Would changing law school to two years reduce tuition fees?

Barack Obama's recent comments on reducing law school length to two years have prompted discussion about the trade off between reducing costs for students and the quality of legal education.

However, there's a fairly major point being overlooked, that reducing the course to two years is unlikely to reduce the upfront cost of legal education to students.

Let's assume that Obama is right and law school can be shrunk to two years without reducing quality. Given the huge variation in legal training in different countries, this seems reasonably plausible. We'll make a second assumption that law firms will recognize this fact at least over the medium term.

If this is the case, then the opportunity cost of taking a three year law course is a year of earnings and the interest accrued on loans over the extra year. By this logic, the two year course actually has higher expected value than the three year course and so students should be willing to pay more for a two year course than for a three year one. Because there is no regulation of tuition costs, law schools will quickly adjust prices to fit the demand for the shorter programs.

The key point is that a yearly tuition fee is best understood as a payment plan towards the whole cost of a degree, than a price for each year.

One point that is worth considering is whether fees might be reduced because of lower costs to the law schools of holding the courses. This is possible, but probably only if the market as a whole shifts in that direction so that all law schools are competing on the basis of two year costs. In a mixed market it probably makes sense for two year courses to maintain prices: 1) because they can and 2) to avoid signalling a lower quality product.

So if upfront costs are unlikely to go down, is the plan a bad idea? Not at all. The reason prices won't go down is because two year courses offer a better deal for the student. A chance to be a lawyer a year earlier and an extra year of earnings over a career.

This last point is also important for society. A student who enters the jobs market a year earlier provides an extra year of lawyer. And this difference isn't an extra year of a junior lawyer but an extra year of being an experienced lawyer at the end of the career. The lawyer becomes a lawyer "with 30 years of legal experience" a year earlier and a lawyer "with 40 years of legal experience" a year earlier.

So reducing law school length sounds like a good option, just don't expect it to reduce fees.