The Business of Law

Brandeis, 20 years before taking his seat on the Court, taught an introductory business law course to students at MIT. He offered his students the following rationale for the study of law: “First … an understanding of the general principles of law and of its administration is an essential part of a liberal education; and Second … such knowledge is of great practical value to men engaged in active life. It is of practical value, because it will enable you in your business relations to solve difficulties or avoid them; it is valuable as a part of a liberal education, because the conduct of life is to so large an extent determined by existing legal institutions, that an understanding of the legal system must give you a clearer view of human affairs in their manifold relations, and must aid you in comprehending the conditions, and institutions by which you are surrounded.” Brandeis went on to disclaim any intention of imparting to his students “the working knowledge of law which the lawyer must possess”; rather he wanted his students “to secure that general knowledge of the law and its machinery, which a layman must possess in order to understand really what the legal system is,” especially as it pertains to business. Sachar A. Goldsmith W. , eds., The Public Papers of Louis D. Brandeis (Brandeis University Microfilms, 1978), Reel 1, Doc. 9, p. 1.

See, for instance, Solicitor General Charles Fried's comments several years ago in “The Trouble With Lawyers,” N.Y. Times Magazine (Sunday), February 12, 1984, p. 56; and similarly in “What's Good for General Motors is Good for Lawyers,” Student Lawyer, 12 (March 1984): 18. The controversy over which discipline offers managers the most promising training has a long and shadowy history. Suffice it to say, that lawyers have constituted roughly 12–17 percent of “Fortune 500” CEOs since the 1950s. See, e.g., McComas M. , “Atop the Fortune 500: A Survey of CEOs,” Fortune, April 28, 1986, p. 26; and Piercy J. Forbes J. , “The Functional Backgrounds of Chief Executives: Differences Across Time and Industries,” Akron Business and Economic Review, 17 (1986):27.

But cf McCraw T. , The Prophets of Regulation (Cambridge, MA: Harvard University Press, 1984), pp. 136–137, 222 et seq.

See below, references 17–21.

That is, three years (8–10 courses each year) of rule-oriented coursework.

For a standard text, see, e.g., Adam E. Jr. Ebert R. , Production and Operations Management: Concepts, Models and Behavior (Englewood Cliffs, NJ: Prentice-Hall, 3rd ed. 1986).

See, e.g., Pall G. , Quality Process Management (Englewood Cliffs, NJ: Prentice-Hall, 1987).

Law school casebooks, generally speaking, tend to capture this quality of jurisdiction only briefly. Cound , Civil Procedure (St. Paul, MN: West Publishing Co., 3rd ed. 1980) comes closest among current competitors. The most thorough treatise on jurisdiction along practical, functional lines is probably Roscoe Pound's contribution to the Judicial Administration Series, Organization of Courts (Boston, MA: Little, Brown & Co., 1940); the latter part of the book warrants particular note.

See, e.g., Jones H. , “An Invitation to Jurisprudence,” Columbia Law Review, 74 (1974): 1023–1032 for a coherent and pragmatic statement about the “social ends” of law and the constraints under which lawmakers operate.

Note that legal doctrine relies on the jurisdiction concept not only to regulate the production of court decisions, but to divide the legal system's work between legislative, executive, adjudicative, and administrative agencies as well as within those branches, respectively.

Docket control is perhaps the appropriate analogy here for inventory management. The point, however, is not to inform managers about court administration and case management, but rather to have them understand the texture of rules that determine the way law handles its own production processes.

See, e.g., Sunderland E. , “Problems Connected with the Operation of a State Court System,” Wisconsin Law Review (1950), p. 585.

Filing fees are a traditional means for regulating access to the courts and so regulating the flow of production. For instance, the manager or MBA student might learn to use rules as constraints from cases in which a would-be plaintiff denied access has contested the imposition of a burdensome filing fee or the refusal to grant in pauperis petition. Likewise the procedures in motions for dismissal and summary judgment have been staples in teaching lawyers about regulating the flow of production. Again, the manager may learn from these cases to develop criteria for balancing the risks of weeding “good supplies” (i.e., legitimate complaints) out of the production process too quickly against the risks of allowing “bad supplies” into the process over the long run.

See, Sunderland , pp. 586–68.

For a seminal discussion of the fact/value distinction as it applies to administrative decision making, see Simon H. , Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization (New York, NY: The Free Press, 3d ed. 1970), p. 45 et seq.

These doctrines have been shaped by appellate courts to regulate the flow of cases through administrative agencies and ensure efficient use of administrative (as opposed to judicial) resources. Primary jurisdiction usually refers to the priority of one administrative remedy or process over another and requires an analytic comparison of two or more particular agencies or administrative remedies. Exhaustion of remedies refers to the requirement that a claimant pursue his or her administrative remedies through their full course before requesting judicial intervention in the matter. Scope of judicial review seeks to limit judicial interventions into agency decisions to a narrow range of considerations. In general, see, e.g., Gellhorn E. Boyer B. , Administrative Law and Process in a Nutshell (St. Paul, MN: West Publishing Co., 2nd ed. 1981).

The Journals of David E. Lilienthal (New York, NY: Harper & Row, 1964), pp, 64–65. See also, Lilienthal D. , Management: A Humanist Art (Pittsburgh, PA: Carnegie Institute of Technology, 1967).

The traditional business law curriculum, while it pays lip service to functional perspectives on rule handling, tends to be weighted down with more traditional concerns about legal doctrine. This is reflected in the standard texts, both the “Business Law” variety and the more recently emergent “Legal Environment of Business” types. There is no official reason for this tendency, as the American Association of Collegiate Schools of Business (AACSB), in its accreditation standards, is inclined to broaden the focus. With respect to the law/social science curriculum, the standards simply ask that students acquire “a background of the economic and legal environment as it pertains to profit and/or non-profit organizations along with ethical considerations and social and political influences as they affect such organizations,” AACSB, 1985–86 Accreditation Council Policies, Procedures, and Standards (St. Louis, MO: AACSB, 1985), p. 29.

Twining W. Miers D. , How To Do Things With Rules (London: Weidenfeld & Nicolson, 2d ed. 1982).

Ibid., pp. xv, xvi.

Ibid., p. xvi.

Carter L. , Reason in Law (Boston, MA: Little, Brown & Co., 1984).

See, e.g., Posner R. , “The Decline of Law as an Autonomous Discipline,” Harvard Law Review, 100 (1987) 761; and Ackerman B. , Reconstructing American Law (Cambridge, MA: Harvard University Press, 1984). The infusion has occurred on several fronts, most notably, following Ronald Coase's seminal article, “The Problem of Social Cost,” Journal of Law and Economics, 3 (1960):1.

Most prominently, alternative dispute resolution mechanisms, security services, and a host of “extra-legal” or illicit enforcement institutions.