Thursday, August 16, 2018

Secured Transactions

Normal law schools teach a course called “Secured Transactions.” Not Yale. 

Instead, Yale would offer fascinating seminars, like “Secured Transactions and Economic Theory,” “Secured Transactions and the Empowered Worker,” “Secured Transactions and Social Anxiety,” and “Secured Transactions and Late Romantic Poetry.” 

My former roommate Phillip went to a nice normal law school. Grateful to squeeze "Law and Literature" into his schedule as a precious elective, Phil referred to this type of course as “Law and Bananas.” At Phil’s school, such philosophical seminars were treated like rare exotic fruits. At Yale Law School, they were the main course.

Not that I’m complaining – I loved taking Harold Bloom’s graduate Shakespeare seminar, as well as law school courses with names like “Justice” or “Robust/Fragile International Regimes." I got an amazing education. But like all Yalies, I resigned myself to the fact that if I wanted to learn any substantive legal rules, I’d have to wait until my bar exam preparation course.

I hasten to add that I’m describing conditions at Yale Law School during the impractical era that produced such legal luminaries as Supreme Court nominee Brent Kavanaugh and myself. (We were law school classmates). No doubt things are different nowadays. Indeed, based on the dean’s breathless fundraising updates, I assume they’ve already created a hands-on “Yale Student Clinic for Securing Transactions & Anti-Trump Injunctions.”

The summer after law school graduation was idyllic. The law firm paid the fees for our bar exam prep course, as well as providing a stipend to cover new hires’ living expenses. I would sleep in late, read on a blanket at the park, meet my colleagues for dinner, attend class together in the evening, then ditch the straights and secretly go out clubbing with my new gay friend Rob. It was a blissful summer – until the final few days of frantic cramming for the bar exam, when I lost my mind. Everyone ultimately does.

One evening’s lecture was devoted to the topic of “Secured Transactions.” I’d never even heard the phrase in law school. The dense outline materials were incomprehensible, so I assumed the lecturer would explain everything in person. He did not. Instead, I faced a barrage of mysterious jargon: “negotiable instruments,” “commercial paper,” “PMSI,” "holders," "priority," “attaching” versus “perfecting” interests….

Weeks of study proved futile. When a Secured Transactions essay question showed up on the bar exam, I simply wrote the words “Holder in Due Course” over and over like a mantra. Apparently this strategy worked, because I passed the bar.

As it turned out, one of my first appeals was about Secured Transactions. We represented a bank that was part of a complex transaction involving payment for apple shipments from Washington to Taiwan. The fast-talking senior associate invited me to her office to learn about the case. I frantically wrote down nouns and verbs on my legal notepad. I didn’t confess my ignorance of banking law, but my look of panic must have tipped her off. She gently suggested I go to the firm’s law library to find some background resources.

The librarian directed me to a treatise covering letters of credit and other commercial paper. The author’s name looked familiar. I realized he was my opposing counsel.

Nevertheless, I managed to learn just enough about Secured Transactions to draft a motion that convinced the trial judge to dismiss the case against our clients. In my first published appellate victory, we persuaded the Ninth Circuit Court of Appeals to affirm the ruling. See Cenlin Taiwan Ltd. v. Centon, Ltd., 5 F.3d 354 (9th Cir. 1993).

After the Cenlin case, I mostly forgot about Secured Transactions. Appellate lawyers are like the Gary Cooper character in a classic western movie: we’re invited into town, we clean things up, we ride off into the sunset. 

Then last week it all came back to me.

It’s back to school time around here. Rosalind and Oliver inform me they already have everything they need. In contrast, Eleanor has a long list of expensive “needs.” In addition, she “needed” extra funds to go to an end-of-summer activity with “everyone.” Facing a cash-flow crunch, Eleanor turned to the bank for a bridge loan.

As we hammered out the details of the transaction, I started to recognize familiar terms and concepts. She was the “debtor” and I was the “creditor.” Desperate for cash, she was willing to pledge her most valued possession – her beloved iPhone – in the event she defaulted on her payments. (That’s what makes it a “secured” transaction.) When I asked myself whether I should try selling Eleanor’s note to Grandma or my ex so I could afford groceries this week, I realized I’d even made the instrument “negotiable.” 

Which resulted in a further epiphany. My legal skills aren’t limited to appeals, other litigation, policy analysis, legislative drafting, public education, and client counseling, etc. No, I am also a transactional lawyer.

So to any prospective employers out there:  Please update my resume to reflect that I have substantial recent experience negotiating and documenting Secured Transactions.

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