The For-Profit Law School That Crumbled

The Charlotte School of Law may not be able to outrun the latest—and most damning—chapter of its at-times-scandalous existence. For years, the for-profit school was targeted by critics for its increasingly negative student outcomes: median LSAT scores in the low 140s, state bar-passage rates that hovered around 45 percent, high student indebtedness, and lackluster employment figures. In 2014, a routine re-accreditation site visit by officials from the American Bar Association led to closer scrutiny of the school’s admissions and teaching practices. That same year, it appears the school began offering $11,200 grants to students who delayed taking the bar. During October of last year, the school was placed on probation by the American Bar Association.

Then came the most damaging news: in mid-December, the Department of Education denied the law school’s application for recertification under Title IV of the Higher Education Act. This decision prevented Charlotte’s students from receiving federal loan money—an unprecedented decision for a law school that remains accredited, for-profit or otherwise. Now without a significant source of revenue, the school saw no choice but to fire up to two-thirds of its faculty and close several of its legal-aid clinics.

For many years, experts had predicted the demise of underperforming law schools. The legal employment market has been especially grim since 2009, when the recession caused a sharp decline in demand for legal services—after which large firms responded by laying off substantial numbers of associates. Although the market has seen a 9 percent decline in law-school graduates from 2014 to 2015, there has been a corresponding 8.6 percent decline in the number of legal jobs that require admission to a state bar. As a result, in 2016 the number of law-school graduates exceeds that of legal jobs for them to fill. And these graduates face other obstacles besides securing a full-time job, as students who have completed three years of law school can expect to be saddled with tens of thousands of dollars in loan debt.

To top it off, the average score on the Multistate Bar Examination (a multiple-choice section of the bar administered in every state but Louisiana) dropped to 139 in 2015, its lowest number in years—perhaps indicating that the latest crop of entry-level lawyers is less intellectually proficient than its recent predecessors.

These concerns have become particularly evident at the three for-profit schools that comprise the InfiLaw System, a consortium owned by the private-equity firm Sterling Partners: Charlotte, Florida Coastal School of Law, and Arizona Summit Law School. The University of Colorado law professor Paul Campos explored how desperate the situation had become in 2014, authoring a story for The Atlantic in which he argued that for-profit legal education was scamming potential students and would likely “[leave] federal taxpayers … stuck with the tab, even as the schools themselves continue to reap enormous profits.” Now, it appears that those predictions are quickly becoming reality, as students and faculty at Charlotte struggle to run a for-profit law school without access to federal loans.

Campos’s critique had been inspired by an unorthodox presentation given in April 2014 at Florida Coastal School of Law by David Frakt, a finalist for that school’s deanship. Frakt used his allotted time to focus on “sharply declining enrollment, drastically reduced admissions standards, and low morale among employees” at the InfiLaw campus. Frakt was told to leave the campus before he could finish his PowerPoint slides, but his straight talk was applauded by the growing community of “scambloggers”—disenchanted journalists, academics, and graduates dedicated to exposing the many deceptions employed by law-school administrators to pad their employment and admissions numbers. These individuals often argue for nothing short of shock therapy, shutting down as many underperforming law schools as possible.

If Charlotte School of Law ceases operations, their wish may soon be granted. Many underprepared students will not receive their degrees or sit for the bar, incompetent law-school administrators will eventually lose their jobs, the legal market will be spared a further glut of heavily indebted job-seekers willing to drive wages even lower, and Charlotte will return to its dubious status as America’s largest city without an accredited law school. At least in this instance, goes the scamblogger argument, the free market would have its way.

Brian Clarke, an assistant business-law professor at Western Carolina University who taught at Charlotte from 2011 until 2016, has a different view of the situation. “I’m sure the people who predicted this, Paul Campos and the scambloggers, will be overjoyed,” he told me in a phone conversation. “But this is a tragic development, not a positive one.”

Ben Labe, a Ph.D. candidate in economics at the University of North Carolina whose work focuses on the behavior of nonprofit institutions, believes this isn’t some isolated tragedy, but rather the harbinger of an impending collapse of for-profit higher education. “The French theorist Jean Baudrillard argued that the real scandal of Watergate consisted in convincing everyone that Watergate was a scandal rather than standard operating procedure for the government,” he said in an email. “By that same logic, it can be argued that denying federal funds to one or two for-profit schools, a Charlotte School of Law here and an ITT Tech there, somehow means the system has purged and cleansed itself. Far from it: The entire system of for-profit education remains toxic.”

