In what some might consider a poetic turn of events, Florida Coastal School of Law is being sued by six alumni for a whopping $100 million.
Turns out, if you train a dog to fight (practice law), it just might bite (sue) you.
The lawsuit is one of 15 against law schools nationwide, all seeking class action certification. The plaintiffs are represented by Miami law firm Concepción, Martinez & Bellido and New York-based Law Offices of David Anziska. Elio Martinez, a partner at Concepción, Martinez & Bellido, said his goal is to seek justice for the students.
The plaintiffs claim they are owed a partial tuition refund because FCSL allegedly used inaccurate post-graduate employment and salary statistics in marketing materials, inducing them to “pay inflated tuition based on materially misleading statements, representations and omissions.”
The plaintiffs’ cause of action is based in part on the alleged scarcity of the high-paying legal jobs that they anticipated. The entry-level legal job market has become, in the words of Coastal Dean C. Peter Goplerud, “pretty dismal.” This is blamed on several factors, including the recession and record numbers of law school graduates (45,000 annually in recent years). Other causes behind the shortage of legal careers are the increase in availability of legal forms online; outsourcing of traditional legal work to other business entities (accountants, paralegals, etc.) and foreign countries, such as India; and alternative dispute resolution, like mediation and arbitration.
In June, The American Bar Association (ABA) and Association for Legal Career Professionals (NALP) reported that fewer than half of 2011 law graduates found employment in private practice and overall employment nine months after graduation was 85.6 percent, the lowest since 1994.
The suit alleges that the school’s marketing department knew or had reason to know of the state of the legal economy and prospects for graduates but continued claiming upwards of 95 percent post-graduate employment. Plaintiffs claim that “if Florida Coastal were to disclose the number of graduates who have secured full-time, permanent positions for which a J.D. degree is required or preferred, the numbers would drop dramatically, and could be well below 40 percent, if not lower.”
Who Is To Blame?
Some schools use the defense that they are merely complying with ABA and NALP employment data collection guidelines. Cooley Law School, with campuses in Michigan and Tampa, even sought to enjoin the associations as “indispensable third parties” to the suit filed against it by former students; New York Law School tried a similar argument. Neither was successful. And though Anziska, who represents plaintiffs in 14 of the suits, said he believes the ABA, NALP and U.S. News & World Report (which ranks schools) took a passive role in an ongoing deception, as of now, they’ve decided not to sue.
In what some view as an effort to publicly disclaim potential liability, in March 2011, U.S. News Editor Brian Kelly sent law school deans a letter which stated, in part, “It is not our role … to be any sort of regulatory body over law schools. … The main responsibility to gather data and implement quality standards lies with the ABA, which also accredits law schools.”
Until December 2011, the ABA allowed schools to count any type of employment — part-time, temporary, non-legal, even waiting tables — without making any disclaimer about either the nature of the employment or the number of students who actually responded to the voluntary surveys. Further, statistics were self-collected and unaudited. Schools were free to report students who were working part-time, temporarily, through grants provided by schools themselves or in non-legal positions as employed for the purposes of ABA, NALP and U.S. News statistics. And none of the data was verified by an outside entity.
In response to mounting public pressure, the ABA and NALP changed data collection guidelines in December 2011. Now schools must differentiate among the various types of post-graduate employment. The data collected after the new guidelines revealed that less than half of the class of 2011 was able to secure employment in private practice, making it a 20-year low.
As a result of the new guidelines, FCSL’s 2011 graduating class reported 80.6 percent employment. However, the school’s own website acknowledges that this figure includes students pursuing further education, employed part-time, temporarily employed, in non-legal fields or in positions funded by the school itself.
In response to changes in reporting guidelines, many schools are now providing more in-depth statistics on their websites, but neither this trend nor the changes in reporting guidelines can help students who attended law school before the issue came to light. Alumni are left holding the bill to a six-figure education and scrambling to get hired for lower-paying jobs than they ever anticipated.
“Our argument is that they should have been doing it all along,” Anziska said.
People like Coastal plaintiff Audra Y. Awai, a First Lieutenant in the U.S. National Guard, are deeply in debt with no job prospects in sight. “I expected that as a law school graduate, I would be able to find full-time, legal-related work that would enable me to comfortably live while also paying off my student loans,” she said. Lt. Awai said that after a depressing job search, she entered the U.S. Air Force, which paid a third of her student loans. Now, after four years of service, she still owes $100,000 in student loans and hasn’t been able to find a job in her field.
Others place the blame on students themselves, arguing that they should have known better than to depend on schools’ marketing materials — essentially, caveat emptor or “buyer beware.” Coastal alum Jeanna Vogel, a family law attorney in Tampa, realized that Coastal’s employment figures were based on anyone having any job in any field. “Even though they lied, it didn’t hurt me because I didn’t rely on it,” she said.
Robert Morse, who oversees the U.S. News rankings, told The New York Times in 2011, “These students are going to law school, and they need to learn to read the fine print.” Manhattan Supreme Court Justice Melvin Schweitzer, who presided over the suit against New York Law School, granted the school’s motion to dismiss. “In these new and troubling times, the reasonable consumer of legal education must realize that the omnipresent realities of the market obviously trump any allegedly overly optimistic claims in their law school’s marketing materials,” Schweitzer wrote.
Why Would Schools Lie?
