CL&P Blog

2009 Selected Consumer Statutes Now Available

Here, for $36.  Here's the description:

This statutory supplement is the most up-to-date statutory collection available for use in a consumer protection course or for practicing attorneys. The 2009 edition includes the Credit CARD Act of 2009, changes to Regulation Z, and other changes in the law since the 2007 edition, including measures issued in response to the economic crisis. It contains excerpts from the Consumer Credit Protection Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, consumer privacy and identity theft protections, residential real estate financing regulations, a sample of state consumer protection statutes, relevant international materials, and many other sources.

[Disclosure: I'm a co-editor.]

Law students, lawyers, the economy—A silver lining for consumers?

by Richard Alderman

It’s clear that the ongoing economic crisis is affecting job markets in every city and every profession – and the consequences for the legal profession and graduating 3L’s are profound and troubling. Jobs are difficult to find, offers are being rescinded, and start dates are being pushed back.

To assist our students, the University of Houston Law Center has initiated a program providing up to $500,000 to support the newest graduates. Foremost among the new proposals is an expansion of our Public Interest Fellowship program that was launched in 2006. For a period of three months following the bar exam, the Law Center will provide a stipend of $6,000 to any new graduates selected for a Public Interest Fellowship. We are also offering three-month Research Fellowships to members of the Class of 2009 who assist our faculty with research projects. In addition, new graduates will receive a 50% scholarship for Fall Semester if they are admitted to our LL.M. degree program, and they can register without cost for specialized classes and UH continuing legal education courses.

And there may be a silver lining for consumers in all of this. The Center for Consumer Law recently held a free CLE program entitled, “How to Start and Manage a Successful Consumer Law Practice.” I expected 30 people; we had over 85, including several graduating third-year students. It seems that as jobs get harder to find, and new clients become more important, lawyers are discovering consumers. The fact that most consumer law statutes have fee shifting provisions does not hurt either. It's too bad that it takes an event like the economic downturn to get lawyers thinking about consumers, but I won’t complain about the result.

Do Law Students Get What They Pay for When Law Professors Blog?

by Jeff Sovern

The question assumes that law students pay for faculty blogging, in that the tuition they pay goes to law faculty salaries.  That assumption is probably true, in that most law schools are largely tuition-driven, meaning that law student tuition pays for what most professors do.  You could, however, argue that blogging is something we do on our own time.  I don't know how to figure out whether that's true.  Certainly a lot of blogging gets done outside of normal business hours, but then so does teaching at the many law schools that offer evening program.  It's likely that a lot of bloggers put in more than the standard forty-hour week on their work, which suggests that blogging is an extra.  But then, probably most bloggers report to their deans that they blog, in the hope of eliciting higher raises, which would suggest that the bloggers view it as part of the job, and if it does generate larger raises, that the school does too.  Anyway, let's assume that blogging is part of the job that law students are paying for.

So what do law students get from professorial blogging?  At least three things: first, to the extent that blogging enhances a school's prestige, the students benefit from that.  Some compare being a student or an alum of a school to owning stock; as the stock/law school's reputation appreciates in value, so does the student/alum.  But does blogging really enhance prestige?  The argument that it does is that blog posts reach a lot of people which may enhance readers' views of the professor and hence the institution.  The argument that it doesn't is that the people it reaches may not vote in the reputation rankings for U.S. News, and unfortunately (in my view, at least), that seems to be the chief measure of prestige in the law school world.  At the end of the day, this is a question that can be tested empirically over the next few years: do schools with more and better bloggers rise in the rankings?  I'm not holding my breath, but we'll see.

Second, professors who blog may become more informed teachers.  My own experience, and I have no idea how universal this is, is that the fact that I blog increases my diet of consumer protection news, because I look for things to blog about.  Often what I blog about ends up as fodder for class.  But that helps only in my consumer protection class. 

Third, as my colleague Chris Borgen pointed out to me (Chris founded Opinio Juris, a leading international law blog), students also benefit when their professors blog because they can learn more about the subject by reading the blog.  Probably that also helps them understand their professor's thinking better.

