BAR/BRI and KAPLAN SUED FOR ANTI-TRUST VIOLATIONS
So apparently BAR/BRI [or BarBri if you prefer that spelling] and Kaplan have been getting a tad too cozy. On April 29th a lawsuit was launched against them as co-defendants alleging anti-trust violations. See the press release HERE and you can find the actual complaint HERE in PDF format. The basic jist is that they apparently made a little secret agreement whereby Kaplan agreed not to enter the Bar Exam Prep arena [which they were seriously considering] if Bar/Bri agreed never to try their hand at LSAT prep/review. Now, I for one, have always wondered why these two companies never did just that very thing. If Bar/Bri is all about law school then why don't they help undergrads prepare to be accepted? And why did Kaplan, one of the head honchos of the test prep biz [along with Princeton Review] never enter into the field of coaching folks on passing professional licensing exams such as the Bar Exam? I guess that quandry is a little clearer now. To be sure there are other bar review courses out there, however it is estimated that 95% of people who take review courses take BAR/BRI.
SIDENOTE: If you're really interested in what is available, the only other "full" review course I am aware of is Pieper. For a 10 day or 3 day concentrated review on multi-state subjects only there is PMBR and for those brave enough to study "on their own" there is a computer program you can purchase called MicroMash.
Anyway, as I was saying:
For those who have never had the unique "pleasure" of bar review, it's torture, BUT it's absolutely necessary. [Some people would debate me on that, but I can't see how one would even begin to study for the bar exam without some sort of program or guide to help digest all that material - some of which you never even get to take in law school! But I digress ...] Another thing about bar review, is it is VERY expensive. Bar review is so expensive that education loan lenders have created a special loan program called a "bar loan" to help finance that all important summer after graduation when newly minted JDs prepare for the bar exam all over the country. Personally I paid almost $3,000 to prepare for the bar exam[s] so you can see what a lucrative business it is to be in. If Bar/Bri is purposely making sure that market stays small so that they can jack up their prices then that's just plain wrong.
Bar review companies know they have recent law grads by the throat. We all live in mortal fear of failing and after three years of toiling we will pay just about anything to make sure we pass. Bar/Bri does an excellent and comprehennsive job, don't get me wrong. They constantly update their programs to make sure they are teaching what is being tested. They try to engage interesting speakers who are experts in the covered subjects and they even go so far as to try to minimize the mass hysteria that grips law grads as the exam approaches. They send postcards with funny comics and give words of reassurance prior to lectures, and they even call every single student right before the end of the program to see if we have any last minute concerns or questions. That type of program can't come cheap, but is it worth almost $3,000 for roughly seven weeks of programming?
I did find one detractor in cyberspace who didn't think the defendants were wrong in the current situation, however his beef seems to be more about antitrust litigation in general rather than the sweet deal Bar/Bri and Kaplan made, however I include his point of view here for completeness.
There are several possible outcomes from this lawsuit. Number one, it could be dismissed for a variety of reasons. Number two, if found guilty, the defendants could be forced to break up a la "Ma Bell" and the "Baby Bells" [if you are old enough to remember that]. This could result in a "NY Bar/Bri" and a "NJ Bar/Bri" although that solution still doesn't create any new competitors since all bar exams are state specific in some way. A third scenario is that there could be a settlement. In a settlement, only the named plaintiffs could receive a payment OR every member of the class could receive some money or other type of compensation. [Vouchers for free bar review courses doesn't strike my fancy, but I guess it all depends on the creativity of the attorneys drafting the consent decree.] A consent decree would set out the terms, but potentially everyone who has taken a Bar/Bri course within a specified period of years could be entitled to some restitution, and all future law grads would pay less to begin with. In any event, these things take years and I, for one, will be watching this one.
The real kicker here is that a lot of people complain that even when class action suits settle in favor of the plaintiffs the lawyers get most of the settlement money. Now consider this situation, if the plaintiffs prevail the lawyers who worked on the case get a portion of the settlement [usually 1/3] and ALL the plaintiffs, both named and class members, get the rest and they are also all lawyers! [In fact in an interesting twist the attorneys of record in the case could be potential class members creating an interesting ethical dilemma - but that is a discussion for another time.]
posted by TSC Girl @ 1:04 AM
3 comments
3 Comments:
Nice post on the subject. Kaplan never entering this market is fishy. By the boasting ads of all these companies, you would think they were the keepers of all standardized testing knowledge, and that they are all but going to show you the actual test before you take it. Nothing unusual here, just your standard "mattress" sales pitch. Its up the a consumer to cut through the bull and decide what is right for them.
I found your post through a link from a libertarian hands-off reaction to your posting and the suit:
http://kipesquire.powerblogs.com/economics/archives/archive_2005_04.shtml
Though expressing many good points of concern, the post lacked a thorough and realistic market analysis, and a perspective on what effect the "agreement" has had on competition and more importantly the consumer. I have found that, as far as antitrust litigation goes, economic analysis can support both sides of any argument, thanks to our good friends, the economists. (See Richard Brunell's article for an excellent explanation of these issues "Appropriability in Antitrust: How Much is Enough?," 69 ANTITRUST L. J. 1, 39-40 (2001) ) You are dealing with prospective future business here, wrought with variables, a glorified form of fortune telling in these economic analyses. If this was easy to predict, I would be on a very long boat off the coast of Tahiti, fishing for (insert big tasty fish with a cool name here,) and you would be restocking the bathroom tissue holder with yet another roll of "Bennys." Kip would be doing something equally interesting, probably a lot closer to the above activities, rather than investment banking and worrying about lassies faire economics.
