In April 2015, New York Law School (NYLS) announced that it was opening up its Tribeca campus to the University of Rochester’s Simon Business School. Simon Business School will move all of its administrative offices and academic course offerings to NYLS’s hi-tech, downtown campus. On the face of it, the move might be interpreted as simply an example of the tight New York City real-estate market—cut costs by getting a roommate. On a deeper level, however, the move seems to represent what has increasingly become in vogue in legal education—integrating business knowledge and skills into the law school curriculum. In announcing the co-habitation, Anthony Crowell, president and dean of NYLS, noted that, “The co-location of NYLS and the Simon Business School’s NYC Center creates a unique opportunity to harness the synergies that exist between these two institutions.” He went on, “Lawyers more and more are expected to understand business and have that kind of education. We’re both interested in adding value for our students in the legal and business marketplaces.”
“Law is a profession, and a deeply meaningful one,” says Harvard Law School’s Wilkins. “But it is also part of an increasingly competitive business ecosystem.”
David B. Wilkins, Lester Kissel Professor of Law, Vice Dean for Global Initiatives on the Legal Profession, and Faculty Director of the Center on the Legal Profession, conceptualizes what may be going on. He argues that over the last two decades, core structural changes to the global political and economic landscape have re-shaped conventional styles of doing business and are blurring together traditional categories of organization and knowledge. He notes that for much of human history, we tended to think of concepts as very different and separate, like “the public” versus “the private” or “the global” versus “the local” or, it so happens, “the legal profession” versus “business.” In an age of globalization, it is not that these categories no longer mean anything; it is simply that no one believes that they are as tightly constricted and as hermetically sealed as they once were. “When I was a young professor in the 1980s,” Wilkins says, “I would go to conferences where people would ask, ‘Is law a business or a profession?’ No one would ask that question anymore because it is so clearly both. It is a profession, and a deeply meaningful one, but it is also part of an increasingly competitive business ecosystem.”
Below we examine why the legal profession has stressed business skills in the education of lawyers and how the legal academy has responded.
Indispensable business skills
One can identify three main reasons why business skills are increasingly critical for the 21st century lawyer: they provide a means of understanding one’s own client’s business; they offer the toolkit for running one’s own organization, whether that be a law firm or in-house legal department; and they help maintain one’s own professional marketability, particularly in an era of blurred professional boundaries.
Addressing the first of these reasons, Ben W. Heineman Jr., William F. Lee, and David B. Wilkins write in “Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century” that,
No law student—and particularly no student who is going to spend at least some of his or her career in a law firm or in-house legal department—should graduate without having a basic understanding of the tools that managers use to understand and evaluate business opportunity and risk. Among the competencies that should be emphasized are financial literacy (including accounting), firm economics, market definition, competitive strategy, supply chains, and risk assessment.
Kathryn E. Spier, a professor at Harvard Law School and a co-author of a recent study on business courses in law school, reiterated that point in a recent interview with The Practice, saying, “As an associate at a law firm, you’re going to have to hit the ground running. If you don’t know the basic language of business, you’re going to be at a disadvantage. Being at a law school that offers these courses provides a perfect opportunity to get the skills early, and that will help students later on when they’re working.”
In 2014, Spier, along with Harvard Law School professors John Coates and Jesse M. Fried conducted a survey of attorneys at major law firms in order to learn how to better advise and train students about course selection. The survey focused specifically on business method courses already offered by Harvard Law School, including Accounting and Financial Reporting, Corporate Finance, Negotiation Workshop, Business Strategy for Lawyers, Analytical Methods for Lawyers, Leadership in Law Firms, and Statistical Analysis/Quantitative Analysis. The attorneys participating came from the 11 largest employers of the school’s students over the past several years—Ropes & Gray, Davis Polk, Skadden Arps, Latham & Watkins, Kirkland & Ellis, Cravath, Cleary Gottlieb, WilmerHale, Covington Burling, Gibson Dunn, and Sidley Austin. They were also drawn from a range of positions, practice areas, and experience levels.
