October 08, 2006
Training Dealmakers in Law School
Posted by Usha Rodrigues

I sometimes feel like a voice in the wilderness, preaching to law students that there is life outside of litigation. That despite the fact that law school focuses solely on cases, there is another, completely different way to practice law. Although I can leap onto my soapbox in a split-second, I don’t actually put my pedagogy where my mouth is until my upper level Business Planning seminar. There I use Harvard Business School case studies, which are great because of their in medias res posture (give me a break, I need to drop two-bit literary terms in order to prove I got some mileage out of my Comp. Lit. degree), where students are given a situation and forced to make choices as to how to proceed, much like real-life practice. I also use drafting exercises: I have students mark up a simple restricted stock purchase agreement, then mark up basic VC documents and negotiate them, and finally draft risk factor language for an S-1. But in my intro Bus. Org. class I only use a couple of casebook problems to give a taste of what corporate attorneys do. Most of the time is spent with cases. And in my contracts class, I flash a contract up on the screen, and that’s about it. Does anyone do more to incorporate a planning perspective into basic courses? How can I convert my students to the joys of a transactional practice when I’m lost in a casebook world?

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Comments (5)

1. Posted by William Henderson on October 8, 2006 @ 10:22 | Permalink

Usha,

These are hard questions. In my Corporations class (it should be called "Business Associations"), I emphasize that the law is usually much less important than the facts. Unless a third party is involved, the litigants could usually have contracted for a better outcome ex ante, which means that most cases actually contain a business planning lesson. We discuss these at length.

I also make various formation documents available online, such as LLC operating agreement, shareholder agreements, optional arbitration and buy-out clauses, etc.; I am quite explicit that these documents are (or can be), with only a few exceptions, the governing law for any intra-owner disputes. The statutes and cases don't really matter. So transactional lawyering can be quite creative and add lots of value. This is exciting.

My students often write in my evaluations that they liked the transactional flavor of the class. I love teaching Corporations because much of the material is about baking a bigger pie rather than just dividing it.

My Business Planning class, in contrast, is completely problem driven; no cases and no Socratic method, but lots of drafting and client simulation. It is a challenging, labor-intensive, but rewarding class to teach. I would love to compare notes with you on this topic. The HBS materials sound promising. bh.


2. Posted by Jeff Lipshaw on October 8, 2006 @ 10:57 | Permalink

Usha, I started my basic BE I class (agency, partnership, corporations) with a hypothetical (posted in the syllabus) about a start-up on which we spent almost two full classes dealing with the business input and output issues that might affect form of enterprise. I continue to come back to that hypothetical and others throughout.

I also decided not to follow the traditional agency to partnership to LLC to corporation track of the case book, and instead start with a planning like overview of the essence of agency, partnership and corporations, then come back to duties, and then management so that we are talking about all the forms all the time.

I'd be happy to make the materials available to anyone who asks.


3. Posted by Kevin OKeefe on October 8, 2006 @ 12:59 | Permalink

I am a formal trial lawyer (17 years) who is now an entrepreneur founding my second business. Greatest joy founding first company was picking up phone and instead of lawyer threatening this or that, I was talking with other business people, often JD's, about building things.

Getting students exposed to deals being negotiated by Yahoo, Google, and new media companies would turn many students on.

From what I recall, corporations class was not a class focused on negotiating and structuring deals. So another class may be needed.

In addition getting into the class business development people from these companies who have JD's could inspire them. VC's with jd's may also work. In-house counsel may be a possibility but often they are involved more in managing risk and litigation for a company.


4. Posted by Elizabeth Brown on October 8, 2006 @ 15:48 | Permalink

In addition to doing some of things previously mentioned by others here, in my Business Associations class, I divide the students into teams of four and give them a problem that requires them to draft articles of incorporation/certificate of incorporation based on the clients' needs in three jurisdictions, Delaware, Minnesota, and a fictional state that has adopted the MBCA verbatium. They also have to write up a letter to the clients and a bill for the work done.
This exercise has several goals. First, it gives students a taste of drafting the most basic of corporate documents and tailoring these documents to the demands of a client. Second, it gets them to think about and apply the concepts that we are studying in corporations, like cumulative voting and preemptive rights. Third, it gets them to realize that they cannot just copy a document from one jurisdiction and have it work in another jurisdiction. Fourth, it also forces them to think about the economics of what they are doing, i.e., would a client pay for the number of hours that you have run up to draft these documents? Finally, even though drafting articles would be a single assignment for an individual first year associate, I have them work in teams because the first time that a first year associate drafts articles, they usually are able to get some guidance from other associates about how to do it and letting them work in teams allows them to bounce ideas off one another. In addition, I let them work in teams because I want to emphasize to students that most transactional work, at least at mid-to-large law firms, is done in teams.
I have had a number of students comment on how useful this exercise was for them during their summer associate stints because they had to draft articles to create new corporations for the deals that they worked on.


5. Posted by Eric on October 9, 2006 @ 7:22 | Permalink

At Wisconsin they teach, or taught at least when I was there ('04 grad), a Business Transactions course. It was a full-year course in which students were divided up into corporations (teams of four). Each corp. had to sell one of its divisions and buy another corp's division. We went through due dilligence (e.g., environmental) and negotiations, etc. We did have practicing attorneys come in and talk to us about things like financing, how to deal with intellectual property, etc.

Even though I'm going into litigation, I valued the chance to see how deals get done, even if it was a stipped-down version. There was some talk of coupling the class with something involving MBA students, but I don't know what has come of that.

It may be that it's just better to offer a class like this than to try and teach deal making in a more traditional class.

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