Rick Inatome is the chief executive officer of a 300-employee corporation supported by a big private equity fund with a hefty portfolio of diverse businesses. Like many other executives, he spends his day trying to stay ahead of technology, meet customer demands and maintain shareholder value.
So why is he so special? Because his business is law schools. As head of InfiLaw Corp., Inatome oversees operations of three for-profit law schools, which include Florida Coastal School of Law, Phoenix International School of Law and Charlotte School of Law. The institutions are part of a contingent of for-profit law schools that have sprung up in the 10 years since the American Bar Association began permitting them to seek accreditation. And even though InfiLaw’s schools and the other for-profits across the country make up a small — if not stigmatized — portion of law schools, their businesslike approach is one that their nonprofit competitors are increasingly utilizing. “There are all kinds of market realities that all schools have to deal with,” Inatome said. Faced with rankings, competition to place graduates at top law firms and rapidly evolving skill demands, law schools have become more aggressive in trying to recruit talent and distinguish themselves. At the same time, the pressures to reduce class size and offer slick facilities have squeezed their budgets. As a result, all law schools — including about 185 not-for-profit ABA-accredited institutions across the country — are finding that their leaders need to demonstrate high-level business acumen, especially since tuition dollars only go so far. “There’s an increased demand on law schools to increase revenues, but there’s a limit on how high you can raise tuition,” said Howard Glickstein, a professor at Touro College Jacob D. Fuchsberg Law Center, who served as the dean of the 26-year-old, not-for-profit law school in Huntington, N.Y., for almost 19 years. Before ending his stint two years ago as Touro’s dean, he helped orchestrate its relocation to a $33 million, 180,000-square-foot facility, to which the school will move in August. While serving as dean, Glickstein saw the operations of law schools change, he said. Today, alumni development, career placement and marketing take a much larger portion of a law school’s budget, he said, adding that meeting the ABA’s facilities standards requires lots of capital from sources other than tuition. “There’s a competition to build bigger buildings with bigger and better libraries with more space that looks good and is not used,” he said. But getting the money to fund projects, whether through a state’s legislative process or the donation route, can take years. In InfiLaw’s case, Inatome said that its schools have a certain degree of nimbleness that not-for-profits lack — and perhaps envy. “We’re not hamstrung by bureaucracy,” he said. InfiLaw is a part of the portfolio of Sterling Partners, a $850 million private equity group whose investors include the likes of Citigroup Inc., Merrill Lynch & Co. and Bank of America Corp., he said. Its sizeable portfolio of education systems includes Laureate Education Inc., a publicly traded education network of 20 undergraduate and graduate schools in foreign countries; Sylvan Learning Centers, the tutoring service; Meritas Schools, a group of K-12 schools based in Fort Lauderdale, Fla.; and Professional Career Development Institute, an online education company. The fund also has several other ventures not related to education. InfiLaw’s oldest school is Florida Coastal in Jacksonville, which opened in 1996 and gained full ABA accreditation in 2002. Phoenix International School of Law, with about 100 students, was launched last fall, and Charlotte School of Law will open next fall, with an expected class of about 100 students. InfiLaw’s goal is to gain ABA accreditation for all of its for-profit law schools. As part of consent decree in an antitrust case reached with the U.S. Department of Justice in 1996, the ABA agreed to allow for-profit schools to seek accreditation. Some other for-profit schools not part of InfiLaw’s system include Western State University College of Law in Fullerton, Calif.; American Justice School of Law in Paducah, Ky.; Charleston School of Law in South Carolina; and Concord Law School, an online school owned by Kaplan Higher Education. Inatome identifies “access to critical capital” as the advantage that his group of schools enjoys. The schools are not forced to slog through what he called the “donation cycle,” the time-consuming process in which not-for-profit law schools seek donations, receive them and eventually put them into action. Instead, they are able to see where the deficiencies are in their own students and to identify what skills the legal market demands — such as intellectual property or negotiation know-how — and address those demands quickly. That strategy, said Inatome, is one that all law schools might do well to follow. “It’s incumbent upon all law schools to asses their ability to serve students differently for the law industry,” he said. Inatome acknowledges that for-profit schools face a certain stigma regarding their structure, and it is a situation that requires some public relations finesse, he said. “We deal with it very humbly,” he said. “What private equity isn’t