[Federal Register Volume 60, Number 148 (Wednesday, August 2, 1995)]
[Notices]
[Pages 39421-39427]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18946]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. American Bar Association; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Secs. 16(b)-(h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States of America v. American Bar Association, Civil Action No.
95-1211.
The Complaint in this case alleges that the defendant conspired to
violate Section 1 of the Sherman Act, 15 U.S.C. Sec. 1, allowing the
law school accreditation process to be captured by those with a direct
interest in its outcome. Among other things, the ABA adopted and
enforced law school accreditation Standards, Interpretations, and Rules
that unreasonably raised salaries paid to law school faculty, deans,
and other professional personnel.
The proposed Final Judgment enjoins the defendant from adopting or
enforcing any Standard, Interpretation, or Rule that conditions
accreditation on salaries and other benefits paid to law school
professional personnel and from using compensation data in connection
with the accreditation of a law school. It also enjoins the defendant
from refusing to accredit proprietary law schools and from prohibiting
ABA-accredited law schools from accepting transfer credits from state-
accredited law schools.
The proposed Final Judgment requires that the defendant establish a
commission to review accreditation standards regarding student/faculty
ratios, teaching loads, sabbaticals, and bar preparation courses. It
further requires changes in the composition of the defendant's
accrediting committees.
Public comment on the proposed Final Judgment is invited within the
statutory 60-day comment period. The comments and responses to them
will be published in the Federal Register and filed with the Court.
Comments should be directed to John F. Greaney, Chief, Computers and
Finance Section, Room 9903, U.S. Department of Justice, Antitrust
Division, 555 Fourth Street, NW., Washington, DC 20001 (telephone: 202/
307-6122).
Rebecca P. Dick,
Deputy Director of Operations Antitrust Division.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. American Bar
Association, Defendant.
Stipulation
The undersigned parties, by their respective attorneys, stipulate
that:
1. The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in the District of Columbia;
2. The parties consent that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act (15
U.S.C. Sec. 16), and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendant and by filing that
notice with the Court; and
3. Pending approval of the Final Judgment by the Court, defendant
agrees to be bound by the provisions of the proposed Final Judgment and
to be subject to the jurisdiction of this Court. If plaintiff withdraws
it consent, or if the proposed Final Judgment is not entered pursuant
to the terms of the Stipulation, this Stipulation shall be of no effect
whatsoever, and the making of this Stipulation shall be without
prejudice to any party in this or in any proceeding.
For Plaintiff United States:
Anne K. Bingaman,
Assistant Attorney General.
Joel I. Klein,
Deputy Asst. Attorney General.
Rebecca P. Dick,
Asst. Director of Operations.
John F. Greaney,
Chief, Computers & Finance Section.
Scott N. Sacks,
Asst. Chief, Computers & Finance Section.
Antitrust Division, U.S. Department of Justice,
D. Bruce Pearson,
Molly L. Debusschere,
Jessica N. Cohen,
James J. Tierney,
Attorneys, U.S. Department of Justice, Antitrust Division, 555
Fourth Street, NW., Room 9901, Washington, DC 20001, Tel: 202/307-
0809, Fax: 202/616-5980.
For Defendant American Bar Association:
[[Page 39422]]
Darryl L. DePriest,
General Counsel.
American Bar Association, 541 N. Fairbanks Court, Chicago, Illinois
60611, Tel: 312/988-5215, Fax: 312/988-5217.
Certificate of Service
On June 27, 1995, I caused a copy of the foregoing Stipulation to
be served by facsimile and first-class mail upon:
David T. Pritikin, Esquire Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603.
Jessica N. Cohen
Final Judgment
Plaintiff, United States of America, filed its Complaint on June
27, 1995. Plaintiff and defendant American Bar Association (``ABA''),
by their attorneys, have consented to the entry of this Final Judgment
without trial or adjudication of any issue of fact or law. This Final
Judgment shall not be evidence or admission by any party with respect
to any issue of fact or law. Therefore, before any testimony is taken,
and without trial or adjudication of any issue of fact or law, and upon
consent of the parties, it is hereby Ordered, Adjudged And Decreed:
I
Jurisdiction
This Court has jurisdiction of the subject matter of this action
and of the parties consenting to this Final Judgment. The Complaint
states a claim upon which relief may be granted against the ABA under
Section 1 of the Sherman Act, 15 U.S.C. 1.
II
Definitions
As used in this Final Judgment:
(A) ``ABA'' means the American Bar Association and all of its
components.
