value of numeracy. Lawyers
should become more "numerate." Likewise, business managers
should become legally "literate." Although lawyers have
been the principal social architects of Western culture
over the last few centuries, perhaps this role is shifting.
Who will design our future? See Bernhard Grossfeld,
and Accountants: A Semiotic Competition, 36 Wake
Forest Law Review 167 (2001).
in legal contexts. This course builds on these
premises by exposing law students to valuation methods,
and business students to the law's use of valuation.
These issues permeate the law:
- Should a bankruptcy court order
a financially-troubled company to be liquidated or
continued -- what is the company's salvage value compared
to its ongoing value?
- Should a spouse in a divorce proceeding
receive a lump-sum settlement or a payout over time
-- what is the effect and the value of each? which
advances the purposes of the divorce statute?
- Should a minority shareholder in
a corporate appraisal receive a pro rata share of
the company's assets or its earnings potential --
which is a more appropriate measure of ownership?
- Should a worker injured on the
job receive disability payments based on past inflation
trends or current interest rates -- which fulfills
the objectives of the liability scheme?
- Should a business responsible for
environmental damage be assessed clean-up costs as
they arise or in one lump-sum -- which approach is
best for "Mother Earth"?
As you see, almost all legal decisions
that involve future payment obligations or financial
rights trigger questions of valuation. Although legal
valuation often (if not usually) arises in non-litigation
transactional settings, much of our attention will be
on litigated cases. They represent case studies of conflicting
views on valuation, resolved through an institutional
(judicial) response. As we will seen, sometimes the
law recognizes and uses modern financial valuation theory
and methods -- and sometimes not.