Twenty-three years after it was founded, Florida Coastal School of Law is seeking to change its corporate tax status from for-profit to not-for-profit.
The school has filed with the American Bar Association an Application for Acquiescence in a Substantive Change in Program or Structure.
The application was denied at its first review in August, but the school, with the ABA’s approval, is submitting additional information for reconsideration, said Florida Coastal President Peter Goplerud.
The intent is to change the perception of the school’s corporate structure.
“Rightly or wrongly, there is a cloud over for-profit education. We think that some of our competitors use our tax status against us in student recruitment,” Goplerud said.
“The time is right to send a positive message to our prospective students and to our alumni and move forward in a way that will provide even more opportunity for success,” he said.
The proposed change in tax status would not change the school’s business model, however.
“As a matter of good business, every law school in the country has to make a profit or they can’t survive. I was dean of three other law schools before I came to Florida Coastal. At each university, the law school was essentially required to make a surplus to turn over to the university,” he said.
The inspiration: ‘An alternative model’
Florida Coastal was founded in 1996, the end of a two-year quest by law professor Donald Lively.
He said his experience teaching law at traditional institutions led to the belief that there were qualified people who wanted to become attorneys, but were denied the opportunity.
“I thought there was a need that was not being filled by traditional institutions. I wanted to create an alternative model with a greater focus on practice readiness and diversity within the profession,” Lively said.
“They were looking to change the color of the legal profession,” said Richard Danford, president of the Jacksonville Urban League and one of Florida Coastal’s board members in 1996.
Lively began presenting the idea to colleges and universities, but was unsuccessful in finding a home that had both interest and resources.
After two years of searching, he was contacted by the founders of the for-profit Walden University. They understood what he had in mind and were the primary source of capital to establish the law school, Lively said.
“They proposed the idea of for-profit. Until then, it hadn’t crossed my mind,” he said.
Lively and his backers chose Jacksonville because they saw it as a “city on the rise,” he said.
Florida Coastal was licensed by the state in 1995. Its first students began classes the next year.
The school was provisionally approved by the ABA in 1999 and fully accredited in 2002.
“The first time we went up for accreditation, we got it. It was a bit of a journey, but we got to the destination,” Lively said.
The InfiLaw years
Florida Coastal was purchased in 2004 by Sterling Partners, a holding company. It subsequently founded The InfiLaw System, that in addition to owning Florida Coastal, established two more for-profit schools, Arizona Summit Law School in Phoenix and Charlotte School of Law in North Carolina.
Over the years, enrollment grew at all three schools, reaching a peak at Florida Coastal in fall 2011, when 1,755 students were taking classes.
The percentage of graduates from each school who passed the Bar exam increased during the first several years.
In the six Bar exams from July 2005 through February 2008, Florida Coastal students bettered the state average five times.
A decade later, Bar passage rates at the other two schools declined significantly, with Arizona Summit hitting a low of 19.7% in July 2016.
The low passage rates got the ABA’s attention and Charlotte and Arizona Summit were placed under sanctions.
The school in Charlotte closed in August 2017 and Arizona Summit is closing early next year at the end of the spring semester.
Florida Coastal hit its lowest Bar pass rate – 25% - in February 2017.
In October, the ABA notified the school it was “significantly out of compliance” with accreditation standards.
That led to increasing the minimum academic standards for admission to Florida Coastal and an overhaul of the curriculum, including adding Bar exam preparation courses to the requirement for graduation.
Bar passage rates improved and in May, the ABA lifted its sanctions and declared that “Florida Coastal School of Law remains an approved law school.”
Florida Coastal’s future
In the most recent Bar exam in July, 71% of Florida Coastal graduates — 22 of 31 — passed the exam, compared to the state average of 73.9%
When former Dean Scott DeVito resigned in August, Dean of Academics Jennifer Reiber became Florida Coastal’s interim dean.
“It wasn’t raising the incoming credentials that has impacted the recent Bar exams. It is the academic support and rigor of our program and the faculty. Students have to perform, so we’ve given them a longer runway,” she said.
Reiber said that transitioning to not-for-profit status will open opportunities for the school that are not available to for-profit institutions, such as grants for faculty research.
Being a not-for-profit also would allow the school to establish an endowment.
Goplerud said that if the change is approved, Florida Coastal no longer would be owned by InfiLaw and the company no longer would provide administrative support functions, such as information technology and human resources.
Florida Coastal would be an independent law school run by an independent board and would be better positioned to possibly affiliate with a not-for-profit university partner. The school’s enrollment for the current semester is 184 students.
The cost of resident tuition and living expenses at Florida Coastal is $46,156 per semester compared to $29,462 per semester at the University of Florida Levin College of Law.
“The mission of Florida Coastal will remain to serve the underserved. The two major state university law schools are exclusive in terms of who they take. That leaves a significant number of people who can succeed in law school who can’t get into (the University of ) Florida or Florida State (University). That’s the segment of the prospective student market that we focus on,” Goplerud said.
The ABA is scheduled to review Florida Coastal’s application for status change again in November.
“I think Coastal is doing well. It has good leadership and I hope everything works out well for the school,” said Lively.