(B) ``Accreditation Committee'' means the Accreditation Committee
of the Section of Legal Education and Admissions to the Bar of the ABA.
(C) ``Board'' means the ABA Board of Governors.
(D) ``Council'' means the Council of the Section of Legal Education
and Admissions to the Bar of the ABA.
(E) ``Faculty'' means all persons who teach classes (except adjunct
professors), including administrators who teach, emeritus of senior
faculty, visiting professors, joint-appointed faculty, clinical
instructors, and instructors holding short-term appointments.
(F) ``Section'' means the ABA's Section of Legal Education and
Admissions to the Bar.
(G) ``Standards,'' ``Interpretations'' and ``Rules'' mean the
Standards for Approval of Law Schools and Interpretations and Rules of
Procedure for Approval of Law Schools and Polices of the Council of the
Section and its Accreditation Committee.
III
Applicability
This Final Judgment shall apply to the ABA and its governors,
officers, employees, and full-time consultants involved in law school
accreditation.
IV
Prohibited Conduct
The ABA is enjoined and restrained from:
(A) adopting or enforcing any Standard, Interpretation or Rule, or
taking any action that has the purpose or effect of imposing
requirements as to the base salary, stipends, fringe benefits, or other
compensation paid law school deans, associate deans, assistant deans,
faculty, library directors, librarians, or other law school employees,
or in any way conditioning the accreditation of any law school on the
compensation paid law school deans, associate deans, assistant deans,
faculty, library directors, librarians, or other law school employees;
(B) collecting from or disseminating to any law school data
concerning compensation paid or to be paid to deans, administrators,
faculty, librarians, or other employees;
(C) using law school compensation data in connection with the
accreditation or review of any law school; and
(D) adopting or enforcing any Standard, Interpretation or Rule, or
taking any action that has the purpose or effect of prohibiting a law
school from:
(1) enrolling a member of the bar or graduate of a state-accredited
law school in an LL.M. program or other post-J.D. program;
(2) offering transfer credits for any course successfully completed
at a state-accredited law school, except that the ABA may require that
two-thirds of the credits required for graduation must be successfully
completed at an ABA-approved law school; or
(3) being an institution organized as a for-profit entity.
V
Permitted Conduct
Nothing herein shall be construed to prohibit the ABA from: (1)
adopting or applying such other reasonable Standards, Interpretations
or Rules, consistent with all other provisions of this Final Judgment,
as are necessary to attract and retain a competent faculty; (2)
investigating or reporting on whether a law school is in compliance
with such Standards, Interpretations or Rules, or the cause of non-
compliance; or (3) requiring that a law school take remedical action to
comply with such Standards, Interpretations or Rules as a condition of
obtaining or maintaining ABA approval.
VI
Additional Relief
The ABA shall:
(A) require that all Interpretations and Rules be subjected to the
same public comment and review process and approval procedures that
apply to proposed Standards;
(B) permit appeals from Accreditation Committee Action Letters to
the Council;
(C) revise the Council's membership as follows:
(1) for a period of five years, all elections shall be subject to
Board approval;
(2) members shall serve staggered three-year terms, with a two-term
limit; however, officers may serve as officers for an additional term
beyond the six-year limit; and
(3) no more than 50% of the members shall be law school deans or
faculty;
(D) revise the Accreditation Committee's membership as follows:
(1) for a period of five years, all appointments shall be subject
to Board approval;
(2) all members shall serve staggered three-year terms, with a two-
term limit; and
(3) no more than 50% of the members shall be law school deans or
faculty;
(E) revise the Standards Review Committee's membership as follows:
(1) for a period of five years, all appointments shall be subject
to Board approval;
(2) members shall serve one three-year term; and
(3) no more than 50% of the members shall be law school deans or
faculty;
(F) require that no more than 40% of the members of the Nominating
Committee for officers of the Section shall be law school deans or
faculty;
(G) require that each site evaluation team include, to the extent
reasonably feasible, at least:
(1) one university administrator who is not a law school dean or
faculty member; and
(2) one practicing lawyer, judge or public member;
(H) require the Accreditation Committee after each meeting to send
a
[[Page 39423]]
written report to the Council, that may be done on a confidential basis
if necessary, identifying all actions taken by it, including a list
identifying all law schools on report or under review, and for each law
school, identifying the areas of actual or apparent non-compliance and
the length of time the law school has been on report or under review;
(I) require the Council to send an annual report to the Board, that
may be done on a confidential basis if necessary, on its accreditation
activities during the preceding year, including a list identifying all
law schools on report or under review, and for each law school,
identifying the areas of actual or apparent non-compliance and the
length of time the law school has been on report or under review;
(J) require Council approval and Board receipt of annual and site
inspection questionnaires before they are sent to law schools;
(K) publish annually in The ABA Journal and the Section's Review of
Legal Education in the United States:
(1) all proposed Standards, Interpretations, Rules, and Policies,
and the name(s) of the sponsors of each; and
(2) the date, place, and names of the evaluators for each law
school and foreign program inspected; and
(L) hire, by October 31, 1995, an outside independent consultant
who is an expert on education and accreditation and who is not a legal
educator, to assist in validating all Standards and Interpretations, as
required by the Department of Education, and develop a plan for
validation by December 31, 1995.
