TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, March 8, 2017

Independent Law Schools And The Last Buggy Whip Manufacturer

Buggy WhipLawProfBlawg & TempDean, Independent Law Schools And The Last Buggy Whip Manufacturer:

LawProfBlawg and TempDean are both somewhat surprised that none of the recent closures have involved freestanding law schools. Freestanding law schools have been an important feature of the legal education landscape for the past century. ...

Today the ranks of truly independent law schools have shrunk more from absorption by universities than from outright failure. Detroit College of Law eventually became Michigan State College of Law; Franklin Pierce became University of New Hampshire Law; Southern New England turned into University of Massachusetts Dartmouth Law; Thomas Cooley hooked up most recently with Western Michigan University. Rumors abound of more fantasy league law school trades and combinations.

The remaining independent law schools have a number of common features. They tend to exist in major metropolitan areas, have snazzy real estate, recruit pretty good to excellent faculties, but struggle to attract high rankings and sufficient numbers of highly qualified students without throwing vast amounts of budget-busting financial aid at the applicants. This can lead to problems with bar passage and employment that, in turn, raises issues of long-term viability.

What independents have going for them is money and autonomy. Independents don’t have to play accounting games with a Central University over Hollywood accounting rules for overhead and often a second and separate exorbitant profit tax. Plus you get to spend the money any way you wish, unless the outside Trustees smell disaster and put their feet down. The roaring 1990s were probably the peak boom years for smart independent law schools who could make bold Master of the University moves paid for by taking 5-10 more students or starting a new LLM program. But like highly leveraged hedge funds, things can south quickly when the odds are no longer in your favor.

In contrast, university-based law schools outside of some elite group were generally stodgier creatures enmeshed in cumbersome budgetary processes and unforgiving university bean counters who took too much off the top and then off the bottom of tuition dollars, fundraising, and grants. Innovation can fall prey to bureaucracy and sheer perversity. ...

While predictions are tough, especially about the future (thanks Yogi Berra), we think more independents will seek the comfort of their closest law school-less university than will fold their tents. The future belongs to smart innovative law schools, whether university or freestanding, that can figure out adequate income streams from a combination of JDs, LLMs, international students, on-line, non-law students, and innovations yet to come. Schools with elite reputations and those with some other durable competitive advantage will thrive. Those with high fixed costs and inadequate variable revenues will struggle and a few won’t be around when LawProgBlog and TempDean cash in their TIAA-CREF accounts when we turn 90. There will be more fire sales and shot-gun marriages. What baffles us is why otherwise healthy universities want to hook up with truly struggling independents. The university environment can include many positive things, but rapid innovation and successful turnaround artists usually aren’t part of the package.

LawProfBlog and TempDean want to turn around the bet of our colleagues that began this column. Twenty years from now, who will be the survivors and the success stories of the independent law schools? Or will they become quaint relics of the past like the proverbial buggy whip manufacturers? Oh by the way, one buggy whip manufacturer in fact survives quite nicely now serving the adjacent market for horse and show riders. There’s a lesson in there somewhere.

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Unsurprisingly, financial strain causes mergers. It's almost as if market pressures were present in higher education...

Posted by: Matthew Bruckner | Mar 8, 2017 5:09:04 AM

The remaining independent law schools have a number of common features. They tend to exist in major metropolitan areas, have snazzy real estate, recruit pretty good to excellent faculties,

Dickinson, Brooklyn, New York, Albany, Vermont, Wm. Mitchell, Appalachian, John Marshall, Ave Maria, Charleston, Charlotte, Florida Coastal, John Marshall of Atlanta, Hebert Law Center, New England, Southern Law Center, South Texas, Southwestern, Thomas Jefferson, Western / Argosy

That's 20 schools, of which 3 are state schools, 15 are private and philanthropic, and 2 are commercial.

Three of these are in 3d tier cities and five are in small towns. (About 85% of all private research university enrollment is to be found in 1st tier (e.g. Dallas) or 2d tier (e.g. Pittsburgh or Charlotte) cities. Only about 6 of these 20 schools are ranked by U.S. News, of which one is in a 3d tier city and two are in small towns.

They seem disproportionately private, provincial and ho-hum in selectivity.

Posted by: Art Deco | Mar 9, 2017 11:01:51 AM