Education / Schools, Law School Deans, Law Schools, Money, Student Loans

A Resigning Law Dean Spills The Beans On The Fleecing Of Law Students

Are law students being financially victimized by their universities?

It’s the not-so-veiled secret of the law school tuition game: law schools are the cash cows of the university system. University presidents, often feeling a budget crunch from a decrease in state educational funding or weak, recession-era fundraising initiatives, know they can get cash out of law schools. For some reason, law students always seem willing to pay more for the same education.

When the New York Times wrote its big exposé on law school funding, I highlighted this exact issue. The most interesting part of that Times article was the research David Segal did into how much money universities take from law school coffers. After the article went up, I wrote: “[N]obody in their right mind would pay hundreds of thousands of dollars to get additional education in some of this crap, because they know they’ll never make enough to justify the cost. The university needs to subsidize that education in some way — and so they turn to law schools.”

Apparently, we didn’t know the half of it. One brave law school dean has been asked to tender his resignation by his university president. On his way out of the door, the dean decided to shine a light on the whole ugly mess of law school economics…

Phillip J. Closius is the now-outgoing dean of the University of Baltimore Law School. But we should call him “Dean Whistle Blower.” His resignation letter, transmitted to the entire Baltimore Law community, is a reasoned explanation of everything that is wrong with the economics of law school.

In his long letter (reprinted in full below), Dean Closius explains how the University of Baltimore appropriates law school funds for “non-law University functions.” He explains his battles with the University president over even obtaining accurate data about how much money the university is taking from the law school. Apparently, the problem with law school transparency starts much higher up than we knew.

Here is the money section:

The unwillingness of the University to discuss in a meaningful way the growing imbalance in the financial relationship was also becoming a matter of principle to me. We have increased our in-state tuition over 70% and our out-of-state tuition over 48% in the last seven years. Our in-state day students last year paid $1,450 more in tuition and fees than University of Maryland law day students and our in-state part-time students paid $2,080 more than the University of Maryland law part-time students. Of our students in the 2010 graduating class who borrowed money, the average law school debt was over $95,000.

Media reports continually criticized the rising costs of legal education. I was becoming increasingly uncomfortable justifying tuition and fee increases to law students when the money was actually being used to fund non-law University initiatives. I was also concerned about my continuing effectiveness as Dean given statements by University officials that there were no plans to remedy the situation and that significant funding for School of Law programs was not a University priority.

I was becoming increasingly uncomfortable justifying tuition and fee increases to law students when the money was actually being used to fund non-law University initiatives. Thank you, Phillip Closius. Would that more of your fellow law deans were willing to put their jobs on the line to stop this kind of exploitation of the law student community.

After you read Closius’s letter, you immediately want to know if the problem is specific to the University of Baltimore, or if Closius is just the first dean willing to lose his job over a situation that happens almost everywhere. Closius suggests that Baltimore’s problems are extreme:

The financial data demonstrates that the amount and percentage of the law school revenue retained by the University has increased, particularly over the last two years. For the most recent academic year (AY 10-11), our tuition increase generated $1,455,650 in additional revenue. Of that amount, the School of Law budget increased by only $80,774. I do not know of any law school in the country receiving such a small percentage of its generated tuition revenue. A recent article in The New York Times noted that a 25-30% revenue retention by a university was considered high by national standards. As of academic year 2010-11, the University retained approximately 45% of the revenue generated by law tuition, fees and state subsidy. Using any reasonable calculation of the direct and indirect University costs, the University was still diverting millions of dollars in law school revenue to non-law University functions.

But even if most law schools are in the 25-30% range of university revenue retention, can that still be justified given the relevant market conditions? Is it right for law school tuition to go up, at all, given the weakness of the legal job market, just so law schools can pay a tithe to their parent universities? Perhaps Closius was willing to expose this situation because of the extreme difficulties he faced, but shouldn’t all law deans be trying to do something to stop the transfer of funds from over-indebted law students to the university as a whole?

