Chuck Newton

Sett Studio

I continue to get throw back from attorneys that they do not have the space or privacy in their homes to have a home office or practice.  My question is often, do you have a yard? Even a small yard will do. If so, then add a small studio office. I have posted examples before, but here is an example from Sett Studio in Austin, Texas.

These home offices range in size from about 97 to 192 square feet, they are energy-efficient and cost between $20,000 – $30,000.  Construction takes about 45 days and installation is finished in a couple days.  Transportation costs between $500-$3,000 depending on where the studio is being shipped.  Typically permits are not necessary given the size of the building.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Puke Rates And Default Rates Of Student Loans

Now I know the numbers represented in these charts, below, apply to more than law schools, and I know the crux of the story related to these charts concerns the default rate on federally insured student loans related to for-profit schools.  But, there are a couple of underlying stories here that should be frieghtening to those in or wanting to go to law school.

First, as to the first chart bemoaning the increase to 8.8% of the default rate for federal insured student loans. With what is essentially government insurance of student loans against default, financial institutions are free to make risk free loans to students seeking such things as law degrees. Because the money is risk free the financial institutions are more free with the money. Because the financial institutions are more free with the money, law schools feel unrestricted in raising tuition to what would be called a "puke level".

In regard to some big law firms firms, the "puke level" is the the guess of how high an hourly rate can be raised until it causes a gag response from the big business that would need to pay it. Taking after their big law counterparts, for which they act like minor league training camps, law schools have been aggressively employing the puke rate analysis in raising tuition and fees to the highest level possible. It is of course denied, but the goal seems to be to get from each student the full and highest amount that can possbily be borrowed for a law school education regardless of the ultimate consequence to the student for this action. And, just like during the houseing bubble, the goal of most law schools is to keep testing those barriers or the puke rate.

This is important to understand because the first chart does not actually show the pain suffered by student loans incurred due to the puke rate of law school tution, so much as it show the penalty for law students getting locked in to federal insured student loans at levels now demanded of law schools. If you were to believe the first chart, the strain of student loans has actually eased since 1990, when the default rate was over 20%. In fact, this is probably not the case at all. This is because before 1990 student loans were dischargeable in bankruptcy. After 1990 the laws were changed to allow student loans to be discharged based only upon a number of years and/or the creating of a long term hardship. Then the bankruptcy rules were changes to not allow discharge regardless of the nunber of years that had passed. Now, it is virtually impossible to discharge students loans in bankruptcy, to outlive the student loans other than by death, and the laws have been strengthen further to involuntarily collect the debt through garnishment, tax refund seizures and even the removal of professional licenses, ending a lawyer's ability to build a law practice, which was the entire reason to obtain the loans in the first place. Also, in the interim, law school tution and fees have far outpaced actual inflation.

Second, as to the second chart, the focus of most articles is on the default rate related to for-profit schools. There are a few for-profit law schools, but not many. More interesting to me is the the default rate for public institutions as opposed to private, non-profit institutions. From a law school perspective this make some sense. When someone starts law school they get locked into the school. It is not easy to change law schools for cheaper tution. This is the reason, for example, for teaser scholarships by some law schools. They intice a prospect with the thought of a free legal education, then cut the support, leaving the law student to scramble to unexpectedly pay for their legal education.

Public law schools have been increasing their tution and fees on existing law students more quickly and in higher percentages than private law schools. Often this is happening to students that have less in the way of family resources than those in private institutions.

Something has to be done with law schools and their perception of the puke rate for tution and fees. If not, then our entire legal community will be irreparably harmed in the future.

 

Now I know the numbers represented in these charts apply to more than law schools, and I know the crux of the story concerning these charts is the default rate related to for-profit schools. But, there are a couple of underlying stories here that are just frieghtening.

 

Plain And Simple: It Is The Cost Of A Legal Education That Matters

Law schools like to talk about their value. In this day and time, when most law schools cannot manage to keep tuition under control, there is no such thing as intrinsic value to a legal education with the exception of bar passage rate and the overall cost of a legal education. All else is extrinsic and it should be ignored as little more than hucksterism on the part of law schools to otherwise justify the princely price on criteria that is just not that important.

