Unincorporated Business Entities

Amitai Aviram

Fall 2007

Syllabus

 

Learning Objectives: The corporate world has experienced in recent years a significant proliferation in the number of business entities.  For example, in 1980 Pennsylvania offered entrepreneurs a choice between nine forms of business entities; by 1997 the state offered 21 alternatives.  A basic Corporations Law course acquaints students with only one such entity – the corporation.  A more extensive Business Associations course may also introduce students to general partnerships.  Corporate tax classes introduce students to important hybrid entities (e.g., the S Corporation).  Nonetheless, a vast range of business entities are ignored.

 

Unincorporated Business Entities attempts to fill this void.  The course examines the array of legal forms that are used to coordinate individuals jointly undertaking business activities.  A good corporate lawyer is expected to advise of the business entity most suitable to a client’s needs and custom-tailor it to fit the particulars of the client’s business.  This course introduces future corporate practitioners to the variety of business entities, including: the Sole Proprietorship, the Limited Partnership, the Limited Liability Partnership, the Limited Liability Company and the Business Trust.

 

The course combines theory with practice.  To enhance students’ practical skills, the course includes simulations, in which students role-play situations similar to those they may face as transactional lawyers. Simulations familiarize students with two aspects of legal practice that traditional teaching does not – the human dynamics involved in forming a business entity, and the crafting of the legal documents required to form business entities.  Grades in this course are based on the quality of a paper on a topic of your choice that is related to the course and on class/simulation participation.

 

Reaching Me: The best way to contact me is by e-mail, at: Aviram@illinois.edu.  You are also welcome to meet with me at my office.  Simply send me an e-mail suggesting days/times that are more convenient to you and we will find a mutually convenient time to meet.

 

Do not be shy about scheduling a meeting to clarify something that you did not understand in class.  If, despite having read the assigned material and attending class, you are puzzled about some issue that was discussed in class, it is perfectly appropriate for you to schedule a meeting so that I can (hopefully) make things clearer.  Out-of-class discussion affords me the luxury of focusing on your individual questions or concerns.

 

Attendance & Preparedness: The American Bar Association requires accredited schools to ensure the “regular and punctual class attendance” of students.  The rule applies to this course.  You are expected to be present and prepared for class, and I reserve the right to reduce grades for poor attendance or participation.  Being prepared includes two components: familiarity with the assigned reading, and making an honest effort to think about the issues raised in the assigned reading and in the questions that I ask you in class.  Being prepared does not require you to know the correct answers to my questions; just to make your best effort based on the material you were assigned to read.  This is not “The Paper Chase” and nobody aces every question they are asked (not even the professor).

 

Speaking in front of a group of students may be daunting for many people, but it’s an excellent preparation for law practice.  Anxiety may cause you not to respond to the very best of your ability, but you will not be penalized for lack of eloquence.  As long as your response shows that you read the material and thought about what I am asking you, you were prepared for class.  To ensure that you demonstrate familiarity with the material even when you are anxious, you might want to consider bringing with you to class notes summarizing the reading assignments, or you might want to highlight and write notes on the reading assignment itself.  Try to find the technique that works best for you to quickly retrieve detailed information in response to an unexpected question.  It will be a valuable skill when you practice law.

 

You should not feel embarrassed about giving a wrong answer or misunderstanding the material.  If you don’t understand something after doing the reading and making an effort to make sense of it, then there are probably other students who are in the same situation.  Your ‘wrong’ answer enabled the discussion that clarifies the relevant issues not only for you, but for all the other students.  So, you are doing them a service (don’t be too altruistic, though – try to get the answer right…).

 

My Teaching Style: I tend to use a mix of lecture and Socratic dialogue, because I believe each has advantages in teaching certain aspects of the course.  I use PowerPoint slides in nearly all classes.  The slides serve primarily to assist you in reviewing the material after class.  During class time, if something I say is unclear, note which slide I am on and remember to read that slide after class to resolve the confusion (the slides serve during class like bookmarks, to which you can return later).  My former students tell me that they liked this system, because it significantly reduced the amount of notes they had to take, freeing them to focus on listening and thinking.  They also told me that the slides were a convenient resource for them to review the material after class.

