Law School Transparency Seeks To Monetize Services

More details from Brian Leiter here and from Steve  Diamond here.  I had no idea LST had been seeking angel funding.  

Update: Kyle McEntee from LST responds on the issue of angel funding:

We are not seeking angel funding from a VC or anybody else who would take a stake in LST. We are a nonprofit. Nonprofits cannot sell equity because nonprofits have no equity to sell. The ABA Journal was interested in our vision for LST beyond what people knew through the press. Our vision required a full-time staff, and one way would have been through an angel donor.

 

Comments

[Anonymous]

Dan,

You really seem to hate the law school reform movement. Why? Too close to home? Threat to the bottom line?

Would you agree that in the last decade, there has been a real disconnect between student outcomes and tuition costs?

[Dan Filler]

I agree with folks like Bernie Burk who think that LST encouraged very necessary and desirable improvements in transparency. In fact, LST is a big success story. Prospective students have much more, and much better, information. At the same time, my own view is that this monetization is strategically undesirable if LST's goal is to keep its credibility (and therefore its efficacy) high. And, separately, given the incredible venom directed at Steve for suggesting that LST might be looking monetize, it seems only fair to acknowledge the gap between those critiques and this news.

[Paul Horwitz]

I would hope for, but oddly am not expecting, an actual useful conversation about this. I've dealt with the people from LST repeatedly in the last two years and haven't seen any real evidence that they are not sincerely interested in the issues they address. Of course they could be fantastic liars. Or they could be, you know, sincerely interested in the issues they address. Maybe they think the fee is a good idea, or an imperfect but necessary one. Calling it extortion doesn't actually improve anyone's analysis on that point, as far as I can tell.

By the same token, that doesn't make the fee a good idea. Perhaps any such effort needs to be restructured or monitored by outside experts to guarantee impartiality. Perhaps it impairs their independence and their ability to change their minds. Maybe charging a fee is even a bad idea from start to finish and is irremediable. That it might be sincere and well-intentioned wouldn't change that as far as I can tell.

The Simkovic and McIntyre paper is either good or bad on its merits. There have been some useful points of both praise and criticism of the paper. There have also been some too-lazy-to-read-the-paper attacks that assume that if one can accuse the authors of having any self-interest, then there's no point addressing the merits of the paper itself. I find it hard to view LST any differently. Their work, and this fee idea, are either good or bad on their merits, and the value-added of asking about their motives is in my view not terribly likely to add more than just asking directly whether this is a good or bad idea, and if a bad one whether it can or should be modified or rejected altogether. I'm not terribly shocked that a professor wants to write work that gets attention in order to actually get attention or even sell a copy of his book, that someone who starts a non-profit would still like to have a salary, that someone who gets personal value out of writing on a scamblog, or feels a sense of vindication in doing so, would be inclined to think ill of law schools. Of course these motives can be relevant, but they're pretty thin gruel for conspiracy theories, and direct evaluation of arguments is still bound to generate more light and less heat. I don't doubt there are reasons to criticize this apparent move, but I suspect they will be just as persuasive regardless of speculations about motives--just as I'm sure there are reasons to praise or criticize specific positions that Dan has taken, but the idea that he hates the law school reform movement also seems pretty silly to me.

[Barry]

I think that this is going to be bad for them, simply because they are bucking the establishment, and if there's one rule of life, it's that the establishment can be cheerfully corrupt, but that the rebels must be pure.

[Barry]

Dan, thanks for posting that update; it puts them in a much better light.

[Anonymous]

Barry, I agree that it puts them in a much better light.

What does that say about Diamond and Leiter? But haters gonna hate.

[Christine Hurt]

LST is a non-profit that seeks to serve potential law students but needs funds to do so. Libraries, museums, national and state parks, and many other NFPs charge fees to cover costs. It could, like USNRW I guess, charge law students a fee to see its data. Charging law schools a fee seems to be a better way to stay independent than coming up with a way to scare up subscribers (ads! rankings of party schools!) or charging subscribers a lot of money, like Consumer Reports does. Either way, it doesn't make LST suspect, it just makes it nonmagical in that it actually needs funds to operate.

