August 06, 2008
B-School for Law School
Posted by Tina Stark

In my last post, I discussed how proposed revisions to the basic “accounting for lawyers” course could improve the transactional curriculum.  In this post, I suggest that we add a new course to the curriculum: B-school for Law School. 

Many students enter law school with little or no business background.  They come directly to law school from college, having taken a broad range of liberal arts courses with perhaps a course or two in economics.  While a sophisticated grounding in economics is essential to understanding the business world, economics and business are not synonymous.  As transactional lawyers do business deals, knowing about business is essential.  Indeed, to be a good transactional lawyer, the lawyer must understand business, the client’s business, and the business deal.

To give students the background they need, we must begin by giving them a primer in the most basic aspects of business.  “B-school for Law School” would start with students learning about the business world in general.  They would learn, among other things, about interest rates, currency exchange rates, insurance, credit-rating agencies, commercial banks, investment banking, and how stock exchanges function.  (While students may study how securities are issued, most do not know the pragmatics of how they are bought and sold once issued.)

Students also need an understanding of how companies function – not the legal issues relating to shareholders, directors, and officers - but how companies function as businesses.  As part of this course, students would learn about corporate organization – cost v. profit centers and the various reporting structures.  In addition, they would learn about strategic planning, quality control, risk management, and human resource management.  With this background, students will gain insight into the business issues with which their clients grapple and how those issues affect their legal needs. 

Finally, as today’s deal market is the progeny of the LBO market of the 80’s, the course should include a history of deals over the last 25 years, providing students a much needed perspective on what is happening today.  Among other things, students need to know about Drexel and Michael Milken.  They need to know not only legal ethics, but also business ethics. 

To give all of this context and some fun, students could play two computer games.  The first is a business simulation game companies use to teach management skills to their employees.  Each student runs a company, making such decisions as to whether to invest in inventory or research and development.  Bad things happen along the way and students have to decide what to do.  The winner is the student whose company makes the most money.

The second game is known as the Stock Market Game.  In it, each student invests $100,000 in a hypothetical portfolio.  As the Dow Jones Average goes up and down, so too does the value of a student’s portfolio.  The winner, of course, is the person with the largest portfolio when the game ends. 

If we are to give students a solid foundation for the practice of transactional law, B-school for Law School is not an elective; it is an indispensable, core course. 

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