of the law school remained small. We diow in Figure 7 a range of acceptance ratios that might be expected over a range of capture-rate assumptions. X. THE REGIONAL APPLICANT POOL The proposed law school's planning efforts have focused on Nevadans' needs for legal education. But in feet, students cross state borders to attend educational institutions in other states. One should expect a continuation in this migration. Projected population growth in neighboring states will also provide an additional source of students, thereby increasing the pool of applicants in Nevada. As time goes on, however, the growth of neighboring states will bring pressure for fewer out-of-state admissions to be offered to Nevada residents at other state universities. In this way the gro>vth of the region's population, that is, the states that border on Nevada (Arizona, California, Idaho, Oregon, and Utah), will most likely reduce the number of law '®Smith, S. R. (1990). [Consultant, Cleveland-Marshall College of Law]. Cleveland State University. 26 Figure 7 . Projected Acceptance Rate for a Nevada Law School Assuming 100 Applicants Accepted Per Year Under High and Low Application Assumptions: 1996-2006 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Year Number of Aplications for High and Low Assumptions Given in Figure 6 Source: Center for Business & Economic Research, UNLV schcx)l seats available for Nevadans. Only private universities with higher tuition costs can be expected to avoid these pressures. Thus, we expect continued and increasing demand by Nevadans for legal education within their own state. Just as Nevadans have gone to other states to receive their legal education, students in neighboring states will avail themselves of the opportumty to attend a law school in Nevada. See Table 4 for comparative population estimates for states in the Western region. The Nevada applicant pool of students from other states is likely to be small initially, primarily of interest to students as a secondary source. But this source will become increasingly significant as the school becomes established, and its high quality and reputation are affirmed. We have not included any out-of-state applicants in reaching conclusions about a likely applicant pool for the proposed Nevada law school. XI. THE DEMAND FOR LAWYERS EST NEVADA The demand for legal education is more than the demand for practicing attomeys. A legal education is needed by members of the judiciary and is desired by nonpracticing lawyers in business, such as gaming, real estate, and banking. The demand for legal training ly nonpracticing lawyers constitutes a large component of the overall demand for legal education, although this component of demand is not always easy to estimate. In addition, legal training has traditionally been a desirable educational background for a wide range of nonlegal occupations, professions, and jobs. Estimating this component of the demand for legal education proves most difficult to measure and, no doubt, absorbs a good portion of the periodic oversupply (a condition that occurs when labor supply exceeds demand). Thus, one 28 Table 4 Population, Population Growth Rates, and the Presence of a Law School: Western States Pnpiilfltinn (in thousands'! Annual Growth Rates Law School 1980-1990 1990-1994 in State 4.3% 4.7% No 3.1% 2.4% No 3.0% 2.7% Yes 2.3% 1.4% Yes 1.6% 2.5% Yes 1.5% 2.2% Yes 1.3% 2.6% Yes 1.6% 2.3% Yes Idaho y44 i,uu/ 1,1 J J 0-6% 2.9% Yes 7 842 3.086 0.8% 2.1% Yes 0.2% 1.7% Yes -0.3% 1.2% Yes State 1980 1990 1994 Nevada 800 1,236 1,494 Alaska 402 550 606 Arizona 2,718 3,665 4,075 California 23,668 29,760 31,431 Utah 1,461 1,723 1,908 New Mexico 1,303 1,515 1,654 Colorado 2,890 3,294 3,656 Washington 4,132 4,867 5,343 Idaho 944 1,007 1,133 Oregon 2,633 2,842 3,086 Montana 787 799 856 Wyoming 470 454 476 Source: Statistical Abstract of the United States 1995 cannot estimate the demand for law school education only in terms of the number of practicing attorneys in the popialation. Periods of oversupply occur in free market economies for specific labor categories. Understandably, the legal professions have from time to time suffered the shortcomings of an oversupply situation. However, the general nature of a legal education has been a good preparation for entry into other fruitful careers. Unlike other educational programs of a more limited scope, the careers of persons trained in law often evolve easily to positions in other fields, should they choose; versatility makes transitions both easier and more successful than for those educated in many other fields. Versatility becomes more important as individuals increase the number of separate careers they pursue during their working years. Thus, the breadth and general applicability of a legal education generate a supply of graduates at times which may seem as excess, but which the economy assimilates for reasons other than legal needs. Xn. ESTIMATING DEMAND USING THE RATIO METHOD The simplest method for estimating the future demand for lawyers rests on assuming that the current ratio of the number of population-to-lawyers remains imchanged in the future. Multiplying the ratio by the projected future population yields an estimate