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Nearly every start-up is confronted by legal hurdles. "Legal Aspects of Entrepreneurship" gives students a solid footing for plotting strategy and choosing legal counsel.

Every time Bob Borghese teaches Legal Aspects of Entrepreneurship (Management 813) at least one student insists that a noncompete agreement can't be enforced if it denies a former employee a livelihood.

"I hear that every semester," Borghese says. "And it's just not true. The statement isn't framed correctly. Employers can't stop you from earning any living, but they can stop you from competing with them." Just because you've sold optical networking equipment in the past, for example, doesn't mean you have a right to sell it in the future.

But a noncompete agreement doesn't let an employer lock a former employee out of an industry under any circumstance, either.

Richard Shell, the Wharton legal studies professor who created the class, aimed to make Wharton students who start or buy companies sensitive to just these sorts of legal pitfalls. The class isn't intended to make them lawyers, but to teach them when to call one. "It makes them better-informed consumers of legal services," he explains. "It's about how to get the biggest bang for your buck in legal consultations."

Shell designed the course to follow the lifecycle of an entrepreneurial business from startup to bankruptcy, if, as many startups do, that's where a company ends up. "Each topic is an episode in the life of a startup," he says.

Former student Chris Ashton (WG'03) says the course was one of the best he took at Wharton. "Bob takes you through the whole process of setting up a company," Ashton says. "And because he practices law, he illustrates it with real-world examples."

After graduating, Ashton and his wife, Natasha (WG'03) started a Philadelphia pet insurance company called Fetch Inc. (Its predecessor, called Paws, won the 2003 Wharton Business Plan Competition.)

Ben Samson, a 2000 Wharton MBA, also took the class, and he, too, liked its practical focus. And the key lesson he took away was just the one that Shell had intended: "It pays to understand when it's time to call a lawyer, and it's never a good idea to try to play one yourself."

The course begins with the first legal hurdle that many entrepreneurs face — their obligations to their former employer. Among the topics addressed is negotiating employment agreements that allow would-be entrepreneurs to leave and start their own companies.

Different issues are negotiable in different industries, he points out. "A manufacturer isn't usually concerned about [noncompete] covenants that revolve around customers. Financial-services companies are. In financial services and consulting, it's all about clients. In manufacturing, it's intellectual property."

From there, the course turns to topics such as organizing a business and raising money. "Most people don't know that, even when they solicit money from friends and family, the issuance has to comply with federal securities laws."
It then moves to taxation and mergers and acquisitions. In 2002, Borghese published a book called M&A: From Planning to Integration, which breaks the merger process into a series of steps and identifies what he calls "the key driver" in each step.

The course wraps up with intellectual property and employment law, saving the best — or at least most potentially painful — for last. "If there's an area of law that's going to cause people difficulty, it's employment law. The laws are so complex that most employment lawyers can't keep up with them."

"You're dealing with issues like race and age discrimination, sexual harassment and the Americans with Disabilities Act," he explains. "The list just goes on and on. And employment law involves a lot of emotion — people getting fired."

orghese has been an instructor at Wharton since 1992. Initially, he taught the introduction to law and public policy course (Legal Studies 101) that's required for every Wharton undergrad. In 1994, Shell handed the entrepreneurial law class off to him.

He brings to the classroom a strong sense of what his students want because he's both a Wharton alum (W'85) and a business owner. After graduating from the University of Pennsylvania's law school in 1990, he created his own law firm, with the intention of advising startup companies. He also has started several companies, including Stonehedge Funding, a commercial mortgage bank.

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