Monday, July 1, 2019

The trend in law school mergers

The online ABA Journal has an interesting article on the growing trend in law school mergers over the past few years. Some have been born out of a desire to avoid possible closure in light of falling applications while other mergers are motivated by a more proactive effort on the part of law school administrators to strengthen their brand in a tightening market. 

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. Around the same time, the law school was given a “zone” rating by the U.S. Department of Education, which means that it was close to not meeting gainful employment standards, and must pass the gainful employment standard in one of the next four years to stay in good standing.

 

In February 2019, the law school filed an application to switch to nonprofit status with the ABA’s Section of Legal Education and Admissions to the Bar. Scott DeVito, the law school’s dean, says that if the plan is executed, the next step would be to become affiliated with a nonprofit university.

 

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.

. . . . 

Continue reading here.

(jbl).

https://lawprofessors.typepad.com/legal_skills/2019/07/the-trend-in-law-school-mergers-.html

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