The conclusion that students benefit from professorial blogging (blogging is also useful in other ways, but I'm just focusing here on student benefits) answers only part of the question, because of the opportunity costs of blogging.  If professors weren't blogging, what would they do with the time?  If they would, say, go to theater or watch TV, then students are better off when professors blog because the alternative doesn't benefit them. But if professors would work on a scholarly article, would students be better off?  I'm not sure.  First, there's the broader question, which I'm not addressing at the moment, of whether conventional scholarship benefits students, and on which people are divided.  But assume that it does benefit students.  Blogging seems to reach a lot more people.  SSRN gives us some measure of how many people read articles, and the answer is not many.  An awful lot of papers never get as many as 300 downloads.  In contrast, many blogs register that many hits in a day; this blog, which is fairly specialized, gets far more than that a day, and still others read our posts via email. SSRN is not a complete record of who reads a particular paper, since once a paper is published, people can read it in print without it showing up on SSRN, and some papers are posted elsewhere, but the available evidence suggests that more people read blog posts than law journal articles.  On the other hand, a blog post, which typically reflects far less thought, research, and care than an article in print, surely adds much less to the prestige of a writer or institution than an article.  A further complication is that all of this ignores the connections between blog posts and law journal writing.  For example, authors can use blog posts to try out ideas they will later use in articles, then post links to the article on their blogs.

But that assumes that the alternative to blogging is conventional writing.  What if it's something that benefits students more directly?  For example, many law school doctrinal classes famously base grades on a single exam at the end of the semester.  Suppose that professors took all the time they put into writing and instead administered midterms, and provided feedback to students on those midterms?  Or gave drafting assignments with feedback?  Or--well, you get the idea.  My own suspicion is that while students might not be enthusiastic about more work and feedback (remember the famous quote: "education is the only thing people pay for that they want less of"), the extra work and feedback would do more for them than any writing we could do for any outside audience.  But most of us would rather do our own writing than grade, say, and as Adam Smith wrote in his 1776 book, On the Wealth of Nations, universities are run for the faculty.

2009 Email Supplement to Casebook Now Available

My co-authors and I have put together a new supplement to our consumer law casebook and the accompanying Selected Consumer Statute.  As a measure of how much has been happening in consumer law, this is our third update since the books were published about a year and a half ago. In addition to the materials in the previous updates, the new supplement takes into account the November amendments to the RESPA regs and the December amendments to Regulations AA and Z.  As in the past, West will probably make it available via a web site to any professor using the book, but if you need it right away, I can email it to you.

2008 Supplement to Consumer Law Casebook Available

by Jeff Sovern

I am pleased to announce that the 2008 supplement to our casebook is now finished.  I expect Thomson/West will shortly make it available to those using the book but if you are using the book and need it right away, I can email it to you.  Perhaps the most significant addition consists of the materials on the subprime lending crisis.  Because we anticipate that some professors will want to refer to the subprime crisis throughout the course, as it has ramifications for a number of topics, including fraud rules, TILA, reverse-redlining and predatory lending, we inserted a prefatory note that provides a brief overview of the crisis (those who don't wish to discuss the crisis until later in the course can simply skip the prefatory note).   We also added materials at various points that go into more detail on the crisis and responses to it, including problems on advertising rules and "higher-priced mortgage loans" under the new amendments to Regulation Z.  The supplement also contains the revisions to TILA and Regulation Z.  In other areas, the supplement includes as a principal case the recent New Mexico Supreme Court decision in Fiser v. Dell Computer Corp. (Deepak blogged about it here), as well as references to other recent consumer law court decisions and developments.  And, of course, the supplement contains most of the material that appeared in the 2007 supplement, including the Supreme Court's Safeco decision.  As always, we welcome comments and suggestions on the casebook and supplement.

One Class's Field Test of the Magnuson-Moss Disclosure Rules

§ 702.3(a) of the Magnuson-Moss Warranty regulations requires that sellers:

of a consumer product with a written warranty shall make a text of the warranty readily available for examination by the prospective buyer by:

(1) Displaying it in close proximity to the warranted product, or

(2) Furnishing it upon request prior to sale and placing signs reasonably calculated to elicit the prospective buyer's attention in prominent locations in the store or department advising such prospective buyers of the availability of warranties upon request.

The goal of the provision is obviously to enable consumers to shop for better warranty coverage if they are so inclined.  Our casebook suggests a field test of this provision in Problem 2-25, page 215: students are invited to visit local retailers selling appliances and determine compliance with the reg.  One professor who required students to conduct the field test was kind enough to share the student papers with me.  Most of the results would probably have disappointed  the drafters of Magnuson-Moss.  Though a salesperson at one store did offer to pull all the warranties out of the boxes (apparently making the student feel guilty) and another actually did so, others were less helpful.

