And then there were 6: Charlotte School of Law closes its doors

After a long and difficult process with governing authorities, Charlotte School of Law officially announced its closure just days before fall classes were set to begin.

Photo: Travis Dove for the New York Times (Courtesy of Google Images)

For most law students, August brings the uncertainty of a new semester: what will my professors be like, what will the workload be like, should I be taking this many hours? But for students at the Charlotte School of Law (CSL), a private, for-profit law school in Charlotte, NC, August brought a different kind of uncertainty. Students at Charlotte questioned whether they would be returning at all for another semester.  They were not concerned about returning because of any failure on their part; rather, it was a failure of the school that ultimately kept these students from returning to law school this fall.

CSL’s troubles began with dwindling enrollment after the American Bar Association (ABA), the body responsible for accrediting law schools, placed Charlotte’s accreditation on probation in November 2016. Charlotte was placed on probation for failing to comply with ABA disclosure standards. Soon after, the school was cited by the Federal Department of Education for “substantial misrepresentations to students” about its compliance with accreditation standards. As a result, the school soon lost access to federal loans for its students.

At the state level, the University of North Carolina Board of Governors (B.o.G), the body responsible for the licensing of private post-secondary education institutions in North Carolina, issued Charlotte a restricted operating license on June 21 that required the school to regain access to federal student loans and obtain ABA approval of a teach-out plan by August 2017. According to the Southern Association of Colleges and Schools, a teach-out plan requires schools in danger of closing to “teach out” currently enrolled students until all students have graduated.

Charlotte School of Law failed to qualify for federal student financial aid by the August 10 deadline, and as a result, its restricted operating license expired without renewal. That same day, the school issued a letter to the UNC Board of Governors (B.o.G) noting the school’s continued efforts to meet the conditions imposed by the Board, as well as requesting that the B.o.G. extend the compliance deadline and keep the school’s operating license in place. On August 11, the school’s dean wrote an email to students reassuring them that the Board of Governors had not yet “declared” that the school’s license had expired, and that the semester would start as usual.

“Our law school, it seems, is closing, effective immediately.”

Despite Charlotte’s reassurances, the UNC Board of Governors denied Charlotte’s requests for a deadline extension and a renewed license. On August 14, the ABA notified Charlotte that it had rejected the school’s proposed “teach-out plan,” meaning the school could not even remain open to finish teaching its remaining students. That same day, the President of CSL’s Alumni Association sent an email to alumni stating, “Our law school, it seems, is closing, effective immediately.”

The next day, the Charlotte School of Law website was taken down. Again, the school sent an email attempting to reassure its students, stating, “To ensure that CSL does not inadvertently run afoul of North Carolina law, we have taken down the school’s website to avoid any perception that we may be engaged in unauthorized conduct.” Another email was later sent to students by school administration to inform them that the school would be closing. On August 24, the Charlotte administration finally announced its closure.

Though the school has closed, legal troubles will persist for Infilaw System, the owner of Charlotte School of Law, and its parent company, a private equity firm, Sterling Partners. North Carolina’s Attorney General Josh Stein has continued to investigate Charlotte for not providing students with the requisite information to enroll in law school. At the federal level, a criminal investigation of Charlotte that started over a year ago may be ongoing. The criminal investigation sprang out of a qui tam lawsuit brought by former Charlotte professor Barbara Bernier.

The suit alleges that the school manipulated bar passage and employment statistics by offering students who seemed unlikely to pass $5,000 not to take the bar exam.

The suit alleges that the school manipulated bar passage and employment statistics by offering students who seemed unlikely to pass $5,000 not to take the bar exam. The complaint also alleged CSL “exploited veterans and active military personnel to take advantage of a loophole in federal regulation that requires for-profit colleges receiving Federal Student Aid to get at least 10 percent of annual revenues from sources other than the FSA program.” Charlotte confirmed in a statement that as of February 2017, there was an ongoing investigation with the U.S. Attorney’s office. CSL also claimed Bernier’s lawsuit was without merit.

