Three Moves Ahead
At Columbia Law School, upper-year students interested in corporate and business law learn from some of the nation’s most renowned practitioners and judges. Casebooks, Socratic exchanges, and traditional final exams are giving way to innovative teaching approaches that focus on interdisciplinary learning, global perspective, real-world strategy determinations, and lining up all the pieces necessary for a successful career.
In the wake of the Supreme Court’s landmark 2010 Citizens United decision, which held that the First Amendment prohibits the government from restricting certain political expenditures by corporations and unions, Professor Robert J. Jackson Jr. embarked on a mission. His goal: persuade securities regulators to mandate that public companies disclose such spending to their shareholders. Investors, he contended, often know little-to-nothing about such corporate political spending, particularly when it occurs through intermediaries. And without that knowledge, they have no way of deciding whether it fits with their objectives.
“Corporate rules treat the decision to spend money on politics like any other decision,” says Jackson, who researched the subject with the help of Columbia Law School students after the Citizens United decision. “There’s no shareholder approval, and companies are not required to disclose this spending.”
Jackson co-chaired a group of 10 prominent legal academics—including three others from Columbia Law School—who, with the help of student researchers, petitioned the Securities and Exchange Commission in the summer of 2011 to issue new rules requiring public companies to disclose such spending. Since then, the petition has received nearly half-a-million comments—including supporting letters from heavyweight institutional investors—and the SEC is expected to propose a new disclosure rule soon. While it is not yet clear whether a new rule will pass, Jackson has succeeded in raising an important issue in a very public way, with his crusade landing on the front page of The New York Times in late-April. “Ours is the most-commented-on petition in the history of the SEC,” he says.
Opponents of the proposal include many Republican legislators, as well as business groups such as the U.S. Chamber of Commerce and the Business Roundtable, which argue that securities regulators lack the authority and expertise to issue rules about political spending. Supporters—including large shareholders, pension funds, and several Democratic elected officials—assert that investors have every right to learn about the political spending of publicly traded companies.
The looming battle, sparked by a young professor, could transform a significant piece of the wild world of campaign spending, and that type of activism is one sign of a major shift that has taken place at Columbia Law School in the five years since the financial crisis. Across numerous areas of corporate and business law, there has been a fundamental rethinking of what legal education in those fields should consist of—with the Law School taking even greater advantage of its unmatched ties to the business law community, while focusing more than ever on the benefits of interdisciplinary learning and global proficiency. That rethinking has played out in the courses, the approaches, and the breakdown in barriers between related fields.
The Richard Paul Richman Center for Business, Law, and Public Policy formalizes an interdisciplinary focus, particularly on important public policy issues. The Center on Global Legal Transformation, meanwhile, is a new multidisciplinary venue set on examining major issues raised by globalization. Upper-year seminars have an increasingly interdisciplinary feel, with Columbia Law School and Business School faculty teaching together, or tenured faculty tag-teaming with high-profile practitioners. Those students particularly inclined toward business may choose the Three-Year J.D./M.B.A. Program, an accelerated dual degree program with special upper-year courses. Students in that program gain a deep knowledge of both business and law—spending one full year at each school, and the third year taking classes in both disciplines—yet enter the workforce one year earlier than otherwise would be possible.
The upshot is an increasingly real-world education at a time when global business, economic policy, and financial regulation are on everyone’s minds.
“A lot of the teaching that happens in the corporate law area, broadly defined, is heavily interdisciplinary,” says Jeffrey N. Gordon, the Richard Paul Richman Professor of Law and co-director of the Richman Center. “There’s a lot of economics in the classes. I tell my students to follow the money. Part of the effort to train really great lawyers, who can play a leadership role in the public debates, involves an interdisciplinary focus for students.”
One afternoon in early spring, John C. Coffee Jr., the Adolf A. Berle Professor of Law, and Delaware Supreme Court Justice Jack B. Jacobs, who is also an adjunct professor at the Law School, were preparing for a session of Corporations in Court, a course they have co-taught for the past four years. Each week, the seminar focuses on one important court case, bringing in the participants—lawyers and judges—to discuss how it played out and what it meant.