If you want to see the anticompetitive effect, look at the market from the customer's point of view. Antitrust law was established to protect the customer. The allocation of resources, although a large factor in an antitrust analysis and, when efficient, a very nice benefit of a competitive market, is not the goal of antitrust. The reward and promotion of technological advancement is similarly a common issue in antitrust cases, but, thankfully, absent from the proper analysis of the legality of an agreement, merger, or a monopolist's actions. Efficiencies are traditionally worked out in the market, and the kind of reward system for innovation, often pitted ideologically against antitrust, is found in patent and copyright protection. Leave this to the economists and patent holders for now. Personally, I am glad that there is a body of law to check those parties who already have the consumer by the cajones and would leverage this market/monopoly power to prevent competition. Really? What good is allowing Barbri to keep that (theoretical) extra $1000 without any significant competition? Oh yeah, suuuure, they are going to use it to make a better course with it, and everyone will be happier, even Tiny Tim, if only the big bad government just didn't interfere with the natural order of things.
Simply Baloney! If Barbri’s product is really $1000 better, let them earn it and prove it, rather than steal it from the public with a little "wink, wink, nudge, nudge say no more" act! And the market left to its own devices can come up with some fantastic little numbers, contracts of adhesion, child labor, hertz, slavery, Donald Duck. OK, Im grandstanding, going overboard, and getting a wee bit silly, but I'll take the protection of this minimally obtrusive law and to hell with anyone who says its too paternalistic or socialist or whatever rhetoric they can dig up. Illegally stop competition (on the merits of the product, the cost, whatever) and pay the price of liability later. By the time the case is settled/decided, most of the damage is done anyway, and extreme remedies, like breaking up the "Bells," will only be a employed in extreme measures. Only a sucker would feel bad for them, if you don’t see the wrong in the illegal horizontal agreement here, please explain this to me, and then, please don’t shake me down for “protection.”
In the name of full disclosure, I just graduated from law school and JUST shelled out 2K for the basic Barbri course. This course consists of a bankers box full of books and a "lecture," that will be played on a VCR in front of me and 30 other key-clacking, money-leaking, lawyer hopefuls. No, this is not a "gee, poor law student" post with which prolifically whining law students fill the net at this time of year. Hey, I signed my name on the line, I get to take part in one of the largest "off the shelf" monopolies around if I actually pass the damn thing. But if there was a little competition in the mix here, who knows, maybe the man in the taped lecture would not be wearing a butterfly collar and bell bottoms. Maybe I could afford the "live lecture" and all the bells and whistles Barbri offers.
Their market power is massive right now. If you are not familiar with it, tell your standard law student that you are preparing without "barbri." Invariably you will get a "Good Luck?" with that inflection to make it sound like you are certified not to take the course. Its the Windows of Bar review courses, and there isnt yet an Apple with enough market power to challenge it. I really wonder if they are doing all the security patch updates they need to (assuming they made a product that would intentionally need tons of security patches) I prefer a self-study method, but "baaaaa, baaaaaa," excuse me, I did sign up for Barbri rather than another course. Remarkably, you would think that shelling out 2-3K for materials would be enough for this exam? I havent yet met a person, who isn’t supplementing it with PMBR or Micromash, or something else. I see a lot of room for improvement to say the least. Doing the math, Bar/Bri is raking in the cash here, claw over foot, twice a year, for minimal work and the vigilant protection of their copyrights. Also, the customer service I received this morning makes me want to leggo my Eggos after I already ate them. Its turned into a rant. I’m one of the people you should be asking about the effects, not someone who can theoretically put 1000 dollars back into Barbri’s hands, and assume they will reinvest it. They will not, especially without competition.
What they will most likely do with this money is use it to continue creating barriers to entry in a market that could really use an overhaul. Sure, Barbri is good. They better be good, they've had 35 years to practice and cost an arm and a leg. Looking at the stack of books I’m about to study, I doubt they have erased anything in those past 35 years in the name of being concise, but that’s part of it I guess. Kip and you both bring up a very good point, the lack of any obvious remedy to the situation. Cant make Kaplan offer a bar review, cant make Barbri do an LSAT course, and we cant go back to fix whenever this issue crossed the line from independent actions within two growing markets, to a conscious decision to stifle competition in these markets, thought both player clearly could slide on over into the other market without much effort. Also, breaking Barbri up into different operation divisions like a Bell or a Microsoft isn’t realistic from a business standpoint, given the MBE and similar state exams. Also, its not an issue like Microsoft, where the product itself is put together to cause the effect, through tying and other arrangement. Splitting Barbri would be just plain stupid and would amount to nothing more than kicking them in the groin to give some other competitors a momentary advantage they will not realize.
I just read my previous rant, and realized it sounds like its directed to you. Sorry for this. If you read it, please read the "you" as an opponent to the suit. YOUR analysis was very intersting, informative and well written. I got it, I agree with you. Just tossing a few early morning pre-coffee spurts of venom into the emptiness of the net. Anonymously to boot.
All valid points. It's crazy to read things like this about such prestigious resources that some law students rely on to advance in their careers.
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