Several of the salespeople responded by offering the terms of an extended warranty (which clearly doesn't comply with the reg) or by suggesting that the students check the warranties online (which is a closer question but in my view doesn't satisfy the reg either unless the store enables the customer to find the warranty on the web at the store).  My own personal favorite paper was written by a student who first encountered a salesperson who said all the warranties were the same and thought that the requirement was satisfied by the extended warranty brochure which, for comparison's purposes, included a summary of a typical manufacturer's warranty.  The student then asked for the manager.  After some back-and-forth, the manager asked another salesperson to get a warranty for a different product by the same manufacturer, saying that it was the same thing.  The manager's check of the manufacturer's web site found a general description of its warranty, but also elicited the news that the manufacturer provides in-home service for one year, something the manager hadn't known (so much for all warranties being the same).   Meanwhile, the salesperson had returned with the manual for the wrong product, which in any event did not contain the warranty.  Eventually, the manager became convinced that the student was a secret shopper checking up on him.  He disappeared into the back for at least ten minutes, and finally returned with the warranty for the correct product.  He also brought the student into the staff break room where he showed the student a plaque he had won for scoring a ten on a previous visit from a secret shopper.

Some other entertaining tidbits: one salesperson suggested that if a student was so interested in reading a warranty, she should just buy a TV.  Another pointed to a small card displaying the price and a description of the warranty as "one year parts and labor."  The card also stated that additional terms of the warranty were available upon request.  The clerk insisted that all of the information was available on the card and refused to give any other information.  Still another clerk said that getting the warranty would require ninety minutes because it had to be found on the web and printed out.

I suspect that if consumers genuinely cared about warranty terms, sellers would be more accustomed to such queries and would be better able to provide the warranties.  So maybe the field exercise tells us as much about consumers as it does about sellers.  If consumers don't care enough to ask for the warranties, is any purpose served by requiring sellers to have them on hand (which, in any event, often seems not to occur, if these experiences are representative)?

Do Law Students Get What They Pay For? A Partial Answer (Herein of Faculty Salaries).

Recently I wondered how high law school tuition could go. That raises an issue of whether those paying tuition are getting what they pay for.  One way to think about that question is to look at how law schools use their tuition income (probably a better way to answer the question would be to focus on law school outputs, but I’m not going to address that today).  A major component of law school expenses is salaries, including faculty salaries.  In recent years it has become difficult to learn what faculty salaries are.  Once upon a time, the American Bar Association collected information about faculty salaries and made that information available to law schools.   But the Department of Justice antitrust consent decree put an end to that practice.  The Society of American Law Teachers used to publish some information about salaries on its web site, but it is apparently unable to obtain information about many schools.  A couple of state schools make salaries public, but most do not, and the ones that do are probably not representative, though it is impossible to be certain.  Consequently, those who wish to know about law faculty salaries—which includes law professors themselves, and perhaps law students or the merely curious--have been unable to learn much about those salaries. 

But another source for faculty salary information exists, though it has significant limits.  Non-profit institutions are required by federal law to file a form with the IRS, called Form 990.  These forms are posted on the web at www.guidestar.org (free registration required).  The Form 990s oblige institutions to list their five highest paid employees.  That list includes law professors and deans at many schools—typically standalone law schools and universities without medical schools (medical schools usually have personnel whose salaries far exceed that of law professors, which means that at most elite law schools the Form 990 doesn’t include law professors).  Even in schools where few or no faculty members are listed, the Form 990 tells you the ceiling for the remaining employees (that is, they make no more than the fifth highest-paid person listed). The forms are usually filed well after the year to which they pertain, so for most institutions the most recent forms available are for the 2005-2006 fiscal year, or about two years ago.

If you want to know who the highest-paid employees of a particular institution were back then, go to Guidestar, search for the institution, click your way to the report, and then click on the Form 990 that you wish to examine.  Income information is usually somewhere between pages seven and fifteen. 

So are the salary numbers too high (at the schools about which we have information)?  My own biased view is that they are not, at least at the schools whose numbers I’ve looked at (my view is biased because even though my salary is, unfortunately, nowhere near the top five at my institution, I obviously have an interest in arguing for higher faculty salaries).  The Form 990s report the pay for the highest-paid employees, a list which presumably is dominated by those who would be most likely to be of interest to the considerably higher-paid private sector.  Yes, the life of a lawyer in private practice is different from the life of a law professor, but many law professors have opportunities to consult for substantial sums while still living the life of a law professor.  Professors choosing between devoting their time to law school pursuits or consulting, say, will have an easier time foregoing the substantial remuneration for consulting if they feel they are earning a comfortable enough living writing.  If schools value the activities faculty members engage in, they have to give them an incentive to choose those activities (all of this ignores the question of whether the activities law professors pursue actually benefit those who are paying tuition (typically, students and their families), a question as to which there is considerable debate (e.g., do students benefit when professors write papers on esoteric subjects not covered in the classroom)).

