Rival law schools twist the knife over BPP parent’s SEC probe
30 November 2009 | By Corinne McPartland
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Amid the news that BPP Law School’s US parent Apollo Group is being investigated by the SEC in connection to accounting irregularities (The Lawyer, 23 November), the educator’s business model has been put under scrutiny.
While some of this scepticism smacks of sour grapes from cheesed-off rivals, it can also be perceived as a dig at BPP’s efforts to achieve its long-term goal of transforming itself into a full-blown university.
One graduate recruitment partner at a firm that has signed an exclusive LPC deal with BPP admits that, although he will be monitoring the situation carefully, he will “not be losing any sleep” over the investigation.
“It undoubtedly raises questions about the future reputation of the school,” he says. “But what’s really at the forefront of all this is the question of whether privately owned companies can really run universities.”
The probe is the second time Apollo has been investigated by the SEC for its revenue recognition policies. It is understood that it relates to the way Apollo accounts for revenue relating to students enrolling at the University of Phoenix, who are refunded for dropping out early.
The university is also embroiled in an $80m (£47.93m) pay dispute with staff. It is understood that in 2004 Apollo paid out nearly $10m to staff after it allegedly broke the law by tying their remuneration to student enrolments.
In a statement Apollo clarified that it is attempting to settle and resolve a six year old False Claims Act lawsuit in which the US Department of Justice declined to intervene - relating to its compliance with a single provision of the Higher Education Act. The previous $9.8m settlement was with the US Department of Education to resolve similar allegations.
BPP chief executive Peter Crisp, meanwhile, said in a statement: “The inquiry relates to Apollo’s US operations only and not BPP, which remains a UK company subject to UK legislation.”
Since BPP Holdings, the owner of BPP Law School, agreed to be taken over by US-based Apollo for £305m earlier this year, it has been involved in a series of PR scrapes, which one reader of TheLawyer.com claims have dragged “the good name of BPP down”.
BPP was investigated by the Bar Standards Board in October after it emerged it had oversubscribed the number of students on its BVC. The school asked students to push back their start dates to September 2010 in return for a 15 per cent discount on fees.
The news came after an administrative error caused the start of an LPC exam to be delayed by two and a half hours and then a technical fault resulted in hundreds of GDL students waiting 48 hours longer for their exam results.
One student who is currently deciding where to study his LPC admits that the blunders have put a serious question mark over whether he wants to attend BPP.
But the mishaps have not slowed down the school, which has launched a third City branch and has said it will open in Bristol - just days after rival the College of Law (CoL) said it was opening there.
BPP is also planning to launch in Birmingham, where the CoL already has a branch. This expansion is going ahead despite BPP making 11 LPC staff redundant in Manchester in July.
“I think it’s a volume game for them and making money is paramount,” says Oxford Institute of Legal Practice director Julie Brannan.
BPP became the first privately owned company to receive degree-awarding powers in September 2007 and has since launched a law degree that attracted 100 students in its first year.
“What’s to stop someone like easyJet buying a university and start selling ‘easyDegrees’? Apollo has a bad track record in the States, and I hope it doesn’t start to bring the UK’s legal education into disrepute,” says CoL chief executive Nigel Savage.
Some have called for the reintroduction of the Solicitors Regulation Authority (SRA) grading system for the LPC, which was abolished in preparation for the next generation of LPC courses.“Rather than spending five to 10 years consulting with providers, I’d urge the SRA to immediately reinstate its grading visits, and those should include an element of assessing classes. The results should then be published and made available to the public,” says Bristol Institute of Legal Practice deputy director Steven Dinning.
The SRA’s tired response runs thus: “The SRA will keep under review the investigation into the alleged accounting irregularities of the Apollo Group as it relates to BPP and take action if necessary.”
But with rivals crying out for tougher regulation and firms watching closely as BPP vies for university status, the SRA may have no choice but to intervene.