Read It And Eat 11/04

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Major Headlines

• Making Senior Partner is no longer the Ultimate Goal

• A LexisNexis survey of 500+ law firm associates and senior leaders found only a quarter (25%) of legal associates aspire to make Partner at their current firm within the next five years, and only 3% at another firm. Nearly half of leaders (49%) said they have noticed a decline in the number of associates aspiring to make Partner, with only 19% disagreeing. This rises to 63% for leaders at large law firms. Most leaders accredited this shift in behaviour to a desire for a better work-life balance (71%). However, associates expressed a strong sense of loyalty to their current firms. More than half (56%) of associates said they plan to be at their current firm in five years. Only 12% said they plan to leave private practice for in-house, ALSPs, or academic career opportunities. Yet, the majority of leaders (72%) believe associates are less loyal than previous generations. This jumped to 81% when looking at responses from leaders at medium and large law firms. Associates said they would be tempted to change firms for a better work-life balance and salary, at 71% and 69% respectively. Yet, when asked what would encourage them to stay put at their current firm, 70% said more money while only 36% said a better work-life balance. The survey also revealed attracting and retaining talent to be one of the biggest challenges for law firms, with 69% of large law firm leaders citing this as their biggest challenge. Stuart Greenhill, Senior Director of Segment Strategy at LexisNexis, said: “The current generation of workers are disruptors, not conformers. If they see something they don’t like, they’ll push back. To meet growth goals and retain a feasible talent pipeline, law firms will need to find a middle ground. They cannot rely on what has worked well in the past, especially with the AI revolution well on its way.” [Legal Cheek]
  

• ChatGPT Wrote a Whopping 28 Million Essays

• With the rise of AI specifically with ChatGPT and its ability to produce stellar writing content based on the context and the information it has available, it is easy to see the allure to students and how much easier it could make essay writing for them, and that is exactly what was done. In order to combat this schools are using platforms like Turnitin which is a software schools and universities use for essays and coursework submission by students. It is a text-matching tool that aids the educational institutions detect plagiarism within the work submitted and provides a similarity index. How it works is that it identifies the matched material by checking the electronically submitted documents against its database of academic publications, the internet and preciously submitted documents. In April of 2023 it added an AI writing detection feature  and to celebrate the one year anniversary of the feature, it released a report of which the data shows that over 200 million papers reviewed, over 22 million (11%) have at least 20% AI writing present and over 6 million (3%) have at least 80% AI writing present. “We’re at an important juncture in education where technologies are transforming learning, and the need for academic integrity is more critical than ever,” said Annie Chechitelli, chief product officer of Turnitin. “Everyone in education is looking for resources to enable them to perform at their best, and technologies, including our AI writing detection feature, help advance learning without sacrificing academic integrity.” [FE News]
  

• 10-15 Years in Prison for a School Shooter’s Parents

• The court cases against Jennifer and James Crumbley have hinged on a thorny question: As school shootings become increasingly common in the United States, can parents be held liable for the actions of teenage gunmen? Juries in Michigan have wrestled with that question in recent weeks, as they grappled with the aftermath of a shooting at Oxford High School in Michigan that killed four children on November 30, 2021. And in each parent’s case, the jury returned a clear answer: Yes. Despite being tried separately, both Jennifer and James Crumbley were found guilty of involuntary manslaughter in relation to their son Ethan’s actions. It was a historic verdict. Never before had a parent in the US been found criminally responsible for manslaughter after their child committed a mass shooting. On Tuesday, both parents were sentenced to 10 to 15 years in prison, the maximum sentence carried by the charges, in an emotionally charged hearing where families of the victims spoke. While the sentencing represents the end of the current proceedings, those who cheered the outcome — and those who warned against the legal precedent it set — have said the Crumbley cases are likely to reverberate for years to come. “You have a painful crime. You have a legal novelty and an unprecedented action. And then you have this social thing in which we’re all interested, all coming together in one case,” Ekow Yankah, a law professor at the University of Michigan, told Al Jazeera.“And I think there’s this kind of deep intuition about: At what point are your children’s actions not your own?” One would likely agree with gun control advocates who see this as a good deterrent, helping prevent further mass shootings, they say it is a much more practical response than the usual “thoughts and prayers” that are given to the victims’ families. In essence, using the “many ways to skin a cat” analogy, because there is not much movement towards reform of gun reform laws this could potentially take more guns off school grounds without encroaching on their constitutional rights. In 2023 alone, there were nearly twice as many mass shootings as there were days of the year. [CNN]
  

• $100,000 Yearly Tuition

• A university degree is typically the third or fourth largest expense one incurs during their lifetime, after a house, a car and maybe a child. This is something that has become socially acceptable, and the rising cost of tuition is also something that even though it is constantly complained about, nothing systematic is done to prevent this from happening.With no checks nor balances, these higher education institutions have been able to raise their tuition prices by 747.8% from the years of 1963 to 2020 and averaged an annual rise of 12% from 2010-2022 alone. That brings us where we are today, The New York Times reported that at Vanderbilt University, an engineering student was quoted an all-in price of $98,426 for the 2024-25 school year. This includes room, board, personal expenses and a laptop if you add in a few holiday trips home from the Nashville campus would take the total to six figures, the report said. But research by the DailyMail.com shows the amount is not a one-off. Half a dozen other private colleges charge above $90,000, including the University of Southern California, Boston University and Yale. Over a typical four-year course, it means those paying the full amount face a bill of $400,000. [New York Times]

MINOR NEWS

• Arizona Supreme Court enforces a law that bans almost all abortions. [The Independent]

• Google expands In-House Chip efforts. [Wall Street Journal]

• Salt Lake City Utah ranked as America’s hottest job market. [Axios]

• KPMG Fined $25 million in exam cheating scandal. [Wall Street Journal]

• TikTok parent company ByteDance profits jumpy 60% in 2023. [Bloomberg]

• Foxconn is considering a rotating CEO system in a management reshuffle. [Reuters]

• Apple to open New Miami office space following Amazon and Microsoft.[Bloomberg]

• BMW EV sales rise even as overall EV sales decline. [Bloomberg]

NEWS OF THE DAY

The Insanely Profitable Business of College Endowment Funds.

