The Breakdown | Explaining Southern California's economy

The law school money machine, UCLA, and Lowell Milken

We recently did an AirTalk segment about a controversial $10 million gift to the UCLA School of Law from Lowell Milken, brother of disgraced junk-bond king Michael. The Milken boys have both been barred from the securities industry for their sins in the 1980s when they labored for defunct investment bank Drexel Burnham Lambert. 

For his part, Lowell Milken, a UCLA Law grad, was never convicted of any wrongdoing and has been engaged in various philanthropic activities over the time since. At UCLA, his gift would be used to establish an Institute for Business Law and Policy, a move that has riled Lynn Stout, a tenured business law professor at the school. 

Right and wrong and money

This is a pretty good example of the perfect ethical storm that underfunded state law schools can face. UCLA, as the university itself pointed out in the press release announcing the endowment campaign in 2008, is both the youngest top 20 law school in the country – and among the most under-endowed. 

However, like a lot of law schools in the U.S., UCLA Law is so profitable that it's continued prosperity has become critical to the university at a time when the California state education budget is under incredible stress. The big question is whether ethics take a back seat to survival in this case. Stout is essentially alone in her complaints among law school faculty. That said, she does have a point: Lowell Milken's reputation as an ethical businessman is seriously questionable – even if his philanthropy isn't.

Actually, the issue isn't really about saying no to $10 million. It's about using the $10 million to endow a program that could be seen as whitewashing Lowell Milken's alleged wrongdoing. Saying no probably isn't an option, given that the law school business has become so important, even as the actual business of law is enduring a major downturn. 

The desperately lucrative business of legal education

Lawyers fresh out of law school and burdened with massive debt aren't getting the hefty pay packages they did in years past – if they can get jobs as all. This has spurred a debate about whether law school is a good career option anymore, if it costs hundred of thousands in borrowed money to get the chance to be un- or under-employed. 

So law schools need to do what they can to bolster their competitive statures. UCLA doesn't want to drop out of the top 20 and have to start adjusting tuition rates to address economic reality. It also doesn't want to stress out its endowment. Nor does it want to pull back on funding that the law school might subsidize at the rest of the university. So chances are pretty good that Prof. Stout's objections will be duly noted – and then quickly ignored.

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