The main findings of the study points to a common trend: students should take accounting and financial statement analysis as well as corporate finance. Overall, 83 percent of the attorneys surveyed advised students take “Accounting and Financial Reporting” and 68 percent advised them to take “Corporate Finance.” When limited to corporate lawyer respondents, 86 percent recommended “Accounting and Financial Reporting” and 78 percent recommended “Corporate Finance.” Interestingly, even when restricted to litigators, 85 percent still advised students to take accounting and finance.
These numerical findings found strong support in the survey’s open-ended responses. A young corporate partner at a top firm noted that it is “critical to obtain a basic background in accounting and finance” to be an effective lawyer. Similarly, a corporate partner with over 30 years of experience at a top New York firm wrote, “Accounting is absolutely central to commercial life and for lawyers whose practice involves commerce, it is essential.” The bottom line is that if being a good lawyer relates to understanding your client’s business, having business knowledge is critical.
Data from both the After the JD and the Harvard Law School Career Study found that though most graduates begin their careers in law, upwards of 20 percent migrate out of law to other professions, most notably business, over time.
While learning business skills is critical to understanding one’s own clients and their needs, one must not lose sight of that fact that they are also important within a lawyer’s own professional context, whether at a law firm or an in-house legal department. Derek Davis, the executive director of the Harvard Law School Center on the Legal Profession and a long-time law firm partner, notes that business skills are just as critical as lawyers navigate their own firms. “Lawyers have to understand that the firms they work in are businesses,” Davis says. “There is rent. There are accounts receivables. There are write-offs. There are expenses. There are matters of leadership and personnel management. The list goes on. Particularly when you become a partner, understanding the business-side of the law firm is critical.”
Finally, having business skills is important as lawyers venture outside the confines of the legal profession and explore other career options, most notably in business roles. Data from both the After the JD and the Harvard Law School Career Study found that though most graduates begin their careers in law, upwards of 20 percent migrate out of law to other professions, most notably business, over time. Spier, who previously was a business professor at Northwestern University, says in an interview with The Practice, “I have had many students who are not destined to go on to the top law firms. That’s not necessarily their aspiration. Many of my students are interested in smaller parts of the market. Many of them are interested in going to consulting groups or into the financial sector. Many of them are interested in becoming entrepreneurs and they’re thinking maybe I’ll practice law for a short period of time and then start my own company.”
While law schools cannot cater to every student’s aspirations, there are clear indications that law graduates are pursuing a multiplicity of career options, including many with strong business components. In a dynamic, global talent pool, legal professionals need to have the skills to compete.
Responding to demand
If being a lawyer in the 21st century requires both strong legal knowledge as well as a foundation in business skills, how are law schools responding? Below we review some of the methods that schools from around the county are undertaking to incorporate business training into the law school experience.
Business classes within the legal curriculum. The most obvious way to incorporate more business training into law school curricula is to offer courses within the school itself, something that has not always been the case. As one respondent to the Coates, Spier, and Fried study notes, “The biggest deficiency from my HLS education (many years ago) was the lack of any serious education in accounting. All that was offered was a half-semester course in basic double-entry bookkeeping, which was a joke.”
“What’s special about Analytical Methods for Lawyers,” say Harvard’s Spier, “is that it introduces students who are coming from a humanities background who’ve never seen anything related to this. It exposes them to the basic principles of accounting and finance, economics, decision analysis and statistics. … I think the feedback from our students has been very positive.”
That picture has since changed, at Harvard Law School and at law schools around the country. Many law schools now offer a broad a range of business-oriented courses, including those teaching background business skills, such as accounting and finance, as well as softer business skills, such as leadership and teamwork. At Harvard Law School, for example, one of the most popular business-method courses is Analytical Methods for Lawyers. The class syllabus provides fitting introduction.
Lawyers in almost every area of practice (litigation, corporate, government, public interest) deal routinely with problems that are usefully illuminated by basic business and economic concepts. This course is designed to teach the most important analytical methods to law students, in a manner that will be fully accessible to those with no prior quantitative training or background in the subjects covered.