That day, the case under discussion would be Scully v. Nighthawk Radiology Holdings, Inc., a Delaware Court of Chancery case that raised several thorny issues relating to jurisdiction shopping. The plaintiffs in Nighthawk brought a class-action lawsuit challenging a merger in Delaware and in Arizona state court. When the Delaware court declined to expedite the case, the plaintiffs moved on to Arizona, where they won a so-called “disclosure-only” settlement, prompting the Delaware court to appoint a special counsel to investigate.
The complex case is overflowing with twists and turns, and in Coffee’s office on the eighth floor of Jerome Greene Hall that afternoon, two participants in it—Delaware Chancery Court Vice Chancellor J. Travis Laster and Gregory Williams, chairman of the corporate department at Richards, Layton & Finger, who had been appointed special counsel—brainstormed about how best to talk about it candidly with the students.
“We have today,” Coffee later told the two dozen students seated around the conference room table, “an issue of dueling class actions.”
For the next few hours, the conversation would delve into scores of questions: What happened when the plaintiffs filed multiple class-action claims? Was forum shopping distorting the judicial process? And could the broader systemic issues raised by the Nighthawk case be fixed?
The idea behind the innovative class, Coffee explains, is to prod students to understand how these complex cases actually proceed, from start to finish. Lawyers in the real world necessarily make decisions under uncertainty, he says, but, in the classroom, this is obscured because of a basic hindsight bias that comes from learning law through appellate decisions. The results in real-world cases depend on both sides making decisions as best they can under conditions of uncertainty, and in light of many moving pieces. “This is a chess game,” says Coffee, who recently came up with the idea to launch The CLS Blue Sky Blog, a wide-ranging online forum focused on corporations and capital markets. “If you move your pawn to king 7, what happens three moves later?”
The Corporations in Court seminar is one of a number of classes at Columbia Law School that veer from more traditional law school norms—where casebooks are primary and the law can seem far removed from real-world complications and missteps. Several other upper-level seminars offer students insight into current business law developments from multiple perspectives.
Black Letter Law/White Collar Crime, which is co-taught by Coffee and U.S. District Court Judge for the Southern District of New York Jed Rakoff, who is currently an adjunct professor at the Law School and was formerly a litigation partner at Fried, Frank, Harris, Shriver & Jacobson, focuses on corporate scandals of the past 30 years—Ivan Boesky, Enron, and others—to help students understand how conflicts of interest can trigger crimes. Meanwhile, Financial Institutions and Financial Crises, which Jeffrey Gordon teaches with Business School professor Patrick Bolton, asks students to examine the most recent global economic downturn in context. “We look at the pattern of financial crises, plural, which have been recurrent over a long period of time,” Gordon explains, “and also at the pattern of regulatory reforms, which, in trying to address the causes of the immediate crisis, may set frameworks in which the next crisis may occur.”
The course analyzes the legal issues at play in financial regulation, as well as the economic and historical underpinnings of financial instability. Such an approach, Gordon says, offers students a way to understand the recent crisis, and the resulting Dodd-Frank regulations that came out of it, but it goes deeper than that. “It’s really about bringing this interdisciplinary perspective to bear to see deeper into how the system works,” he says. “It’s fun to teach.”
A related seminar on financial institutions, taught by Adjunct Professor Margaret Tahyar ’87, a partner in Davis Polk’s financial institutions group, looks at systemic financial risk, both in the U.S. and internationally, and at the regulations designed to increase stability. Gordon, who previously co-taught the course with Tahyar, says that this year he is sitting in on it, instead. “It’s a good way for me to stay in touch with what practitioners regard as cutting-edge questions,” he says.
Robert Jackson, who previously worked at Wachtell, Lipton, Rosen & Katz, and Zack Friedman ’06, of the global advisory and investment firm Henley Partners, co-teach an investment banking course that would seem equally at home in a business school as at the Law School. Drawing on their backgrounds in the corporate world, Jackson and Friedman use specific transactions to illuminate the investment banker’s role in deal-making, capital-raising, and corporate restructurings. There is no final exam. The professors evaluate students on problem sets that reflect an investment banker’s actual work.
Jackson also teaches a course on executive compensation that makes good use of what he learned in his role as deputy to Kenneth R. Feinberg, the Obama administration’s former special master on executive compensation. “Before I went to Washington, I wasn’t focused on policymaking, and I saw this enormous gap between what’s required to regulate financial institutions and the skills that lawyers have,” Jackson says. “I experienced a fundamental shift in the way that I looked at the world. Those divisions between public and private law, to the extent they were ever real, they aren’t anymore.”
