Gordon,

Excellent post. I support the idea of organizing (or theorizing or structuring) the field of "law and entrepeneurship."

Regarding which is the subfield, bus org or law & entreneurship, business organizations scholarship and teaching still draws heavily upon case law. In contrast, entreprenuership involves a social and economic process that, if done right, avoids serious legal disputes--albeit some legal saavy is necessary to achieve this outcome. But the reported case is no longer the best vehicle for theorizing. Systematic collection of formation documents or review of public filings or interviews with entrepeneurs or business press accounts are much more salient.

So I agree with you that law & entrepenuership is broader than bus org. It might be exciting to develop this field in conjunction with a business school and enroll both JD and MBA students in such a course. Your field carries on the Wisc "law in action" tradition.

Thanks, Bill, for the excellent comments. You and I are thinking along very similar lines.

As Gordon knows, here at Arizona we are doing something along the lines that Bill suggests, developing a collaboration between law and MBA students centered around our business school's wonderful entrepreneurship program. The basic idea is that a select group of law students will serve as mock counsel to the entrepreneurship teams as they develop their technology ventures and prepare business plans.

As a prerequisite, a select group of law students will take my law & entrepreneurship course, or my colleagues' courses in IP transactions or business tax, during the spring of their second year. During the fall of their third year (hopefully having a better understanding of the relevant issues!), they will counsel the entrepreneurship teams and draft various legal documents (e.g., business formation documents, IP licenses/transfers). The business students start to think about the legal issues affecting their ventures, while the law students get practical experience working with entrepreneurs.

Regarding the field of "law and entrepreneurship," I think Gordon's forthcoming casebook will be quite helpful in defining things for those of us who teach a course in the area. As of now I tend to focus on the traditional business planning issues, but I know Gordon's book will add sophistication and variety (e.g., expanded coverage of venture capital, franchising).

I guess the vehicle of a sole-proprietor has nothing to do with being an entrepreneur?

I wonder if this class should be taught by an entrepreneur rather than a staunch academic?

PK, I am missing your point. Sole proprietors can form "business organizations" (not partnerships, but corporations or LLCs), and I stated quite clearly that "business organizations" law falls within my understanding of "law and entrepreneurship."

I should add, however, that the actions of a sole proprietor are not very interesting from a legal standpoint until they touch other people. As Bird's definition suggests, the act of creating a new invention is not entrepreneurial, even though it is creative. What is entrepreneurial is the development and exploitation of the invention, and these are activities that inevitably require the formation of relationships that are the focus of my study.

That's right, however, I get a little irked when I hear about the entrepreneurial spirit in every context but the sole-proprietor. Sorry for that. I know several entrepreneurs that are making good money and have yet to consider the implications of business organization. Actually, the first time many of them do think about this is when they are courted by a purchaser, a lawyer, or bankruptcy. In my head, the concept of organization is entirely different and separate from entrepreneurism.

Which made me think of something else. Why not teach this course as a clinic? Take on real clients and help them draft paperwork for funding? Help a contract worker that got sued for his floor work set up an LLC? Help charitables set up a non-profit? Create various contracts for different settings (management, license, temporary, etc.). Help an engineer or author work at home without violating shoprights?

I do agree that there is a void for the law and entrepreneur class.

A number of schools have business clinics of various sorts, and we are working on that here. I think that a startup clinic would be a great addition to our curriculum and could provide some opportunities for research, which is why I am working on the idea.

Certainly an interesting idea for study.

But the term "entrepreneur" (at least to anyone who has been one) is at odds with "law." This is not to suggest entrepreneurs are outlaws. Only that any sensible entrepreneur worthy of the label wants to keep much distance from lawyers.

Thinking more about the discussion of business associations as a subset of law and entrepreneurship (or vice versa), the quoted definition appears broad enough to suggest that all business people -- from mom and pop who run the corner store to public company directors -- qualify as entrepreneurs. However, I think the connotation of "entrepreneur" may be much narrower. To me, the term typifies a start-up business owner, as opposed to a director of a public company, but also a special kind of start-up owner -- one who wishes to grow the business, probably through venture capital financing, with an exit strategy of sale or IPO. In other words, it does not include the owner who starts small and (happily) remains there.

Does anyone else think the term has this narrow connotation? Should "entrepreneur" be defined more broadly, particularly in the legal literature? And what does the answer mean for framing the study of law and entrepreneurship?

