An American Bar Association panel has recommended the organization drop its prohibition against law students receiving both academic credit and money for internships and externships.

The ABA’s Council of the Section of Legal Education and Admissions to the Bar still must approve the idea, but it would represent a significant departure from existing rules that forbid students from receiving monetary payment for field placements.

The proposal was among a series of reforms on the table during an ABA Standards Review Committee meeting over the weekend. The most controversial would have toughened law schools’ bar examination passage rate standard, but committee leaders concluded they needed more time to develop the proposal and opted not to act. The move effectively kills the proposal for this year.

The pay-for-field-placement rule is intended to open more opportunities within the private sector, said committee chair Jeff Lewis, a professor at Saint Louis University School of Law.

“Law schools won’t place students in the private sector because those employers are required under federal law to pay,” Lewis said. “That’s what everybody seems to believe, and they weren’t willing to risk violating the law. It cuts off large swathes off the world for student field placements.”

In September, the ABA sought and received clarification from the U.S. Department of Labor that the Fair Labor Standards Act does not prohibit law students from performing unpaid pro bono work at law firms, subject to certain restrictions.

The ABA’s Law Student Division has been lobbying for the rule change, enlisting support from student bar associations around the country. The division argued in a letter to the committee that changing economic realities no longer allow students to pass up opportunities to be paid for their work.

In a survey of students, 95 percent said they would be better encouraged to pursue externships if they could be paid and receive academic credit.

“I’m glad that that this is the committee’s recommendation, and I think law students around the country will be very glad to learn that this is the next step in the process toward achieving our goal,” said Mathew Kerbis, chairman of the division’s board of governors and a student at DePaul University College of Law.

The Student Bar Association at The John Marshall Law School in Chicago signed the division’s letter, and students universally agreed that the old rule should go, association president Melissa Soso said.

“Why ask students to pay to work?” she said. “A credit hour costs about $1,500 each, so why create that extra hurdle for students?”

The decision not to change the bar exam passage standard followed years of discussion about the best way to protect students as consumer of legal education. The committee had considered requiring schools to maintain a minimum pass rate for their students of 75 percent within two years of graduation, instead of the existing 75 percent within five years.

Legal diversity advocates lined up against the idea, warning that it would disproportionately harm the most racially diverse law schools and encourage admission only of students with higher undergraduate grades and test scores. Studies show that some minority groups on average score lower on the Law School Admission Test.

Ultimately, committee members felt they lacked sufficient time and data from state bar examiners to justify action, Lewis said.

“Everybody understands that we need to get all the state bar examiners on board to provide all the schools with their results,” Lewis said. “We need to get that accomplished first, and we want to figure out a way to take into account different pass rates in different states.”

National Conference of Bar Examiners President Erica Moeser has been a vocal supporter of raising the bar passage standard and called the decision “mildly disappointing.”

However, the committee has already moved to strengthen the consumer information that law schools must disclose, she said. Moreover, the number of state bar authorities disclosing exam results to law schools is on the rise, and that gives the ABA better information regarding accreditation.

Both Moeser and Lewis predicted the topic would resurface, likely as soon as next year.

“This issue is not going to go away,” Moeser said. “In fact, it might become more acute because of what we know about law school enrollments shrinking and schools going deeper into their applicant pool to fill their seats.”

Contact Karen Sloan at ksloan@alm.com. For more of The National Law Journal’s law school coverage, visit: http://www.facebook.com/NLJLawSchools.