Law Schools

U of Texas put 'golden handcuffs' on law faculty with help of $213M private foundation


As the state attorney general continues to look into the operations of a private nonprofit foundation that helped raise money for the University of Texas Law School, details are emerging about the “golden handcuffs” that discouraged faculty from going to other institutions.

Although there is nothing to indicate that any illegal conduct took place, questions have been raised about the propriety, transparency and accuracy of compensation arrangements for faculty at the state’s premier law school that involve benefits provided by an outside foundation with a powerful board of trustees, the American-Statesman reports.

News reports have also noted that the largesse from the University of Texas Law School Foundation created what university president William Powers Jr. called “a divided atmosphere among the faculty” over law school’s faculty compensation practices.

The foundation has assets of $213 million and gave nearly $75 million to the law school and its faculty in little more than a decade, the newspaper says. Since the 1950s, as recommended by a series of law school deans, the foundation has given faculty financial assistance including stipends and mortgage help. Such “golden handcuffs” also benefited the law school by giving its faculty a financial incentive to stay at the University of Texas, said the current law dean, Ward Farnsworth.

Sometimes, a loan would be provided that had a certain portion forgiven each year that a law professor remained on the faculty. Alternatively, a law professor might be given a deferred compensation agreement that provided for him to get more pay for each year he stayed at UT.

Particularly at private law schools, “It’s a common recruiting tool,” Farnsworth said.

Among those who benefited at UT were former dean Lawrence Sager, who had $300,000 of a $500,000 loan forgiven before he was asked to step down as dean and return to the faculty, ending his loan-forgiveness arrangement.

An internal report has suggested that Sager might also have been getting $100,000 a year in deferred compensation at a time when salaries for other deans in the UT system were frozen.

See also:

ABAJournal.com: “Foundation’s Forgivable Loans to U of Texas Law Profs Draw Fire; Former Dean Got $500K”

ABAJournal.com: “U of Texas regents OK external probe of law school funding”

Daily Texan: “Texas Senate passes bill limiting boards of regents’ power”

Houston Chronicle: “UT regents back down on records, probe”

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