It is important to preface this by stating that for my non-American readers, a college in the context of this article means university and both words would be used interchangeably. One would understandably think that colleges are in the business of educating students and expanding the current research scope and the fact that these institutions only make money as a byproduct of this, but they would be wrong. Colleges are non-profit institutions, that make enormous profits and occasionally educate people.

Tuition, research grants, gifts, college sports, fundraising, funding from state taxes and endowments are inclusive of the various ways colleges gain their revenue. We would specifically be discussing Endowment funds which, according to the American Council of Education, is an aggregation of assets invested by a college or university to support its educational and research mission in perpetuity. These gifts also allow an institution to make commitments far into the future knowing that resources to meet those commitments will continue to be available. In essence, an investment account is made up of charitable donations of money and or assets to help fund and sustain the institution, sometimes these donations are given for specific spending purposes.

Endowments have been around for a very long time, as far back as 176 A.D. when the Roman emperor and Stoic philosopher Marcus Aurelius established the first recorded endowed professorships in Athens. In the case of one of the prestigious universities, Harvard, Minister John Harvard upon his death donated his library of over 200 books and half his estate to the then-recently established institution of higher learning that would be renamed Harvard University. Its investment strategy was to invest in government bonds and blue chip companies a safer bet to steadily grow its fund however, this all changed when in 1985 David Swensen took over the Yale endowment fund and established the Yale model. The Yale Model of Asset Allocation is an investment strategy that emphasises diversification and risk-seeking orientation to capitalise on long-term investing horizons. This model exposes these endowment funds to riskier investments such as Private Equity funds, Asset Management funds, Venture Capital Funds and Hedge Funds. This strategy was so successful that David grew the Yale fund from $1 billion in 1985 to $31 billion in 2021, Harvard’s head of the endowment fund, Jack Meyer, copied the Yale model and grew Harvard’s endowment from $5 billion in 1990 to over $25 billion in 2005. As of 2023, Yale’s endowment fund sits at $56.2 billion, and Harvard’s endowment fund sits at $72.8 billion, in fact, as of 2022, the wealthiest 15 universities had an endowment of over $21 billion, which is more than the GDP of countries like Iceland, Estonia and Honduras.

There is nothing inherently wrong about the concept of endowment funds, it is the use, deployment and focus of the institution in regard to the fund that becomes problematic. For starters the fact that the fund is used to prop up the prestige of the university. The money in the fund is used to build incredibly expensive new facilities, update the older buildings and facilities that they have and fund cutting-edge scientific research while keeping the total student body virtually unchanged and in some cases even lowering the acceptance rate of that institution. This, in turn, increases the desire and prestige of the university and allows these institutions to raise their tuition and fees. Furthermore, the funds do not increase the amount of financial aid provided to students, this sends a clear message that they only want people who can effortlessly afford to attend these institutions. Thus we have the problem we face today, Vanderbilt University, with an endowment fund of  $9.7 billion, charging an all-in fee of roughly $100,000 per year for a four-year engineering degree. In fact, public universities in the U.S. have almost tripled their fees and private universities have almost doubled theirs since 1990.

Another major problem with endowment funds is the fact that these institutions are not for profit which means they are exempted from capital gains tax and are controlled by a Board of Trustees.  The Board of Trustees of these funds are partners of Venture Capital, Private Equity and Hedge Fund firms and they allocate a portion of this endowment into their own firms, and it is all legal as long as the conflict of interest is disclosed. These trustees are typically former students of these universities and they direct money from the funds to their friends and associates who are also PE, VC and Hedge Fund owners and former students of the institution itself. It creates a Tit-for-Tat system that only benefits the board of trustees, their friends and associates and not the students it aims to educate. This is evident as seen in how these colleges responded in the fallout of the 2008 financial crisis, rather than drawing more on the endowment fund to be able to fund the expenses of the university, they opted instead for salary freezes and staff cuts. It’s akin to saving for a rainy day and when the rainy day comes, you don’t use those savings and you opt for eating pot noodles and skipping meals.

Some colleges and universities do not share the mentality of hedge fund first and educators after. For example, Princeton University increased its financial aid spending by 25% and cancelled tuition for households with a combined income of less than $100,000. Berea College was established in 1855 and has been tuition-free since 1892. It also keeps its student body small and draws off 4% of its $1.5 billion endowment to keep it tuition-free, while relying on grants and donations from its former students and the wider public.

Universities in the U.K. do not have as large funds, even though there are a few that are considerably large. The University of Oxford has an endowment fund of £8 billion as of 2023, the University of Cambridge has an endowment fund of £7.8 billion, Kings College London has an endowment fund of £301 million and my alma mater, the University of Kent has an endowment fund of £5.5 million. You can search for your university and its endowment fund here.

All of this has caused people to question the value of a University degree. People are opting for more blue-collar work/apprenticeships as they do not want to be saddled with a mountain of debt at the start of their lives especially now that a college education no longer guarantees you the good paying job that allows one to afford to even pay off those college loans, the Master's degree holder who is a Starbucks barista situation.[New York Times]

Gen-Z Word Of The Day

Huggybear

1) A person that you want to be with all the time, and someone that you care about more than anything else.