The Future of a Once-Doomed Law School

Earlier this year, it appeared as though the Charlotte School of Law would have to close its doors. The for-profit school, which had long suffered from poor bar-passage rates and long-term employment figures, was placed on probation last November by its accreditor. A month later, the U.S. Education Department announced that it would be refusing the school’s access to federal loan money, likely spelling the end for an institution heavily reliant on this source of revenue. Its dean quickly resigned, as did the interim dean who replaced him shortly after that. Enrollment dwindled to some 100 students.

Charlotte Law’s apparent downfall reflected broader trends in the legal-education marketplace. Enrollment in Juris Doctor programs dipped to 110,951 students in the 2016-17 academic year, down from 147,525 students in 2010—a decline that has cost schools approximately $1 billion in tuition. The situation is particularly acute at non-elite law schools. Plummeting enrollments are forcing Indiana Tech Law School and Whittier Law School, both of them nonprofits, to close their doors, for example.

For Charlotte Law, efforts during the early months of 2017 to regain access to federal loan monies had proven unsuccessful. According to The Charlotte Observer, the resignations of both the dean and interim dean were motivated in part by their inability to convince the Education Department to release loans to cover students’ education expenses. “If I felt I could effect anything positive for the school at this point,” the interim dean, the former federal prosecutor and faculty member Scott Broyles, told the newspaper in April, “I would not have resigned.”

Yet Charlotte Law, which is part of the for-profit InfiLaw consortium, had reason to be optimistic. Indeed, Lewis Wasserman, an associate professor in the University of Texas at Arlington’s department of educational leadership and policy studies, in January offered one possibility for the school’s recovery: “About the only way the school could extricate itself from this situation is if Trump’s incoming Department of Education leadership takes a different view of this situation than Obama’s had,” he told me then. “It’s possible a Republican administration would look more kindly on a for-profit operation like InfiLaw.”

Perceived as having profited off vulnerable students during the Great Recession, for-profit universities received harsh criticism from then-President Obama and increased regulatory scrutiny by Department of Education officials. In 2015, a “gainful employment” rule took effect requiring schools to monitor student employment and cutting off access to federal funds if certain statistical benchmarks were not met. But Betsy DeVos, the education secretary appointed under President Trump who has long expressed a desire to roll back regulations, in June announced the department would substantially rewrite the gainful-employment rule; two weeks later, she delayed the implementation of key parts of it. The moves are emblematic of the “regulatory reset” that the Trump administration is pursuing in for-profit higher education.

In other words, Charlotte Law, which had once found itself on the wrong end of developments in both the legal education and for-profit-college marketplaces, may have found a reprieve. In late July, the school announced that it had come to an agreement with the Education Department to restore access to federal funds. When contacted for comment, a Charlotte School of Law spokesperson directed me to a press release confirming that the school’s access to federal funding is “effective for the coming fall semester” as long as it complies with certain conditions. Further details, which are still “under discussion,” have yet to be announced.

Paul Meggett, who in June replaced Broyles as interim dean of Charlotte Law, expressed optimism about the school’s future. “We are excited at the prospect of being able to help our students complete their legal education,” the school’s press release quotes him as saying. “CSL continues to work closely with the American Bar Association and the [University of North Carolina] Board of Governors to resolve all remaining compliance-related matters.”

Staying open, however, is only half the battle. As a lengthy article published last week in the ABA Journal emphasizes, the school continues to grapple with poor student outcomes. In fact, all three InfiLaw schools—Arizona Summit and Charlotte, which are on probation, and Florida Coastal School of Law, which is not—have failed or are close to failing to meet the Education Department’s debt-to-income ratio requirement. Failing could compromise their access to federal loans regardless of whatever temporary arrangement Charlotte Law administrators reach with department officials.

What’s more, Charlotte Law remains firmly in the crosshairs of state regulators, who’ve prohibited the school from admitting new students until it proves it’s financially stable. The state’s Democratic attorney general is also conducting an investigation into whether Charlotte Law misrepresented information to prospective students.

The experience of students such as Barbara Strang, who was profiled in the ABA Journal’s recent story about the school, indicate that investigation is onto something. Strang says she has $200,000 in debt, failed the bar, and has been unable to find anything but low-paying work. “When people talked to me about where I went to law school, they cringed,” Strang told the Journal.

Ben Labe, a Ph.D. candidate in economics at the University of North Carolina who focuses on the behavior of nonprofit institutions and has followed this story closely, hopes that former and current Charlotte Law students are eventually able to recover damages for money they’ve spent on tuition and living expenses. Still, the Education Department’s decision to reverse course, he argued, isn't surprising. Senate disclosure forms show that Charlotte School of Law paid the Podesta Group $50,000 to lobby Washington officials on its behalf.

And he ultimately he believes that this controversy is just “a drop in the bucket” when it comes to dealing with what he described as the excesses of the for-profit education industry. The Trump administration’s favorable relationship with these institutions, he contended, will likely make the sort of rigorous oversight Obama sought “difficult if not impossible.”

Some argue that’s a good thing. Richard Bynum, a lawyer who operates a small lobbying firm in Raleigh but also represents business interests throughout Charlotte, believes that state agencies ought to be working to sell the school or otherwise keep its doors open—not hasten its closure. Stressing that it is the only accredited law school and a major tenant in Charlotte, North Carolina’s largest city, he argued that losing the institution “would be a terrible blow” to the state. The state attorney general’s decision to conduct a civil investigation into the law school, Bynum said, is “partisan politics at its worst.”

Bynum, while expecting the worst, tries to remain hopeful about the situation. “My mother used to say that in most fights there are at least two losers,” he said. In Bynum’s opinion, for-profit education still had the potential to diversify the legal profession, giving members of historically underrepresented groups a chance to join the state bar, while also continuing to drive down the cost of basic legal services in North Carolina.

Even Margaret Kocaj, a Charlotte Law graduate who has been critical of the institution, stressed that the city would be worse off without a law school. “I truly believe that Charlotte needs a law school,” she told the ABA Journal. “There are a lot of people it can serve.”