InfiLaw, Charleston School of Law, and the rise of for-profit colleges

John Robinson, a local attorney and president of the Charleston School of Law Alumni Board, fondly remembers the closeness he enjoyed with faculty and fellow students as a member of the private law school’s inaugural class of ’07. With almost all of the courses being taught in a building on King Street, the students jokingly referred to the law school as a “one-room schoolhouse.”

“The idea was that we were all in this experiment together,” Robinson says. “The nice thing was that that has continued to be the case — up through this year.”

Like many Charleston School of Law students and alumni, Robinson is concerned about the future of the school, whose administration recently entered a nebulous “management services agreement” with Florida-based company InfiLaw System. To put it mildly, the Charleston legal community is highly skeptical about InfiLaw’s merits. But why should the rest of us care?

For starters, as one of only two law schools in the state, the Charleston School of Law is going to play a major role in producing South Carolina’s next generation of lawyers — the folks who will dissolve our marriages, defend us against lawsuits, and chase our ambulances, among other things. Rep. Stephen Goldfinch, a Republican lawmaker from Georgetown, has taken an interest in the issue and is pushing an alternate solution to save the struggling for-profit law school: Merge it with the publicly funded College of Charleston. “InfiLaw universally, throughout the legal community around here, has a very poor reputation … People see it as a diploma mill,” Goldfinch says. “We don’t want someone with a terrible reputation in our backyard. We want the utmost integrity, and we want the best lawyers we can get.”

As a privately owned, for-profit college, CSOL stands at a fork in the road. In one direction, the school can continue to pursue a relationship with InfiLaw, an out-of-state company that already owns three for-profit law schools in Phoenix, Charlotte, and Jacksonville. Or, choosing the other direction, it can merge with the College of Charleston and become part of a public, nonprofit institution.

A merger between CSOL and the College of Charleston would require approval from the state legislature, the Commission on Higher Education, and the executive boards at both schools. Goldfinch, whose wife Renee Goldfinch is a new member of the College of Charleston board of trustees, says he has heard support for the idea from members of three of the four governing bodies involved. He says the only ones who have given him the cold shoulder have been the leaders of CSOL, who have remained tight-lipped about the details of the InfiLaw agreement and who have refused to say whether a sale to InfiLaw is in the works. When asked if any of CSOL’s board members would be willing to comment on the merger proposal, school spokesman Andy Brack replied with a one-word e-mail: “No.”

Goldfinch is encouraging voters to contact their legislators and push for the CofC merger option. And as a self-described “extreme fiscal conservative,” he’s pitching it as a sound financial decision for the state.

“Law schools are traditionally cash cows for states,” Goldfinch says. “So switching this for-profit law school over to a government institution is not another example of big government getting in the way or an extra cog in the wheel. This is going to be a profit center for the state.”

In addition to the proposed merger with the College of Charleston, the Charleston School of Law Alumni Board is considering lodging a complaint with the ABA and the S.C. Commission on Higher Education. Students were kept in the dark about the InfiLaw deal until the news broke on FITSNews July 25, less than a month before the start of the fall semester.

InfiLaw’s Infamy

Charleston School of Law students weren’t the first to complain about InfiLaw. Lawsuits are currently pending against two InfiLaw-owned schools, Florida Coastal School of Law and Phoenix School of Law.

In February 2012, then-current and former students at Florida Coastal sued the school to address what they called “a systemic, ongoing fraud that is ubiquitous in the legal education industry and threatens to leave a generation of law students in dire financial straits.”

According to the lawsuit, the school was attracting prospective students by telling them that “between 80 and 95 percent of its graduates secured employment within nine months of graduation.” However, the lawsuit says, Florida Coastal was massaging those numbers by including graduates who found any type of employment, whether as attorneys or fry cooks.

The lawsuit alleged that if the school only included graduates who secured full-time, permanent positions for which a JD degree is required or preferred, “the numbers would drop dramatically, and could be well below 40 percent, if not even lower.”

InfiLaw CEO Rick Inatome says the lawsuit against Florida Coastal is “without merit.” He says the schools’ postgraduate employment data is audited by an independent firm and that the data is “comprehensively reported in a manner consistent with American Bar Association and Department of Education standards.”

The type of lawsuit being filed against Florida Coastal is by no means unique to for-profit law schools. Jesse Strauss, a New York attorney who helped file the lawsuit, currently represents plaintiffs in 14 similar suits, of which the majority were filed against nonprofit law schools. “The fact that they’re a private law school certainly piqued our interest, but we’ve sued a lot of supposedly nonprofit law schools as well,” Strauss says. “It’s an industry-wide problem.” The lawsuit is still pending in federal court.

In May 2013, another lawsuit was filed against an InfiLaw-owned school by Michael O’Connor and Celia Rumann, two former tenured professors who were fired by the Phoenix School of Law. According to the lawsuit, the two professors, who are married, were fired after they “opposed initiatives presented by Defendants’ administration that placed corporate profits above the articulated purpose, mission, values, and organization of the Phoenix School of Law.” Among their complaints, O’Connor and Rumann said the administration was:

• attempting to “reduce or eliminate the ability to attain tenure”
• attempting to reduce or eliminate professors’ role in setting admissions standards
• proposing curriculum changes that would make it more difficult for students to transfer to another law school and retain their credits, a change that Dean Shirley Mays allegedly described as “building a better mousetrap.”

