The ABA's Recent Settlement: A Pivot in Scholarship Practices

In a development that underscores the evolving landscape of diversity initiatives in higher education, the American Bar Association (ABA) has reached a settlement in a high-profile lawsuit challenging its Legal Opportunity Scholarship Fund (LOSF). This fund, designed to support promising first-year law students committed to advancing diversity in the legal profession, faced allegations of racial discrimination for previously restricting eligibility to underrepresented racial and ethnic minorities. The resolution, announced in late April 2026, commits the ABA to administering the program on a fully race-neutral basis moving forward.

The case highlights broader tensions in legal education, where institutions and professional organizations grapple with balancing access, equity, and compliance with federal civil rights laws following landmark Supreme Court rulings. Law schools across the United States, which rely on such scholarships to attract diverse talent, now face pressure to adapt similar programs to avoid legal risks while maintaining their missions.

Background on the Legal Opportunity Scholarship Fund

Established nearly three decades ago in 2000, the LOSF has been a cornerstone of the ABA's efforts to diversify the legal profession. Each year, the program awards 20 to 25 scholarships totaling $15,000 per recipient, disbursed as $5,000 annually over three years of law school. Historically, eligibility targeted students from ethnic minority or underrepresented racial groups who demonstrated financial need and a dedication to equity in law.

This initiative addressed stark disparities in legal education: for instance, Black and Hispanic students have historically comprised less than 15% of law school enrollees, despite growing representation in undergraduate populations. The fund supported recipients at accredited law schools nationwide, fostering pipelines into clerkships, firms, and public interest roles. However, its explicit racial criteria drew scrutiny amid shifting legal standards.

The Lawsuit: Allegations of Discrimination Under Section 1981

The lawsuit was initiated on April 12, 2025, by the American Alliance for Equal Rights (AAER), a nonprofit led by conservative activist Edward Blum, known for challenging race-conscious policies in cases like Students for Fair Admissions v. Harvard. Filed in the U.S. District Court for the Northern District of Illinois, the complaint invoked 42 U.S.C. § 1981—a Reconstruction-era statute prohibiting racial discrimination in contracts.

AAER argued that the LOSF's requirements effectively barred white applicants, regardless of merit or need, constituting unlawful discrimination. A named plaintiff, a white male preparing to enter law school in fall 2025, claimed he was deterred from applying due to ineligibility. In January 2026, Judge John Robert Blakey denied the ABA's motion to dismiss, affirming standing and a viable claim, which propelled the case toward settlement.

ABA's Policy Evolution and Settlement Terms

Prior to the lawsuit's resolution, the ABA had already begun revising its approach. In October 2025, following a board resolution, eligibility shifted to require only a "strong commitment to advancing diversity, equity, and inclusion (DEI)" in the legal field, open to all first-year students irrespective of race or ethnicity. The settlement formalizes this: the ABA pledges to exclude any race- or ethnicity-based criteria, using demographic data solely for tracking purposes, not selection.

Jointly stipulated dismissal occurred around April 27-30, 2026, with the ABA denying liability but embracing the changes. ABA President Michelle Behnke emphasized, "Diversity and excellence are not mutually exclusive," reaffirming the organization's dedication to an inclusive justice system through merit-based opportunities.

For more on AAER's perspective, see their official announcement.

The Broader Post-SFFA Wave of Challenges in Higher Education

This settlement is part of a larger reckoning triggered by the Supreme Court's 2023 decision in Students for Fair Admissions (SFFA) v. Harvard, which curtailed race-conscious admissions. While admissions were the focus, ripple effects hit scholarships, fellowships, and programs. Dozens of universities, including MIT, Amherst, and the University of Washington, revised or suspended race-based aid to comply.

In law schools specifically, similar suits targeted programs at institutions like the University of San Diego and Congressional Black Caucus Foundation scholarships. Estimates suggest over 100 race-restricted scholarships nationwide were restructured between 2023 and 2026, shifting to proxies like first-generation status, low-income backgrounds, or personal essays on overcoming adversity. These changes aim to achieve diversity goals without explicit racial classifications.

Stakeholder Perspectives: From Advocates to Critics

Proponents of race-neutral reforms, like AAER's Blum, hail the outcome as a win for colorblind equality: "Organizations across the country are recognizing that dividing people by race is inconsistent with our civil rights laws." Legal educators worry about unintended consequences. Law school deans note that while enrollment diversity held steady post-SFFA (e.g., Black representation at top schools dipped 2-4% but stabilized), scholarships are vital for retention.

ABA allies argue race-neutral criteria—such as commitment to DEI—still indirectly promote diversity, citing data from the Law School Admission Council showing inclusive programs boost underrepresented enrollment by 10-15%. Critics, however, caution that vague standards could invite reverse-discrimination claims, as seen in ongoing EEOC probes into ABA clerkships.

Explore ongoing trends via Higher Ed Dive's coverage.

Impacts on Law School Diversity and Enrollment

Law school demographics reflect these shifts: ABA data shows underrepresented minorities now at 28% of enrollees (up from 22% in 2015), but progress slowed post-2023. Scholarships like LOSF historically funded 5-10% of diverse admits at recipient schools. Race-neutral versions may sustain pipelines by prioritizing socioeconomic factors, which correlate strongly with race (e.g., 40% of Black law students are first-gen).

• Retention rates improve 20% with financial aid, per LSAC studies.
• Top schools like Harvard and Yale report stable diversity via holistic reviews.
• Rural and public law schools face greater challenges, with 15% drops in minority apps.

Race-Neutral Alternatives: Strategies for Law Schools

To navigate this terrain, law schools employ multifaceted approaches:

1. Socioeconomic Targeting: Need-based aid for Pell-eligible or low-income students captures 70% of underrepresented groups.
2. Essay-Based Commitments: Prompts on personal diversity experiences, as in LOSF's new model.
3. Outreach Expansion: Partnerships with HBCUs and community colleges yield 25% more diverse applicants.
4. Mentorship Programs: Race-neutral pipelines into summer associateships.

Universities like Northwestern Pritzker and UC Berkeley have piloted these, maintaining diversity while withstanding audits.

Policy and Accreditation Implications

The Trump administration's 2025-2026 executive orders scrutinized ABA accreditation standards for DEI elements, prompting revisions to clerkship programs. States like Florida and Texas enacted bans on race-based aid in public universities, affecting 50+ programs. Federally, Section 1981 suits offer private enforcement, bypassing Title VI hurdles post-SFFA.

Accreditors advise "viewpoint diversity" to preempt claims, blending ideological balance with traditional equity. For law schools, this means auditing all aid for neutrality.

Future Outlook: Balancing Equity and Legality

Looking ahead, experts predict more litigation but also innovation. The ABA's LOSF relaunch for 2026-2027 cycles could serve as a model, with applications emphasizing lived experiences over demographics. Law schools investing in data analytics—tracking outcomes by proxy factors—stand to thrive.

Ultimately, the settlement signals a maturation of DEI: from quotas to genuine inclusion. As one dean noted, "True diversity emerges from opportunity for all, measured by impact, not identity." With bar passage rates rising among aided students (85% vs. 78% baseline), race-neutral aid proves viable.

Visit the ABA's LOSF page for application details.

Photo by Caleb Walley on Unsplash

Actionable Insights for Law Students and Administrators

• Students: Highlight personal equity stories in apps; explore need-based options like federal loans or state grants.
• Admins: Conduct compliance audits; partner with platforms like LSAC for targeted recruitment.
• Firms: Expand clerkship diversity via merit-focused criteria.

This era demands creativity: schools blending merit, need, and commitment will lead in producing equitable legal talent.