In any event, taking a stand against this kind of behavior apparently cost Dean Closius his job. From his resignation letter:

We were inspected this last academic year and the University and I received the final report of the ABA Accreditation Committee on July 27. The report generally praised the condition of the law school but indicated a concern, among others, about the substantial amount of money the law school contributes to the University and the lack of a University explanation of a rationale by which the money retained by the University is determined. The ABA Committee requested that the University President and Dean submit a report by March 12, 2012 which provides in part a rationale for the School of Law’s share of costs for non-law school activities and central administration services and information about any agreement between the Law School and the University regarding a fair process by which the Law School’s contribution to the University for direct and indirect costs will be determined. The day after receipt of the ABA report, I was asked to resign.

You can read the full letter below. Let’s hope it is an inspiration to other law deans.


DEAN PHILLIP CLOSIUS — UNIVERSITY OF BALTIMORE SCHOOL OF LAW — RESIGNATION

July 29, 2011

To the School of Law Community:

At a meeting at 4 o’clock on July 28, University President Robert Bogomolny asked for my resignation as Dean of the School of Law. As of today’s date, I have resigned my position as Dean. I truly appreciate the support I have received from the faculty, staff, students and alumni of the School of Law. I write this decanal farewell in order to provide a brief explanation of why I am no longer Dean and to express my gratitude to all of you who welcomed me so warmly to Baltimore.

In the last two years, tensions have been increasing between the University administration and me regarding the financial relationship between the University and the School of Law. When I was a candidate for the Deanship, I was aware that, historically, the University retained a high percentage of the revenue generated by the law school. I was assured by the President at that time that he was aware of the problem and would work with me to remedy it over time. As I began my deanship, I realized that the law school did not possess accurate data in many areas, including its financial situation. Obtaining accurate financial data regarding the School of Law has not been an easy task. After much research and discussion, the University Finance Office and the School of Law agreed this past year on the amount of law school revenue generated by tuition, fees and state subsidy. I obviously always knew our School of Law budget. I have not yet received the critical data regarding the amount of direct and indirect University costs properly attributable to the School of Law. My insistence on having accurate data has exacerbated the difficulties between the University and me.

Every seven years, the ABA inspects law schools for renewal of their accreditation. The law faculty drafted a self study in the spring of 2010 as part of our ABA reinspection process. The percentage of law revenue retained by the University was emphasized as a significant concern of the faculty in that document. I believe a law school dean has a continuing responsibility to share accurate data regarding the law school and its operations. In the past year, I distributed the financial data I had to the faculty and the Dean’s Advisory Board in order to inform them about the increasing scope of the problem. Both bodies were concerned about the continued ability of the law school to reach its potential without sufficient funding and the inequity of charging law students increasingly high tuition and fees if a significant percentage of those funds were not directly benefitting the law school. Both the faculty and the alumni insisted that I continue in my efforts to obtain more financial data and a University agreement to decrease its retention percentage over time. I was criticized by the central administration for sharing the financial data with the faculty and my advisory board. University officials also stated that providing funding for the continued improvement of the School of Law was not a high priority for the University.

The financial data demonstrates that the amount and percentage of the law school revenue retained by the University has increased, particularly over the last two years. For the most recent academic year (AY 10-11), our tuition increase generated $1,455,650 in additional revenue. Of that amount, the School of Law budget increased by only $80,774. I do not know of any law school in the country receiving such a small percentage of its generated tuition revenue. A recent article in The New York Times noted that a 25-30% revenue retention by a university was considered high by national standards. As of academic year 2010-11, the University retained approximately 45% of the revenue generated by law tuition, fees and state subsidy. Using any reasonable calculation of the direct and indirect University costs, the University was still diverting millions of dollars in law school revenue to non-law University functions.