The course covers seven modules, including decision analysis, games and information, contracting, finance, accounting, microeconomics, macroeconomics, and statistics. Spier, who teaches a section of the class, said in an interview with The Practice, “[The class] was developed by several Harvard Law professors about 10 years ago. What’s special about this course is that it introduces students who are coming from a humanities background who’ve never seen anything related to this. It exposes them to the basic principles of accounting and finance, economics, decision analysis and statistics. … I think the feedback from our students has been very positive about this class.”
There are, of course, challenges, including recruiting faculty to teach such courses. However, students are pushing for them. As one respondent to the Coates, Spier, and Fried study wrote, “I took … business strategy class one of the first semesters it was offered (I was a 3L), and it was wildly oversubscribed. I wish there had been more classes like that while I was there.”
Joint-degrees. Major law schools have long offered joint J.D./M.B.A. programs. Historically, these programs have functioned largely as separate entities. At Harvard Law School, for example, J.D./M.B.A. candidates apply separately to the Law School and the Business School. As a result, they must take both the LSAT and GMAT and be admitted separately to each faculty. Similarly, while such programs typically shave off a year of study—it would require five years to complete both programs separately—they still run four years which, as Spier notes, “is a long period of time, especially [since] it’s not clear that having two degrees is better than one degree.”
“Going forward, any innovations such as an accelerated joint-degree,” Harvard’s Wilkins says, “must be constructed in ways that do not sacrifice the traditional core of what make’s law school’s distinct and what makes the legal profession unique.”
In recent years, however, accelerated J.D./M.B.A. programs have developed that take just three years to complete. Northwestern University, for instance, offers a joint three-year J.D./M.B.A., complete with a streamlined application process. Upon completion, students received both a J.D. from Northwestern School of Law and an M.B.A. from the Kellogg School of Management. In advertising the joint-degree, Northwestern notes that it allows students to pursue a wider option of career choices—for the classes of 2008-2011, 56 percent of graduates went to law firms, clerkships, in-house departments or the government while 44 percent secured positions in business, such as investment banks, consulting firms, or venture capital/private equity. Other accelerated joint degree programs exist, including at the University of Pennsylvania, Yale, and Duke. Heineman, Lee and Wilkins voice support for such initiatives in their essay writing, “Given what we have said about the importance of collaboration and interdisciplinary learning, we strongly support programs—currently adopted by an increasing number of law schools—that offer joint J.D./M.B.A. degrees in three years as opposed to four.”
One should voice a note of caution, however. Rakesh Khurana, dean of Harvard College and a professor at Harvard Business School, notes in the March 2015 issue of The Practice that, “There are positives to [joint-degree programs] in terms of diffusion of knowledge. But there are also significant downsides. For instance, these programs are frequently constituted in ways that don’t give much consideration to the normative underpinnings of how you want a doctor to approach a patient or the relationship between legal counsel and a client.” Wilkins, while endorsing accelerated joint-degrees, echoes Khurana’s sentiment saying, “Going forward, any innovations such as an accelerated joint-degree must be constructed in ways that do not sacrifice the traditional core of what makes law school’s distinct and what makes the legal profession unique.”
Specialized programs. Law schools are also creating specialized business programs geared at providing strong business foundations short of a joint-degree. For instance, in 2002 the University of Virginia Law School began a specialized program entitled “Business in Law.” Since its launch, it has since been endowed and re-named the John W. Glynn, Jr. Law & Business Program. The program, which is not a separate degree mode of study, integrates business and legal analysis in the law school classroom. It contains courses designed to teach business methods and skills, including accounting, specifically geared towards providing the skills and languages used by future corporate clients.
A broad range of law schools are following suit, developing what are often dubbed “mini-M.B.A.s” or “M.B.A. boot camps.” These programs aim to provide basic business skills in order to produce practice ready lawyers. While the success of these programs in achieving that goal remains an open question, the proliferation of them represents a clear trend that business knowledge is directly tied with the skills required to actually practice law.