[Paul Campos]

"LST is a non-profit that seeks to serve potential law students but needs funds to do so. Libraries, museums, national and state parks, and many other NFPs charge fees to cover costs. It could, like USNRW I guess, charge law students a fee to see its data. Charging law schools a fee seems to be a better way to stay independent than coming up with a way to scare up subscribers (ads! rankings of party schools!) or charging subscribers a lot of money, like Consumer Reports does. Either way, it doesn't make LST suspect, it just makes it nonmagical in that it actually needs funds to operate."

Exactly right. The amazing thing about LST is that it's done such fantastically valuable work over the past three years with no funding at all, beyond a few thousand dollars in donations.

[JLG]

The question for MacK is why does LST need to subsist forever? Employment reporting has been changed to report full time positions, JD-required positions, etc. part time positions separately. That was the whole point of LST, wasn't it?

[MacK]

Maybe it doe not need to subsist forever - except that only recently were new ways in which law schools gamed the data revealed - while court decisions to date have taken the view "so the law school lied" that is not fraud because the students should not have been taken in ...

The only real way to fix this problem is some sort of SarBox type rule for any institution receiving Federally backed student loans - that any data it publishes about outcomes that is misleading puts the dean etc. in jeapordy

[Susan appleby]

How much money are we talking about here?

[BoredJD]

"The question for MacK is why does LST need to subsist forever? Employment reporting has been changed to report full time positions, JD-required positions, etc. part time positions separately. That was the whole point of LST, wasn't it? "

Salary information and reporting rates are arguably more important than raw numbers of people employed, and this information is not required to be disclosed.

[None]

I would like to know more about LST's nonprofit status. The organization's own web page doesn't provide any real information. Here is what information is publicly available--if any of this is wrong, it would be nice to get the full information directly from LST.

LST apparently is a North Carolina corporation, but the North Carolina secretary of state's page says that its status is "problem report." This status means that a creation document has been submitted for filing but did not comply with the filing requirements.

LST is not a tax-exempt organization for federal purposes--that doesn't mean it's not a nonprofit, but it does mean that it hasn't undergone the kind of review that people often associate with something being a nonprofit (and it also means donations aren't tax-deductible).

Anyway, given that this is an organization devoted to transparency, and given the constant mention by its supporters of LST's nonprofit status, it would be nice to know more about LST's own organizational status.

https://www.secretary.state.nc.us/corporations/Corp.aspx?PitemId=10308915

[Blockhead]

if schools refuse to pay, would that mean that Mr. McEntee would be forced to get a real job?

[kip]

What are LST's qualifications to perform an audit? Would they just choose their audit targets by just whichever school has someone sticking their necks out to say something pro-law school that week, or whomever Campos goes after in his blog that week? That seems to be how it works at most of the scamblogs, of which these guys are a part.

[Kyle McEntee]

@none

We are a GA nonprofit, and we just filed for foreign corp status in NC about a week ago. My guess is that it's still processing, but I'm sure we'll receive notice of what's wrong (if anything) shortly. Things are done by mail in NC, sadly, which makes the process a little more strung out.

We are filing our 1023 to the IRS soon. We have just one more section to fill out and then we will be having somebody review it.

Hope this answers your questions.

[Steve Diamond]

And, of course, if the IRS does grant LST tax exempt status, it will have to file an annual report on either a full Form 990 or the postcard version 990N (if their annual receipts are <50K). The option is theirs and I hope they will opt for the more "transparent" approach, namely, the filing of the full 990. I don't know why this simple point caused so much consternation when I pointed it out some months ago but I am glad to hear LST is moving ahead with this step.

[Stan]

Steve, any thoughts on allowing comments on your blog? Signed comments of course, you know, in the interest of transparency.

[dailyshow]

I was recently offered the chance to be listed in a Who's Who in Law. For a fee, of course.

[BoredJD]

Steve, it caused so much consternation because you clearly had no idea what you were talking about, were engaging in all sorts of wild accusations that were absurd in the context of the conversation, and had to be educated by several anonymous commenters about non-profit tax law. I'm glad to see you read those comments and can now parrot back "990N (if their annual receipts are <50K)" like a good fellow.