Teaching LLCs Through a Problem-Based Approach

Table of ContentsI. Introduction 490II. Challenges of Teaching LLCs 491A. Curricular Structure 491B. Lack of Uniformity in Law 492C. Emphasis on Private Ordering and Freedom of Contract 493III. Pedagogical Benefits of the Case Study Method 494IV. Integrating Case Studies in a Traditional PodiumClass 501A. The Value of the Mini-Case Study Approach 501B. The McConnell Mini-Case Study 503C. Setting the Stage 505D. The Ownership Dispute 508E. Potential Issues for the Mini-Case Study 510V. Case Studies as the Centerpiece Pedagogy 513A. Summary of the Tribeca Simulation 515B. What Are the Pedagogical Goals? 520VI. Conclusion 523I. IntroductionSince their first creation by Wyoming in the 1970s, LLCs have become a significant part of the business landscape.1 Every state has an LLC statute.2 LLCs are becoming a favored entity for smaller and newer enterprises.3 As a practical matter, general knowledge of LLCs is important. Many business lawyers will not work in big law firms that traditionally do corporate transactional work involving large public corporations, but all business lawyers, including lawyers at big law firms, will work with LLCs.Teaching LLCs is challenging for several reasons: a lack of uniformity in the law, an emphasis on private ordering and freedom of contract, and the range of variability in structuring the entity and the constituent relationships.4 There are two aspects to teaching LLCs: firstly, teaching the default statutory rules and understanding how LLCs are different from other forms of business organizations; secondly, teaching the contracting and transactional aspects, which is a core aspect of practice. The first part lends itself to traditional teaching methods-in other words-reading statutes and appellate cases. The second part is not conducive to this traditional pedagogy. A problem-based approach is needed.Case studies and case simulations can be used to teach LLCs with an eye toward training business lawyers. These tools can be used in the traditional four-credit Business Associations (BA) course to supplement traditional teaching materials with minicase studies that accent and apply analysis of primary legal sources. Alternatively, case studies and case simulations can be the centerpiece of a specialized course on LLCs. We discuss both approaches.U. Challenges of Teaching LLCsAlthough LLCs are important business entities and will probably become more important with the passage of time, teaching the subject has three significant challenges.A. Curricular StructureIn many law schools, BA is a four-credit course that seeks to cover agency, partnership, and corporations, including, perhaps, a little bit of securities regulation with respect to insider trading. Many law school casebooks are written to accommodate this course structure. The time and coverage constraints are significant. Covering the subject of LLCs broadly cannot be done through the typical four-credit BA course while also maintaining traditional coverage of agency, partnership, and corporations. The obvious problem is a lack of credit time if the other subjects in BA are kept. Agency and partnership, not to mention federal statutes affecting corporate governance, should not be given short shrift on account of LLCs. …