16 Colleges, 1 Law Firm

In unusual collaboration, Associated Colleges of the South strikes agreement with national law firm to provide legal services to its member institutions.

August 31, 2017
 

Collaboration is hard -- so much so that while a majority of campus business officials think their college or university should share back-office functions with other institutions, fewer than one in four say their leaders have seriously considered doing so, according to Inside Higher Ed’s recent survey of business officers.

The Associated Colleges of the South is a well-established consortium of 16 private liberal arts colleges that have a history of working together on international programs, teaching workshops and digital learning initiatives, as well as some joint purchasing agreements.

But in an environment that the group's leader, R. Owen Williams, believes increasingly requires the colleges to drive down their internal costs (and hence their tuition prices), the coalition is taking collaboration to a new level: a seemingly unprecedented agreement for the 16 independent ACS colleges to share one national law firm, Steptoe & Johnson PLLC, based in West Virginia.

Under the arrangement, in which the members are expected to participate to varying degrees, the colleges will continue to use their in-house legal teams (which half of them have) and local law firms for legal work involving the nuances of state law and transactions such as zoning or real estate.

But Steptoe will offer both preventative educational advice designed to help keep the 16 colleges out of legal trouble, by better navigating the increasingly complex regulatory environment they face, and project-based legal services at a sharply reduced rate on issues such as federal regulatory compliance, academic freedom, domestic and international admissions, and nonprofit governance.

"Finding ways for colleges to operate differently is critical, especially to bring down our costs," Williams says. "Collaboration is a very difficult enterprise, as all of us are conditioned, culturally and historically, to think about what makes our institutions distinctive, rather than what we share in common. We're not going to be able to combine all our resources, or address our concerns about cost containment, through shared services alone. But it has to be part of the mix."

How the Arrangement Came About

Like many advocates for liberal arts colleges, Williams believes deeply in the institutions’ importance -- and equally strongly that they must adapt if they are to thrive (and in some cases survive).

He acknowledges that people have been questioning the viability of small colleges for generations, and given that history of largely failed predictions, "it's not hard to see why academics are inclined to dismiss all of the concerns that they see as overstated," Williams says. But this time is different, he argues, given the demographic changes in the country (declining numbers of the white middle-class people many colleges have historically recruited), tuition prices that have outpaced virtually all other things Americans pay for, and the emergence of "more and better alternatives" to going to college.

Most sharing of services in higher education is done by public universities that are part of state systems or private institutions in close proximity to one another, like Southern California's Claremont University Consortium or the Five Colleges in Massachusetts. Proximity overcomes one of the three major impediments to collaboration cited by respondents to the Inside Higher Ed survey -- geography. But the others (faculty opposition and a desire to maintain the status quo) are powerful, too, Williams says. Institutional leaders tend to believe their colleges are distinctive if not unique, and are often reluctant to make the compromises and changes that collaboration with other institutions usually necessitates.

"The point we tried to make with our members is that we have more in common with each other than not, and we need to recognize that we're competing against others," Williams says, citing honors colleges at public universities and online providers as examples. "We have to get people over this sense of competitiveness."

That "philosophical" hurdle is the first step in getting buy-in for a group effort like this, Williams says: "Realizing we can share things together without in any way diminishing our respective competitive advantages." The second step, he says, is figuring out "where can we do it and cause the least amount of blowback, the least negative effect on the campuses."

As officials from ACS and the campuses began considering areas that might benefit from such an approach, the colleges' business officers suggested they look at legal affairs, which is consuming growing portions of institutions’ budgets amid regulatory and other pressures.

"Legal is one of the easiest areas to combine," because it's an area that interacts with relatively few other units on campuses (the president's office, the chief business officer or equivalent). Many colleges and universities at some point need legal help that exceeds the combined expertise (or capacity) of their in-house teams or local firms, and a sizable and growing number of Washington-based and other law firms have developed higher education practices to meet those needs.

ACS created a list of issues that the campuses commonly faced, and a committee of in-house lawyers and business officers examined firms that had expertise in all of those areas. From that search, Steptoe was chosen.

How It Will Work

The next challenge came in crafting an arrangement that satisfied the differing needs of the 16 ACS institutions, which include complex universities with law schools (like Washington and Lee University and the University of Richmond) and pure liberal arts colleges with operating budgets one-fifth the size of some of their ACS peers. Some have multiperson in-house legal offices; others have none at all.

The arrangement is designed to "help the colleges in a proactive way to avoid a bunch of problems, and when problems do arise, as they inevitably will, we'll be in a position to readily assist them," says Jim Newberry, who heads Steptoe's higher education practice.

The educational component will consist of regular events and newsletters in which Steptoe will advise the colleges about recent legal developments in white-hot areas such as Title IX sexual assault compliance and specialized realms such as the Uniform Prudent Management of Institutional Funds Act. "We want to give them information on the most topical issues that we think are affecting all of our members, and hopefully by doing that, we can reduce our exposure and prevent the need for a more responsive legal engagement," Williams says.

No amount of education or guidance is going to prevent colleges from facing legal issues, so the rest of the arrangement enables ACS members to contract with Steptoe for blocks of time on an annual basis or to hire the firm for individual projects at what Williams describes as a "significantly reduced fee, [by] 25 to 50 percent, depending on the circumstances."

Williams says the arrangement will save its members money in multiple ways. First, working with a common firm that understands the colleges' issues will mean that "when you engage this firm, they won’t have to spend as much time getting up to speed," so the institutions will accumulate fewer billable hours, he says.

ACS also hopes that giving its members regular, thorough educational legal advice will prevent them from having to hire Steptoe for other matters. “As soon as any one of our colleges encounters some sort of quagmire or quicksand,” Williams says, “we’re going to be able to save them and then pass the message to the others -- ‘here’s the quicksand,’ creating a feedback loop of sorts.”

Potential Impediments

Higher education lawyers interviewed about the ACS-Steptoe deal said they were unfamiliar with other arrangements at this scale, and thought it had promise. They expressed some doubts, however, about how much individual institutions would want to share what they learned from a particular legal entanglement (especially an unflattering one) with their peers, in ways that could limit how much the group benefits from the "feedback loop" Williams envisions.

In addition, numerous ACS members have their own histories with law firms that they don't want to give up -- arguably limiting the extent of the financial benefit and collective impact that Williams hopes to achieve.

Leanne Shank, general counsel at Washington and Lee University, an ACS member, and incoming president of the National Association of College and University Attorneys, says her institution will happily participate in the educational offerings Steptoe provides, "because anything that helps with preventing problems is a good thing."

Shank's office will continue to handle the vast majority of its legal work, though, and "in the limited cases" where the university needs additional help or expertise, it will continue to "make an independent decision about what outside firm we use," she says. "We have very good relationships with firms that know our issues and know our culture. This really won't change the way we do our legal work."

Williams doesn't expect this particular arrangement (or any single change) to dramatically alter the financial picture for his members or higher education broadly. But he hopes that, step by step, ACS's members and colleges generally grow more comfortable working together.

"Collaboration requires a lot of things before it can happen," he says. "As important as any of those is trust. This is something that will bring our institutions just that much closer to each other, and further the trust that is so important to what we do across all that we do. If it does that, I'm hoping there will be other areas we can collaborate on."

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