There is a small discussion going on about grade inflation at Orin Kerr's blog and Volokh Conspiracy. The jist of it is that law schools keep raising the median grade in a class because everyone else is doing it. Orin Kerr has the best bit of information though; apparently the law school school with the highest median grade now is Stanford with a 3.4. Stanford's reasoning was (page 9 of the pdf):
The Law School faculty adopted changes in the SLS grading policy that are designed to express more accurately the quality of student performance in upper-level courses, and enhance students’ job opportunities.This has to be the most absurd reasoning ever for inflating grades. But what seems even more absurd is that they would publicly justify bumping up the grades with the justification that it will give their students a leg up with their slightly higher grades. It is also sad that because Stanford uses warped reasoning like this, in time, every other law school is going to raise its grades in order to stay in tune with their peer institutions.I'd be willing to guess that this is how rampant grade inflation in academia began in the first place. It will be interesting to see though how schools respond once this gets even more out of hand (can you imagine a 3.7 median!). My guess would be that in time, any respectable law school will go to alternative grading scale like what Yale Law School and UChicago Law School have done (although YLS's seems more about giving everyone meaningless grades and UChicago's more about avoiding rampant grade inflation—but that shouldn’t come as a surprise to anyone acquainted with the two institutions).