 

I will release the slides each class on my webpage (http://www.law.illinois.edu/aviram/) a few days after teaching that class.  For your convenience, I will have early versions of the slides available online.  You may look at these slides to anticipate what we will discuss in class, but be aware than the slides presented in class may be somewhat different than the ones available before class, because I often make last minute changes.

 

Course Methodology: This course (together with Business Associations) will provide you with foundations to assist clients in forming a business entity that is optimal for their needs.  The course approaches this goal by engaging the material on two fronts:

• The reading assignments and class discussion focus on the more abstract level of the law of business formation.  First, we will discuss rudimentary concepts explaining what a business entity is and why we have more than one type of business entity.  Second, you will be introduced to a variety of business entities, most of which you may not have studied in other courses.
• The simulations will introduce you to some of the realities of practicing business law (luckily for you, the course will not introduce you to the concept of billable hours).  Through simulations you will learn of the issues (and frustrations) that come up in negotiation with other important members of the business team (e.g., financial backers), as well as creative ways to accommodate team members’ different needs.  You will also gain experience in finding the legal documents that are needed to create a business entity and modifying them to accommodate the needs of your client and the other parties to negotiations.
• Research for the paper will provide you with more in depth expertise in one aspect (of your choice) of the law of unincorporated business entities.

 

Paper: Each student will research and write a paper on a topic of her or his choice, as long as the topic is sufficiently related to unincorporated business entity law.  The paper must be submitted by the last day of classes in the semester.  Please submit the paper in electronic form, by e-mail, to: aviram@illinois.edu.

 

You have the option of writing a paper that qualifies for the Upper Level Writing Requirement, but you do not have to do so.  If you choose to write a paper that does not qualify for ULWR, there are no additional requirement other than that you submit the completed paper by the last day of classes.  You are encouraged to discuss with me throughout the semester what the topic of your paper is and how to develop it, but you are not required to do so.

 

If you choose to write a paper that you want to qualify for ULWR, you need to tell me about this intention and pick your topic within one month of the first class, and submit a draft of the paper within two months of the first class.  I will read your draft and comment on it.  Submit the final paper (incorporating responses to my comments) by the last day of classes in the semester.

 

Simulations: The course will include four simulations, each of which will take place over the course of two classes.  In the first class you will negotiate the business understanding, and in the second class you will translate this understanding into legal documents.

 

Simulations are designed both to internalize the academic learning in class with practical application of it, and to become familiar with the human dynamics of negotiating.  You will play a role (typically as counsel for an entrepreneur, venture capitalist, key employee, etc.), negotiate and draft the agreements creating a suitable business entity.  Each of you will be privy to somewhat different information and different interests.  You will not receive assigned reading prior to classes in which we will have a simulation.

 

Simulations will not only employ your negotiating skill and develop your business savvy, but will also require you to apply business agreements into legal documents (locating and modifying generic forms to fit your needs).  Each student will act as “lead attorney” once in the course.  As lead attorney, you will facilitate the second class of a simulation by: (1) identifying and acquiring the necessary generic legal forms (e.g., partnership agreement, LLC operating agreement, etc.); (2) leading the process of modifying the generic form to accommodate the parties’ understandings; (3) Providing me, at the end of the simulation, with the final set of documents you drafted (redlined so that I can see the changes you made from the forms that you found), and a brief memo summarizing the transaction’s structure and the terms of the deal.

 

Grading: Grades will be assigned by fitting students’ scores to the grade distribution policy of the College of Law.  The components of a student’s score are: 70% - paper; 30% - class participation (including participation in simulations and performance as “lead attorney”).

 

Required Books: The only required text for the course is the course materials packet that I prepared, which is available from the copy center.

 

Determining the Reading Assignments for Each Class: It is hard to predict in advance how much material we will cover in each class, so only at the end of one class can I determine what the reading assignment should be for the next class.  At the end of each class I will announce the reading assignment for the next class.  In case I ever forget to do so, please read the three cases following the last case we covered in class (assigned reading of sections of legislation count all together as one case for this purpose).

 

The assigned reading is tentative until the end of the immediately preceding class session.  I may modify the outline and assigned reading throughout the semester. Please make sure to check my website (http://home.law.uiuc.edu/~aviram) each weekend to confirm the assigned reading for the following week.  If I must make more immediate changes, I will notify of them in class.

 

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