Some may wonder why law schools would bother lying. The reason is simple, said plaintiffs’ attorney Elio Martinez. “Law schools are making a lot of money off these students, based on these misrepresentations,” he said.
Martinez said the perception is that the law school industry has become far too profit-oriented, increasing enrollment and tuition and inducing more students to attend, with allegedly inflated and inaccurate employment data. According to Lawyers Against the Law School Scam (lawschoolscam.blogspot.com), one of the first entities to bring this issue to light, the law school industry annually collects $3 billion from students. As The New York Times reported in 2011, while profits from schools like FCSL go directly into company coffers, even public, non-profit law schools have been criticized for continuing to raise tuition, then turning over as much as 30 percent of revenue to subsidize undergraduate programs.
Originally owned by education investment fund InfiLaw Corp., Coastal was bought out by Sterling Partners Inc. (not to be confused with the financial consulting firm of the same name in Ponte Vedra), a private equity firm in Chicago. Sterling’s $4 billion portfolio includes for-profit education giants Sylvan Learning Center and Laureate International Universities. “The company gets involved in fast-growing markets. In law schools, overhead is cheap, making it good business,” Anziska said.
What Are the Costs?
Much of the cost of doing such good business is paid through student loans. According to U.S. News, in 2012, law school graduates averaged $100,000 in student loan debt. Coastal’s website states that the median indebtedness for graduates between 2009 and ’11 was $117,855. The complaint against Coastal alleges that its alumni are in the top 5 percent of indebtedness of law school graduates.
Indebtedness is pervasive in the entire higher education industry. Rohit Chopra, ombudsman for Consumer Financial Protection Bureau, reported that in 2011, U.S. students incurred $117 billion in federal student loan debt, contributing to the total student loan debt in the U.S. hitting $1 trillion earlier this year. Many students defer, forbear or simply default when the loans come due. The U.S. Education Department reports that in 2011, just 38 percent of students were paying off their federal student loans.
A student loan was once considered a wise investment in the student’s future. Now student loan debt may become the burden that keeps a generation from achieving the benchmarks of adulthood, like buying a home, driving a new car or having a family. Unlike credit card, medical or mortgage debt, student loans cannot be discharged by bankruptcy. Ten years from now, there may be a large population of highly indebted, highly educated, middle-aged Americans living with their parents.
And lawyers aren’t the only ones deeply in debt and struggling to find work. Jennifer, who preferred not to use her last name for fear it will hurt her job prospects, graduated from University of Florida with a master of arts degree in 2008 and more than $60,000 in student loan debt. Jennifer thought that a strong GPA and a master’s degree from a respected institution like UF would help her land her dream job as a museum curator. But after months of searching, she took an adjunct professorship at a local university. She said she feels conflicted, teaching kids 10 years younger than she is, who are majoring in fine arts just as she did. “They have no idea what they’re in for,” she said.
After she took her master’s degree off her résumé, Jennifer found a temporary position at a local employment agency, making $14 an hour. After several months, the position expired; she has since begun working for $13 an hour at a mortgage company. She’s glad for the work, but after spending half her life focused on a goal, she’s answering phones, living with her parents and traveling all over the city for comparatively meager wages.
The grim job market and indebtedness statistics beg the question: Why do people enroll in higher education programs? The National Center for Education Statistics reported that between 1999 and 2009, enrollment in postsecondary education increased 38 percent. It could be as simple as naïvety: They believe that they will be the exceptions and that those who can’t find jobs are just not doing it right. Take FCSL student and Student Bar Association President Stefano Portigliatti, who estimated he will owe $150,000 in student loans when he graduates. “You really have to fail at job preparation and searching to not be able to get a decent job after law school,” Portigliatti said. He said no one he knows is really worried about finding a job. But Portigliatti’s and other students’ misconceptions aren’t entirely their faults; until recently, the statistics were on their side. According to the ABA, NALP and some schools’ marketing materials, while the economy was getting into the swing of the Great Recession, law schools continued reporting that 80, 90, even 97 percent (reported on June 4 by University of Phoenix School of Law, also owned by Sterling Partners) found jobs within nine months of graduation.
What About Coastal?
Litigation aside, almost no one had anything critical to say about the quality of the education Florida Coastal School of Law provides. Even plaintiff Awai said she “received a high quality education and an experience that undoubtedly built [her] character.” Former Jacksonville Bar Association President Michael Freed, whose firm has hired Coastal graduates, agreed. “The school graduates some wonderful attorneys,” he said. Prominent local attorney and Jacksonville Public Defender Matt Shirk is a Coastal alum.
“The faculty are committed to the students and much more accessible than I’ve seen elsewhere in my career as a dean or when I’ve done ABA accreditation inspections,” Coastal’s Dean Goplerud said. Goplerud previously served as dean at Southern Illinois University School of Law, University of Oklahoma College of Law and Saint Louis University School of Law.
One former Coastal professor did not hold the school in such high regard, writing in an email on condition of anonymity that he or she had been disheartened by the way things were run at Coastal. “Coastal turns out too many graduates, and not a lot of places will hire Coastal graduates because it is a fourth-tier school and too many other grads from higher-ranked schools are also desperate to find jobs.” The professor wrote that the school desired to be “student-centered” but became “student-catered,” giving the feeling that at Coastal, the customer is always right.
The lawsuit against Coastal has been transferred to federal court on the plaintiffs’ motion for what Martinez said were “strategic reasons” and is currently awaiting hearing on the school’s motion to dismiss.