Even lists, such as The National Jurist list of Best Value Law Schools, have to be taken with a grain of salt, for a good part of the list is made up of state supported law schools that only offer lower rates to their residents, or religious-based law schools that offer the best rates to those of their faith. But, mainly these lists are being perverted by all law school raising their tuition through the stratosphere, making those that are merely slightly less unreasonable seem to be a value.

A website homepage today is the place where a law school presents what it believes are the values it possesses to the world. So, what are those values? In my mind, a law school tells you its priorities not only by what it makes easily available on its website, and espeicially its homepage, as what it does not tell you or makes difficult to find.

For most law schools, it is certainly not about providing its graduates with an affordable legal education.

Case in point (but there are many more) is the Thomas Goode Jones School of Law of Faulkner University. It is on the National Jurist List. Yet, when you go to its homepage it lists its Mission Statement as the defining reason anyone should attend. Its mission is to (1) provide an "excellent legal education"; (2) "promote a Christian environment"; (3) obtain and retain a competent faculty; (3) attract a "diverse student body"; (4) provide students with "meaningful resources"; (4) "contribute to discussion of the relationship of faith"; and (5) "regularly reassess the program of legal education".

Nowhere on this mission, or on its homepage, does the law school provide a prospective law student with with the cost of its legal education. No link on the home page makes clear to the student to what the cost of its legal education is or might be found.

Only after a great deal of searching do you realize that the law school bunches or hides tuition and fees on a page call "Consumer Information". (Consumers by the way are not people as much as they are statistics). Here, you discover that the great value the law school represents is a present tuition, no counting fees, of $31,000.00 per year.

Another way to look at this is that a costs of legal education, not counting certain tuition increases during the term of education, books and materials, fees, and living expenses will be at least $93,000.00. In reality this is deceiving because with tuition increases and fees alone, the costs will likely be in fare in excess of $100,000.00 by the time anyone graduates.

Most law schools today want to promote their new facilities, either built, in the process of being built, or in the planning stages. Or, the cost of their extensive libraries, even though most what is needed for a legal education is now on a student's laptop. Understand, these are monuments to the law school's vanity and most often results only in outrageous tuition.

While most law schools complain about the difficulty in making ends meet, most of their websites are testaments for spending out of control, spurred on by the thought that their students can simple borrow more and more money in the way of student loans, family contributions and credit cards to scrape their way through.

For example, Thomas M. Cooley Law School purchased the naming rights to a minor league baseball stadium while increasing its tuition on students.

How do we get this problem under control?

It is hard to say. But, we need to insist that each law school must:

1.  Have a large red button on the banner of its homepage for anyone reviewing the the law school online to view its tuition and fees. It should be front and center so nobody can be tricked into substituting all of the other glitz for value until the law school accounts for the costs of its education.

2.  Disclose how long on average it will take a law school graduate to pay off his or her student loans if the full amount of tuition and fees are financed and only typical minimum payments are made each month on that debt.

3.  Much like cigarette packages must have dire waringing, explain the consequential effect of a graduate defaulting on students loans, as opposed to defaulting on any other type of debt in this country.

4.  Disclose all forms and the full amount of compensation paid to the law school dean.

5.  Much like Cooley Law, have a calculator that states how much a student is likely to receive in scholarships from the law school should they apply and get accepted.

6.  If conditional scholarships are offered, to detail for the student how many students are provided those scholarships, what percentage are capable of maintaining those scholarships and, if based upon maintaining a particular grade point average, what percentage of students at the law school maintain that level of grade point average.

7.  Provide a tuition guarantee program ensuring each entering student the same cost for their education for the full three or four years of study.

8.  Required to present a realistic estimate of living expenses while attending law school.

9.  Require that any law school building program be paid for without any contribution from tuition and fees.

10. Get rid of the paper, including most text books, which cost too much and rely primary on published cases which are already available over the student's computers and their WestLaw subscription.