VII
Special Commission
The ABA shall:
(A) establish a Special Commission to Review the Substance and
Process of the ABA's Accreditation of American Law Schools to determine
whether the Standards, Interpretations, and Rules, and their
enforcement governing the following subjects should be revised:
(1) faculty teaching-hours;
(2) leaves of absence, compensated or otherwise, for faculty and
other staff;
(3) the calculation of the faculty component of student-faculty
ratios;
(4) physical facilities;
(5) the allocation of resources to a law school by the law school
or its parent university; and
(6) the treatment of bar preparation courses;
(B) require that the Special Commission complete its review no
later than February 29, 1996. The Special Commission shall file its
report with the Board. Upon completing its review, the Board shall file
its report with the Court and the United States setting out its
analysis and any proposed revisions; and
(C) allow the Untied States 90 days in which to review the Special
Commission's report and determine whether to challenge any of the
proposals. The United States may challenge any such proposal and, if
the ABA chooses to defend it, the challenge will be decided by this
Court applying a Rule of Reason antitrust analysis.
VIII
Compliance Program
The ABA is ordered to maintain an antitrust compliance program
which shall include designating, within 30 days of the entry of this
Final Judgment, an Antitrust Compliance Officer with responsibility for
accomplishing the antitrust compliance program and with the purpose of
achieving compliance with this Final Judgment. The Antitrust Compliance
Officer shall, on a continuing basis, supervise the review of the
current and proposed activities of the ABA's law school accrediting
activities to ensure that they comply with this Final Judgment. The
Antitrust Compliance Officer shall be responsible for accomplishing the
following activities:
(A) reviewing the ABA's Standards, Interpretations, Rules, and
practices, and identifying and recommending the elimination of any
provisions or activities that violate or are inconsistent with Sections
IV or VI above to the Board or to the ABA's House of Delegates within
90 days of entry of this Final Judgment;
(B) distributing a copy of this Final Judgment within 30 days of
entry to:
(1) all members of the Board and officers of the ABA, the Section
and the Law Student Division;
(2) all members of the Council, Accreditation Committee and
Standards Review Committee;
(3) all university presidents with ABA-approved law schools, the
deans of all ABA-approved law schools, the Chief Justices or Judges of
the highest Courts of the States and other admitting jurisdictions, and
to make a best effort to notify the deans of all state-accredited law
schools; and
(4) all persons serving on site inspection teams during the term of
this Final Judgment;
(C) causing this Final Judgment to be published in the next issue
of The ABA Journal and the Student Lawyer following the entry of the
Final Judgment;
(D) providing the United States, during the term of the Final
Judgment, a copy of all proposed changes to these Standards,
Interpretations and Rules before they are acted on by the House of
Delegates, and a copy of all Standards, Interpretations and Rules
adopted by the House;
(E) briefing annually the Section's Officers, all members of the
Council, Committee and Standards Review Committee, the Consultant and
the Consultant's staff, and all participants at site inspectors'
workshops on the meaning and requirements of this Final Judgment;
(F) obtaining from all Section officers, all members of the
Council, Accreditation committee and Standards Review Committee, and
the Consultant and the Consultant's staff an annual written
certification that they: (1) have read, understand, and agree to abide
by the terms of this Final Judgment; and (2) are not aware of any
violation of this Final Judgment that they have not reported to the
Antitrust Compliance Officer; and
(G) obtaining from the Executive Director of The ABA, the
Consultant and the Consultant's staff, an annual written certification
that they have been advised and understand that their failure to comply
with the Final Judgment may result in conviction for contempt of court.
