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Raising the Bar: Educating Our Next Generation of Lawyers

To engage with the Impact Economy

Imagine that you live in a world where a test is administered to every person seeking to start a business career. Pass this test and you can hold yourself out as a businessperson. Fail this test and you’ll be shut out of a working in business (or subjected to repeated testing until you finally muster a passing score).

Bar Exam question about benefit corporations

NYS Bar Examination question about benefit corporations.

Then imagine that this test asks you, among other things, to analyze the governance and financial implications of merging an existing company into a new legal form – the benefit corporation — in order to pursue social impact as well as profits.

That is what happened to thousands of people in the United States in July of 2021. But the profession that these folks were striving to join was law. The stakes for starting their legal careers couldn’t have been higher.

Last summer, in New York State alone, over nine thousand aspiring lawyers were asked to spend 30 minutes writing an essay about benefit corporations as part of the Multistate Essay Examination (MEE) portion of the New York State bar exam. Because New York is but one of 33 state jurisdictions and five territories to incorporate the MEE into its bar examination, the actual number of bar examinees that tackled this issue in July probably counted in the tens of thousands. [DB1]

What are the implications for the legal profession of including on bar examinations a question about strategic decision-making and governance within a social enterprise? [DB2]Does this point to a need to rethink how legal education prepares lawyers to engage with the impact economy?

William H. Clark, Jr., the attorney who originated the benefit corporation, believes it does. He argues that “the appearance of a question on the bar exam about benefit corporations proves that bar examiners recognize new lawyers need to be equipped to advise social entrepreneurs. Law schools need to wake up and add this to the basic curriculum.”

One of the two educational objectives required by the American Bar Association of an accredited law school is to prepare students for admission to the bar. The other required objective is to prepare students for effective, ethical, and responsible participation as members of the legal profession. By either objective, a case can be made for introducing law students to the legal issues arising out of and shaping the evolution of the impact economy.

What are the implications for the legal profession of including on bar examinations a question about strategic decision-making and governance within a social enterprise?

More should be done in legal education in this regard, according to Professor Susan R. Jones of The George Washington University Law School. “Law schools today are not doing enough to educate law students about business forms designed to embrace new business structures like benefit corporations and L3Cs [low profit limited liability corporations] or even older structures like business and worker cooperatives that have important financial, societal, and public benefits.”

State Benefit Corporation Passage in US

Benefit Corporation Legislation Passage by U.S. State (Green = Passed; Grey = No Action; Black = Failed) https://socentlawtracker.org/#/map

This education gap is even more pronounced when you compare the educational offerings of law schools to what is happening in business schools and public policy schools. As Professor Steven A. Dean of Brooklyn Law School and co-author, with Professor Dana Brakman Reiser, of Social Enterprise Law: Trust, Public Benefit and Capital Markets, observes, “law schools have tended to pay much less attention to social enterprise than other programs. For example, business schools have developed a number of courses and centers devoted to studying mission-driven ventures.”

Law student studying

One place where legal education is focusing on social enterprises is within the growing number of transactional law clinics offered at law schools. In a 2018 survey of transactional law clinics undertaken by the Grunin Center for Law and Social Entrepreneurship at NYU Law, we found at least 28 transactional law clinics serving clients that self-identify as social enterprises or impact investors. And this trend appears to be growing within the transactional law clinic community.

Take, for example, the Social Enterprise & Nonprofit Clinic (SENC) at Georgetown University Law Center. Professor Alicia Plerhoples, who directs the SENC, categorizes in her article Representing Social Enterprises the many reasons why a transactional law clinic like the SENC would choose to focus on serving social enterprises as clients. Growing interest in developing sustainable businesses is one of those reasons. She writes “[l]aw students who want to practice business law must be prepared for a shifting business and consumer culture where sustainability plays a central role, whether for financial or altruistic reasons.”1

But not every law student will enroll in a clinic like the SENC. So, how are more doctrinal law school courses evolving?

Prof. Brakman Reiser of Brooklyn Law School sees a “movement in the right direction in the [more traditional] classroom too.” She notes that most business associations casebooks now recognize some of the new legal corporate forms, particularly when they examine the question of a corporation’s proper objectives against the backdrop of prior case law. Yet she cautions “there is so much more to advising a social entrepreneur or a social enterprise than recognizing the existence of these forms. Lawyers advising founders and firms with a social mission need to think about how to attract mission-aligned investors and how to recruit and retain mission-aligned talent and about internal governance and management practices that will steward their missions over the firm’s lifetime. Whether or not one opts to use a specialized legal form barely scratches the surface on these important issues.”

The impact economy is likely to present far more challenging legal questions than that posed by the MEE to aspiring lawyers last July, especially once significant rulemaking and even litigation takes place.

The impact economy is likely to present far more challenging legal questions than that posed by the MEE to aspiring lawyers last July, especially once significant rulemaking and even litigation takes place. This is a point made by Professor David B. Guenther who directs the International Transactions Clinic (ITC) at the University of Michigan Law School. He says that students enrolled in the ITC spend more time advising their social entrepreneurial clients on “how to accommodate/achieve a social mission in the available legal entities” than counselling them on which legal entity to choose among the new specialized forms.

The inclusion on bar examinations of a question about social enterprise may indeed encourage law schools to rethink how they are educating law students. There is much more to be done, however, if we’re to prepare the business lawyers of tomorrow to understand and navigate the challenges and opportunities presented by the impact economy.

1 Alicia Plerhoples, Representing Social Enterprises, 20 Clinical L. Rev. 215, 239 (2013).

Deborah Burand is a Professor of Clinical Law at NYU School of Law where she also is the co-faculty director of the Grunin Center for Law and Social Entrepreneurship. She currently is writing a book for new lawyers about how to develop a transactional law practice that does good by ... Read more
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