Law Schools

Caveat Venditor: Empty Threats From Notorious For-Profit Law Schools

InfiLaw threatens a documentary filmmaker, but truth is the ultimate defense.

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Closeup of a pile of caution tapeWelcome to Caveat Venditor, a new series that assesses claims made by law schools to separate truth from fiction. This week, we look at a threatening letter sent to a documentary film maker by Tom Clare, a lawyer for The Infilaw System.

InfiLaw owns three law schools — Arizona Summit, Charlotte School of Law, and Florida Coastal — and several legal education-related management companies. These are three of six total for-profit law schools approved by the ABA, although two of the other three are transitioning to non-profit status. InfiLaw also tried and failed to purchase Charleston School of Law after faculty, alumni, students, and the local legal community revolted.

Hat tip to Paul Campos for the full text of the letter:

I write on behalf of my client, The InfiLaw System (“InfiLaw”), regarding your inquiry into interviews with Florida Coastal School of Law officials for a documentary you are making. I write to caution you as you proceed with fact-finding and information gathering associated with your planned documentary.

Prior reporting on the issues you plan to address, including law school attrition rates and student success, has been plagued by gross misinformation, factual errors, and a general misuse and distortion of available data and analysis. This is especially true as they have been applied to InfiLaw schools such as Florida Coastal. Individuals, such as Paul Campos, have distorted facts and data and engaged in nefarious and inappropriate investigative tactics in order to accomplish a false agenda attacking law school admissions and career advancement policies. As such, I caution you to carefully assess any information and facts you gather from Mr. Campos and any other purported “authorities” on law school success metrics and the risks and rewards of attending law school in this day and age. InfiLaw and its affiliated schools will carefully analyze and assess any statements made about them and will not be afraid to pursue legal recourse to protect its reputation against any false and reckless statements.

In addition, InfiLaw requests that you notify me immediately upon any decisions to include any references to or subject matter about InfiLaw or any of its affiliate schools in your documentary, and provide InfiLaw the opportunity to review and comment on them prior to any public dissemination.

Many negative things have been written about InfiLaw and its schools in The Atlantic, New York Times, Charleston Post & Courier, Charlotte Business Journal, the North Carolina State Bar Journal, ABA Journal, the National Law Journal, and dozens of times here on Above the Law (school tags here, here, here, and here).

These stories have several common themes. They typically discuss facts related to bar passage rates and job outcomes. They also speak to the reputation of the InfiLaw System and its schools in the legal community. Further, the total cost to obtain their degrees provides a near universal backdrop, including the fact that the vast majority of their revenue comes from student loans that, ultimately, federal taxpayers are on the hook for if students do not repay.

To put it mildly, InfiLaw has a major public relations problem that’s really dampening the bottom line. First-year enrollment is down 41% at Arizona Summit, 51% at Charlotte, and 60% at Florida Coastal from peak enrollment just a few years ago. These losses translate to somewhere in the ballpark of $100,000,000 per smaller entering class.

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In Clare’s letter on behalf of InfiLaw, he threatens the documentary filmmaker by intimating that the above-linked stories committed factual errors and acts of distortion of publicly available data. Let’s look at two of the more eye-popping claims that reflect the common themes.

From The Atlantic:

How much debt do graduates of the three InfiLaw schools incur? The numbers are startling. According to data from the schools themselves, more than 90 percent of the 1,191 students who graduated from InfiLaw schools in 2013 carried educational debt, with a median amount, by my calculation, of approximately $204,000, when accounting for interest accrued within six months of graduation—meaning that a single year’s graduating class from these three schools was likely carrying about a quarter of a billion dollars of high-interest, non-dischargeable, taxpayer-backed debt.

I ran the numbers, and the numbers appear correct if we include the national average of about $30,000 of undergraduate debt. The average law school loan disbursement for 2013 graduates at Charlotte was $135,000 and $150,000 at Florida Coastal. We only have Arizona Summit’s median from that year, $185,000, but the average in 2012 was $163,000. (At the two other schools, the median is usually 10-15% higher than the average.) Add interest, which the government does not subsidize for graduate students, and we get to $204,000, no problem.

I find that prospective law students frequently misjudge how much and how quickly interest will accumulate during law school. I was pretty savvy in my analysis before law school and I certainly fell into this category. My organization helps students do these projections using their own personal financial circumstances. Knowledge, however, is irrelevant to the unfortunate truth that interest accumulates and capitalizes six months after graduation. Focusing on debt owed is far more meaningful than loans disbursed.

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From The New York Times:

In short, most of Florida Coastal’s students are leaving law school with a degree they can’t use, bought with a debt they can’t repay.

If this sounds like a scam, that’s because it is. Florida Coastal, in Jacksonville, is one of six for-profit law schools in the country that have been vacuuming up hordes of young people, charging them outrageously high tuition and, after many of the students fail to become lawyers, sticking taxpayers with the tab for their loan defaults.

The Times Editorial Board’s summation requires a little unpacking, but is mostly accurate. Let’s start with the misstep.

Taxpayers are, in fact, on the hook for defaults, but defaults are vanishingly rare for law school graduates because they tend to be savvy and utilize income-based repayment plans that tie the amount you must pay each month to your income. InfiLaw schools tell journalists, students, and anyone else listening that their “cohort default rate” is low — usually under 2%. Default has a strict definition, and that definition is not that the borrower failed to repay.

For students on Pay As You Earn, a common income-based repayment plan for 2013 graduates, 10% of your discretionary income goes to loan repayment. If you make the payment, you will not default, even if you do not make any progress on your loan balance. PAYE prevents default. A timely payment under PAYE will be $0 if your income does not exceed 150% of the poverty line. Your loans are then forgiven — i.e., taxpayers are on the hook — after you make 10 years of timely payments while working in public service, or after 20 years for everyone else.

If you owe $204,000 when your first loan payment is due, your monthly payment is about $2,300 per month for 10 years. Even a salary of $160,000 while on PAYE would not cover your monthly principal payment, thus interest will continue to accumulate, making it even more difficult for taxpayers to avoid forgiveness.

Unless the average InfiLaw graduate makes double the average lawyer salary or quadruple the average entry-level salary almost immediately after graduation, the taxpayers will be on the hook in 7.5 or 17.5 years. The evidence for salaries that high is non-existent. The only salary information comes from 2011. Just 20% of that year’s Florida Coastal graduates made $40,000 or more.

This relates to the Editorial Board’s point that Florida Coastal students leave law school with a degree they can’t use. Hyperbole aside, as I have no doubt that InfiLaw students develop measurable skills during school, Florida Coastal graduates are not obtaining professional jobs within 10 months of graduation. The school submits no evidence to the contrary, just vacuous assurances. This does not even get into the abysmal bar passage rates, which continue to plummet at all InfiLaw schools.

In sum, Clare’s letter on behalf of InfiLaw is nothing but hot air. The press has not been kind to InfiLaw schools because the facts damn the schools beyond any acceptable standard. Fortunately for the documentary filmmaker subject to InfiLaw’s threats, truth is the ultimate defense.

Do you have a law school claim you’d like analyzed? Please email me with “Caveat Venditor” in the subject line. You will be kept anonymous.

Kyle McEntee is the executive director of Law School Transparency, a 501(c)(3) nonprofit with a mission to make entry to the legal profession more transparent, affordable, and fair. LST publishes the LST Reports and produces I Am The Law, a podcast about law jobs. You can follow him on Twitter @kpmcentee and @LSTupdates.

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