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How Many Hours of Bankruptcy?

posted by Bob Lawless

Yesterday, the University of Illinois faculty voted to increase the number of credit hours for Bankruptcy class from three to four. Granted, this may seem like a small administrative detail for one law school, but I think it has broader relevance for those concerned about credit and bankruptcy. My bankruptcy colleagues here at Illinois, Ralph Brubaker and Charles Tabb, and I proposed the  increase in credit hours because of the increasingly complex bankruptcy law. Increased complexity means lawyers will be even more powerful players because they serve to intermediate between the  law and those to whom it applies. Increased complexity will and already has driven up the cost of legal services for bankruptcy.

I attribute this complexity to two things. First, with more people filing bankruptcy, the practice of bankruptcy law is more nuanced and contextual. A wider variety of bankruptcy filers means that practitioners will encounter a wider variety of factual circumstances in which the law must be applied. Second, the 2005 bankruptcy amendments were 500 pages long. Not all of those pages went into the Bankruptcy Code, but the law changed dramatically. As my students have heard me say, when I was a student even someone of my limited talents could do well in Bankruptcy because things like section 707(b) were only a few sentences long but now take up four pages in the statute books. Still, there is a part of me that wonders whether we did the right thing.

A friend once suggested to me that there should be a standing faculty bylaw allowing a faculty member to take any position at a faculty meeting so long as the faculty member first disclosed why that position was in his or her self-interest. Following that stricture requires me to disclose that it is better for me to teach four-credit classes than three-credit classes because it makes it easier for me to fulfill my teaching obligations. (Academics are generally expected to teach a certain number of credits per year.) I could cover bankruptcy law with three credit hours or even one credit hour. The other night, I attempted to to cover the entirety of bankruptcy law in 75 minutes. It's all a question of coverage. One covers what one can in the time available.

My analysis, however, is that the coverage of a three-hour bankruptcy course has become too sparse for a future practitioner of bankruptcy law. For example, to accommodate coverage of the new bankruptcy law in my course I have substantially cut back on coverage of basic state-law collection procedures. At the same time, someone who just wants a background in the basic principles of bankruptcy law probably does not need even a three-hour course let alone a four-hour course. Bankruptcy has become like tax law, and the pattern there is for law schools to offer a basic tax class with more advanced electives (e.g., corporate tax, partnership tax) for those interested in the area. Should bankruptcy law now be taught in a similar way, with an introductory gateway course that leads to advanced study? Is that a practical solution? Will law students take these advanced classes if they are offered? Will law schools staff such courses? Are there more creative solutions for law schools who want to be responsive to the growing complexity of bankruptcy law?


My colleague Pat Bauer and I have recently reworked the curriculum at the University of Iowa College of Law. In some part, our reforms were driven by the new, longer, more confusing Bankruptcy Code, but there were other concerns. Over the years, a fairly specialized series of courses had developed. To learn personal property security interests, mortgages, state law collection, and the Bankruptcy Code (consumer and business) students had to take 4 courses for a total of 12 credits. Few did so, and many struggled to know which class or classes were most important.

Our new curriculum is two courses. Debt Transactions is a 4 hour course covering state collection law (unsecured debt collection; liens, garnishments, etc), then moving to mortgages (the historical underpinning of personal property security interests, and then Article 9. Our idea is that students have a better appreciation of credit and debt if they can compare unsecured v. secured lending and different schemes for enforcement (liens v. garnishments v. foreclosure). We then have a comprehensive 4 credit bankruptcy course, for which Debt Transactions is a prerequisite.

This is our first year with this program, and we are still testing it out. Our goal is to get more students into these two basic courses, and so far that is working. We are moving in the opposite direction of the tax folks that Bob mentions--corporate tax, partnership tax, estate tax, etc. I think debt collection is sufficiently important that it needs to take its place with Article 9 as a sort of "core" law course.

In this vein, I highly commend the Corporate Reorganizations seminar course taught at Washington University School of Law. It is what convinced me that bankruptcy was the area for me.

This is a three hour seminar course with a 30 student limit that is taught by a law professor (Dan Keating), a practitioner (Lloyd Palans of Bryan Cave), and a bankruptcy judge (Barry Schermer) in "problem method". There is a semester-long hypothethical involving a fictional company (I seem to remember that it was called Peter's Propeller Palace) and most major Chapter 11 issues (cash collateral, DIP financing, critical vendors, preferences, disclosure statements, confirmation, insider issues, etc.).

The class met once a week for three hours. The class would start with a lecture component (considerably enlivened by the fact that Keating and Palans would dress up as characters in the hypothetical or use various props) on the law on the particular subject.

After the lecture and some discussion (participation was a grade component), the class would break into the "debtor" team and the "creditor" team. After caucusing with the team coaches (Keating and Palans again), one person's name would be picked from each team and the designated person would have ten minutes to argue to the judge. After that, the judge would rule, and there would be more discussion.

In addition to participation (1/3 of the grade), there were two research papers. The papers were in the forms of memoranda in support of motions on particular subjects and were limited to eight pages each.

The course really is what got me into bankruptcy in a serious way. It presented practical issues that come up in the practice and really made clear the issues faced in actual Chapter 11 classes.

At the time I attended, Wash U also offered classes in bankruptcy generally (3 hours) and Article 9 (3 hours). I understand that there also was or is a class every other year on Advanced Bankruptcy that gets into complex consumer issues, commercial issue and one on Consumer Transactions (which includes FDCPA, FTC laws, lemon laws, etc etc).

For several years we have offered separate courses on Consumer Bankruptcy and Business Bankruptcy (each three credits, and still separate from Sadistic Transactions and Consumer [Transactions] Law). I could use four credits for Consumer Bankruptcy if I wanted to throw in some of the non-bankruptcy debt collection materials, but given time constraints (and personal preferences) I omit that material. Oh, so much commercial law, but so few credits.

Bob, your lament about needing more time to explain the ever expanding Bankruptcy Code also applies in the CLE education realm. I teach a "fundamentals of bankruptcy" continuing legal education course each year, and the sponsor gives me a total of around 3 hours to introduce practicing lawyers (usually solos or small firm lawyers) to the basics of bankruptcy.

In years past, I could start with a big picture and touch on some of the details. Now, the exceptions to the rules (like the automatic stay rules) often swallow the big picture rules.

Consumer bankruptcy is no longer a practice area where lawyers can dabble. Unfortunately, in actual practice, there is often a problem getting paid a reasonable fee for what has become a complex practice area.

Jonathan Ginsberg

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