Even if you think the salary numbers are high, it would probably be a mistake to assume that increases in salaries are driving soaring tuition.  My impression, based on incomplete information, is that law school salaries have risen much more slowly than tuition.  It appears that law schools have used much of the increased tuition to fund scholarships, smaller classes (especially as the number of clinics has increased), computer technology, and the like---and all those expenditures benefit students.  I’m told that the cost of library materials has also increased dramatically. If faculty salaries were lower, law schools could certainly charge lower tuitions (which is not the same thing as saying that they would—they might simply use the money for other purposes), but tuition would still be higher than it once was.

How High Can Tuition Go?

by Jeff Sovern

Each year, colleges and universities hike tuition, typically by more than the rate of inflation.  Competition among schools undoubtedly constrains the hikes to some extent, but are there any other limits?  An economist might say that it makes sense to pay tuition as long as the tuition is less than the present value of the expected lifetime benefits of the education, minus the opportunity costs.  Put another way, if the amount you receive in the form of increased salary over your lifetime after going to college is higher than the amount you would earn without a degree, which is what has consistently been reported, it makes sense to pay tuition as long as the tuition is less than the present value of that increase. That formulation overlooks the nonpecuniary benefits of education, which are substantial, but if you could quantify those benefits, you would add them to the expected benefits as well.  In any event, it suggests that when the costs of education exceed the benefits, people should stop paying tuition.

That should work the same way for law schools as well, except that we’re comparing incomes as lawyers with incomes as non-lawyers for college grads.  We’ve already seen some signs that law school tuition has risen high enough to price some people who formerly went to law schools out of the market.  In my early years as a law teacher, our school had a substantial number of students who saw becoming a lawyer as a second long-term career; many were retiring after twenty years or so as teachers or police officers, for example.  Most of them were enrolled in our part time night program, but some went full-time during the day.  The number of such students has dropped dramatically with a correspondingly dramatic shift in the character of the night program.  I can’t be certain, but I suspect that a contributing factor is that they can no longer expect to earn enough in the years between beginning their second career and retirement to justify spending money on the much higher tuitions we and other law schools charge.  I haven’t researched the matter, but friends at other law schools with night programs have told me that their programs too have many fewer students who see law school as a doorway to such a second long term career.  Those students used to enrich our classes by bringing in relevant experiences, and we’ve lost that (though in return we’ve gained greater financial resources to do other things), plus society has lost whatever benefits accrue from having lawyers with substantial experience in other careers.

The Content of Consumer Law Classes

Want to know what is taught in consumer protection classes?  I've now posted to SSRN "The Content of Consumer Law Classes," which will appear in 12 Journal of Consumer and Commercial Law, No. 1.  The piece reports on the survey we conducted at Richard Alderman's Teaching Consumer Law Conference, under the auspices of the University of Houston Law Center.  The results in the paper are somewhat different from what I reported at the Conference because the paper includes more responses.  Here's the abstract:

Attendees at the University of Houston Law Center Conference titled Teaching Consumer Law: The Who, What, Where, Why, When and How were surveyed to determine what topics they covered in consumer law classes. Twenty-five responses were received, representing fourteen survey classes, five clinics, and six miscellaneous responses. The responses indicated considerable diversity in the topics covered. No topic was covered by more than 21 professors and each of the 32 topics listed on the survey instrument was discussed by at least four professors. Under the circumstances, it seems difficult to claim that consumer protection classes have a canon agreed upon by those who teach them. The responses, including those in survey courses, indicate that coverage is not static; many professors taught subjects that arose only recently, such as the subprime lending meltdown and statutes enacted since 1999.

Survey on Content of Consumer Law Classes

Last Friday, at Richard Alderman's excellent Teaching Consumer Law Conference, under the auspices of the University of Houston Law Center--the conference where, two years ago, this Blog was born--I distributed a survey inquiring about what topics professors teach in their consumer law classes.  I announced some of the results at the conference and I have since received other survey responses.  The responses are interesting and potentially useful to at least those teaching the subject, but they would be even more useful if we had more of them.  Accordingly, before I post anything about the results, I wanted to urge anyone who has not already given me their response and who teaches consumer law to email me their survey response, at sovernj@stjohns.edu.  The survey is pasted in below.  If you like, you can copy and paste it into an email, indicating your responses.  It takes only a moment to complete.