Paul L. Caron
Dean


Tuesday, July 9, 2019

Over Past Three Years, Seven Law Schools Have Tried To Be Acquired By Universities

ABA Journal, Urge to Merge: Difficult Times for Law Schools Have Prompted Several to Attempt to be Acquired by Other Schools:

Law school enrollment has decreased significantly since the Great Recession, as have many law schools’ reputations. Fewer graduates are passing the bar, and for the past two years, less than 70% of new lawyers were hired for full-time, long-term jobs that require bar passage after graduation—jobs that, at one point, had been the minimum expectation for newly minted JDs.

In the past three years, seven law schools announced plans to partner, gift or sell themselves to universities—all but begging the question: Why would anyone want them?

The answer comes down to net tuition revenue, which matters more than academic reputation, says Ken Redd, the senior director of research and policy analysis at the National Association of College and University Business Officers. According to him, a private institution with net tuition that grows 3% or more annually is generally seen as desirable.

“It’s about trying to make as much money as possible for healthy institutions. If there was some scandal that made the news, you might see some hesitation. But if it’s just something garden variety, like ABA probation, [universities] do not care about that,” Redd says.

Also, while there are approximately 235 law schools, there are only 203 accredited by the ABA.

“It remains a quality brand,” says Barry Currier, the ABA’s managing director of accreditation and legal education. “Law schools used to be a so-called cash cow for universities. I’m not sure that was really true, but at least they broke even or slightly better. Now law schools are having to be subsidized by their universities, and that makes them less attractive than they might have been.”

In some cases, these proposed mergers were actually bailouts designed to rescue failing schools. Not all, however, are failing schools.

Approximately two years ago, Florida Coastal School of Law, one of three for-profit law schools operated by the InfiLaw System, announced that it was looking for a nonprofit partner. ...

Only two proposed mergers have been approved so far. A deal between Michigan State University College of Law (an independent entity) and Michigan State University remains pending, while the University of Illinois at Chicago’s acquisition of John Marshall Law School, a stand-alone school, is nearing completion.

A fellow InfiLaw school, Arizona Summit Law School, had tried in 2017 to affiliate itself with Bethune-Cookman University, only to announce it would shut its doors the following year. Meanwhile, Valparaiso University Law School and Whittier Law School both decided to close after mergers were either rejected or failed to materialize; and Western State College of Law at Argosy University, currently in receivership, filed a teach-out plan (which closing schools take to ensure students complete study programs) that was approved by the ABA in May. The ABA also approved an alternative option for Western whereby it would be acquired by an unnamed university. ...

Three years ago Robert Zemsky, a professor at the University of Pennsylvania and a member of the board of trustees at Whittier College, predicted that if law school enrollment continued to decrease, 10 to 15 schools might close. His study, “Mapping a Contracting Market,” analyzed 171 law schools and found that between 2011 and 2015, enrollment dropped by 21% at private law schools and 18% at public law schools.

Between 2017 and 2018, there was a 1.2% increase in law students overall, according to ABA data. Nevertheless, Zemsky says that for the most part, it still doesn’t make much sense to acquire a law school.

“If you’ve got a fairly good stand-alone school, where the flagship doesn’t have a law school, that could be likely. But I don’t think anybody is looking for that, because it’s a loss leader of an extraordinary nature,” says Zemsky, adding that stand-alone law schools are in the most danger: They don’t have a university to absorb costs. 

Likewise, he doesn’t see law schools that are part of universities closing or being sold off.

“Even though law schools are expensive, they’re small. So at a big public university, they can cover the losses for a long time. It’s easier to cut costs where you can, hold your breath and soldier on.”

https://taxprof.typepad.com/taxprof_blog/2019/07/over-past-three-years-seven-law-schools-have-tried-to-be-acquired-by-universities-.html

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Comments

"Three years ago Robert Zemsky, a professor at the University of Pennsylvania and a member of the board of trustees at Whittier College, predicted that if law school enrollment continued to decrease, 10 to 15 schools might close."


Or if Senator Alexander deep-sixes GradPLUS Loans with the tentative HEA reauthorization this year. Or if Congress and/or Trump gut income-based repayment and PSLF. Or...

Posted by: Unemployed Northeastern | Jul 9, 2019 2:18:52 PM

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