In the executive compensation class, Jackson pushes students to take part in the regulatory process: Instead of requiring them to submit a final academic paper, he asks students to write to the SEC explaining how it should develop some aspects of the executive compensation rules in Dodd-Frank. “They work in groups, and develop consensus about the right choice,” Jackson says. “If I learned anything about policymaking in Washington, it was that you have to make compromises.”
Finally, in the Deals course, an especially popular offering developed by Professors Ronald Gilson and Victor P. Goldberg, students get an inside look at deal-making. After learning how to analyze mergers, acquisitions, financings, and the like, they plow through documents from five recent transactions, and class discussions often include guest appearances by the attorneys involved. The class is part of Columbia Law School’s innovative Charles E. Gerber Transactional Studies Program, which is co-chaired by Professors Ronald Mann and Alex Raskolnikov. Students enrolled in recent Deals courses have examined movie financings, acquisitions in China, and pharmaceutical joint ventures. During one session, the lawyers for Kirk Kerkorian came in to talk about his unsuccessful effort to take over Chrysler.
A cornerstone of Columbia Law School’s transactional studies program, the Deals course has been taught not just by Gilson and Goldberg, but also by Mann and Avery W. Katz. An offshoot of the Deals class, the Deals Workshop, gives upper-year students a more detailed look into deal structuring and negotiation. The high-profile practitioners who currently teach it include Arthur S. Kaufman ’71, of counsel at Fried, Frank, Harris, Shriver & Jacobson; James B. McHugh, formerly of counsel and associate general counsel at Goldman Sachs; and Melissa Sawyer, partner at Sullivan & Cromwell, whose practice focuses on M&A work and private equity matters.
The idea behind all these courses is to provide Law School graduates with the background and experience they will need to succeed in a more difficult economy, where the ability to understand the economics of a deal, as well as its legal structure, will set them apart. “We can show that transaction structure creates value,” Gilson says, “and we can give students a set of skills to do that.”
Learning to add value to domestic transactions is critical, but so too, in an increasingly global world, is understanding the issues—and opportunities—abroad. Global trade has increased, as have cross-border investments. A U.S.-based company may operate in dozens of nations, subject to the financial regimes of each one of them. And the global financial system faces risks—as became abundantly clear during the financial crisis and the ongoing European economic crisis—that could not have been foreseen a generation ago. All of these global trends raise legal issues that students are exploring at Columbia Law School.
Numerous faculty members focus their work globally. Katharina Pistor, the Michael I. Sovern Professor of Law, is a world-renowned scholar specializing in how legal and sovereignty issues influence the global financial system. Petros C. Mavroidis, the Edwin B. Parker Professor of Foreign and Comparative Law, is an expert on trade issues with a background as an attorney at the World Trade Organization. And George A. Bermann ’75 LL.M., the Jean Monnet Professor of EU Law and the Walter Gellhorn Professor of Law, is a leading authority on international arbitration.
Professor Anu Bradford, who joined the Law School faculty in 2012, brings an expertise in European Union law and international economic law. “Given my international background, I teach much more globally,” Bradford says. She previously practiced antitrust law and EU law at Cleary Gottlieb in Brussels, and served as an adviser on economic policy in the European Parliament and in the Parliament of Finland, her native country.
A new course Bradford created for the fall will examine international economic migration—the movement of people across state boundaries, often for economic opportunity—and the ways in which legal institutions can maximize economic gains and mitigate risks associated with economic migration. “I believe that it will provide a fascinating conversation on a very topical issue,” she says.
For students interested in global economics, the resources go beyond those available in Jerome Greene Hall. Those who want to delve into international business law can earn a J.D. and a certificate in global business law and governance in association with the University of Paris I and Sciences Po, for example, while students interested in law and finance can study at Oxford through a joint program during the third year of law school.
Ronald Gilson, who is currently writing a paper on reform of the European takeover regime, sees the comparative, cross-border, and multidisciplinary work going on at Columbia Law School as reflective of a certain institutional mindset. “One of the hallmarks of the business group at Columbia is that pretty much everybody does comparative work,” he says. “That allows them to begin to see connections between things that might not otherwise be apparent.”