Better integration. While joint degrees offer the most robust form of integration, law schools are also trying to create stronger synergies with other parts of the wider university, particularly by encouraging the cross-registering of classes. As a prime example, in 2010, Stanford Law School completed a transition away from its traditional semester system to a quarter system (which the wider university was on) in an effort to better integrate the Law School into Stanford’s wider university community. Larry Kramer, the dean at the time, reflected on the change in an interview with the Stanford Daily,
Changes in the legal profession over the past 25 years have made it not just useful, but necessary for law students to learn a variety of things taught in other parts of the University. Lawyers need to understand what their clients need and want to accomplish, and to do that, they need to understand more than law. The law school needed to change its calendar to bring itself in sync with the rest of the University, but cross-disciplinary learning is happening everywhere and across every discipline.
Roadblocks to such initiatives remain. Many schools do not operate on the same calendars and bureaucratic hassles abound. Moreover, ABA rules limit the amount of classes law students can take through cross-registration. Nevertheless, cross-registration represents a means towards exposing law students to business training.
New initiatives. Schools are also experimenting. For instance, in April 2015, Harvard Law School announced an innovative new partnership with Harvard Business School which allows newly admitted law students the ability to enroll in the “HBX Credential of Readiness” (CORe) program at a subsidized rate. As part of the partnership, the Law School will subsidize the normal $1,800 enrollment cost, so that law students can enroll for as little as $250. CORe, developed and run out the Business School, is designed to teach students key concepts of business using HBS’s case-based approach adapted to an online environment. It has three specialized courses: Business Analytics, Economics for Managers, and Financial Accounting. In announcing the program, Martha Minow, the dean of Harvard Law School, said in a statement,
To assist clients or even to launch entrepreneurial ventures of their own, lawyers need to understand and use the tools and skills involved in growing and running a business. We know from recent studies and surveys that law firms, businesses, and also the public sector and non-profit employers increasingly value these skills. In the past several years we have added new curricula opportunities for students to develop business skills, and I am especially delighted that Harvard Business Schools’ innovate CORe program will now be available for Harvard Law School students.
While business training during law school is undoubtedly critical in preparing lawyers for a cutthroat marketplace, it is also becoming clear that training should not stop with one’s law degree. Wilkins, who co-founded Harvard Law School’s Executive Education program in 2007, says that, “In an age of globalization where the pace of knowledge and information are increasing at exponential rates, it is critical that legal professionals realize their education does not end with their J.D. This is particularly important when it comes to learning business skills, which are not the primary focus of any law school.” Just as law schools are adapting their J.D. programs for this new reality, there are signs that post-J.D. programs in business training are becoming more prevalent.
While historically not a strength, law firms have begun creating internal, business-oriented training programs. Indeed, the Coates, Spier, and Freid study found that 72 percent of respondents reported that their firms offered in-house training in business-methods, with most programs focusing, at least in part, on accounting, financial reporting, and valuation. Skadden Arps, for example, requires all new hires undergo an intensive, five-week mini-M.B.A. The course, which is conducted online, includes topics such as corporate valuation, income statements, cash flows, and the business-side of mergers and acquisitions. Explaining the rationale behind the program, Jodie Garfinkel, director of attorney development and professional personnel at Skadden told Law360 in an interview that, “We were looking for a way to prepare people to hit the ground running,” We want to prepare people to add as much value as they can, as quickly as they can.”
The law firm Orrick, Herrington & Sutcliffe has begun a similar program. The initiative, called the Senior Associate Academy, is a partnership with the Fullbridge Program, an education company geared towards bridging the skill gap between companies and their employees. According to Orrick, the Academy is “designed like a mini-M.B.A. program, [and] focuses on developing our attorneys into trusted legal advisors who understand our clients’ industries and business challenges and deliver legal advice that reflects commercial awareness.” Unlike the Skadden program, which is for new hires, Orrick’s Senior Associate Academy is geared towards lawyers who have a good deal of practical experience. Scott Westfahl, the director of Harvard Law School Executive Education and a professor of practice at the Law School, writes that “[t]eaching core business skills (finance, valuation, accounting, strategy, marketing, etc.) to law firm associates is more effective than at the J.D. level because, once they have practiced for a few years, they understand the context much better.”
