The private equity firm, Eureka Growth Capital, that purchased West Academic Publishing from Thomson Reuters has put out a press release which gave more details about the deal. The release indicated that the deal was actually a partnership with the Thomson Reuters managers that were operating West Academic Publishing. Although the release also acknowledged declining enrollment in U.S. law schools, it asserted that the purchase provided “opportunities for significant growth as the legal economy recovers.”
This statement is interesting in light of the recent online debates concerning the causes for the drop in law school applications and the downturn in the legal market. Eureka’s statement seems to indicate that they view the recent downturn in law school enrollment as a temporary condition caused by a weak legal market. Personally, I think this logic is flawed, since economic downturns typically have a counter-cyclical impact on education enrollment. Many commentators on the law school drop have argued that it is more of a downward correction that has more to do with the employment metrics scandal and increased public awareness about the real value of law school compared to tuition. To make matters worse, there are convincing arguments (increased focus on legal spend by corporations, etc.) that the weakness in the legal market represents much more than a temporary reflection of the decline in the overall economy. If either of these declines is in reality a more permanent shift or correction (i.e., a “new normal”) rather than simply a temporary condition, Eureka’s expectation of “significant growth” would seem to be misplaced.
Does Eureka really not believe the nay-saying about the legal market? Does Eureka know something everyone else has missed? Has Thomson Reuters sold Eureka a lemon? Are both companies unaware of these trends? We may never know Eureka’s reasons but it seems like a risky move on Eureka’s part.