Charleston law school the first, but likely not the last

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Charleston School of Law in Charleston, South Carolina, is on the verge of becoming the first law school to shutter its doors since law school applications began to plummet in 2011, but experts in legal academia say it’s very unlikely to be the last.

As law school applications swelled in the early part of the century, the number of law schools grew with it—the number of schools in North Carolina swelled from five to seven during the boom—but a course correction has long appeared inevitable, even overdue.

The consolidation began this February, when two law schools in St. Paul, Minnesota, Hamline University School of Law and William Mitchell College of Law, announced their plans to merge. But CSOL would be the first to out-and-out close, a result of both its own unique problems and structural factors affecting law schools everywhere, especially the ones furthest down in the academic pecking order.

It’s unclear how many schools might ultimately wind down, but there are plenty of candidates. Earlier this month, the Boston Globe reported that the University of Massachusetts School of Law ran a $3.8 million deficit last fiscal year and expects to run an even bigger one this year. Appalachian School of Law in Grundy, Virginia, is widely believed to be in danger of closing; the school admitted just 45 incoming students last fall and may admit even fewer this fall.

Brian Tamahana, a law professor at Washington University in St. Louis, said that the pressure will be felt most acutely by stand-alone law schools unattached to a larger university, regardless of whether those schools are for-profit or nonprofit institutions. CSOL is a for-profit, stand-alone institution.

At many stand-alone schools, Tamahana said, acceptance rates are already so high that schools have no way to respond to the drop in applications except to accept anyone who enrolls and absorb the hit to academic credentials.

“It’s not their for-profit status in itself,” Tamahana said. “In the short run, many for-profit schools are better positioned to weather the storm because they’re simply dropping their standards to levels that universities would be hesitant to go to.”

Where others fear to tread

Indeed, universities’ reluctance to lower admission standards is a main reason why contraction among law schools might be less widespread than some had initially predicted. Deborah Merritt, a law professor at Moritz College of Law at The Ohio State University, said that mid-ranked law schools have been more willing to forgo revenue by reducing class sizes than she had expected. If class sizes had remained constant, even more schools would likely find themselves in trouble, she said.

“I think schools have just quietly grown a bit smaller,” Merritt said. “So with the classes shrinking at so many schools, the herd has been more spread out than it might have otherwise been.”

Merritt said a closure at CSOL likely wouldn’t send any shock waves through dean’s offices at other law schools—closures have been expected for a while, and CSOL is seen as an outlier among law schools because of the way that its for-profit owners siphoned off money from its coffers. She said that news of a closure might deter students from applying to lower-ranked schools, especially for-profit ones, but that the impact might be limited since students are already wary of them.

Three of the remaining for-profit law schools in the U.S., including Charlotte Law School, are owned by the InfiLaw consortium, which is itself owned by a private equity firm.

Greensboro attorney Kyle McEntee, executive director at Law School Transparency, an advocacy and reform group, said that funding model might leave its three law schools better positioned for the current climate than a nonprofit stand-alone law school because it’s easier for a private equity firm to have longer time horizon. But he agreed that the environment remained difficult for stand-alone law schools generally.

“Unless you have some kind of external source of revenue that sees the investment for the long term, or at least doesn’t want the short-term embarrassment of having the law school close on your watch, you can’t get the financing you need,” McEntee said. “I don’t think there are many lenders lining up to make loans to stand-alone law schools.”

It’s tough all over

But affiliation with a university also brings along its own set of dangers, McEntee said. He likened the problem to the rash of dental schools at prestigious universities that closed in the 1980s and 1990s. Dental schools across the country were facing financial headwinds as applications dropped nationally, but for those universities that closed down their schools, the bigger impetus was usually the declining academic quality of the students the schools were forced to accept.

“It’s not that they couldn’t afford [to keep the schools open], it’s that they didn’t want to,” McEntee said. “Maybe a university has a great reputation, but the law school is dragging that reputation down as it struggles. So then it’s not so much a financial issue as, ‘you’re making us look bad, so we don’t want you to be around anymore.’”

For stand-alone law schools, the worries are different. Many schools have had their credit ratings downgraded by rating agencies, in some cases all the way down to junk status. Borrowing can thus be prohibitively expensive for schools trying to get through lean years, as CSOL is. Just as the school tried unsuccessfully to hitch its fortunes to InfiLaw, many others could find themselves searching for lifelines.

“Whatever happened with InfiLaw, I think Charleston would have been under similar pressure no matter what. This is a nationwide phenomenon. Charleston may be going under, but it’s not the only institution that is,” Tamahana said. “The schools that are going to survive will be the ones who were financially prudent and set aside money they can draw down on, and apparently Charleston didn’t do that.”

Follow David Donovan on Twitter @NCLWDonovan