Yesterday, Standard and Poors issued a new report, As Law School Demand Drops Credit Quality Among U.S. Schools Diverges. In addition to noting the drop in demand for legal education generally, the authors emphasized that credit quality gap between independent law schools and those tied to universities has grown. The report looked at five independent schools - Albany, New York Law, Brooklyn, Thomas Cooley and Thomas Jefferson. It concluded that, while all had had stable or positive credit outlooks in 2010-11, all but Albany are now negative. Albany is stable.
The report also noted that several smaller regional universities and non-flagship public universities - including Widener, Regent, University of Puerto Rico, Pace, Western New England, Suffolk, and Nova Southeastern - are showing some credit weakness as a result of their law schools' performance. Because the law schools at universities don't, in the main, issue rated debt, it appears that the impact of law school weakness on universities is less detectable.
This was the boldest conclusion from the report:
In our opinion, high turnover of leadership has the potential to either inhibit or accelerate the execution of strategic plans to address current operating challenges.
And I promise you that no matter where you live, there either will or will not be precipitation tomorrow. Count on it.