trying to do is to say, ‘We have close to a billion dollars.’” InfiLaw’s approach seems to be working for now. Florida Coastal had the highest bar passage rate in Florida for first-time test takers last July. Nearly 82 percent of its graduates passed the bar, compared with the state’s average pass rate of 70.5 percent. Florida is home to seven fully ABA-accredited law schools, most of them ranked higher than Florida Coastal by U.S. News & World Report. InfiLaw’s board also has some heavy hitters, including its chairman, Dennis Archer, a former president of the ABA, two-term mayor of Detroit and chairman of the law firm Dickinson Wright. Serving on the Charlotte law school’s board is Henry Ramsey Jr., former chair for the ABA Section of Legal Education, and Leigh Taylor, dean emeritus of Southwestern University School of Law in Los Angeles. RESERVATIONS ABOUT FOR-PROFITS But the for-profit structure has its detractors. Michael Ariens, a professor at St. Mary’s University School of Law in San Antonio, is a legal education scholar who said that the primary concern about for-profits is the pressure to fill their classrooms. Ariens said that although all law schools need full capacity in order to maintain revenue streams, for-profit schools have investors to consider. The problem could become particularly acute if law school enrollment continues to decline, he said. Last year, law school applications dropped for the first time since 1997. Some 4.6 percent fewer people applied to law schools in 2005, according to the Law School Admission Council. The upshot means that these schools may admit students who cannot meet the qualifications to become lawyers. “You have investors who want a return on their investments,” Ariens said. Another concern is that for-profit law schools, while focusing on student outcomes, may pay short shrift to legal research and scholarship. Such a strategy can create an institution that delivers information to students but lacks a foundation to foster critical thinking. “The philosophical question you have to ask is if there is a value to law schools that goes beyond merely the transmission of information, beyond the purpose of someone being licensed,” Ariens said. The issue, he added, encompasses the long-running debate over whether law schools are purely professional institutions whose purpose is to prepare practice-ready graduates or whether they are academic institutions that view the law as a science. While most law schools are a combination of both approaches, the emphasis on rankings, marketing and career placement suggests that law schools are functioning more than ever under a business model. In Glickstein’s situation, creating a new home for Touro required talents far removed from curriculum development and even farther removed from legal doctrines and theories. “I had to learn some new skills,” he said. “I had to learn how to deal with architects, contractors, buying furniture, the problems that could be associated with a site.” Without exception, law school leaders point to the rankings conducted by U.S. News & World Report as having a profound impact on their operations. The annual publication not only has grown in popularity by those considering attending law school but has become the primary metric by which most law school leaders — admittedly or not — measure their own value, or at least the value of their competitors. “Almost anytime you talk about major changes in law schools, you can’t get too far from the impact of the U.S. News & World Report ranking,” said David Yellen, dean of Loyola University Chicago School of Law. The conventional notion is that higher rankings lead to stronger law school applicants, and with stronger applicants come better bar-pass rates, as well as increased placement rates at top firms. Finally, with more graduates at top firms, law schools are able to garner more financial support from their alumni bases. The harm of the rankings, according to University of Texas School of Law professor Brian Leiter, is that law schools devote too much energy trying to bolster their rank at the expense of students’ other needs. Law schools spend millions each year on marketing to help boost their peer evaluation scores. They also may cut applicants with lower entrance exam scores in order to increase their standing and finagle class sizes to win ranking points. “The main negative is that resources are diverted away from things that may have educational value,” said Leiter, who has developed his own law school rankings online. But “educational value” may be relative. Yellen said that law schools today provide a “much better product” than they did a generation ago. However, he added that market forces have hit a crescendo and helped to create law schools that are complex organizations, with bigger administrative staffs, more clinical offerings and additional services. Yellen, who helped secure a $5 million private donation earlier this year to expand Loyola’s health law institute, said that the shift in law schools reflects what has happened in law firms. “Law firms have changed in how they run, probably more than law schools have changed,” he said. “They used to be run as true partnership law firms, but now they are much more corporatelike in their structure. We’re responding to the same market forces.”