Charlotte’s problems did not happen overnight, Clarke explained. “Our earliest classes—in 2011 and 2012—were about as strong as could be expected, with a handful of excellent students who would fare well anywhere and others who needed more assistance,” he said. “But by 2013, that had changed. 2013 was a much weaker class, as the market for legal education had cratered and other, better schools were forced to poach students who previously might have opted for Charlotte and excelled here. Then, in 2014, the school was up for reaccreditation, and that’s when things went downhill.”

Lewis Wasserman, an attorney and education researcher, was surprised by the Department of Education’s decision to terminate Charlotte’s eligibility for federal funding. While in private practice, Wasserman, an associate professor in the University of Texas at Arlington’s department of educational leadership and policy studies, sued both the federal and New York state education departments to enforce the Individuals with Disabilities Education Act. “What you learn as you do this kind of work is that these regulating agencies have rather cozy relationships with one another, and most of their punishments are toothless exercises in semantics: schools are placed ‘under review,’ ‘under supervision,’ ‘on probation,’ and so forth, but these are mainly publicity measures, things to tell the newspapers. Truly punitive measures are typically a last resort.”

Jay Conison, Charlotte School of Law’s dean, has found himself squarely in the crosshairs of this controversy. Conison, who served on the ABA’s Accreditation Committee for several years beginning in 2005, was an accreditation wonk, someone who knew the standards—and the criteria needed to meet those standards—as well as anyone in the country. I have firsthand knowledge of Conison’s expertise on this subject, having assisted him with academic papers about law-school accreditation when I was a student research assistant and he was serving as dean of the law school at Valparaiso University, a private, nonprofit institution in Indiana.

And yet, in spite of this expertise and what Clarke described as “the best of intentions,” in November 2016, the ABA censured Valparaiso and placed Charlotte on probation—in both cases because of actions that occurred under Conison’s watch. The censure at Valparaiso covered the years between 2007 and 2013, during which time the ABA claimed that the school had admitted students who were unprepared to pass basic legal classes or the bar examination. In the case of Charlotte’s probation, ABA officials cited a lax admissions policy as well as the absence of a “rigorous program of legal education” that would prepare students for the bar examination.

I recently reached out to Conison to get his take on the troubles facing the school. He initially accepted, but Victoria Taylor, the school’s public-relations director, later canceled our interview, asking that I instead refer to letters the dean had issued to the university community.

Clarke wasn’t surprised by Conison’s reluctance to speak on the record. “You asked me for the names of other professors to talk to, faculty who recently left or are still there … well, not many people are going to be willing to go on the record,” he said. “The faculty who took buyouts accepted them subject to non-disclosure agreements, and the folks who are still there are probably nervous about what’s going on right now. Everyone is worried about lawsuits.”

Lost in the struggle to keep Charlotte’s doors open is a discussion of the school’s much-changed curriculum, which may have already left many underprepared students without a secure option to continue their law education.

“Over the past decade, law schools have been cutting off their noses to spite their faces as far as course offerings go,” Wasserman explained, noting that law schools had begun emphasizing skills-based education, such as clinical experiences, at the expense of elective courses that covered subjects that were on state bar exams. “Learning how to practice law is useful, and it’s nice to see law schools teaching you how to draft documents and interview clients, but we used to learn that on our own, after law school.”

Clarke affirms Wasserman’s assessment, at least insofar as it applies to Charlotte School of Law. “We had a legitimately fantastic teaching faculty, the best I’ve ever encountered … everyone was there because they wanted to be there,” he said.  However, Clarke stressed that Charlotte’s focus on practical skills over instruction in bar exam subjects proved problematic in a state that tests students across 16 subject areas. “Many of our students weren’t very good writers when they arrived, and by the time they graduated, they weren’t all that much better equipped to answer the essay questions on the bar exam.”

October’s probation was only the beginning for Charlotte, which, like Valparaiso, had already bought out the contracts of some of its faculty. The Department of Education’s decision in December to terminate CSL’s access to federal loans, however, meant the end was not only going to be certain but also swift; last year, federal aid and loans to the school’s students amounted to nearly $50 million. Feelings of confusion and anger permeated the campus, with students worried about their futures. “Again, it’s just infuriating. We’re smarter than that. [Administrators] should have told us this stuff beforehand. You have held our futures hostage,” a third-year law student, Margaret Kocaj, told The Charlotte Observer.

