[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.

DATE:------------------------------------------------------------------

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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