FORTUNE — Students are opting out of the law school entrance exam in significant numbers as they confront a scarcity of law jobs and the prospect of staggering debt loads. While some law schools are trimming back class sizes and tinkering with curriculum, most are forging ahead, and some are even expanding.
There is talk among law schools of teaching more practical skills, focusing on narrower, but enduring, legal specialties like bankruptcy, and even lopping off the third year of law school. But others are saying legal education’s survival will come by way of radical new models like modular teaching, which would use part-time professors for defined periods, or lawyer academies, which are more like trade schools readying attorneys to practice immediately after graduating.
These are two possibilities outlined in the current issue of the Michigan Journal of Law Reform, by Kyle McEntee and two co-authors from Law School Transparency, a group founded in 2009 to make the law school admissions process more open and job placement numbers clear.
“Right now, schools are dabbling in what to do,” says McEntee, “but the issue is already at crisis proportion. We have to start thinking about new options and new systems. Tinkering is not enough.”
Inside the law school earnings machine
So far, about half of the nation’s 200 law schools are cutting back the size of their entering classes, and many are handing out more student financial aid, which effectively lowers tuition. But the powerful economic reality is that law schools are big business, with tuition high enough that students graduate with an average of more than $100,000 each in debt.
Salaries are a major factor, with some law professors at elite or large law schools earning in excess of $350,000 to $400,000 annually. These sums significantly outpace other legal remuneration, except for the 10% in the upper ranks at top law firms.
But law school deans insist, almost uniformly, that the tuition rates are worth it, arguing that the law degree will hold its value over a period of years. And few deans, also law professors themselves, want to meddle with a proven earning machine or trigger alumni wrath by devaluing the professional degree.
“It’s a powerful juggernaut that has momentum of its own,” says Brian Tamanaha, a Washington University School of Law professor and author of Failing Law Schools. Readily available student loans, lock-step accreditation processes, and national law school rankings also have helped create a one-size-fits-all law school system that does not suit the majority of students, he concludes.
Tamanaha says that the American Bar Association accreditation system has excessively encouraged a “scholarly model” where handsomely paid professors teach few courses so they have time to write law journal articles or conduct research.
That model may work well for top-tier schools but, Tamanaha argues, it’s too expensive for students preparing for careers in public service, pro bono, or similar attorney positions.
Can the legal fat be trimmed?
One solution, he says, is for professors to teach more courses each academic year to cut back on law school salary budgets. Other schools could rely more on part-time professors and offer two-year degrees to shave the overall tuition bill.
Several prestigious law schools have targeted the third year for overhaul, including New York University’s School of Law which, in October, agreed to open the third year of study to international experience, or work in a specialized area like environmental or antitrust law. Another cadre of students could choose to focus on specialties like patent or tax law.
Washington and Lee Law School adopted a revamped third year approach, so students can work at law clinics or internships at outside locations. Stanford Law School also broadened its third-year curriculum for students to earn joint degrees with other university departments.
McEntee, however, says that by using adjunct professors, who are typically practicing attorneys, teaching a course over a defined period of time, students could get the benefit of expertise and lower costs. Adjunct professors “don’t have the time to commit to something long-term,” he says.
Another alternative, he outlines in his journal article, would be to develop law schools modeled after American military academies such as West Point. Students would receive a core liberal arts undergraduate education with a focus on preparing for law practice, says McEntee.
“Its unlikely,” he concedes, “that many existing law schools would adopt this practice. It would probably work better for new schools.”
Diminishing interest, skittish applicants
As some law schools consider or adopt new models, students grow increasingly skittish about law school. The number taking the law school admissions test in October 2012 was down by 16.4% from the previous year, hitting its lowest level since 1999, according to figures from the Law School Admissions Council released in November.
So far, 51% of law schools have cut the size of their entering classes, according to a November survey of law school admissions officers by Kaplan Test Prep, the education and career services provider. Two-thirds said they did so because of a weak legal job market, and more schools anticipate trimming back again in the future.
These law schools are following in the footsteps of the University of California Hastings College of Law, which announced last spring that it would reduce its admitted student pool by 20%. Hastings’ dean, Frank Wu, noted at the time that there are “too many law schools and there are too many law students and we need to do something about that.”
Kaplan also found that 47% of law schools have increased the amount of financial aid they are giving to students for the current school year, a sign to Paul Campos, a University of Colorado law professor who writes the “Inside the Law School Scam” blog, that law schools are lowering their entry standards.
Campos, who tracks law school statistics, says the total number of law school applicants for the current academic year, is one-third lower than the number in the 2003-2004 academic year.
Law school enrollment is down by about 15% from 2010, which was a record high with nearly 52,500 students signing up for classes. This academic year, the number was 45,000 full- and part-time students, according to the ABA.
“This isn’t sustainable,” warns Campos. “There is a zealous faith in American culture that higher education always pays for itself, but it’s like the subprime mortgage scandal without securitization. When people realize it’s a worthless degree, the system is going to collapse.”
The legal field’s problems have been growing for some time, according to a review of law school employment data from the National Association of Law Placement, which found that two out of three of the approximately 1.4 million law school graduates over the past 25 years have found full-time jobs requiring juris doctor degrees.
Even so, the ABA has provisionally approved the creation of even more law schools, including the University of California-Irvine School of Law and the University of Massachusetts Law School-Dartmouth, according to the bar association’s website.
Like it or not, law schools may have to up their game if they are going to overcome the objections of their own disgruntled graduates. Earlier this month, a judge in San Diego refused to dismiss a lawsuit by four Thomas Jefferson School of Law graduates who claimed they enrolled on the basis of misleading job placement data. The school will need to explain how it came up with its numbers.