A legal maneuver that could save local law school

Charleston School of Law graduates listen as Dorothea Frank gives the commencement address during commencement Sunday, May 10. (Brad Nettles/Staff)

“May they never make peace with greed ...”

— The Rev. Doctor James Fraser Lyons IV, Commencement, Charleston School of Law, May 10

Last week’s Charleston School of Law commencement opened with a powerful invocation to the 140 members of the Class of 2015 by the rector of Good Shepherd Episcopal Church in Columbia.

“May they never make peace with greed and oppression,” Father Lyons said.

It was a timely request for a school that some say does not have a prayer of staying open.

Surely two of the owners of the besieged law school who sat on the commencement stage got the message.

One of them stood up and left prior to the conferring of degrees upon the graduates, who, following the ceremony, enjoyed a low-budget reception of their own.

Unlike previous years, these two owners announced during the final exams period that they would not pay for the festivities.

Sadly, the five original founders — a prominent judge and former president of the College of Charleston, two former federal magistrates and two Charleston lawyers — paid themselves more than $25 million since the school was founded 12 years ago. Two sold their shares for another $6 million between them and retired. Another resigned as a director in disgust because he could not convince the others to give back at least some of the money.

It was as if the law school got run over by a Mack truck.

Meanwhile, some very skilled local attorneys are working quickly and quietly on a plan to rescue the foundering for-profit law school: File a suit on behalf of the students asking the S.C. Supreme Court to place the school into “receivership,” which is not to be confused with bankruptcy. Here is how the receivership could work:

Law school students in the classes of 2016 and 2017 engage an experienced attorney who files the request to place the school in a receivership position.

The students have standing because they are “creditors” who have invested thousands in tuitions, much of it in student loans paid up front to the school.

The court assigns the case to a special master (a respected lawyer or judge), who appoints a “receiver,” an experienced lawyer or banker with no school connection. The receiver works with the creditors, considers all factors involved and formulates an action plan to settle the matter.

The plan would keep the school open and establish a process for settling the debts. In this case, the creditors are 1) InfiLaw, a private company that loaned the Charleston school’s owners more than $6 million in cash and provided at least $500,000 in management services; 2) the students; and 3) others unpaid for services rendered.

The school stays open with funds generated by a foundation consisting of unpaid benefactors. They request gifts of at least a million dollars from each of the five founders, who already were paid millions in profits and loans. Each $1 million gift would help offset each founder’s income taxes on their multimillion-dollar distributions.

The gifts would provide an opportunity for the founders to restore some of the community’s good will by showing that they genuinely care about the students and the law school’s future.

The receivership plan, if approved by the court, pays off a portion of debt to InfiLaw, provides the students a possible return on investment and establishes a non-profit Charleston School of Law overseen by a board dedicated to restoring its reputation, while keeping the faculty and staff. Under the plan, the three remaining owners would receive nothing in addition, recognizing that they have already been paid well.

Imagine what the law students, as creditors, would learn about intricacies of their chosen profession during this process. On-the-job training, if you will.

And the success of the endeavor would be national news, thus generating more financial support funneled through the non-profit foundation.

Thus, Father Lyons’ prayer would be answered, and the law school could resume living up to the lofty charge of its motto:

Pro bono populi (for the good of the people).

John M. Burbage is a journalist, editor and book publisher who lives in Charleston and owns a working farm in Hampton County. He may be reached at jburbage@postandcourier.com.