IX
Certification
(A) Within 90 days after the entry of this Final Judgment, the ABA
shall certify to the United States whether it has designated an
Antitrust Compliance Officer and has distributed the Final Judgment in
accordance with Section VIII above.
(B) For 10 years after the entry of this Final Judgment, on or
before its anniversary date, the Antitrust Compliance Officer shall
certify annually to the Court and the United States whether the ABA has
complied with the provisions of Section VIII.
(C) At any time, if the Antitrust Compliance Office learns of any
past, current or anticipated violation of Sections IV or VI of this
Final Judgment, the ABA shall, within 45 days after such knowledge is
obtained, take action, or where appropriate initiate action, to
terminate or modify the activity so as to comply with this Final
Judgment.
X
Plaintiff Access
(A) To determine or secure compliance with this Final Judgment,
duly authorized representatives of the
[[Page 39424]]
United States shall, upon written request of the Assistant Attorney
General in charge of the Antitrust Division, and on reasonable notice
to the ABA, be permitted:
(1) access during the ABA's office hours to inspect and copy all
records and documents in its possession or control relating to any
matters contained in this Final Judgment; and
(2) to interview the ABA's officers, employees, or agents,who may
have counsel present, regarding such matters. The interviews shall be
subject to the ABA's reasonable convenience and without restraint or
interference by the ABA.
(B) Upon the written request of the Assistant Attorney General in
charge of the Antitrust Division, the ABA shall submit such written
reports, under oath if requested, relating to any of the matters
contained in this Final Judgment as may be requested.
(C) No information or documents obtained by the means provided in
this Section X shall be divulged by the United States to any person
other than a duly-authorized representative of the executive branch of
the United States, except in the course of legal proceedings to which
the United States is a party, or for the purpose of securing compliance
with this Final Judgment, or as otherwise required by law.
XI
Further Elements of Decree
(A) This Final Judgment shall expire 10 years from the date of
entry.
(B) Jurisdiction is retained by this Court for the purpose of
enabling either of the parties to this Final Judgment to apply to this
Court at any time for further orders and directions as may be necessary
or appropriate to carry out or construe this Final Judgment, to modify
or terminate any of its provisions, to enforce compliance, and to
punish violations of its provisions.
(C) Entry of this Final Judgment is in the public interest.
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UNITED STATES DISTRICT JUDGE
Certificate of Service
On June 27, 1995, I caused a copy of the foregoing Proposed Final
Judgment to be served by facsimile and first-class mail upon:
David T. Pritikin,
Esqurie Sidley & Austin One First National Plaza Chicago, Illinois
60603.
Jessica N. Cohen
United States of America, Plaintiff, v. American Bar
Association, Defendant.
Civil Action NO. 95-1211 (CR)
Filed: June 27, 1995
Competititve Impact Statement
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties
Act, 15 U.S.C. Sec. 16(b), the United States submits this Competitive
Impact Statement relating to the proposed Final Judgment submitted for
entry with the consent of defendant American Bar Association (``ABA'')
in this civil antitrust action.
I
Nature and Purpose of the Proceeding
A. The Complaint
On June 27, 1995, the United States filed a civil antitrust suit
alleging that the ABA violated Section 1 of the Sherman Act in its
accreditation of law schools. The Complaint alleges that the ABA
restrained competition among professional personnel at ABA-approved law
schools by fixing their compensation levels and working conditions, and
by limiting competition from non-ABA-approved schools. The Complaint
also alleges that the ABA allowed its law school accreditation process
to be captured by those with a direct interest in its outcome.
Consequently, rather than setting minimum standards for law school
quality and thus providing valuable information to consumers, the
legitimate purposes of accreditation, the ABA at times acted as a guild
that protected the interests of professional law school personnel.
The United States and the ABA have agreed that the proposed Final
Judgment may be entered after compliance with the Antitrust Procedures
and Penalties Act. Entry of the Final Judgment will terminate this
civil action, except that the Court will retain jurisdiction for
further proceedings that may be required to enforce or modify the
Judgment, or to punish violations of any of its provisions.
B. Law School Accreditation
The Section of Legal Education and Admissions to the Bar (``Section
of Legal Education'') administers law school accreditation. It was
created in 1883 as the first Section of the ABA and assumed the role of
an accrediting agency in 1921.
ABA approval is critical to the successful operation of a law
school. The bar admission rules in over 40 States require graduation
from an ABA-approved law school in order to satisfy the legal education
requirement for taking the bar examination. In addition, the ABA is the
only agency recognized by the United States Department of Education as
a law school accrediting agency.
