The Legal Beat

Prospective Law Students Now Have To Think About Whether A Law School Is In Danger Of Closing Before They Graduate
Posted on Wednesday March 13, 2019

Western State College of Law is a respected school in Orange County, California. Most of the prosecutors and public defenders in the county courthouses are Western State graduates. A quarter of the county’s judges and commissioners are alums. I have colleagues and friends from the school and will not hesitate to refer potential clients to them. This, along with being the oldest law school in Orange County, I thought it would survive the law school day of reckoning.

So I was surprised and sad to hear that Western State is on the verge of closing, soon to become the latest victim of the new normal.

To make things worse, the school’s potential shutdown was sudden and immediate due to the Department of Education’s decision to cut off federal student loan funding. As a result, students were unable to get student loan money to pay for rent and basic necessities and have resorted to setting up a GoFundMe page to solicit donations. Presently, there is no announcement of a teach-out plan or any kind of restructuring plan.

While I sincerely hope Western State will pull through, I have read about enough law school closures over the years to know that the school’s fate is pretty much sealed. Even their dean acknowledged this.

Even though Western State is on its last legs, I don’t think it will be the last law school that faces closure. In the last few years, a number of law schools have closed, including my alma mater Whittier Law School. There are other law schools in similar financial straits and I don’t think the sudden interest in law school due to the rage against the Trump machine will help.

The 2020 U.S. News law school rankings are now available and like every year, there will be a cohort of potential law students who can only attend the lower-ranked schools. A few of them are in danger of closing due to financial or accreditation problems.

Not only will students have to worry about getting a job after graduation or passing their state’s bar exam, they will have to wonder whether their school will still be around by the time they graduate. And if the school closes, will it do so in an orderly fashion to ensure that all of their remaining students will graduate and be eligible to take the bar exam? Or, as in Western State’s situation, will the rug be pulled out from under the students, creating a panic and forcing them to somehow find money for food and shelter?

When a law school closes, there is that feeling of embarrassment having to explain what happened to family and employers. But there are also some tangible consequences that can make things difficult for students and recent alums. First, they may have trouble getting official transcripts which they will need in case a potential employer or a graduate school admissions office requests one. Second, the school’s law library and career services will also be unavailable. While some may question the latter’s usefulness to alums, it’s better than nothing. Finally, there is the uncomfortable feeling of realizing that you are on your own. Many schools may have alumni associations students can turn to for assistance but their effectiveness depends on the alumni base and the leadership.

So which school will be next to close? I’m not going to name and shame a particular school or make any predictions about which one will close next. But after reviewing the schools that have recently closed, I noticed some patterns that should raise some red flags for potential students.

First, almost all of the schools that closed were due to large drops in enrollment. Even though some schools lowered admission standards under the guise of promoting opportunity and diversity, apparently even this revenue-boosting strategy was not enough to get their financials back in the black. I should note that there are many law schools that are strategically and voluntarily reducing enrollment to improve job placement percentages and ultimately their reputation, but usually these schools have financial reserves or are backed by a central university.

Second, some of the schools that closed are for-profit entities. Many for-profit schools are getting a bad rap for their predatory practices even though some non-profit (and tax exempt) schools have been doing the same thing.

Third, the school has had accreditation issues in the past. In most cases, they were rectified or were placed on probationary status. But keep in mind they were investigated for a reason.

Fourth, the school has downsized and has gone through numerous management changes. If a top official resigns in less than a year, that’s usually a bad sign.

Finally, the school has been subject to a lot of negative press. Look, every law school will make a mistake once in a while. People will write about it and maybe get a few laughs. Lessons will be learned and everyone will move on to the next outrage. But if a school is constantly in the news for bad employment outcomes and for things that will make a prospective student wonder, “Am I going to be a jobless, perpetual debt slave by enrolling here?” that school will face irreparable financial damage.

Even if a law school has any or all of the warning signs I listed, it does not necessarily mean the law school is in danger of closing. However, I would advise prospective students to take a closer look at the school’s financial standing and ask some tough questions to the administration before even considering attending.

The sad story of Western State serves as a warning to potential law students that a school with poor bar passage rates and employment outcomes might be in danger of closing. While I think only a few schools are at risk and the chances of closure are small, potential students need to be diligent and not be afraid to ask detailed financial questions — a useful skill in actual law practice. Because if a school unexpectedly closes during the school year, their students may end up in a precarious situation where they cannot get money to pay the rent, have difficulty obtaining necessary paperwork from the school, and lose resources students and recent alums need to start their careers. That is not something students need to deal with after they finish their midterm exams.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected] Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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