O’Connor and Rumann filed the lawsuit against both the school and InfiLaw.

So, what is InfiLaw? The company is listed in the portfolio of Sterling Partners, a $4 billion private equity fund. Sterling Partners is heavily invested in the private health care and education industries, with a portfolio that includes the online for-profit Ashworth College, Sylvan Learning Systems tutoring service, virtual charter school operator Connections Academy, and music education service School of Rock. According to Sterling Partners’ profile on the tech company database CrunchBase, the company’s strategy is “to invest from $5 million to more than $150 million of equity in each company with which they partner.” Other investment firms that have put money into InfiLaw include ABRY Partners and Ares Management, according to an InfiLaw spokesperson.

Inatome, InfiLaw’s CEO, was once a co-owner of Computer City, a computer superstore chain that was sold to CompUSA in 1998 for $275 million. He also served as a managing director at Sterling from 2004 to 2012, according to his LinkedIn profile. “Although I started my business career in technology, early on I realized that people needed education more than they needed technology,” Inatome said in an e-mail interview. “To meet this requirement, we developed a business model that focused on the intersection of technology and education and partnered with many outstanding colleges, like the University of Michigan, Marygrove College, and Walsh College, where we ran the university’s small computer programs.” Inatome says he began investing in education companies 30 years ago, starting with Sylvan Learning Systems.

“Although I did not attend law school,” Inatome said, “I have been in the legal business for 10 years and have developed a deep understanding of, and appreciation for, the legal academy.”

Inatome would not say if money was exchanged as part of the agreement with Charleston School of Law, and when asked whether InfiLaw intended to buy the school, he wrote, “Any comments about the future of our relationship with Charleston School of Law would be speculative.”

Some Charleston School of Law students began applying to other law schools almost immediately after news broke of the management services agreement with InfiLaw. Citing fear of damaging their legal careers, few students were willing to speak on the record. One third-year student, speaking from an airport as he flew to an interview at another school, said he expected he would have to answer questions about the quality of his law education in interviews now that the InfiLaw news was creating a buzz in law circles. “Charleston doesn’t have the best reputation, but they’re not on a level with Charlotte School of Law, Florida Coastal, or Phoenix,” he said. “Those are thought of as the bottom of the bottom.”

Pot Kettle Black

At for-profit and nonprofit institutions alike, law school isn’t the surefire career starter it once was. The ABA reported 45,160 law school graduates in the class of 2012, of which only 28,873 found jobs that required passing the bar.

Increasingly, potential law students must weigh the risks and consider whether incurring tens of thousands of dollars in student loan debt is worth it in the long run. This is especially true at for-profit law schools, where tuition tends to be higher. Charleston School of Law, for instance, charges almost $38,000 per year for in-state tuition, compared to $22,000 at the public University of South Carolina School of Law. InfiLaw’s schools are not much more expensive than CSOL, averaging about $39,000 for tuition.

As private, for-profit colleges have expanded in the past two decades, they have come under increased scrutiny. A 2011 New York Times investigation found that student loan default rates were much higher at for-profit colleges (15 percent) than at nonprofit colleges (4.6 percent). In July 2012, the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee found that 96 percent of students at for-profit colleges were taking out loans and one in five were defaulting on loans within three years.

What does the steep tuition at Charleston School of Law get you? Not much, if you’re going by the data provided to the ABA (see infographic on p. 14). CSOL students are paying $16,000 more per year than USC Law students, and yet CSOL students are passing the bar at a rate nearly 10 percentage points below USC Law’s students. And going by self-reported data, CSOL’s bar passage rate is identical to the average for InfiLaw’s three schools.

Still, some parts of the law school experience aren’t quantifiable. Robinson, the CSOL Alumni Board president, says he appreciated the school’s emphasis on “the idea of being a professional lawyer as opposed to a businessman in the business of law.”

“I came here because everything I read and saw said this was going to be different than any other law school in its orientation toward public interest, its emphasis on pro bono work, this idea that it was going to carry a lot of Charleston legal traditions forward,” Robinson says.

But Strauss, the plaintiffs’ attorney in the Florida Coastal lawsuit, takes a dimmer view of law schools in general. He says he’s “optimistic” that the courts will find law schools guilty of misleading students with their job placement numbers.

“With something like InfiLaw, the veneer of public service wears thin on the law schools,” Strauss says. “Whereas a lot of schools are nonprofits and they started saying, ‘We have this duty to the bar and to educate the lawyers of the future,’ InfiLaw in some ways is a little more honest. They say, ‘We’re just here to make a buck.'”

How the law schools rate

South Carolina has only two law schools accredited by the American Bar Association: The public University of South Carolina School of Law and the private Charleston School of Law. USC Law is ranked No. 109 in U.S. News and World Report‘s ratings of top law schools, whereas CSOL — like InfiLaw’s law schools — does not even appear in the rankings. Here’s how CSOL stacks up against USC Law and the three InfiLaw-owned law schools, Florida Coastal School of Law, Phoenix School of Law, and Charlotte School of Law.