In addition to internal professional development, law firms and in-house legal departments have also been leveraging executive education programs designed specifically for lawyers. Once the domain of business schools and corporate clients, law schools have increasingly recognized the unique business challenges lawyers face and gotten into the game. Westfahl writes,
Borrowing from the business world, executive education for lawyers is proving to be a highly effective, efficient way to help lawyers and legal organizations quickly address and rectify their chronic under-investment in leadership development… An important function of executive education has always been to teach core business skills to executives in a condensed, accelerated way. The reason for this is that leaders need to understand how to direct the business operations of their enterprise and communicate effectively with the experts on whom they rely internally.
While business training, particularly at the J.D. and associate level, tends to focus on hard business skills there is also an urgent need to teach the softer-side of business, such as leadership. Westfahl explains,
The leadership gap … exists because unlike business schools, law schools have mostly shunned any notion of helping to prepare students to be leaders, or, for that matter, to work in teams, collaborate, appreciate and leverage others’ strengths, manage people and projects, and/or give and receive critical feedback. As a result, compared to M.B.A.s, lawyers start their careers at a significant disadvantage in those skills, all of which become critical when taking on leadership roles.
To this end, Harvard Law School Executive Education runs a series of open-enrollment programs for lawyers geared primarily at teaching leadership and other managerial skills. Its flagship program, Leadership in Law Firms, brings together senior law firm leaders from around the world to discuss and learn about the biggest challenges they will face as they lead their organizations. These challenges, including strategy, alignment, growth, profitability, and differentiation, frequently have more to do with business, than law. The program uses business-school style cases written specifically about lawyers, law firms, and legal organizations. “Many leaders, and especially lawyers, advance to leadership roles without any formal training in core business skills,” Westfahl writes. “At [Harvard Law School Executive Education], we have taken an interdisciplinary approach to this. We partner with professors from across Harvard University to teach participants how to communicate more effectively with clients, influence others, and solve problems involving areas such as strategy, negotiations, finance, valuation, accounting, and adapting to the global economic environment.”
It is clear that business skills are critical to being a 21st century lawyer. Clients want their lawyers to have these skills. Law firms want their lawyers to know them. New lawyers and law students want venues to learn them. And law schools, law firms, and other innovative organizations are beginning to respond.
Harvard Law School is certainly not alone in this endeavor with other top law schools, including Georgetown, Stanford, New York University, and Oxford, developing their own programs. “As lawyers progress in their careers, they will require new skills, whether due to a new position or a changing industry,” Wilkins says in an interview with The Practice. “Executive education and professional development offer venues through which lawyers can fine tune their skills and remain competitive.”
Developing a new standard
What should we make of all these new programs and initiatives? First, it is clear that business skills are critical to being a 21st century lawyer. Clients want their lawyers to have these skills. Law firms want their lawyers to know them. New lawyers and law students want venues to learn them. And law schools, law firms, and other innovative organizations are beginning to respond, whether by incorporating new classes in to the curriculum, forming innovative partnerships, or through professional and executive education.
Second, while business skills may be the most salient example of recent attempts to incorporate more interdisciplinary training into law, they are not the only areas. Law schools have begun to experiment with a host of disciplines, including technology skills. While these other knowledge areas may not have the full cross-practice appeal as business training, the blurring of knowledge and organizational lines undoubtedly requires increased, interdisciplinary legal skillsets. Fred Headon, the past-president of the Canadian Bar Association and the assistant general counsel of Air Canada, provides a useful metaphor, describing the goal “as a ‘T’.” He continues, “On the vertical axis, we need a very deep, rigorous understanding of law and legal reasoning. … It is fundamental to what makes [lawyers] different from all the other professions. But [on the horizontal axis] we also need to have a thinner knowledge, and a much broader range, across a whole number of other disciplines. Some of those are very much in the line of practice … such as psychology. Others are much more in line with business. … We have to have enough knowledge to be fully able to engage.”
Finally, a word of caution. While it is critical to incorporate business and other interdisciplinary skillsets into the law school experience, Wilkins makes clear that “we can’t turn law schools into graduate school for the study of law.” He goes on, “There are longstanding and well-founded reasons why law schools have evolved in the ways that they have and teach the courses that they do. While innovation and adaption are necessary, we must be careful not to, to quote an old expression, throw the baby out with the bathwater.”