of the future number of lawyers and members of the judiciary. Since demands for legal services increase with both the size of the population and the increasing coirq)lexity of economic activity, one may want to adjust the simple ratio method. One adjustment procedure (the lawyer-to-income ratio) will be considered later. Yet another 30 way of estimating the demand is to use methods more sophisticated than the simple ratio method. A. Demand Estimates Using the Population-to-Lawyer Ratio The ratio of the number of people-per-lawyer in Nevada exceeded the same ratio for the United States in 1970 and 1980. See Table 5. In addition, the ratio over time shows a pronotmced decline from 573 people-per-lawyer in 1970 to 313 people-per-lawyer in 1990 for the United States. Nevada also shows the same downward trend, declining from 662 to 343. We projected the future demand for lawyers by assuming a continuation of the population-to-lawyer ratio of 313. Dividing the projected Nevada population for the year 2000 and 2010 by the people-per-lawyer ratio yields the estimated demand for Nevada lawyers. We project a demand of 5,843 in 2000, and 7,424 in 2010. On the other hand, the demand is estimated as 5,342 in 2000, and 6,776 in 2010 using a people-per-lawyer ratio of 343. Believing that Nevada's ratio of population-per-lawyer will more likely track the natinnal troid, we used the 313 estimate, concluding that it is both a conservative and realistic assun^tion. Therefore, we project a demand for 2,061 additional lawyers between 1991 and 2000, and 1,581 between 2000 and 2010. On a per year basis, the average net increase is 229 from 1991 to 20(X), and 158 from 2000 to 2010. Thus, these estimates suggest that a Nevada school of law will only be able to satisfy part of the state's anticipated future demand. 31 Tables Resident Population and Number of Lawyers: United States and Nevada; 1970,1980, and 1991 and Projections for 2000 and 2010 US Population US Population per Lawyer Number of Lawyers Nevada Population Nevada Population per Lawyer Number of Lawyers 1970 203,302,000 573 355,242 489,000 662 739 1980 226,546,000 418 542,205 800,493 452 1,771 1991 252,131,000 313 805,872 1,297,910 343 3,782 Projections 2000 270,259,000 313 863,447 1,829,000 313 5,843* 2010 281,180,000 313 898,338 2,324,000 313 7,424* •Using a population-to-lawyer ratio of 343, the projection is 5,332 for 2000, and 6,776 for 2010. Source: Center for Business & Economic Research, UNLV; Statistical Abstract of the United States 1995. B. Demand Rstimates Using the Income-to-Lawver Ratio The demand for lawyers increases with the increasing complexities of the modem American economy. This complexity (dependent on numerous factors) can be approximated by personal income as a proxy measure. Nevada currently ranks 7th among the states in per capita personal income.'® Thus, one might reasonably expect that in terms of income alone that Nevada has a greater-than-average demand for lawyers. The income-ratio approach to estimating demand suggests a rising demand in the next decade. We find the dollars of total personal income (measured in billions of constant dollars) per lawyer increasing over the historical period. However, the number of Nevada lawyers per million dollars of Nevada total personal income falls short of the national average, suggesting fewer lawyers per dollar of economic activity. See Table 6. Projected growth in Nevada personal income suggests continued growth in the demand for lawyers. If a Nevada ratio of 6.0 million dollars of state total personal income per lawyer held over the decade of the 1990's, we estimate an increase in net demand for lawyers of 2,101; and firom 2000 to 2010, our procedure yields a net increase of 1,900. Using the income-ratio approach, we project an average annual net increase of 233 lawyers during the 1990s and 190 during the first decade of the 21st century. We believe the 190 to 238 ^dditinnal lawyers per-year range seems most appropriate in light of Nevada's expected future economic development '®U.S. Bureau of the Census. (1995). Statistical Abstract of the United States: 1995. Washington D.C. 33 Table 6 Personal Income in Billions of 1987 Dollars and Number of Lawyers: United States and Nevada 1980,1990, and 1991 and Projections for 2000 and 2010 United States Nevada US Personal Income (Billions) US Personal Income per Lawyer (Millions) Number of Lawyers Nevada Personal Income (Billions) Nevada Personal Income per Lawyer (Millions) Number of Lawyers 1980 3,163.9 5.8 542,205 13.1 7.4 1,771 1990 4,051.7 5.2 778,311* 21.5 6.2 3,496 1991 4,860.3 6.0 805,872 22.3 5.9 3,782 Projections 2000 5,088.0 6.0 848,000 35.3 6.0 5,883 2010 5,767.0 6.0 961,000 46.7 6.0 7,783 *Estimated Source; Center for Business & Economic Research, UNLV; Statistical Abstract of the United States 1995. Xm. DEMAND FOR LAWYERS USING AN ECONOMETRIC MODEL We used an econometric model to project the demand for Nevada lawyers and judges.