Sunday, May 04, 2008

Law, Finance, Accounting, and the J.D.-M.B.A.

(Cross Posted at Legal Profession Blog)


Over at PrawfsBlawg, Adam Levitin  (Georgetown, left) provoked a discussion on the value of the JD-MBA degree, as well as the general shortcomings of business law education.  Let me throw in my two cents' worth.

We need to distinguish between the value of the skills and the value of the degrees.  Whether the benefit justifies the cost is open to question, but it seems to me the M.B.A. skills have value to big deal - big firm lawyers, as well as to small business lawyers.  The whole panoply of M.B.A. skills - accounting, finance, organizational design, marketing - are particularly helpful to lawyers who practice in-house, and who aspire to management as well as law.  The M.B.A. skills are also helpful to lawyers who represent start-ups.  I'm not sure about the entire panoply, but I think a basic grounding in business, and certainly in accounting, would be helpful to someone who is going to hang out a shingle and start a business practice wherever located.

My experience in large corporations is that the J.D. skills are also valuable to people in non-legal positions, but this is a place that the J.D. degree might make a difference.  Moreover, I agree with one of the comments to the effect that we need to be careful about the elite school - elite firm bias.  I suspect the J.D.-M.B.A. degree IS an asset in a limited number of elite openings - investment banking and high level consulting of the Bain-McKinsey-Booz type.  I agree that the M.B.A. portion of the degree (qua degree) is not particularly valuable in the standard recruitment to big law.

I do think the J.D. degree is helpful to non-lawyers seeking to advance their careers in certain non-legal areas, but I recognize that's an empirical assertion founded on my experience, albeit anecdotal. Here's where we have to acknowledge the difference between those schools a huge percentage of whose graduates go on to big law or prestigious clerkships and those where that is not so.  Human resources executives, environmental executives, purchasing (or as we say now, supply chain) people, compliance departments all overlap significantly with regulation, and I think the legal sheepskin does indeed make a difference in one's ability (a) to do the job, and (b) to distinguish oneself from one's peers in doing so.  This may not be a critical consideration at Columbia, which apparently sent 75% of its grads to NLJ 250 firms, but it may be at a lot of other places.

Finally, accounting.  Yes, there are areas of the law that will never really require that you understand the rudiments of accounting.  But they do not include:  trusts and estates, divorce, business litigation, antitrust counseling and litigation, mergers and acquisitions, small town general practice, white collar criminal prosecution and defense, personal (much less business) tax, and much much more.  I used an otherwise fine (and well-regarded) casebook on sales in which the author, in his discussion of the lost profits measure of damages under UCC 2-708, confused the economic concept of fixed and variable costs with the accounting concept of direct and indirect costs.   They aren't the same, and the lawyer who doesn't understand that is apt to do a disservice to his or her client someday.


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