The unwillingness of the University to discuss in a meaningful way the growing imbalance in the financial relationship was also becoming a matter of principle to me. We have increased our in-state tuition over 70% and our out-of-state tuition over 48% in the last seven years. Our in-state day students last year paid $1,450 more in tuition and fees than University of Maryland law day students and our in-state part-time students paid $2,080 more than the University of Maryland law part-time students. Of our students in the 2010 graduating class who borrowed money, the average law school debt was over $95,000. Media reports continually criticized the rising costs of legal education. I was becoming increasingly uncomfortable justifying tuition and fee increases to law students when the money was actually being used to fund non-law University initiatives. I was also concerned about my continuing effectiveness as Dean given statements by University officials that there were no plans to remedy the situation and that significant funding for School of Law programs was not a University priority.

We were inspected this last academic year and the University and I received the final report of the ABA Accreditation Committee on July 27. The report generally praised the condition of the law school but indicated a concern, among others, about the substantial amount of money the law school contributes to the University and the lack of a University explanation of a rationale by which the money retained by the University is determined. The ABA Committee requested that the University President and Dean submit a report by March 12, 2012 which provides in part a rationale for the School of Law’s share of costs for non-law school activities and central administration services and information about any agreement between the Law School and the University regarding a fair process by which the Law School’s contribution to the University for direct and indirect costs will be determined. The day after receipt of the ABA report, I was asked to resign.

A particular incident was also a turning point in my relationship with the University administration. This occurred in the context of fundraising approximately two years ago. In setting the naming rights menu for the new Law School building, the President set the price for naming the School of Law (not the building) at $10,000,000. I objected at the time that the amount was too low but acquiesced to the President’s position. For almost a year, I worked with Stephen L. Snyder on making such a gift to name the School. During this period, I was updating the President approximately every two weeks on fundraising in general and the Snyder talks in particular. When I informed the President that Steve and his family had committed to the $10,000,000 and we needed to get their pledge on paper, the President and the system decided to reject the gift, informing Steve that the price for naming the school would have to be $20,000,000. Mr. Snyder declined. Shortly thereafter, I was informed that I could no longer have regular contact with a number of key prospective donors. My relationship with the University administration was altered for my remaining years as Dean.

I only cite these facts in an effort to explain partially the reasons behind my resignation. I am grateful for my four years as Dean of the School of Law. I am pleased to say that I am leaving the school in excellent shape. Our US News ranking has jumped from 170 to 117, with another jump projected in March 2012. Our new building is on schedule to open in January of 2013. In my four years, we have hired an amazing new group of faculty members. We are teaching better, writing more, and increasing our national reputation for academic quality. We have opened a number of new Centers, highlighted by our collaboration with the Johns Hopkins School of Medicine in the Center for Medicine and Law. Our bar passage rates are up and our student organizations are thriving. Our entering class in 2011 is our most highly qualified ever and is incredibly diverse. We offer hundreds of internships and our presence in Washington, DC is expanding. In sum, we are improving significantly in every manner by which a law school is measured. The ABA site visit team noted that they had never observed so many excellent classroom teachers, both full-time and adjunct, in one school. They also noted that they had never visited a law school in which everyone seemed so happy. I can’t think of two better compliments for a law dean.

I of course was not responsible for most of these improvements. The faculty have been extraordinary in their willingness to embrace change and commit themselves to a great student experience. The law school staff is dedicated, loyal and hard-working. None of our accomplishments would have been possible if the staff just did their jobs. I am amazed by the dedication of the UB alumni and leave office still saying that I have never been turned down by an alumnus in anything that I asked him or her to do. Finally, I am grateful for all the UB Law students who shared my vision of the future and made this such a special place. My decisions were always motivated by a desire to provide law students with the best academic experience possible.

I hope you will join me in continuing to believe that the School of Law is becoming a unique institution in legal education. After a one year administrative leave, I look forward to rejoining you as a full-time faculty member. My family and I are committed to Baltimore and look forward to many years of working with all of you to assist the School of Law in fully realizing its amazing potential. Thank you again for all of your support.

Very truly yours,

Phil Closius

Earlier: The Times ‘Unearths’ The Law School Scam, But Still Can’t Explain It

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