I'm not sure if this answers your question, Darian, but I also think that the word "entrepreneur" carries a connotation of success or at least a worthy effort. If you start a mediocre business and it just limps along, we would rarely call you an entrepreneur. If we call you a failed entrepreneur, we generally mean that you had something going there and it just didn't work for one reason or another. Gordon's definition calls for a discovery, a creation of an opportunity. Therefore, I'm not sure if business associations could be a subset of Law & Entrepreneurship because so many businesses do not have at their core a discovery or a creation of an opportunity, unless we define "discovery" very narrowly. (He discovered that there wasn't a storefront selling cell phones on that particular corner.)

Thanks, Christine. I do think it depends on how narrowly or broadly we define "discovery" or "opportunity." Creation of new markets is also envisioned, and I think rightly so. You seem to imply that not all small and start-up business owners should be considered entrepreneurs, and I think that is the standard connotation. Whether a narrower definition is warranted seems like an important question. How "entrepreneur" is defined has important implications for how legal academics shape/bound their research in the field and teach the subject to students. For instance, should my law & entrepreneurship course even cover alternate business forms (e.g. LLPs, LLCs) if entrepreneurs under the narrow definition mostly form start-ups looking for an exit strategy of sale/IPO in x years, and therefore choose the corporate form? (Although I suppose strategic alliances and joint ventures can be entrepreneurial in nature and take other forms.)

I also like your caveat that an entrepreneur does not have to be profitable to fall under the definition. I'm on a list serv where the debate for the past couple of days has been whether the success of a small business should be defined by profitability, or by something else. Some commentators noted, correctly I think, that some start-ups never turn a profit but are sold at high prices, which has to be deemed a success.

Gordon,

You use the term "organization" in two different ways. In one sense, entrepreneurship is organization, i.e., the act of organizing, or bringing diverse elements (e.g., materials, money, time and, one hopes, inventiveness) into a proper order to produce desired outputs (products, services, intellectual property). This is distinct from, but related to, "organization" referring to the formal legal structure of a business.

As I started in on your post I was reading it with the first meaning but, in view of the comments, I'm not sure if that was your intended meaning. I really like the idea of defining Entrepreneurship as that process of bringing order to diverse elements to create value, like a crystal brings order to diverse atoms to create gemstone. Identifying that certain elements can be brought together to produce value is the act of recognizing an opportunity. The act of ordering the elements covers a huge diversity of interactions, including all of the interactions traditionally contemplated under the heading of Bus Orgs., but also including other transactions or interactions that may be outside the traditional Bus Orgs case law (e.g., identification and acquisition of needed non-money resources (personnel, IP, know how), e.g., through network and relationship building, grantsmanship (non-equity linked financial inputs), market timing. In some events both time (window of opportunity) and government regulation are critical components to be included into the ordering of the elements. Sometimes the very order in which the entrepreneur approaches organizing the elements is critical to success. Each of these interactions touches on some aspect of law and not all of it is under Bus Orgs. I suggest a rephrase of what you said: "Law and entrepreneurship" is the study of the legal structures of organization.

Mary Ann: "'Law and entrepreneurship' is the study of the legal structures of organization."

Excellent! Well put.

Darian: Entrepreneurship "does not include the owner who starts small and (happily) remains there."

I can see how this might matter for defining the content of a course (though a course called "Law and Entrepreneurship" need not cover the whole field ... perhaps some future law school will offer a series, like "Law and Entrepreneurship I," "Law and Entrepreneurship II," like we do now with Business Organizations), but I am not sure how that would help refine the research agenda. If entrepreneurship is about "the study of the legal structures of organization," I don't understand the need to distinguish growth entrepreneurs from lifestyle entrepreneurs.

Christine: "'entrepreneur' carries a connotation of success or at least a worthy effort."

Hmm. I am pondering "worthy effort." And your later comments about discoveries and opportunities. I don't understand the desire to exclude small business owners (as opposed to growth entrepreneurs) as "unworthy." The opportunities that they exploit may be more modest, but why should the study of law and entrepreneurship depend on world-beating ambition? In my view, forming a small business is a creative act, and it requires attention to "the legal structures of organization" in much the same way as more ambitious schemes. In other words, to me the differences look more like differences of scale than of kind, which should not dictate the scope of the field.