Exam type: In class.
Lawyers in almost every area of practice (litigation, corporate, government, public interest) deal routinely with problems that are usefully illuminated by basic business and economic concepts. This course is designed to teach the most important analytical methods to law students, in a manner that will be fully accessible to those with no prior quantitative training or background in the subjects covered. Using text, classroom activities, and written exercises, we will explore how these tools may be used to analyze concrete problems that arise in a wide range of legal practice settings.The course will consist of seven units:
1. Decision Analysis, Games and Information: Lawyers assist their clients in making a wide variety of decisions, ranging from the settlement of lawsuits to the purchase of property. We will explore a standard technique that has been developed to organize thinking about decision-making problems and how to solve these problems. We will also consider strategic interactions between parties and considerations related to imperfect information.
2. Contracting: Lawyers write many contracts concerning such matters as acquisitions of land or corporations, creation of partnerships and nonprofit entities, settlement of lawsuits, financing arrangements, and government procurement. This unit presents practical principles concerning what issues should be addressed in contracts and how they might best be resolved.
3. Accounting: Lawyers who counsel clients in conducting their affairs, or who represent them in litigation, must understand the parties' financial circumstances and dealings, which often are represented in financial statements. Basic accounting concepts will be introduced, and the relationship between accounting information and economic reality will be examined.
4. Finance: Legal advice in business transactions, division of assets upon divorce, litigation, and many other matters require knowledge of valuation, assessment of financial risk, and comprehension of the relationships between those who provide financing and those who need it. We will consider basic principles of finance, such as present value, the tradeoff between risk and return, the importance of diversification, and basic methods for valuing financial assets.
5. Microeconomics: Lawyers need to understand their clients' and other parties' economic situations and opportunities as well as the principles that underlie many of the rules of our legal system. This unit presents basic economic concepts--the operation of competitive markets, imperfect competition, and market failures--that are necessary to this understanding.
6. Law and Economics: Legal rules have important effects on clients' interests, which must be appreciated by lawyers who advise them and by judges, regulators, and legislators who formulate legal rules. We will explore these effects using the economic approach to law, with illustrations from torts, contracts, property, law enforcement, and legal procedure.
7. Statistics: Legal matters increasingly involve the use of statistics in business contexts, in the promulgation of government regulations, in the measurement of damages, in attempts to make inferences concerning parties' behavior (such as those regarding discrimination in employment), and in determination of causation (in tort, contract, and other disputes). We will address the basic statistical methods, including regression analysis, as well as issues that commonly arise when statistics are used in the courtroom.