11. Do not allow law school professors to profit off their student by creating course packs or texts that primarily rely on published cases, including outlines or syllabi that primarily refer to case law.

12. Require liquidate damages to be paid for any information used or disclosed that is not absolutely accurate by a law school.

I would suggest that these requirements, and others, could be enforced as requirements for accreditation by the ABA, if either the law schools or the ABA actually cared about their law students as opposed to the amount of money to be made off the student.

It is Time To Boost The Economy By Bailing Out The Solo Practitoner!

I watched the GOP presidential debate at the Reagan Library and thought the answers and rationals for the cures of our economy completely lame. If you understand what will or can drive the economy, you will understand that every one of the candidates ignored the only reasonable solution.  Not to mention, what solution for our economic ills can be expected when you invite cultural warriors like Rick Santorum to the debate and bar those like Buddy Roemer from participating.

First, however, a short message to the Administration, which has failed miserably in this regard as well. You bailed out the banks and it did not help anybody but the banks. Then you gave billions to big business thinking that they would share the wealth with everyone else, and they did not. Then you gave money to the states thinking that would help, but they just used it to plug their own sinking ships. You denied the bankruptcy courts the ability to restructure mortgages to keep people in their homes, substantially handicapping the home prices of everyone but the rich and decimating the mortgage market for everyone not paying cash. You passed health reform legislation that did not have a public option and the enactment date was kick out so far in the future it could not possibly help anyone now. You extended unemployment benefits to those that were formally employed, but in no way help the self-employed who have lost business. Then you cut social security taxes temporarily in a way that disproportionately helps those working for others. The tax base has shrunk by millions of people put out of work in the process because you cannot do enough to make big business hire workers. As a result of the shrinking tax base, huge deficits continue to mount, impacting the economy further, and hurting solos disproportionately.

I do not know what the President plans to propose and the GOP plans to oppose, but I can just about guarantee you that BOTH will ignore the main group of people that are building and maintaining this economy, as it is.

Of course, I am talking about the self-employed or, in the case of lawyers, the solo practitioner.

I think we have to face the fact that the workforce of America has substantially changed since we last visited this type of hard times. As a result, prior remedies are not going to work. It is the failure of those in government to not recognize the trend.

I am so tired of hearing the GOP call the mega-rich "job creators". What a canard. The statistics of the last 8 years shows this is not true. As we say in Texas, "a turd is a turd n' callin' it a rose ain't goin' to make no never mine".

Here is the reality of today. Thirty-one percent of our entire labor force (nearly one in three eligible workers), over 40 million people in all, are SELF-EMPLOYED! And, this trend is increasing with an expected 40% of workers to be self-employed by 2019. This includes the overwhelming majority of lawyers.

Solos are the drivers of the economy. It will only be due to the efforts of these self-employed and solo practitioners that the economy will recover. These people represent the future. It is the result of tech, it is the Google-ization of the economy. It is the Third Wave, which has arrived. This fact is being ignored at the risk of our future.

You want employment to increase? You give solos some relief and the ability to expand and grow. You want the housing market to recover? You give solos the ability to buy homes. You want taxable income to increase (meaning more government revenues)? You throw solos a bone or two to help make this happen.

Yet, you will not hear about solos much from the government. They will ignore one out of three workers in this country and talk about what to do for big business, medium business, and small business. They will talk about how to rev the Dow Jones while completely ignoring Doug Jones.

Solos are shouldering all of the risk that were formally borne by companies in this current economy.

Here are a few, but by no means all of, the things that need to happen immediately in order for solos to thrive:

1.    Create secured financing for the building and building out of co-working locations. Solos need a place to work and currently construction financing of commercial spaces is based upon long term leases. Shared work environments do not depend on long term leases.

2.    Bypass tightfisted bankers and issue small grants and low interest loans to solos.

3.    Student loan forgiveness, or at least interest-free abatements, while people are getting their feet wet while going out on their own. We do not need to be bankrupting people before they even start.

