Stavrinakis: CSOL needs a new operating license
State Rep. Leon Stavrinakis said he thinks recent leadership and management changes at the Charleston School of Law require that it apply for a new state operating license.
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Stavrinakis said he doesn't know what the details of those changes are, because law school founders are resisting turning over a copy of the document spelling out an agreement between the founders and the for-profit InfiLaw System.
Stavrinakis, D-Charleston, made the comments Wednesday at a meeting of the Charleston County legislative delegation's Courts, Laws and Rules Committee, which he called in response to a public outcry opposing the possible sale of the law school to InfiLaw, which owns three other for-profit law schools.
Students, alumni and many others in the state's legal community were outraged when law school leaders announced July 25 that they had entered into a management services agreement with InfiLaw, which sometimes is the first step in a sale.
They have said that they think a possible sale to InfiLaw could diminish the value of a Charleston School of Law degree because the company's other schools are seen in some legal circles as “diploma mills.”
Stavrinakis, who is a lawyer, said he thinks the state's Commission on Higher Education, an agency that must approve a license for all for-profit schools operating in the state, should have required the for-profit Charleston School of Law to apply for a new license even before it entered into the agreement with InfiLaw.
Two days before that agreement was announced, two of the school's five founders — Alex Sanders and Ralph McCullough — sold their shares back to the school. That is a significant change in administration that should have triggered the commission to require the school to apply for a new license, Stavrinakis said.
“I'm troubled that you would just assume something like this is compliant,” he said to commission Executive Director Richard Sutton. “I think you guys have some work to do,” Stavrinakis said. “It seems obvious to me that it triggered CHE approval.”
He also said that he thought it was “obvious that the reason some of those people left was because they didn't want to be associated with the change that's coming.”
Representatives from the Commission on Higher Education, the South Carolina Bar Association, and the school's Alumni Board and student body made presentations to the committee. Law school leaders Tuesday declined Stavrinakis' invitation to speak. They stated in a news release that it was possible a merger between the law school and the College of Charleston would be discussed there.
The law school's license prohibits it from pursing a merger with a public institution, the release stated. So, in an abundance of caution, they declined because they didn't not want to risk their condition of licensure.
Committee members said the issues around the law school and possible sale were confusing, and they voted to request an opinion from the state's attorney general on what constitutes a change in ownership, when a management services agreement becomes tantamount to running a school, and any remedies if licensing regulations were violated.
They also asked Sutton to get back to them when he heard from law school leaders about what the management services agreement contained. Having access to the agreement is important, they said, because it could reveal other violations of state regulations.
Sutton said commission leaders have asked Charleston School of Law co-founders George Kosko and Robert Carr to turn over a copy of the management services agreement between them and InfiLaw. They are reluctant to do that, Sutton said, because they said it contains proprietary information.
He said commission leaders will meet with Kosko and Carr next week, but he can't predict whether they will agree to turn over the document.
John Robinson, president of the school's Alumni Board, said graduates have been trying to get answers to questions on the future of the school for weeks.
Among them is whether the Charleston School of Law has any connection to CSOL Acquisition, LLC, a corporation opened in Delaware on June 26. CSOL Acquisitions, LLC was filed by the same agent that filed corporations for InfiLaw's three other law schools, Robinson said. And all of those schools also were opened in Delaware, a state known for requiring limited transparency in such matters, he said.
State Rep. Stephen Goldfinch, R-Murrells Inlet, a Charleston School of Law graduate, said he had heard rumors that InfiLaw purchased Sanders' and McCullough's shares of the school.
Sutton said if that were true, and if law school leaders had misled the commission, it could result in the school's license being revoked.
Sanders said after the meeting that he sold his shares to the law school, not InfiLaw. He also said he had no role in the sale to InfiLaw. He sold his shares simply because he is 75 years old and it was time to slow down.
But, he said, all five founders had an idea when they launched the law school that turned out to be wrong. “We all thought that we put up the money, so the government would be out of it,” Sanders said. “That was a mistake to think that.”
Reach Diane Knich at 937-5491 or on Twitter @dianeknich.