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The dark side of entrepreneurial finance

Editors: Arvind Ashta, Olivier Toutain

Theme of the special issue

Whether we are talking about start-ups, more recently “grow up” or more broadly about company creation-takeover, entrepreneurial finance attracts a lot of attention, from the entrepreneurs’ side and from the side of private and public financing organisations and the media. Entrepreneurial finance includes Founder’s equity, Love Money, Business Angel, Venture Capital, LBO Funds, banks, IPOs and various alternative financing treated as shadow banking: micro-credit, loan sharking, leasing, crowdfunding, Initial Coin Offerings, among others (Block, Colombo, Cumming, & Vismara, 2018; Wright, Lumpkin, Zott, & Agarwal, 2016).

Financing is considered as an inherent dimension of the entrepreneurial development process (Panda, 2016; Yunus, 2003). Without financing, there is no investment and, therefore, little chance of starting a business with adequate production tools and an organization capable of absorbing the trials and tribulations of starting and developing entrepreneurial activities. Without funding, the risk of lack of legitimacy is also high: what does it mean in the entrepreneurial ecosystem not to have the support of one or more funding agencies? More so in the start-up world! Is that conceivable? Finally, can the entrepreneur now free himself from financial support, even if he does not really need it to start his business? If the reasoning is pursued further, does the entrepreneur have a choice? In other words, is it possible to create and develop your company without mobilizing the financial resources of the territory? Without entering into a financial system and ecosystem that regulates the creation and takeover of companies in a territory? Or a system that pushes the entrepreneur to finance so much that the system itself collapses by bringing forth a financial crisis (Boddy, 2011; Diamond & Rajan, 2009; Donaldson, 2012; Guérin, Labie, & Servet, 2015; Mishkin, 2011).

Applying for funding today is often considered as a difficult adventure: is it really a fighter’s path given the particularly numerous mechanisms in France? But are they also numerous in Europe? In the world? Is the cost of financing transparent or hidden (Attuel-Mendes & Ashta, 2013)? In any case, to adventure is to walk and remove obstacles while following a guide… often at the funder’s request… which is often called coaching or mentoring. Or following the guide, sometimes – or often, depending on the reader’s appreciation – results in respecting rules, imposed steps, in short, to adopt a good conduct… to such an extent that the entrepreneur can lose track of his North Star, or at least part of his project, modified by “pitching” and integrating the comments, suggestions, strong suggestions of potential funders… In other words, if we push the reflection further, the accompanying logic proposed in the form of good intentions by the funders of an ecosystem, are they not likely, by force, to respond to external constraints, to generate effects opposite to expectations: inhibited entrepreneurs, whose project has lost its originality, vitality and excellence through the coaching or mentoring of initially imagined value creation (Collewaert, 2009)? Isn’t the finance injected into the support systems finally a Dr Jekyll and Mr Hyde of entrepreneurship? In other words, if it constitutes an unprecedented measure of support for entrepreneurial growth in the world, does it not at the same time generate “antipreneurial” effects? Normative and highly biased, do financial actors deserve such a place in the creative process? What is it that basically legitimizes their central place? (Bateman, 2010; Sinclair, 2012) What is the hidden face of entrepreneurial finance (Henderson & Pearson, 2011; Krohmer, Lauterbach, & Calanog, 2009; Toe, Hollandts, & Valiorgue, 2017)?

The purpose of this issue is to extract itself from the normative fields and discourses that highlight, in the vast majority of cases, the important role of finance in the development of entrepreneurship, whether purely economic, social or environmental. In other words, we are asking ourselves here about the secondary, even hidden, effects of finance on the emergence and development of new companies in France and around the world.

The proposals will address, among other things, the following topics:

  • What place does finance occupy today in the feeling of success and accomplishment of an entrepreneurial activity?
  • How do entrepreneurs interact with potential funders?
  • How do funders dialogue with each other?
  • How do funders make their investment decisions? Rationality, Short termism, information asymmetry….
  • How do entrepreneurs and funders negotiate? On which elements of the project or company? Are there any losers? What is lost in the process?
  • How does the relationship between entrepreneurs and funders change over time?
  • Can finance harm the value creation produced by entrepreneurial activity? Can it affect entrepreneurial freedom?
  • Is it possible to free oneself from financing circuits? How?

Finally, what is the dark side of entrepreneurial finance?

Timeline:

Submission of texts: By April 30, 2020 at the latest

Publication: March 2021

[I have omitted here the list of references supporting the text citations.  Please contact me by email if you would like a .pdf copy of the call for papers that includes the list.  There is more information after the jump.]

Continue Reading Call for Papers – The Dark Side of Entrepreneurial Finance

Veil piercing continues its randomness. Back in April, in Hawai’i Supreme Court decision, Calipjo v. Purdy, 144 Hawai’i 266, 439 P.3d 218 (2019), the court determined that there was evidence to support a trial court jury’s decision to pierce the veil of an multiple entities and hold the sole member/shareholder of the entities liable.  (An appellate court had determined that there was insufficient evidence to support veil piercing.)