In 1973, the ABA adopted its current Standards for the Approval of
Law Schools (``Standards''), setting forth the minimum requirements for
legal education that must be met to obtain and maintain ABA approval.
Law schools were required to be in full compliance with the Standards
commencing with the 1975-76 academic year. The Standards and their
Interpretations covered many aspects of the operation of a law school,
including its salary structure, student-faculty ratios, faculty leave
policies, faculty workloads, and physical facilities.
The Section of Legal Education is governed by its Council, which
has supervisory authority on all accreditation matters. The Council has
established a Standards Review Committee that reviews the Standards and
their ``Interpretations'' and recommends changes to the Council. The
Council has also established an Accreditation Committee, which closely
oversees the inspection of new law schools and the sabbatical
reinspections of previously approved law schools, and make the initial
recommendations regarding ABA approval.
The Accreditation Committee enforces the Standards through
extensive on-site inspections of law schools. Provisionally approved
law schools are inspected every year until receiving full approval, and
fully approved law schools are inspected every seven years, except for
an initial visit three years after first gaining full approval. Site
inspection teams prepare detailed reports for the Accreditation
Committee. The Accreditation Committee may ``continue'' the
accreditation of an approved law school, require additional information
from a law school in actual or apparent non-compliance with the
Standards or about whom the Accreditation Committee has ``concerns,''
or require a show cause hearing for law schools in apparent non-
compliance with the Standards or their Interpretations.
The day-to-day operation of the ABA's accreditation process is
directed by the ABA's Consultant on Legal Education. The Consultant
prepares ``Action Letters'' that inform the law school deans and
university presidents of the Accreditation Committee's findings and
conclusions.
[[Page 39425]]
II
Description of the Practices Involved in the Alleged Sherman Act
Violation
At trial, the United States would have proved the following:
A. Anticompetitive Standards And Practices
1. Capture Of The Accreditation Process. Legal educators, including
current and former law school dean, faculty, and librarians, control
and dominate the ABA's law school accreditation process. Approximately
90% of the Section of Legal Education's members are legal educators. In
substantial part, this is because of the Section of Legal Education's
Faculty Group Membership Program, under which ABA-approved law schools
may obtain a group discount on dues for their faculty. Many law schools
pay their faculty's dues and the faculties of about 145 of the 1774
ABA-approved law schools hold ABA membership through the Faculty Group
Membership Program.
All current members of the Standards Review Committee and a
majority of the current members of the Accreditation Committee are
legal educators. The typical site inspection team has 5-7 members, all
or nearly all of whom are legal educators. The Consultant's position
has traditionally been held by a legal educator. The incumbent has
served as Consultant for over 20 years and is a former dean and a
current law school faculty member.
2. Professional Staff Compensation. ABA Accreditation Standard
405(a) required that faculty compensation be comparable with that of
other ABA-approved schools. In practice, this Standard was extended to
cover deans' and professional librarians' salaries. The ABA collected
extensive, detailed salary information, among other data collected, in
annual questionnaires that ABA-approved law schools were required to
complete. Often, the comparable schools consisted of a ``peer group''
of schools chosen by the professional staff of the inspected school.
The ``peer group'' could be and at times was manipulated to include
higher-rated law schools or law schools located in higher-cost areas.
Law schools also at times were placed on report under Standard 405(a)
by the Accreditation Committee because of unfavorable salary structure
comparisons, not because of poor faculty quality.
3. Boycotts of non-ABA-approved schools. The ABA prohibited an ABA-
approved school from granting any transfer credits for courses
successfully completed at state-accredited or unaccredited law schools,
but permitted a law school, under certain conditions, to allow credits
for courses taken at a foreign law school (Standard 308 and its
Interpretation). The ABA also prohibited ABA-approved law schools from
matriculating graduates of state-accredited or unaccredited law
schools, but permitted, under certain circumstances, the matriculation
of graduates of foreign law schools (Interpretation 3 of Standard 307).
The ABA rejected a 1979 amendment that would have allowed law schools
the discretion to admit any bar members to their graduate programs. In
practice, the ABA permits only the law school, and not the affected
individual, to apply for a waiver of the Interpretation, and such
applications have been denied. Standard 202 prohibited the
accreditation of proprietary law schools. The ABA has never approved a
proprietary law school and the Accreditation Committee twice
recommended against approval of one proprietary law school.
