Tuesday, February 7, 2017

Winding up a law school: the case of Indiana Tech

Indiana Tech's law school will shut down after this semester, and Charlotte's cannot be long for this world. What will happen to their assets?

Soon after last autumn's announcement of Indiana Tech's impending closure, Eric Welch of Muncie, Indiana, demanded that that glorious Harvard on the Wabash (as I called it in a previous article) return the $20k that he had put up to endow a scholarship:

http://www.theindianalawyer.com/impending-closure-of-indiana-tech-law-school-brings-anger-uncertainty/PARAMS/article/42030

Unlike me, Welch is "very disappointed" by the shuttering of Indiana Tech. He established the scholarship in order "to help a law student with a well-rounded body of work, extracurricular activities and classroom studies". Generous though his donation indubitably was, it would not have helped a law student very much: a base of $20k invested at 5% would have supported a scholarship of only $1k per year, nothing like the $30k that Indiana Tech originally charged (but admittedly more than the $0 that Indiana Tech charged in its penultimate year). And I'm not convinced that a single deserving student could be found at Indiana Tech. Hell, only one member of the first year's graduating class passed the bar exam (and another got in on appeal).

Nonetheless, Welch endowed a scholarship in perpetuity, and he certainly didn't expect Indiana Tech to shut up shop in less than four years. His purpose has been thwarted by the very recipient of his largesse. Why shouldn't he get his money back?

Shambaugh Kast Beck & Williams LLP of Fort Wayne apparently donated $25k for a scholarship. Rather than seeking a refund, it plans to let Indiana Tech put the money towards some other program. But Welch doesn't want his money to support the bachelor's program in recreation therapy or the infamous PhD in global leadership (for which Fort Wayne is an internationally recognized center of excellence). And why should he? The university may have a legal claim to those funds but not a moral claim. It should give the money back to Welch or at least transfer it to a law school of his choice.

But the contention at Indiana Tech goes well beyond scholarships. Washington-based lawyer Christopher Mackaronis represents thirteen students and two faculty members of soon-to-be-defunct Indiana Tech. He is "looking into misrepresentation and fraud", as Indiana Tech allegedly duped students and staff alike into moving to Fort Wayne (not exactly the Côte d'Azur) and forgoing other opportunities.

And what about the art collection that Indiana Tech touted even before it opened? Is the university simply going to absorb that collection? Has the artwork already been sold off to make up part of the law skule's eight-figure losses?

These concerns apply in spades to the Charlotte School of Law. Although Harlotte doesn't have a parent university that can absorb its assets, it is owned by the notorious InfiLaw chain of scam schools. Does InfiLaw have the right to absorb any endowments that donors may have set up for scholarships at Harlotte? Would it be appropriate, morally or legally, to move those funds from Harlotte to Horrida Coastal or Arizona Scum Pit?

Two law schools are on their death bed, and others are likely to follow. We shall see what happens to their estates, so to speak. For now, anyone wishing to endow a scholarship should consider using an independent foundation rather than putting the law school in control of the funds.

25 comments:

  1. The money will remain with the pigs. After all, that is the name of the game.

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    1. Hip Hop and the Law is priceless. Give it to andré douglas pond cummings so he can buy a premium refrigerator box to live in now that he's going to live in the ghetto for realz...

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  2. 2 down, another 100 to go. Half of the lawl schools got to go.

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  3. Well, lots of colleges and for-profit schools have closed and these things get sorted out one way or another. Where there's only $20K in play I figure the donor won't sue and if he does the executors of the TTTT will just write a check rather than hire, presumably, a graduate of someone else's law school.

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  4. Shambaugh Kast Beck & Williams LLP has a lawyer on the board of Indiana Tech. That lawyer was involved in the "feasibility study" that determined—surprise!—that a law school at Indiana Tech was viable. Perhaps that's why the firm is not asking for the return of its money: it can hardly claim to have been deceived when one of its own members participated in the "feasibility study".

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    1. An attorney friend of mine once commented to me about another local lawyer who had sued a high school kid for slander on behalf of a union teacher who was on the Board of Education and it got in the papers. He said: "Before today I had always thought that other than being arrested or disciplined there was no such thing as a lawyer getting bad publicity." I suspect there is a firm in Fort Wayne that is seeing his point right about now.

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  5. Captain Hruska Carswell, Continuance KingFebruary 8, 2017 at 12:36 PM

    The Indiana Toll Road eventually leads to Chicago's Expressways where struggling Solos in their LeSabres can pass billboards offering Traffic Ticket Defense for $49.00. "Don't Pay that Ticket!" Make 20K back in no time. All you need is 408 new clients!!!!!! Each not guilty and demanding trial!!!!! No Pleas!!!

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  6. I was hoping Charlotte would follow the ITT Tech model and just close. I know they (the law school administration) think they're going to be able to scam their way out of this, but they need to just give up the ghost.

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    1. Key difference: Indiana Tech has to support its toilet to the prejudice of its overall operation. Infilaw has nothing to lose by milking theirs for everything they can until the loan money dries up.

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    2. If one of InfiLaw's toilets becomes unprofitable, InfiLaw will be in the same position as Indiana Tech.

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    3. 7:18 here, Old Guy. My point is that InfiLaw has filled its owners' pockets with millions. They can shut it down and open up a new, similar operation elsewhere. Indiana Tech, however, has Trustees who could face personal liability for breaching their fiduciary duty should they tank the whole place pursuing the hopeless cause of getting a law school up to speed. The pigs running InfiLaw have no such worries. Hell, they could make a plausible argument that the best business decision is, recognizing sooner or later they're going under, that it's best to just keep the loan money flowing as long as possible.

