Legal education has been under attack the past three years, and Thomas Jefferson School of Law has taken the brunt of those hits.
When The New York Times wrote its seminal and scathing article in January 2011 on how law schools were enticing students to apply even though the employment outlook was worsening, the lead subject of the story was Michael Wallerstein, a Thomas Jefferson graduate who was $250,000 in debt and unemployed.
Four months later, Anna Alaburda, who graduated with honors from Thomas Jefferson in 2008, filed a class action lawsuit alleging the school presented misleading information to prospective students on its website and in advertising materials. It was the first of many lawsuits against law schools, and, as such, grabbed much attention in the press.
Things only got worse.
The school reported a dismal bar pass rate in 2011 — just 36.57 percent of first-time takers in California passed the exam. Employment rates dropped. In 2012, less than 30 percent of its graduates had full-time long-term legal jobs nine months after graduating, according to the American Bar Association. More than 30 percent had no jobs at all.
And to top things off, the school reported a higher debt load for its graduates — $168,800 in 2012 — than any other school, according to U.S. News & World Report.
While the world was beginning to cave in around it, Thomas Jefferson was just completing a $90 million new building in the East Village. When it opened in January 2011, it was the school’s first new building and was regarded by many as the capstone of then-dean Rudy Hasl’s 32-year career as a law dean.
Now, it looks like an albatross.
Thomas Jefferson is not alone among law schools when it comes to struggles. Most of the nation's law schools have seen drops in applications and enrollments because the job market for new lawyers has cratered of late. Law school enrollment has dropped by an average of 99 students per school from 2010-2011 to 2013-2014, with only 16 of the nation's more than 200 law schools enjoying an increase in students.
The University of La Verne College in Ontario saw the biggest drop in that timeframe, with a 66.2 percent decrease.
Thomas Jefferson also has seen class sizes dwindle. The school’s first-year enrollment dropped from 348 in 2010, to 300 in 2011, to 255 in 2012. To make matters worse, 47.7 percent of the class that entered in fall 2010, either failed or transferred.
Thomas Jefferson is particularly vulnerable to the changing legal education landscape because it's a stand-alone school, meaning it can't rely on a parent university for help. With a small endowment, Thomas Jefferson generates 95 percent of its income from tuition, according to its most recent tax filing. It has no track record of significant fundraising and carries a heavy debt load from the construction of the new building. It paid $10.8 million in interest in 2011, or about 21 percent of revenue.
The recent drop in enrollment revenue, estimated at more than 10 percent, meant the school violated its debt covenants in 2012 and 2013, according to Standard & Poor’s Ratings Services. As a result, its credit rating was downgraded two notches in October to junk bond status with a negative outlook.
Paul Campos, a professor at the University of Colorado Law School and an outspoken critic of law school education, has said Thomas Jefferson could be the first ABA-accredited school to “keel over.”
“They have very high fixed costs, in the form of debt on their building and tenured faculty,” he said. “The debt of course must be paid one way or another, and the only way to get rid of more than a handful of tenured faculty via buyouts and the like is to declare a financial emergency, which would probably throw the school into a death spiral if it isn’t in one already.”
But the school’s new dean, Thomas Guernsey, who took over in the summer, is not about to give up.
“We must ... be honest with ourselves; many of our troubles are the result of our own missteps, our failure to plan, and our own failure to address problems in a timely fashion,” he wrote to alumni in the fall. “[W]hile a general decline in enrollment is a systemic problem, we did not help maters by allowing an unsustainable growth in the administrative structure of the school or building a facility as grand as ours.”
Guernsey, who declined to be interviewed for this article, was dean at Albany Law School from 2002 to 2011, and was credited with placing that stand-alone school on firm financial footing. He is taking painful steps to do the same at Thomas Jefferson.
Within a few months of his arrival, he made nearly $4.8 million in cuts, in part by laying off 12 staff members. He eliminated unfilled positions, and others left through early retirement and other means — some on their own accord and some by force, sources said. For those who stayed, he cut faculty salaries by a minimum of 8 percent and staff salaries by 5 percent.
Overall, the cuts represented about 10 percent of the school’s total budget, which stood at $51 million in 2011.
But his actions have hurt staff morale, with sources at the school saying Guernsey is belligerent at times. Some faculty members have, off the record, expressed disappointment that he publicly blamed his prior dean, Hasl, for much of the problems the school now faces.
But Guernsey remains positive.
“When I took the job as President and Dean, my eyes were wide open to the difficult challenges ahead,” he wrote to alumni. “Nothing I have learned since my arrival has changed the belief that, with your help, we will meet these challenges and Thomas Jefferson will become stronger as a result.”
And there are some positive signs for the future. In October, a judge ruled the lawsuit by Anna Alaburda didn’t merit a class action. The judge said the plantiffs should pursue individual suits instead.
The school also improved its bar pass rate in 2012 to 53.63 percent in California, and recorded a 64 percent pass rate on the February 2013 exam. While that is still below the state average for first-time takers (68.3 percent), the school is confident changes it has made will help that number continue to improve.
But Thomas Jefferson’s future may well depend on whether it can reverse the decline in enrollment. The Law School Admission Council has reported that applications are down again this year for all law schools, although by a lower percentage than the prior two years.