These Standards, Interpretations, and their application have
unreasonably restricted competition in the market for the services of
professional law school personnel. The salary Standard and its
application had the effect of ratcheting up law school salaries. The
Standard relating to proprietary law schools erected an unnecessary
barrier to competition from these schools, which often provide their
professional staff with lower salaries and fewer amenities than do ABA-
approved schools. The restrictions on enrolling graduates of non-ABA-
approved schools, and on offering transfer credits for course work
completed at those schools, were unreasonable restraints of trade aimed
at deterring effective competition from law schools that are likely to
pay less in salaries and benefits to their professional staffs.
B. Other Accreditation Standards And Practices
4. Student-To-Faculty Ratios. In its Interpretations of Standards
201 and 401-405, the ABA declared that a student-to-faculty ratio of
20:1 or less is presumably in compliance with its accreditation
standards but that a faculty ratio of 30:1 or more is not. While the
Interpretation counts a part-time student as two-thirds the equivalent
of a full-time student, the ABA has counted only full-time, tenure-
track professors as ``faculty,'' thereby excluding from the count
administrators who teach, emeritus or senior faculty who teach, some
visiting professors, joint-appointed faculty (faculty holding
appointments in two departments in a university) who teach, adjunct
professors, clinical and other instructors holding short-term
contracts, and tenured faculty teaching part-time because of family
responsibilities. Although part of the policy supporting reduced
student-faculty ratios is the desirability of smaller classes and
increased student-faculty contact, the ABA did not measure actual class
size or effectively measure actual student-faculty contacts. The growth
of full-time faculty at ABA-approved law schools substantially exceeded
the growth of student enrollment at such schools in the past 10 years.
5. Teaching Loads. Standard 404 sets a maximum 8-hour-per-week
teaching load or, if a course is duplicated, a 10-hour load. In
practice, an hour was defined as 50 minutes.
6. Compensated Leaves Of Absence. Standard 405(b) required that
faculty members be afforded a ``reasonable opportunity for leaves of
absence and for scholarly research.'' In some instances, this Standard
has been applied in practice to require paid sabbaticals, summer
stipends, and other forms of research compensation.
7. Bar Preparation. While Standard 301 requires a law school to
maintain an educational program designed to qualify its students for
admission to the bar, Standard 302(b) prohibits a law school from
offering a bar preparation course for credit or requiring one for
graduation, even for students identified as being at risk of failing
the bar examination. A bar preparation course cannot be offered as a
required course, even when a law school meets the ABA minimum credit
requirements without counting the bar preparation course.
8. Facilities. Standard 701 requires an ``adequate'' physical
plant. Nearly all ABA-approved law schools occupy new facilities or
have made substantial renovations to existing facilities since the new
Standards were adopted in 1973. Despite this, over one-third of all
ABA-approved schools were put on report for ``inadequate facilities''
by the Accreditation Committee in 1994, including law schools of
recognized distinction.
9. Resources. Standard 201 requires that a law school have the
necessary resources to provide a sound legal education, and Standard
209 requires adequate resources to sustain a sound educational program.
These Standards have been applied at times by the Accreditation
Committee to place law schools on report for alleged shortcomings. In
1994, about 50 law schools, including many of recognized high quality,
were on report for
[[Page 39426]]
allocating inadequate resources to their law school program.
Some of the Standards, Interpretations, and other factors described
in paragraphs 4 through 9 may reflect relevant considerations in
assessing the quality of a law school's educational program. At times,
however, they too have been applied inappropriately to restrict
competition in the law school labor market.
III
Explanation of the Proposed Final Judgment
Prohibited Conduct. The proposed Final Judgment prohibits the
recurrence of conduct that is plainly anticompetitive. Specifically,
the Final Judgment will eliminate the adoption or enforcement of any
Standard, Interpretation or Rule, or the taking of any action that
imposes requirements as to the base salary, stipends, fringe benefits,
or other compensation paid to law school faculty, administrators or
other law school employees. The Final Judgment also will eliminate the
collection or dissemination of compensation data for deans,
administrators, faculty, librarians, or other employees, and the use of
compensation data in connection with the accreditation of any law
school. In addition, the Final Judgment eliminates any Standard,
Interpretation or Rule prohibiting the enrollment of a member of a bar
or a graduate of a state-accredited law school in a post-J.D. program,
or the acceptance of any transfer credits from state-accredited law
schools. The ABA is also prohibited from accrediting only law schools
organized as not-for-profit institutions.
