Other Articles from this issue
- Credit risk: Between having a legally enforceable claim, and getting paid, falls . . . the shadow.
- Getting up the Learning Curve: Five Thoughts on Training First-Year Transactional Lawyers
- The tale of a four-legged dog
Getting up the Learning Curve: Five Thoughts on Training First-Year Transactional Lawyers
We are increasingly hearing criticism from law firms and clients that law schools do a poor job of producing graduates with meaningful practical skills. This problem is worse for students entering transactional practice: the case study learning method shortchanges deal lawyers more than it does litigators.
Even the law school courses that are considered essential for the student who is interested in transactions, such as corporations, secured transactions, and corporate finance, are taught through the analysis of cases about deals that have gone bad. As a result, law students complete these classes without understanding how and why transactions get done in the first place. On the other hand, lawyers starting out as litigators have a distinct advantage: by reading cases for three years, they have absorbed the basic dynamics and vocabulary of litigation practice.
To make matters worse, a new transactional lawyer surveying the law firm training landscape might conclude that this litigation bias goes beyond law school. How many firms that provide well-developed and extensive training programs for incoming litigators don't offer anything comparable for their first-year transactional associates? The primary reason for this is the way that transactional practice (and training) is gerrymandered in the typical big law firm. A first-year M&A associate is taught about M&A practice; a corporate finance associate is taught about securities transactions. What is often missing from this picture is firm-wide training on the basic knowledge and skills that are common to all transactional practices.
Another problem with the law school model that is often replicated in the law firm setting is a bottom-up approach to learning. In law school, students arenÕt told what the law is: they figure out the law themselves by reading cases. When they start practice and are put on deals, the same dynamic may be repeated: they are assigned to small tasks without being given a good understanding of the deal as a whole and how their assignments fit into it.
So, law graduates enter transactional practice with a strike or two against them. What can law firms do to improve this situation? Here are some thoughts:
- Develop a training curriculum that provides all first-year transactional associates — regardless of practice area — with the basic knowledge and skills that your firm considers to be most important. Some examples of the kind of subjects that might be covered are (a) how entities are created and used in transactions, (b) how contracts are structured, negotiated, and drafted, and (c) the rationale and methodology of conducting due diligence. Poll the partners on what should be included in this curriculum. Then, provide consistent firm-wide training in these areas. This is a powerful rationale for conducting a first-year boot camp or its equivalent. Transactional lawyers all speak the same basic language: the sooner it is learned, the better.
- Encourage your internal trainers not to overestimate the level of practical understanding that first-year lawyers have when they start. Experienced lawyers often forget how little they knew when they started. As a result, it is not unusual for those training junior lawyers to assume a level of knowledge that isn't there. Just to take one example, most first-year lawyers do not understand that businesses are usually composed of multiple legal entities, and that third parties with claims against one entity in a corporate group do not have recourse against the other members of the group. They have learned the concept of limitation of corporate liability in law school, but they have no idea how it works in the real world. Without this basic understanding, much of what they observe is not going to make sense to them.
- Transactional lawyers are business lawyers and should be trained accordingly. To be successful, deal lawyers must understand how businesses work and must be able to speak the language of business. As a result, good training in financial literacy — basic accounting and the reading of financial statements — is absolutely essential.
- Encourage day-to-day training on how contracts work. Most law school graduates have never seen a real contract. This may seem difficult to believe, particularly since all law students are required to take a contracts class, but it's true. Contracts involve a vocabulary, and are based on structural logic, that can be quite mystifying to the uninitiated, including most incoming first-year associates. Encourage your firm's senior lawyers to spend time explaining basic contract concepts and skills to junior lawyers on a regular basis.
- Provide cross-training among the different transactional practice groups. A good transactional lawyer does not have tunnel vision. Regardless of the degree of expertise associates have in their specific practice areas, without a grasp of how other transactions work they will never reach their full potential as trusted advisors to clients and as successful business originators. The time to start this learning process is in the earliest stages of a lawyer's career.