The thought of one’s law school closing in the midst of one’s law school career is enough to make any law student appreciate the opportunity to get up and go to class in the morning. But for CSL students, it is not just a thought; it is reality. Students who were enrolled in the school when it closed are now left with a great deal of student debt and no degree. As terrible as the situation may be, the CSL faculty remains committed to helping their students find avenues to complete their legal education, according to a CSL spokesperson. In addition, some students, namely those who withdrew from CSL in the last 120 days, should be able to have their federal loans discharged. It is unclear whether or not federal loans will be discharged for students who were recently enrolled but left Charlotte before the cut-off.

In an attempt to alleviate the debt of these students, Attorney General Stein sent a letter to U.S. Secretary of Education Betsy DeVos informing her that Charlotte was no longer licensed to operate in North Carolina, as well as asking the Department to declare that exceptional circumstances exist at Charlotte which would expand loan forgiveness to students who left Charlotte during or after the Fall 2016 semester.

It should be noted that CSL’s closure not only affects students who were still working towards their degrees; graduates of Charlotte will also be deeply affected by the school’s closure. For example, Barbara Strang, a 2015 graduate of Charlotte, has experienced great difficulty in getting a job and has not yet passed the bar exam. She says that employers cringe when they realize she is a graduate of Charlotte. Graduates like Strang may be able to get their student loans discharged as well, but that has also yet to be determined.

Charlotte’s closing not only calls into question the future of its students, but also the future of legal education. Charlotte is not the first ABA accredited law school to close. Two non-profit law schools, one at Indiana Tech and one at Whittier College, have also announced their closures; the law school at Indiana Tech closed this June. Additionally, Florida Coastal School of Law and Arizona Summit School of Law, two other private, for-profit law schools operated by Infilaw System, have experienced issues similar to that of Charlotte. Arizona Summit was placed on probation for failure to comply with ABA accreditation standards, while Florida Coastal was found to be out of compliance with Department of Education debt/income ratio requirements placed on for-profit schools.

[M]any law schools are essentially asking: what can we do to put you in law school?

One problem facing both for-profit and non-profit law schools is a declining demand for legal education. Prof. Paul Campos of University of Colorado at Boulder Law School has compared some law school admission offices to car dealerships in that many law schools are essentially asking: what can we do to put you in law school? Yet, even though the employment and loan repayment statistics do not weigh in applicants’ favor, there are still plenty of people willing to pay for law school so long as they have access to loans. As for the future of legal education in general, some fear that the new Department of Education will not focus on the best interest of students in scenarios similar to that of Charlotte. This concern is evidenced by the willingness of the Department to allow Charlotte to regain access to federal student aid after certain conditions were met, despite Charlotte’s continued poor academic performance.

More locally, the closing of Charlotte School of Law will leave the city of Charlotte, the largest city in the state, without a law school. When asked if the University of North Carolina at Charlotte could potentially start a law school in the area, Chancellor Phil Dubois responded, “The available statistics all pointed to the same answer: No. The fact that the job market for law school graduates has yet to fully recover from the 2008 recession, combined with the decrease in law school applications do not justify creating another law school in North Carolina any time soon.” With six law schools remaining in North Carolina, it will be interesting to see how CSL’s closure impacts NC’s large legal community, as well as the future of legal education.

Avatar photo
About Cody Davis (12 Articles)
Cody Davis is a third year law student and serves as a contributor for the Campbell Law Observer. He is originally from Archdale, NC. He received his bachelor's degree from N.C. State, majoring in Political Science and minoring in Criminology and Philosophy. In addition to pursuing a Juris Doctorate at Campbell University School of Law, Cody has simultaneously earned his Masters in Public Administration at NC State. He currently serves as the Assistant Director of the Campbell Law Pro Bono Council and has worked as a research assistant for Professor Bobbi Jo Boyd. He is currently interning at the Legislative Analysis Division of the North Carolina General Assembly.