Additional Relief. The proposed Final Judgment also contains
structural provisions to ensure that the law school accreditation
process is governed by persons other than those with a direct economic
interest in its outcome and that the process is brought more into
public view. As the Complaint states, it is the view of the United
States that during the past 20 years, the law school accreditation
process has been captured by legal educators who have a direct interest
in the outcome of the process. Most of the process, as it applied to
individual law schools, was carried out by the Accreditation Committee
and the Consultant's office and was kept from public view and the
supervision of the ABA's Board of Governors and House of Delegates. In
addition, the individuals who serve on the Accreditation Committee and
in the Consultant's office had been in these positions for many years.
Finally, the Interpretations of the accreditation Standards were in
some cases more plainly anticompetitive than the Standards themselves,
yet their adoption was not subject to the same public comment and
hearings requirements as amendments to the Standards.
Accreditation matters for individual law schools often remained
before the Accreditation Committee because it required repeated reports
from law schools under review, thereby lengthening the accreditation
process. At one point in 1994, 56% of ABA-approved law schools were
under continuing Accreditation Committee review and 16% more were
undergoing sabbatical reinspections that school year.
As remedies, the proposed Final Judgment provides:
1. Proposed Interpretations will be subject to the same public
comment and hearings requirements as proposed Standards. All proposed
Interpretations, Standards, Rules, and Policies must be published
annually in the ABA Journal and the Review of Legal Education in the
United States.
2. Law schools may take immediate appeals to the Council from
adverse Accreditation Committee Action Letters. The Accreditation
Committee must also report to the Council following each meeting all
accreditation actions that it took during the meeting.
3. Elections to the Council will be subject to the Board of
Governors' approval, no more than 50% of the Council membership may be
law school deans or faculty, and members will be subject to a two-term
limit. Only 40% of the members of the Nominating Committee may be law
school deans or faculty.
4. Appointments to the Accreditation Committee will be subject to
Board approval. No more than 50% of the Accreditation Committee may be
law school deans or faculty, and members will be subject to a two-term
limit. The same requirements apply to the Standards Review Committee,
except that its members are limited to one term.
5. To the extent reasonably feasible, accreditation site inspection
teams will include at least one practicing lawyer, judge or public
member, and one non-law school university administrator. The ABA will
annually publish the names of those who participated in domestic and
foreign site inspections and the schools they inspected.
6. The Council must annual report to the Board on its accreditation
activities, including identifying all schools under accreditation
review and the reasons the law schools are under review.
7. The Council must approve, and the Board review, all annual and
site inspection questionnaires sent to law schools.
8. By October 31, 1995, the ABA will hire an outside independent
consultant, who is not a legal educator, to assist in evaluating the
ABA's accreditation Standards and Interpretations and develop a plan
for their validation by December 31, 1995.
Special Commission. The ABA has established a Special Commission To
Review The Substance And Process Of The ABA's Accreditation Of American
Law Schools. A number of subjects of the accreditation process raise
legitimate educational policy issues, but were applied at times to
achieve anticompetitive, guild objectives, as discussed in Section II
above. These subjects are: Faculty teaching-hour requirements;
compensated and other required leaves of absence for faculty and other
staff; the manner in which the ABA calculated the faculty component in
calculating student-faculty ratios; physical facilities; the allocation
of resources to the law school, and bar preparation courses. The
Special Commission will review these subjects and report to the Board
of Governors no later than February 29, 1996. Upon completing its
review, the Board will file its report with the United States and the
Court. The United States may challenge any proposal in the report
within 90 days of the Commission's report. Any such challenge will be
decided by the Court applying an antitrust analysis. This is novel
relief in a government antitrust case, resulting from a recognition
that some accreditation practices implicate both antitrust and
educational policy concerns. Since the ABA had initiated the Special
Commission in response to academic criticism of its accreditation
process and its perception of possible antitrust problems, the United
States has agreed that the ABA may first attempt to reconcile antitrust
and educational concerns through its Special Commission.
IV
Remedies Available to Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages suffered, as well as costs and reasonable attorneys' fees.
Entry of the proposed Final Judgment will neither impair nor assist the
bringing of such actions. Under the provisions of Section 5(a) of
[[Page 39427]]
the Clayton Act, 15 U.S.C. Sec. 16(a), the Judgment has no prima facie
effect in any subsequent lawsuits that may be brought against the
defendant in this case.
