Victoria Young assesses legal education sector in wake of Kaplan exit and ULaw sale
With news breaking recently that Kaplan Law School is to close its doors in 2016, a contest between BPP University and The University of Law (ULaw) broke out in September as both institutions grappled for increased market share.
The closure of Kaplan has brought the traditional rivalry between BPP and ULaw to the fore, with BPP picking up business from Ince & Co, Mayer Brown, Nabarro and Holman Fenwick Willan in recent weeks.
Meanwhile, Shearman & Sterling and Trowers & Hamlins had already signed up with ULaw before Kaplan announced it would close. Among the reasons for closing, Kaplan cited the Solicitors Regulation Authority (SRA)’s Training for Tomorrow programme, introduced in 2014, as having opened up new routes to qualification as a solicitor, though there is little doubt in the industry that Kaplan has struggled to make progress.
While Kaplan had just 12 firms as clients, including Legal Business 100 firms Mills & Reeve and Fieldfisher – who have yet to decide what to do with their training programmes – BPP’s dean and chief executive Peter Crisp says its closure has created opportunities for his school.
BPP, owned by Apollo Education Group, a US-based educational services company, has looked increasingly dominant at the top end of the market in recent years, with Linklaters the only Magic Circle firm not to have a deal with the vocational education provider. Crisp says there are three reasons why clients are already moving to BPP, despite Kaplan’s law courses not officially closing until next year: ‘First, the quality of BPP’s programmes have attracted firms to sign up. Second, BPP has strong customer service for clients and trainees alike. Finally, our stability is the third factor winning over clients.’
The exit of Kaplan comes amid a period of turbulence in the English legal education market.
ULaw’s acquisition by Montagu Private Equity in 2012 was regarded as troubled by some in the industry, who claim the private equity house failed to maintain investment in the institution.
ULaw, which declined to comment, has changed ownership twice in the last three years. Once a charity, it was sold by Montagu to Global University Systems in June and changed chief executives in August when its chief operating officer David Johnston took over the top role.
Linklaters, which in February signed up to another five years with ULaw and advised Montagu on the sale of the business, has been working with ULaw since 2006. London graduate recruitment partner Simon Branigan said the firm reviewed its relationship with ULaw on a regular basis, and did so when stories about Clifford Chance and Allen & Overy (A&O) moving from ULaw to BPP appeared in the media in 2014 and 2013 respectively. A&O in particular chose BPP’s legal practice course (LPC) because it integrated business modules into the course, giving graduates masters-level business qualifications.
‘While some of the Magic Circle firms made a point about not having commercial awareness training, that surprised me,’ says Branigan, confirming that Linklaters runs a business course alongside the LPC and before graduates come through the doors of the firm. It was also offering a masters-level business component developed with ULaw.
As for ULaw’s recent management and ownership changes, Branigan reiterated his confidence in the school.
‘If we were to see a change in quality, clearly my answer would be different, but the main point is the tutors who provide the best-quality training,’ he says.
‘Frankly, there’s little point in changing provider at the moment unless they are forced to do so by the provider coming out of the market.’
Nigel Savage, Former ULaw chief
But former ULaw chief executive Nigel Savage, who retired in 2014 after an 18-year career at the law school, says the sale is ‘massively destabilising’ for the institution.
Savage, who is now a consultant, says: ‘The new owner will be looking to leverage its degree-awarding powers in other areas. But BPP is also not without its parent problems: Apollo in America is being investigated by the US Federal Trade Commission and its share price has fallen – when that happens to a parent, the subsidiaries tend to feel the draft.’
To woo over new graduates paying their own way, ULaw in August made a pledge it calls its ’employment promise’. This involves a refund of 50% of fees for students who are not employed in nine months. The university says it is confident as in 2014 it had a success rate of 97% for graduates securing training contracts within nine months.
However, the pledge has not convinced all. The recruitment manager at a firm that has signed up with BPP tells Legal Business that ULaw must be ‘building its own law firm to take on the recruits’, adding that a wave of debt-ridden students were increasingly sceptical about taking on further loans without guaranteed training contracts, which would weaken the market.
For Richard Moorhead, professor of law and professional ethics at University College London’s Faculty of Laws, it has been ‘a bit of a worry’ that two schools dominated so much of the market. ‘My basic anxiety is where one pulls ahead more in the marketplace in terms of competition.’
Moorhead says private equity ownership of law schools was concerning. ‘They expect costs to be cut and profits to be maintained, and quality is put at risk.’
However, for Savage, with legal education in flux, ‘frankly, there’s little point in changing provider at the moment unless they are forced to do so by the provider coming out of the market’.
‘We are now in a situation where legal education is facing the perfect storm. You have the coincidence of so many issues, like the SRA review, the impact of the desegregation of legal services and of the growth of insourcing to Manchester and Glasgow.’
victoria.young@legalease.co.uk