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

Monday, July 31, 2017

Charlotte Law School Faces An Uncertain Future, But It Is Not Alone

Charlotte Logo (2016)ABA Journal, Charlotte School of Law Faces an Uncertain Future, But It Is Not Alone:

Last year, the Department of Education, then under the Obama administration, cut off federal loans to current CSL students. The federal loans were released at the end of the school year, but only for some students. And it’s not just the students and graduates: The law school itself is caught in a grim scenario.

Out of the country’s six for-profit law schools that have ABA accreditation, three, including Charlotte, are part of the InfiLaw System, a consortium owned by the private-equity company Sterling Partners. Arizona Summit Law School, another InfiLaw school, was put on probation by the ABA in March.

As was the case with Charlotte, the council of the ABA Section of Legal Education and Admissions to the Bar found that the Phoenix-based school was not in compliance with admissions standards based on students’ Law School Admission Test scores and undergraduate GPAs. On the LSAT scale from 120 to 180, Charlotte’s median score was below 150 over the past five years, according to ABA data.

Arizona Summit and the third InfiLaw campus, Florida Coastal School of Law in Jacksonville, also had median LSAT scores under 150. Florida Coastal is not on probation, but in January it was found to be out of compliance with the DOE’s debt-to-income ratio requirement placed on for-profit schools. It could lose access to law school loans if the ratio does not improve by next year. ...

Charlotte and its sister law schools might seem like outliers, but they are not. A surge of problems has swept over these campuses — a stagnant job market for new lawyers, growing concern about law school costs and onerous student debt, disappointing bar passage rates, declining law school applications, and allegations of reduced entrance standards to fill law school seats. The surge is hitting many law schools, both public and private.

Two nonprofit law schools, at Indiana Tech and Whittier College, have announced they are closing —Indiana Tech’s closed in June. It’s something that was undreamed of when law school was so popular that some universities used some of their law school tuition income to help finance the rest of their programs. ...

Although the need for change is clear, little is being done. Perhaps that’s due to self-interest, some critics say, speculating that for-profit law school boards are only interested in maximizing profits. Some also accuse nonprofit law school faculty and administrators of fighting change to maintain their status quo.

ABA“The idea that nonprofit law schools aren’t as interested in profits as for-profit law schools is not accurate,” says Clare McCann, a senior policy analyst with the political think tank New America in its Washington, D.C., office. “These problems exist in all sectors, and there’s some really questionable behavior from institutions that are struggling to keep the doors open.” Previously a senior policy adviser with the DOE during the Obama administration, McCann worked on issues that included law school accreditation.

Paul Campos, a professor at the University of Colorado at Boulder Law School, predicts that five to 10 law schools will join those once part of Indiana Tech and Whittier by closing in the next few years. Comparing law schools’ listed tuition prices with grants and scholarships given, he found that between 2011 and 2015, tuition revenue decreased by 30 percent.

Campos says there’s now a comparison to be made between car dealerships and law school admissions offices. “At many schools, you’re a sucker if you pay full tuition,” he says. “They’re basically saying: ‘What do I need to do to put you in a law school seat today?’ ” ...

The Section of Legal Education and Admissions to the Bar is the federally recognized accrediting body for education institutions that offer a JD degree. Barry Currier, managing director of the legal education section, would not comment about criticism that the section is too lax on law schools.

“In the past few years we have, as a matter of course, placed more emphasis for our standards on outcomes, such as bar passage rates and employment data, than inputs,” he wrote in an April email to the Journal. “The council and the accreditation committee pay close attention to schools’ bar pass rates and enter into compliance dialogues with those schools where problems arise. Those matters are confidential under our process.”

ABA Journal, InfiLaw Investors Let Out of Students' Fraud Lawsuit Against Charlotte School of Law:

Investors in the parent company of InfiLaw Corp. on Thursday won a motion to get out of a fraud lawsuit brought against Charlotte School of Law, which is owned by InfiLaw Corp.

The motion-to-dismiss order, which refers to defendants Sterling Capital Partners L.P. and Sterling Capital Partners GMBH & CO. KG as “Sterling Entities,” was granted by North Carolina U.S. District Judge Graham Mullen,Law360 (sub. req.) reports. Mullen found that the court has no jurisdiction over Sterling Entities.

The lawsuit, which seeks class action status, was brought by current and former Charlotte School of Law students in December, shortly after the law school was placed on probationby the ABA and the Department of Education pulled federal loan money for CSL students. Based on court records, three other lawsuits filed against Charlotte School of Law are pending in the U.S. District Court for the Western District of North Carolina, and all of them are assigned to Mullen.

Above the Law, And The Next Law School To Close Down Will Be ...:

My guess: a member of the InfiLaw System, the consortium of law schools owned by the private-equity company Sterling Partners. ...

The InfiLaw Schools are desperately pursuing affiliation agreements with nonprofit universities. But nonprofit status is far from a panacea. Ward notes that two nonprofit law schools, Indiana Tech and Whittier College, have announced their closures (and Indy Tech in fact closed in June).

Prior TaxProf Blog coverage of Charlotte Law School:

http://taxprof.typepad.com/taxprof_blog/2017/07/charlotte-law-school-faces-an-uncertain-future-but-it-is-not-alone.html

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Comments

Law schools have a lot of excess capacity - unsold seats. Demand for legal education is still down, although bolstered by tuition discounts and truckloads of easy federal loan money. At some point the carrying costs of the excess capacity will force closures of some more schools, and not just those with a for-profit tax status.

Posted by: Old Ruster | Jul 31, 2017 4:26:07 AM

"Florida Coastal is not on probation, but in January it was found to be out of compliance with the DOE’s debt-to-income ratio requirement placed on for-profit schools. It could lose access to law school loans if the ratio does not improve by next year. ..."

So much for that wage premium. It's almost as if law is a highly stratified and pedigree-conscious profession! (a.k.a. you don't see Unemployed Northwestern running around here, do you?)

"Barry Currier, managing director of the legal education section, would not comment about criticism that the section is too lax on law schools."

Not shocking given that the federal overseer of higher ed accreditors, NACIQI, was quite upset about the ABA's lax oversight and recommended that it be stripped of its accrediting powers for a year last summer.

Posted by: Unemployed Northeastern | Jul 31, 2017 6:27:21 AM