V
Procedures Available for Modification of the Proposed Judgment
As provided by the Antitrust Procedures and Penalties Act, any
person believing that the proposed Final Judgment should be modified
may submit written comments to John F. Greaney, Chief, Computers and
Finance Section, U.S. Department of Justice, Antitrust Division, 555
4th Street, N.W., Room 9903, Washington, D.C. 20001, within the 60-day
period provided by the Act. These comments, and the Department's
responses, will be filed with the Court and published in the Federal
Register. All comments will be given due consideration by the
Department of Justice, which remains free to withdraw its consent to
the proposed Final Judgment at any time prior to entry. The proposed
Final Judgment provides that the Court retains jurisdiction over this
action, and the parties may apply to the Court for any order necessary
or appropriate for modification, interpretation, or enforcement of the
Final Judgment.
VI
Determinative Materials/Documents
No materials or documents of the type described in Section 2(b) of
the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16(b), were
considered in formulating the proposed Final Judgment.
VII
Alternatives to the Proposed Final Judgment
The United States considered other relief in addition to the
remedies contained in the proposed Final Judgment. In particular, early
in the investigation, the United States proposed injunctive relief
eliminating: the ABA's prohibition of credits for a bar review course:
the ABA's practice of attributing no value to teachers other than full-
time tenure-track faculty in calculating student-faculty ratios; the
maximum teaching hour limits; the faculty leave of absence
requirements; and the requirement that substantially all first-year
courses be taught by full-time faculty. Later the United States
proposed other relief, all of which is included in the proposed Final
Judgment. The United States made these proposals during the negotiating
process as its investigation proceeded and as it learned more about the
ABA's practices and their competitive effects.
The United States eventually concluded, on the basis of the
evidence it had gathered, that mere amendment of the ABA's Standards
and practices would not provide adequate or permanent relief and that
reform of the entire accreditation process was needed. While a
prohibition of some of the rules was warranted, as is accomplished by
the proposed Final Judgment, the larger and more fundamental problem of
regulatory capture also had to be addressed.
Moreover, a number of the Standards, Interpretations and practices
at issue, although sometimes misapplied to further guild interests in
the past, concern matters of legitimate educational concern. The United
States concluded that appraisal of whether the provisions and practices
listed in Section IV.D of the Complaint are anticompetitive or set a
procompetitive minimum educational standard for law school programs
should be made in the first instance by the ABA itself, subject to
subsequent review. The United States agreed to submit the first four of
the practices initially of most concern to it, along with others about
which it had developed concern, to review by the ABA's Special
Commission. (In the case of first-year teaching requirements, on the
basis of evidence it subsequently gathered the United States abandoned
its initial opposition). If the Special Commission fails to consider
adequately the antitrust implications of continuing the ABA's past
practices in these areas, the Final Judgment permits the United States
to challenge the Special Commission's proposals and seek further
injunctive relief from the Court.
The United States had also earlier proposed that the ABA's Special
Commission be separately constituted as an antitrust review committee
whose membership would be one-third practitioners, judges, and public
members; one-third non-law school university administrators; and one-
third law school administrators and faculty. Although the Government
recognized that a number of members of the Special Commission had
participated in the accreditation process in the past, it also
considered that the Special Commission was already constituted and had
progressed in its work, that ABA leadership was now familiar with and
sensitive to antitrust concerns, and that the Commission report was
subject to challenge by the United States and review by the Court.
Another alternative to the proposed Final Judgment is a full trial
of the case. A trial would involve substantial cost both to the United
States and to the defendant, and is not warranted since the Final
Judgment provides all substantial relief the Government would likely
obtain following a successful trial.
Dated: July 14, 1995.
Respectfully submitted,
D. Bruce Pearson
James J. Tierney
Jessica N. Cohen
Molly L. DeBusschere
Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th
Street, N.W., Room 9903, Washington, D.C. 20001, Tel: 202/307-0809,
Fax: 202/616-8544.
Certificate of Service
On July 14, 1995, I caused a copy of the United States' Competitive
Impact Statement to be served by facsimile and first-class mail upon:
Ronald S. Flagg, Esquire, Sidley & Austin, 1722 Eye Street, N.W.,
Washington, D.C. 20006, fax: (202) 736-8711
David T. Pritikin, Esquire, Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, fax: 312/853-7036
and
Darryl L. DePriest, 541 N. Fairbanks Court, Chicago, Illinois 60611,
fax: 312/988-5217.
James J. Tierney
[FR Doc. 95-18946 Filed 8-1-95; 8:45 am]
BILLING CODE 4410-01-M