      In December 1963 Studebaker shut down U.S. car manufacturing, but was still in business because they had diversified into other industries. They did, however, keep their Canadian car plant running. The Board of Directors knew full well that that, too, would eventually fold but by selling 1964 Studebakers as '64s, '65s and '66s, adding only a new grille for '66, they dramatically cut their losses by running through the huge backlog of parts and components that were in the pipeline. Think of Charlotte as the South Bend plant and Florida Coastal and Arizona Summit at the Hamilton, Ontario plant.

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    4. 1:18 PM here: I was referring in my earlier comment to ITT Tech, not Indiana Tech. I'm certainly not praising ITT Tech, but at least they had the good sense to know it was over.

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  7. More on Harlotte:

    https://www.nytimes.com/2017/02/07/business/dealbook/for-profit-charlotte-school-of-law-loans.html

    A lawyer in North Carolina points out that debt, with interest, comes to some $175k per student at Harlotte. “It would require an income of over $122,000 to be able to afford just the interest on a student loan of that size. Most North Carolina lawyers don’t earn that much.”

    And something similar can be said about most other law schools: the graduates just won't be able to pay their debt.

    Why exactly should people get to take out loans—federally guaranteed and non-dischargeable—that they won't be able to repay without a miracle?

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    1. $175-fricken'-k. Amazing. Per the article:

      'That is little consolation to Ms. Valentine, who continues to take classes in the hope of earning her degree in May.

      “We were sold a dream,” she said. “This is affecting real lives.” '

      As we have said multiple times on OTLSS, the behavior by the Cartel affects real people with real lives. Heartbreaking and frustrating both that some people have to get screwed in order to prove the point, although if Ms. Valentine heads for the hills now, she could conceivably get a discharge of her loans. One can hope.

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    2. "Not the way to bet." - Pete Rose

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    3. There are only a few cities in the country that will pay that type of salary, and even then the vast majority of graduates won't sniff those jobs.

      I always thought it ridiculous that a law school in the middle of rural Oklahoma for instance could charge NYC rates. It's not like the land costs the same or any of the other resources. What excuse do the schools have for such insane costs?

      The basic rule for the liberal left is anything that they can charge they will charge. Everyone else has to watch costs and justify what they charge, as attorneys you can't charge unreasonable rates for the location and for the quality of work you do, but these garbage schools can charge whatever they want, wherever they want.

      One possible fix for law is that only lawyers can be administrators or professors in a law school, all subject to the state bar association. Let character and fitness start sorting things out. It might not do anything, but might make them sweat a little at least. Mandatory pro bono for all professors and administrators, since they love suggesting it for students and new graduates. Then if they can't properly represent these pro bono clients, they can risk their licenses, in which case they can't teach/collect law school salaries, and now suddenly they have some skin in the game.

      Just a fantasy though.

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    4. I'm not sure that Ms. Valentine is so innocent and deserving of having her loans discharged, which really means having them transferred to the public. Anyway, she's still at Harlotte, and she expects to graduate in May, so she won't get her debts discharged.

      I see no reason to blame "the liberal left" for the law-school scam. Certainly right-wing scamsters abound.

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    5. There is just one reason they charge so much--because they can.

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    6. I"ve noticed in these cases where there are ballooning numbers of schools opening, the deanships go to unrelated PhDs.

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  8. Captain Hruska Carswell, Continuance KingFebruary 9, 2017 at 7:13 AM

    This is a bit sad. After all, this is an institution of higher learning and by extension an anti-dote to anti-intellectualism and Trumpism. Indiana is a conservative, dystopian wasteland. It is flat, filled with factory farms, massive soy bean and corn plantations. It is dotted by town after town of Dollar Generals, Used Car lots (Saturns, Pontiacs, and old Kias), fire works stands, Gun and Pawn Shops, diabetes clinics and corrugated steal Casey's. It is a drecky, drab place. Indianapolis which overwhelmingly voted Clinton is the only bight spot. Otherwise, the State is a dumpy version of Iowa. This school was actually a breath of fresh air if it succeeded.

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    1. How is getting financially molested by a bunch of professors going to function as an antidote to Trumpism?!? If anything, it serves as a shining example of a Trumpist's suspicious that education is just a racket and that we need to put more faith in the El Presidente.

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  9. Commenting on why people should stay clear of the top law schools. Do a linked in search for attorney Axiom. You will see 35 Harvard Law grads listed,32 Columbia Law, 31 Michigan, 31 Fordham as the top schools represented by numbers.

    Problem is that Axiom is a temp agency, with very unstable jobs. You are employed one minute and the job has ended the next minute. Axiom is where many grads of the top law schools are ending up. Not exactly a great way to pay a mortgage, let alone your law school loans.

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  10. Some 150 current and former students of Harlotte are suing their alma mater:

    http://www.wsoctv.com/news/local/attorneys-file-lawsuits-for-150-plus-students-against-charlotte-school-of-law/489667217

    Some of these juristic geniuses "have failed the bar multiple times; others should not have been admitted or were forced to drop out". Debt runs as high as $200k.

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  11. Old Guy,

    Maybe Indiana Tech and Charlotte could hire Tom Vu as a consultant. Tom Vu was the infomercial star who promised to teach students the secret to making millions in real estate. He eventually shut down his operation after several lawsuits and government investigations. In retrospect, he should have said there was a critical shortage of women and minorities in the real estate business. He was just giving access to people who otherwise wouldn’t have had a chance.

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  12. America doesn't need any more Cooley Law Schools.

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