4.    End the laws that tax solos as medium-sized employers.

5.    Allow solos to deduct health-insurance premiums and other expenses in the same fashion as big business.

6.    End the employer share of Social Security and Medicare from the solo's contribution. Realize that solos on average make about a third less than people in similar jobs at companies, but have to pay twice as much of their gross income as they are required to pay both the employer and employee shares of Social Security and Medicare.

7.    Approximately two thirds of solos work in jurisdictions that tax unincorporated businesses at an average rate of 4% of profits. This needs to end.

8.    Solos need to be made eligible for unemployment insurance or subsidies, as well as worker's compensation. Just because you do not work for someone else does not mean you cannot lose your income. Just because you work for yourself does not mean you cannot have a work related injury.

9.   Most solos cannot afford health and life insurance, and their only hope is to pray for good health. There has to be actual competition in the market to make quality health care affordable. Start by removing the anti-trust provisions as to insurance carriers and create public options for basic health care in order to make big insurance companies behave. And, allow consumers the right to enforce their own rights in our courts against insurance companies that do not behave. You can forgo all of the requirements of Obamacare, Romneycare, or government mandates IF you have truly competitive competition in insurance coverages that allows abundant choice for the consumer.

10.  Congress needs to re-enact the Small Business Jobs Act, which expired at the end of last year. It allowed solos to fully deduct their health care premiums before Social Security and Medicare taxes were assessed. In otherwords, Congress actually increased taxes on solos during these hard economic times while threatening to wreck the economy over taxes on the rich.

11.   Labor laws need to be amended to cover non-payment of fees to consultants and solo lawyers that provide services to big businesses on a routine basis. This would level the playing field by shifting the burden from solos to the big businesses charged with nonpayment.

12.   The government and the markets need to quit punishing solos for the bad conduct of mortgage originators, and begin again to guarantee stated income loans for solos so that they might be able to buy houses. Should 40 million people and families practically be allowed to buy and sell their homes, trade up and trade down as needed, the houseing crises will be over.

It is time to recognize that the ranks of solos have both increased and they have also been punished the most by this economy. And, since solos represent the single greatest source of job creation today and into the distant future, we cannot have recovery until the solo recovers. Solos cannot leap to the status of healthy employers if the emphasis for reform is not squarely focused on the solo. The housing market will not rebound until the solo can easily buy and sell housing. Big business will not fully prosper until solos can buy all of the tech, vehicles and services they need. Solos cannot buy what they need if every penny they make over expenses is going to pay for health insurance and student loans. When solos quit struggling, then the economy will quit struggling. We will support solos for the benefit of all or we will continue to ignore and punish them at the expense of all. Supporting solos will only strengthen the economy.

Get An Inbox!!!

We all have a love-hate relationship with social media. I have a lot of friends (or however you describe people to which I am connected on the various sites). As a result, I often times suffer from feed bankruptcy.

Many lawyers have come to understand that social media can be good for them from a business standpoint. More importantly, those that follow these lawyers have come to relied on their feeds as well.

But, here is a hint.

GET AN INBOX!!!

Just like you might yell "GET A ROOM" at a couple displaying a little too much affection in public, often times I witness too much personal discussion of legal issues on my Facebook and Twitter feeds.

It happens on listservs as well.

It might be described as something like initial-consult porn. Sometimes it is tantalizing to read, but you really should share the information with the World.

Often times I want to yell, "Hey, everyone can read this!".

Just like the lady who insisted on holding a conversation via the speaker function on her cell phone about her daughter's genital warts while waiting in line at the Post Office, I ask, do you not have any discretion?

And, do not think it cannot be harmful. I recently was referred a case in which a lady contacted a banker about how to collect a debt from a "deadbeat" they both knew despite the fact the "deadbeat" had filed bankruptcy. She did not use the private message system on Facebook but each carried on a conversation based upon the message originally posted by her on the banker's wall. Problem was, the so-called "deadbeat", who they also referred to by name, saw the entire conversation between the two, as did a couple hundred of the banks customers.

An inquiry starts out casual enough sometimes, but when it gets beyond niceties, I say, "GET AN INBOX!!!"