Conison and Charlotte’s president, Chidi Ogene, had engaged in tense negotiations with the Department of Education but announced on January 19 that they had reached an impasse. They claimed to be working to ensure that students who had received federal loans for the fall 2016 semester would also receive funding for the spring. In order to remain operational in the spring, Ogene and Conison said the school would credit students’ accounts with these loan funds in anticipation of the government’s payments—thus enabling students entering their final semesters to graduate in the spring.

Since the school and Department of Education had failed to come to terms regarding a “teach-out” plan to conclude operations at the school, students who were in their first and second years might not be eligible for federal loan discharges. Unlike loan forgiveness, which requires the borrower to make a certain number of payments to the government before the debt is written off, discharge is immediate. In their email to students, Conison and Ogene defended the school’s decision by pointing out that “getting a loan discharge does not give students back their two or three years of hard work … and students would have to give up their hard work since … to obtain a discharge a student would have to agree not to use the credits earned at CSL to transfer to another school.”

The economist Ben Labe is unsurprised by these developments and echoed Campos’s earlier concerns about the accountability of for-profit universities. “For-profit universities have a horrendous track record compared to nonprofit private and state schools as far as student outcomes go,” he said in an email.

Indeed, for Clarke, the InfiLaw System—which according to the available literature on its website prides itself on “faculty availability [and] mentoring” as well as “innovation that responds to emerging market realities”—had its strengths and was in many ways comparable to nonprofit law schools. “It’s true that we had a wonderful faculty,” he told me. “Almost all law schools during the early 2000s were profitable enterprises for the nonprofit schools that ran them. They received loads of tuition dollars and added to the bottom lines of those schools, enabling them to subsidize other, less profitable operations. Sterling Partners set up InfiLaw to do much the same thing that nonprofit law schools were doing, except they’d just pocket those profits.” (Infilaw did not respond to a request seeking comment.)

Scott DeVito, the dean of Florida Coastal School of Law, emphasized the value of diversity, rather than profit, when he defended his InfiLaw-owned school’s poor 2015 bar results.  DeVito criticized the correlation between low LSAT scores and lack of success on the bar exam, explaining in a letter sent to the university community, “There are 15.5 percent fewer Asians, 50 percent fewer blacks, and 48 percent fewer Hispanics that pass the 150 LSAT checkpoint than we would expect given the population of college-educated 25-34 year olds,” he wrote. “I am not saying that we should admit students to the legal profession that we do not think can succeed. What I am saying is the only solution to the bar-results problem that I currently have, using higher LSAT scores as a checkpoint, will harm another outcome—diversity in the legal profession. The problem is that if you ask the majority of our critics which is more important, first- time bar passage rates or a culturally diverse student body, I feel comfortable wagering the former would be considered more important.”

Wasserman has studied trends in higher education for the past four decades and believes accessible forms of legal education for lower-performing students will persist—as will ugly incidents like the situation in Charlotte. “I think we’ll see the development of hybrid law schools, partially online and partially in classrooms, that will keep costs contained while delivering the essential aspects of a law-school education,” he said. “Law schools will merge with other law schools, larger universities may acquire failing nonprofit law schools owned by smaller universities, and for-profit legal education, which is inherently problematic because of the obligations to maximize profits for shareholders, will eventually disappear from the scene—though that part of the process won’t be pretty.”

Wasserman is right, I suppose, but that doesn’t change the fact that this is a complex and unsatisfying situation. When I sat for the Pennsylvania bar in July 2007, I took comfort in the state’s overall 77 percent passage rate; that meant, my mother explained, that I only needed to perform better than two out of every 10 people. I hadn’t studied for the exam, having decided to enroll in a Ph.D. program instead, but was merely taking it as a matter of course. At the time, Conison had been one of the most enthusiastic advocates of the Ph.D. course of action, urging me to opt for the relative safety of a five-year graduate fellowship over an uncertain future in law.

I bubbled in my answers and typed my essays, ultimately passing the exam with plenty of cushion. During the breaks between sections, I retreated to the lobby and listened to the other test-takers engage in spirited bull sessions about the responses to difficult questions. The loudest students were almost always wrong, just as they had been in law school, but none of that mattered. What was going to happen to these people? I wondered. For how much longer could thousands of fresh-faced new lawyers, so laden with debt and despair, continue to enter a shrinking market? Time is the most valuable quantity we have, and some students at Charlotte School of Law had invested two years of their lives in a system that’s poised to fail them.

“It’s such a terrible shame,” Clarke said, repeatedly, throughout our conversation. “I keep thinking it could have been different. Yet with everything that’s been happening to the legal profession in this country—all these negative developments—how could it?”