^ While sophisticated in nature and beyond the scope of our presentation here to explain in detail, an econometric model encapsulates the numerous linkages and feedbacks within the economy. The model's refinements include accounting for the region's relative wage influences, purchasing coefficients, regional shares, relative production costs, relative economic opportunities, and migration. Unlike other more ad hoc procedures, the modeling approach explicitly accounts for the numerous feedbacks of an economy. We projected a continuation of the historical trends of the relationship between the four of Nevada's five regions and the United States. The Clark County region, one Nevada region for which we made changes, was rebased to account for current and planned expansion over and above the growth not included in the model. The U.S. projections follow growth studies of the U.S. Department of Labor. We made projections to the year 2035.^' The projected demand for lawyers and members of the judiciary in Nevada is shown in Figure 8. The model, using conservative economic assumptions, projects an increase of ^reyz, G. (1993). Regional Economic Modeling: A Systematic Approach to Economic Forecasting and Policy Analysis. Boston: Kluwer Academic. ^'Treyz, G. (1993). Regional Economic Modeling: A Systematic Approach to Economic Forecasting and Policy Analysis. Boston: Kluwer Academic; Rickman, D., & R. Keith Schwer. (1995). Multiplier Comparisons of the IMPLAN and REM! Models Across Versions: Illuminating Black Boxes. Environment and Planning A, 27,143-151; Rickman, D., & R. Keith Schwer. (1993). A Systematic Comparison of the REMI and IMPLAN Models: The Case of Southern Nevada. Review of Regional Studies, 23,143-161; Rickman, D., & R. Keith Schwer. (1995). A Comparison of the Multipliers of IMPLAN, REMI, and RIMS 11: Benchmarking Ready-Made Models for Comparison. The Annals of Regional Science, 29, 363-374; Schwer, K., & Thomas M. Carroll. (1990, Spring). Nevada Regional Models: Forecasting and Simulations. Nevada Review of Business and Economics, 10-18. 35 Figure 8 Demand for Nevada Lawyers and Judges (Historical and Projected): 1969-2035 12 1969 1975 1981 1987 1993 1999 2005 2011 2017 2023 2029 2035 Years 5,779 lawyers and judges in 2000, conq)ared with 5,843 (using the population-ratio approach) and 5,883 (using the income-ratio approach). The three approaches yield estimates that differ by less than 100. Therefore, we find the future demand for Nevada lawyers exceeds the number of graduates that might be expected from a proposed Nevada law school. XIV. ECONOMICIMPACT The addition of a law school increases economic activity in two ways—students move to Nevada to go to school, thereby bringing money into the state; and students, who would otherwise go out of state, attend a Nevada Law school, keeping money in the state. In the first case, services are exported, although the out-of-state student would reside in Nevada. And in the second case, the state's income increases because of export substitution, that is, we produce and consume focally. Irreq)ective of the mix of in-state or out-of-state students, all expenditures, both for education and other living expenses, add to Nevada's level of economic activity, there would be no double counting. How much each student at the proposed law school spends is unknown. Of course, expenditures will vary, depending on each student's case. A review of law school literature, however, suggests that $25,000 annual expenses might be a good approximation for an average student. Using this per capita expenditure and assuming 300 full-time law students, yield an estimate of $7.5 million in direct expenditures. Each dollar of primary spending creates secondary economic effects, what is referred to as the multiplier effect. Generally speaking, the employment-to-expenditure multiplier for Clark County is about 32, suggesting 37 for each million dollars spent that 32 additional jobs are created.^ Thus, a proposed law school of 300 full-time students is expected to create an additional 240 jobs. XV. CONCLUSION We find ample evidence suggesting that sufficient demand exists, and is expected to exist in the future, to justify establishing a law school in Nevada. The number of law school applicants should exceed the minimum needed for a quality Nevada school of law. Moreover, the state's future growth should create demand for more lawyers than a Nevada school of law woiild be expected to graduate. A Nevada law school is expected to create about 240 additional jobs. ^Gazel, R. (1994). The Economic Impact of UNLV. University of Nevada, Las Vegas: Center for Business and Economic Research. 38 XVI. BIBLIOGRAPHY American Bar Association. Rule 5. Rules of Procedure for Approval of Law Schools. Board of Regents, University of Nevada System, Law School Feasibility Study [a report of the firm Cresap, McCormick, Paget, Inc.]. (Jime 1980). Carr, R. (1995). [Personal communication]. Research Group of Law Services. Feasibility Study of the Nevada School of Law, Old College. (September 1986). Forrester, J. W. (1973). The Life Cycle of Economic Development. (Cambridge, Massachusetts: Wright Allen Press. Gazel, R. (1994). The Economic Impact of UNLV. University of Nevada, Las Vegas: Center for Business and Economic Research. Mager, N. H. (1987). The Kondratiejf Waves. New York, New York: Praeger. The Official Guide to U.S. Law Schools. (1994-1995). 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