SAN FRANCISCO Talks between the small African cooperative and the pharmaceutical giant got off to a promising start. But within weeks, the negotiations had grown so tense that the company's counsel doubted it could strike a deal to land the natural resources it needed.
After a few concessions on both sides, the parties agreed to launch three joint ventures to mine the extract that would be a key ingredient for the company's new drug, manufacture a fertilizer from the byproducts and distribute other products in Africa.
The sense of urgency to get the deal done stemmed not from market conditions but the approach of final exams: The negotiators were law students involved in a simulation designed to give them a taste of what corporate work is all about. Students at Stanford Law School served as counsel for the pharmaceutical company. The African cooperative was represented by a team of students at Northwestern University Law School.
Moot court has long been a staple of law schools, but mock negotiations are a somewhat newer phenomenon, said DLA Piper partner Jay Finkelstein, who brought the class to Stanford this fall. With clients reluctant to be billed for work from young associates, firms are less willing to train new hires. The task of preparing students for practice is falling increasingly to law schools, and courses like Finkelstein's appeal to institutions that are striving to do a better job of it.
"I went into teaching because I was frustrated that the transaction practice did not have the same exposure in law schools that litigation has," he said. "I wanted to find a vehicle to demonstrate the richness of the practice to students and help them gain practical skills."
Finkelstein, who is an adjunct professor at American University Washington College of Law, has taught classes that simulate corporate transactions for more than a decade. Previously, he paired campuses as far-flung as American University and the University of Dundee in Scotland for mock negotiations. His Stanford students met weekly for classes on negotiation strategy and also met five times at DLA Piper's Silicon Valley office for teleconferences with their counterparts at Northwestern over the course of the nine-week quarter. This spring, Finkelstein will simulate a transaction for government lawyers in Tanzania while DLA Piper colleagues Thomas Duley and Hilary Gevondyan introduce the course to UC-Hastings law school.
Finkelstein practices corporate and securities law, with an emphasis on international and domestic acquisitions as well as joint ventures. He was inspired to teach when he realized that his legal education had done little to prepare him for practice and most of the students that he was interviewing for corporate positions at DLA Piper did not seem to understand transactions either.
Now, Finkelstein is not the only one championing the cause. He is in talks with about five more law schools, where the course would likely be taught by DLA Piper partners from nearby offices.
Susan Hackett, CEO of Legal Executive Leadership, said courses like Finkelstein's are a good first step for law schools, though a more comprehensive rethinking of their curricula is still necessary. To ready students for practice, Hackett thinks law schools need to do more to instruct them in the social dynamics that are at play in both dealmaking and litigation.
"If you know how to read the behavioral factors, you become a great lawyer," she said. "And if you don't understand that they're in play, you're an automaton."
Hackett said she has not seen any other simulations that pair students from different schools or last for the duration of the course, but would like to see more of them. William Henderson, a professor at Indiana University Maurer School of Law, agrees. He is trying to launch a consortium of law schools and firms that would partner for similar simulations.
With the legal profession in turmoil, both academia and the bar stand to benefit from collaboration, Henderson said. Practitioners like Finkelstein can stage more realistic transactions than full-time academics, he noted. Lawyers, in turn, get the chance to scout out talent for their firms while they are in the classroom, he added.
DLA Piper approached Larry Kramer, who was then dean of Stanford's law school, a year ago about the prospect of bringing Finkelstein's course to the campus, Finkelstein said. "To the extent that students know that there are DLA Piper partners teaching the course, that is a benefit to the firm," Finkelstein said. "Some of these students may eventually decide to apply to DLA Piper."
And students with experiential courses on their transcripts may well be more attractive to employers, said Henderson. If students who receive hands-on legal education are indeed more prepared for practice, Henderson is hopeful that firms will invest more time and resources in the new courses.
"While it's OK to cut costs, if you do that for five straight years, you're not training the next generation of lawyers," he said.
Duley, an of counsel at DLA Piper who will bring the class to UC-Hastings in the spring, thinks the course will help students approach corporate law with the right mindset. He noted that he has seen some new associates at DLA Piper expect transactions to end with winners and losers, a misconception that he attributes to law schools' slant toward litigation.
Representing the pharmaceutical company at Stanford this fall, Don Lang entered negotiations wanting to win. Talks soon stalled over whether the African cooperative was entitled to a share of the profits from the drug the pharmaceutical company would manufacture with its minerals.
Lang and his classmates eventually realized that a deal could only be reached if both sides saw value in it. They agreed to reinvest a portion of the proceeds from the drug back into the country.
"We had to learn to think of the other side as people, not rational actors in an exercise," said Lang, a second-year law student who will be an associate at Davis Polk & Wardwell's Menlo Park office next summer.
Corinna Coupette, a German law student who spent the quarter at Stanford, had taken transactions courses before, but they followed the traditional format in which students from the same class face off for brief negotiations that last just one sitting. The challenge of finding common ground with a group of strangers deepened her interest in corporate law. She is now trying to bring the format to her own institution, Bucerius Law School in Hamburg.
"We really did learn a lot from the human dynamic that you don't see when you negotiate with your best friend," she said.
A long-time life sciences attorney, Duley often negotiates with pharmaceutical companies. But unlike his students, he rarely gets the chance to assess negotiations with the other side after the deal is done. Duley said that "post-game show" is part of what motivated him to teach the course.
"That rarely happens in real negotiations not only going through the process but then analyzing backwards," he said. "I think it will help my own practice."