© 2013 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
(Aug. 15) – The late Texas Wesleyan University School of Law officially opened its doors Thursday to students, faculty, patrons and the Fort Worth community as Texas A&M University School of Law.
While the acquisition gave A&M the juris doctorate program it has long wanted, administrators say it also will allow the school to redefine legal education.
“It’s an interesting time for legal education,” said Aric Short, interim dean of A&M Law. “I think the timing of this transaction couldn’t be better.”
The public opening followed Monday’s official close on A&M’s $73.2 million acquisition for the law school. The transaction close came just in time for the first day of classes next Monday.
The acquisition was a result of a year of tireless planning, negotiating and seeking approval from regulatory bodies. This included the American Bar Association for accreditation, the Texas Higher Education Coordinating Board’s permission for A&M to add a J.D. degree and the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) to approve the transaction.
In addition to Short, those in attendance of the grand opening included Texas A&M University President R. Bowen Loftin; Texas A&M University System Chancellor John Sharp; Texas A&M University System General Counsel Ray Bonilla; Texas Wesleyan University President Frederick G. Slabach; Fort Worth Mayor Betsy Price; and Kelly, Hart & Hallman founder Dee J. Kelly, a longtime supporter of the school.
“Today we celebrate the history of Texas Wesleyan, and the future of A&M,” Texas Wesleyan President Frederick Slabach said. “This transaction is a win-win-win for Texas A&M, Texas Wesleyan and Fort Worth.”
A&M has tried to form a law school since 1920, A&M President R. Bowen Loftin said.
“Expanding Texas A&M’s graduate professional programs is one of the key tenets of Vision 2020,” he noted, pointing out that most of the nation’s top universities have law schools.
The Purchase
A&M’s and Texas Wesleyan’s original plan was to enter a “strategic partnership” in which A&M would pay $25 million for joint branding (Texas A&M University School of Law at Texas Wesleyan University), joint programs and a 40-year lease. Instead, both parties settled for A&M to pay $73.2 million for a full acquisition that involves:
• $31.4 million paid at closing
• A&M pays $30.8 million ($7.7 million annually) over the next four years for the annual lease payment and non-real estate law school assets
• On the fifth anniversary date, A&M has the option to purchase real estate for $11 million
• No naming rights for Texas Wesleyan or related academic agreements
One of the biggest points of negotiation, of course, was to convince Texas Wesleyan to change the joint partnership to a full A&M acquisition, said Ray Bonilla, A&M’s general counsel and chief legal officer.
But A&M proved that doing so was a cleaner transaction on its end and it accelerated the payments to Texas Wesleyan, Bonilla said.
He added there weren’t many law school acquisitions out there to benchmark the price off of, but the $73.2 million Wesleyan and A&M decided on was a reasonable value for the worth of the real estate and land.
In regard to what is left to do since the transaction closed, “there are a few post closing items but nothing major,” Bonilla said.
“We made a point to work out all of the big issues upfront,” he added.
He also considered the deal a highlight of his legal career.
“As a lawyer, to be able to play a role in bringing a law school to Texas A&M – something the university has wanted for a long time – is very satisfying personally,” Bonilla said. “It was an interesting and exciting transaction to work on.”
The Lawyers
Winstead served as A&M’s legal counsel in addition to Bonilla. Kelly, Hart & Hallman was Texas Wesleyan’s sole legal representation; the university does not have an in-house chief legal officer
Fort Worth shareholder Justin Hoover led the Winstead team from the corporate perspective, with assistance from shareholder Paul Wageman and associate Sargon Daniel in the Dallas office. Also from the firm’s Dallas office was Andy Dow, who handled the real estate matters of the transaction.
Winstead has previously represented A&M in various matters, including the school’s transaction from the Big 12 Conference to the Southeastern Conference, led by Winstead’s former chairman, Mike Baggett.
The firm has also assisted A&M in matters related to the upcoming renovation of its football stadium, Kyle Field.
Hoover said the idea of having a university on each side of the transaction was especially challenging and unique from your typical M&A transaction.
Since Texas Wesleyan is a private, non-profit institution and A&M is public and part of the state agency, it created interesting legal issues, Hoover said. He added that there were many “different voices” to appease that one wouldn’t handle in a typical M&A transaction – more specifically each school’s own set of finance facilities, HR departments, etc.
Wageman noted that close to 10 percent of Winstead attorneys are A&M alumni.
“We have a strong allegiance to the university, so for many of our lawyers it was a source of pride that we were able to represent them,” he said.
It was also meaningful for Kelly Hart to represent Texas Wesleyan. The two entities have a close relationship – in 2005, the Dee J. Kelly Law Library was named in honor of Kelly Hart’s founding partner.
“It was definitely a meaningful transaction for the firm and given the previous relationship we’ve had with Texas Wesleyan,” said Fort Worth partner Benton Cantey, who led the corporate side of the transaction.
Associate David Cook also led the corporate matters, and partner Mark Bishop handled the real estate aspect of the transaction. Both are based in Kelly Hart’s Fort Worth office.
The Transition
Aric Short will remain the school’s interim dean for the current school year while administrators look for a permanent dean. Short the school has been too busy at this point with the acquisition to discuss the timeline or the process to find the new dean. He doesn’t even know whether or not he will pursue continuing as dean in the permanent position.
“Those are the sorts of things that we are going to have to discuss as a faculty and in conjunction with the president and provost,” Short said.
The two main focuses during the transition period – which will probably take one or two years – are budgeting and academic strategic planning.
The law school will not be eligible for state funding until 2016, so it’s important to “run a very tight, careful budget at the law school,” Short said.
In terms of academics, the law school will need to correspond with A&M’s provost on how to expand the academic program – more specifically, how to collaborate law classes with the traditional areas A&M has a specialty in such as engineering, natural resources and maritime activities, Short said.
A&M Chancellor John Sharp noted the university plans to use the law school acquisition to pursue its longtime desire to focus on new areas of growth in the law such as patents and commercialization.
Both sides also expressed no intention to eventually move the law school to College Station, though Bonilla noted there has been some talk about establishing an additional campus in College Station.
“I think [A&M] sees the benefit of being in the Metroplex and I think Fort Worth is such a rich and supportive legal and business environment for the law school,” Short said.
Short added that he hopes the law school will remain closely tied to the Fort Worth community as it grows a stronger national and international presence.
Though many law schools have felt increasing pressures from the U.S. News & World Report rankings, Short said he as interim dean will not spend resources for the sole purpose of improving rankings.
“My goal is going to be doing what’s best for our students. If that has the spillover effect to improving our rankings, that’s great,” he said. “We don’t want to lose the soul of the law school going forward, and I don’t think we will. That’s one of the things I’ve been most impressed with A&M about.
“There may be people who want to improve our rankings. I want to make us the best law school in the country,” he added. “I think those are different things.”
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