Law Schools Could Face Wave of Class Actions in 2012, Attorneys Warn

BOSTON, Dec. 22, 2011 /PRNewswire/ -- Critics who accuse law schools of inflating graduates' employment and salary statistics are not just using the blogosphere to air grievances among themselves—some are brazenly seeking to drum up new plaintiffs for a wave of class action lawsuits against American colleges and universities, warned two attorneys for the national law firm, LeClairRyan.

"We have been tracking this issue closely for six months, and the noise on the blogs and social networks is getting louder," said veteran higher education attorney Robert B. Smith, a Boston-based partner in LeClairRyan and leader of the firm's Education Industry Team. "Among those disenchanted souls who believe law degrees should come with guarantees of 'gainful employment or your money back,' the effort to find potential plaintiffs has been bold, to say the least. In a recent, Internet-published interview, an attorney representing putative plaintiff classes in separate actions against two law schools even went so far as to declare 2012 'the year of law school litigation.' "

In class action suits filed earlier this year, seven former students from New York Law School and Thomas M. Cooley School of Law accused their alma maters of trying to artificially boost enrollments by exaggerating or misrepresenting graduates' employment and salary statistics. Meanwhile, online forums have been full of speculation that at least 15 other schools are on a "hit list" of possible targets for similar suits, noted veteran class-action defense attorney Michael S. Haratz, a partner in LeClairRyan's Business Litigation Team. "Even institutions that are not on this list need to proactively manage the potential risk posed by the proliferation of these veiled and not-so-veiled threats," said Haratz, who is based in the firm's Newark, N.J., office. "The management of potential litigation shouldn't just start early—ideally, it starts before the plaintiff's bar has your school in its sights. The time to take action, in other words, is now."

And yet for education officials such as risk-managers and in-house counsel, determining exactly what action to take can be difficult, because the risk profile for each school is highly context-dependent, Haratz noted. "Let's say the university is under the gun from outraged alumni who are tired of watching bloggers sully their law school's name," he said. "That school might feel pressured to act quickly, but it is critical to think clearly about the potential consequences and objectives of any response."

Indeed, many factors must be weighed, Haratz said. "If there is no pending litigation, but only litigation that is threatened in one or more blog postings, the strategy and action, if any, that is appropriate will vary depending on the circumstances, balancing a variety of objectives and interests, including the need to maintain the reputation of the institution and the need to proactively address threatened litigation," he said. For example, if a class action suit has just been instituted in a state court, a relevant question to consider is whether the court in which the action is brought, or any judge assigned to the case, has much experience with class-action litigation, the attorney noted. "If the judge has very little experience with class actions, it might make sense to move the case to federal court, where such litigation is likely more commonplace," Haratz said.

Likewise, certain judges rarely, if ever, grant motions to dismiss in class-action litigation or complex commercial litigation. "Strategically, filing a motion to dismiss must be considered carefully, weighing the probability of success given the court or judge, the nature of the legal deficiencies underlying the causes of action pleaded, and whether the matters in dispute are public or heavily politicized," Haratz said. "Depending on the circumstances, a motion to dismiss might not only be a long shot—it could actually give the opposition a chance to patch holes in its case or otherwise provide public relations fodder for class-action counsel, who may be all too inclined to litigate the matter in the press and on the Internet."

While taking a proactive and aggressive approach, including suing class-action attorneys and bloggers for defamation, might mollify alumni, even these strategies could backfire, Haratz noted.  However, he said, other proactive decisions amount to a no-brainer for law schools everywhere. "For example, whether your school is on the 'hit list' or not, you should already be looking carefully at the content and presentation of your own salary and employment data. Make careful examination of whether this information is consistent with regulatory requirements and whether modifications might be warranted, as well as any risks associated with various modifications," he said. "It also makes sense to look into how you are managing your communications within your board of trustees and to influential alumni and the rest of the world. This is potentially discoverable information. It needs to be handled in ways that will not cause harm later on, while still bearing in mind that you are managing a university with a student-body and alumni network that have questions or concerns or seek clarity amidst a stream of biased, incomplete or inaccurate information that is being disseminated from sources outside the university community."

The school's legal team should be well-versed in the dynamics of class-action litigation and deeply familiar with the mindsets of both the plaintiffs' bar and increasingly influential bloggers who are part of the so-called "law school transparency" movement, Smith noted. While only three consumer-fraud class actions have been filed against American law schools thus far, if pending motions to dismiss in these cases go nowhere, chances are good that a wave of new suits will be filed against law schools across the country, he said. Moreover, educational institutions that publish similar "consumer" data could easily become targets as well. "If pending motions to dismiss fail, the plaintiffs' bar will be emboldened," Smith concluded, "and these suits could spring up like wildfire."

About LeClairRyan

As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses.  With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 350 attorneys representing a wide variety of clients throughout the nation.  For more information about LeClairRyan, visit www.leclairryan.com.

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Robert B. Smith
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