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Finance and Accounting for Lawyers

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I played Monopoly for hours on end when I was in elementary school. I ran my own small business—a paper route—for three years when I was in junior high school. I majored in economics in college, and did detailed econometric analysis of the fortunes of nations.

In short, by the time I had graduated from law school, I knew everything about numbers and dollars, but nothing about finance or accounting. Yet I was expected to know everything about those topics once I had begun the practice of bankruptcy law. In discussing this situation with my peers, I discovered that I was not alone. In muddling through the reams of financial data presented to the typical chapter 11 and chapter 13 practitioner, I found myself learning by the seat of my pants.

I looked, vainly, for a basic text that would explain these mysteries to me. I needed a book that would thoroughly cover the topic, respect my intelligence, and also understand that as a harried lawyer and father, my time was limited.

I found that book in Finance and Accounting for Lawyers. This is one of the basic non-legal books that every lawyer should have on the shelf behind his or her desk for easy reference. It is a wonderful book to read on an airplane, or while waiting at docket call.

The book is divided into seven basic sections, covering those issues that every bankruptcy practitioner has some familiarity with: the basics of financial statements, the time value of money, securities, the cost of capital, valuation, damages and bankruptcy and fraudulent conveyances. Each of these areas is covered with depth and under-standing and is put forth in such a way as to allow those with a mastery of the subject to move quickly through that section. I found that my level of basic knowledge in each of these areas varied, but placing that basic knowledge within the greater understanding and overview afforded by the entire book, increased my overall understanding substantially. Certainly, some portions of the book covered areas that I had already mastered, but other portions took me through those areas which I only in-completely understood.

This book is an indispensable tool for every young lawyer, and I believe it is a worthwhile refresher course for those who have been through all of this before. Older lawyers (and I include myself in that group) will find helpful the step-by-step instructions on how to use the more complex functions of a financial calculator. In addition, illustrations and practical examples assist the reader in understanding sometimes complex financial issues.

For the second edition, this reader would like to see included, perhaps in an appendix, a glossary of commonly used terms, with the definitions indexed to the main text. This would increase the usefulness to lawyers who need that refresher course in the face of accountants speaking in acronyms. But overall, it is an imminently worthwhile book. Collect $200, pass "Go" and start reading!

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Friday, May 1, 1998

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