It’s hard out there for a standalone law school, according to Moody’s Investor Service. The bond credit rating business’ report, ‘Law Schools Respond to Fundamental Changes in the Legal Industry,’ was pretty harsh on law schools with no university affiliations: “As students evaluate the return on investment for a high-priced professional degree, law schools without premier brands or the resources of a comprehensive university will face greater credit stress and risk of closure . . . .” Out of the 203 ABA-approved law schools, just 26 are loners.
Nonetheless, just over a month after issuing the report in late April, Moody’s gave Brooklyn Law School the thumbs up by affirming its Baa1 rating. Out of 21 total, it’s the eighth highest rating Moody’s gives—not bad for a standalone law school in a tough market. According to this more recent report, Brooklyn Law demonstrates “healthy financial resources relative to debt and operating expenses, a management team that engages in multi-year forecasting and prudent expense management, and consistently positive operating cash flows.”
All this has made Brooklyn Law Dean Nicholas Allard very happy. “I couldn’t have been more thrilled if it was me who had found the 32 new poems by Pablo Neruda in the Santiago church of Chile,” he says. To be fair, the report isn’t all rosy: It notes enrollment-related challenges, “limited revenue diversity and softening operating margins.” But it confirms Allard’s idea that while standalone law schools face many challenges, those challenges don’t always spell out a death sentence.
MANAGING YOUR OWN FINANCIAL DESTINY
Allard even contends that in some ways, standalone law schools are better off. “During difficult times I can make the case that if you’re financially strong, independent law schools have many advantages,” he says.
For one, standalone law schools are nimble. It’s true that when things go south, there’s no larger institution to help foot the bills. But when the need for change arises, standalone law schools can adapt more quickly, which is useful during uncertain times like these, Allard says. “Their management and governance bodies are more streamlined, and basically what you need to do is get your faculty aligned with the administration and the board, decide what’s prudent, and then do it—as opposed to being part of a university, where you know you may have to determine what the university’s priorities are in a particular year,” he explains.
Allard also contends that standalone law schools can reevaluate their budgets more frequently. “I feel like I’m pounding my head against the wall sometimes talking to people about this, but we, as an independent law school, actually manage ourselves and manage our costs,” he says. “We go through a budget exercise every year. We’re given a target—okay, this year, we’d like to reduce prices 10%, which we did two years ago, now we’ve reduced them 15%—we get our entire management administrative team engaged in that.”
‘A MULTIPLE-CHANGE-OF-UNDERWEAR EXPERIENCE’
Affiliated law schools don’t have the same kind of flexibility, largely because they are charged overhead expenses by their universities. “You have a percentage of what’s assigned to you for campus security, heating, you name it—lighting and all of that,” he says. “That’s a big difference. And so, the central university can set cost reduction policies that apply across the board, and you’re not able to really manage your own financial destiny.”
Standalone law schools’ nimbleness also helps them create new, innovative programs. “We’re focusing and using our existing revenue budget to strengthen the existing programming, and for the innovative new programs—we’re getting independent funding for that,” Allard says. As an example, Allard offers Brooklyn’s Center for Urban Business Entrepreneurship (CUBE), launched last November. The center aims to train lawyers to work with entrepreneurs and newly formed businesses. “If I was a part of a university and I wanted to launch CUBE, I might hear that that was stepping on the toes of the business school or that there were other priorities for that kind of investment,” Allard says. “In Brooklyn Law School, we’re able just to do it.”