The decision may be sound, but the evidence for the decision makes the outcome seemingly inevitable. In determining there was evidence to support the jury’s decision, the court notes the plaintiff’s allegations were that “sole ownership and control is one of many factors that can establish alter ego and, therefore, evidence of Purdy’s ownership and control was pertinent to this claim.”  The court then explains, 

In this case, the jury was presented with evidence that Purdy exercised exclusive ownership and control over Regal Corp. and Regal LLC. Purdy testified that he was the sole shareholder, director, and officer of Regal Corp. and the sole member and manager of Regal LLC. This court has held that “sole ownership of all of the stock in a corporation by one individual” is one relevant factor to determine alter ego. Id. (quoting Associated Vendors, 26 Cal. Rptr. at 814). Purdy’s testimony supports the jury’s determination that Purdy exercised exclusive ownership and control over Regal Corp. and Regal LLC; it constitutes evidence that Purdy was the sole owner and manager of either company.

Note, though, that the plaintiff claimed that “sole ownership and control … can establish alter ego.”  The court more accurately  states that ownership and control are a factor.  They are not dispositive or else limited liability for a single-member LLC, corporation, or other limited liability entity would be a fiction.  The jury instructions, though, seem to eliminate the possibility that an entity and a single shareholder or member could be separate.  The jury was told: 

You should consider the following facts in determining whether or not to disregard the legal entity of Regal Capital Corporation and return a verdict in favor of plaintiff against Defendant Jack Purdy, as an individual.

One, whether or not defendant Jack Purdy owned all or substantially all the stock in Regal Capital Corporation; two, whether or not Jack Purdy exercised discretion and control over the management of Defendant Regal Capital Corporation; three, whether or not Defendant Jack Purdy directly or indirectly furnished all or substantially all of the financial investment in Defendant Regal Capital Corporation; four, whether or not Regal Capital Corporation was adequately financed either originally or subsequently for the business in which it was to engage.

Five, whether or not there was actual participation in the affairs of Regal Capital Corporation by its stockholders and whether stock was issued to them. Six, whether or not Regal Capital Corporation observed the [formalities] of doing business as a corporation such as the holding of regular meetings, the issuance of stock, the filing of necessary reports and similar matters. Seven, whether or not Defendant Regal Capital Corporation [dealt] exclusively with Defendant Jack Purdy, directly or indirectly in the real estate sales development activities in this case. Eight, whether or not Defendant Regal Capital Corporation existed merely to do a part of business of Defendant Jack Purdy.

So, here was have an undercapitalization factor, and that could be separate from the shareholder/member, and we have the traditional “corporate formalities” test, but even there, these instructions imply that the entity must have additional shareholders to be “real.” For numbers one, two, three, five, seven, and eight, a jury would almost always have to find that those factors would support veil piercing for any sole shareholder corporation or single-member LLC.  I don’t think that’s either the intent or the substance of current law in most jurisdictions, though the Hawai’i Supreme Court clearly disagrees with me. 

In this case, there seems to be at least some evidence of fraud, and I’m more than willing to defer to a jury if they determined that the defendant had sole control of his entities and he used those entities to commit fraud.  I just object to court’s apparent comfort level with the idea having sole control of an entity or entities, and exercising that control, on its own suggests something nefarious.  

I know people use LLCs and corporations to engage in all sorts of bad behavior, and I’d like to see that punished more often than it seems to be.  But relaxing the application of legal standards to get there is not a good way to do it.  If the law should be changed, then legislatures should get to work on that.  If we think single-owner entities are a bad idea (I don’t think they are inherently so), let’s deal with that through legislation so that at least everyone knows the rules. 

Ultimately, it’s not as though current veil piercing jurisprudence has been clear or sound or predictable. There has always been a random nature to it. However, for single-member entities, if the current trends continue, the randomness of veil piercing will not attach not to the outcome of a lawsuit — it will attach to whether or not someone brings suit at all.  

I don’t have enough material for another focused post on advice for new business law professors (see posts I, II, III, and IV).  However, I do have a smattering of additional thoughts that I wanted to share in hopes that new professors, and potentially others, might find them helpful.  So, in no particular order:

  • As in much of life, less is generally more. Specifically, in prepping a new class, in your excitement, you might initially want to try to cover almost all of the casebook.  Just say no!  For example, given my research interests, I always wanted to cover derivatives etc. in my Banking and Financial Institutions Law course.  However, I finally learned that in a three-hour course without prerequisites, I only had time to cover how banks (and some bank-like financial institutions) were structured, regulated, and handled when in trouble. 

 

  • I think it’s helpful to add syllabus language (and note it to students) along the lines of the following: “In practice, the learning experience of each course is unique. I reserve the right to modify the scheduled readings or material to be covered to promote the best educational experience for students.” I certainly don’t recommend wholesale changes mid-course to the syllabus.  However, I do think, as fellow co-bloggers have aptly pointed out, that clearly setting expectations early on is critical.  Hence, it is helpful to set the expectation that there might be some variation in the assignments over the course of the semester to match the pace of the class.

 

  • The professor sets the energy level of each class. This is particularly important to remember if one is teaching at 8am, right after lunch, or in the evening!

 

  • When possible, be encouraging! We all love to receive encouragement!  Let’s do our best to distribute it too!  For example, if a student’s answer to a question is wrong, is there something positive you can say about their response, and then steer the class to the right answer?      

 

  • Our words, even if only casual remarks, often carry great weight with our students.

 

  • Where possible, I find it helpful to use in-class examples students can relate to, and occasionally to share recent news stories relevant to the material we’re studying.

 

  • In some courses, I’ve found it helpful to begin each class by summarizing at a very high level what we’ve already covered, what we’ll be covering that day, and what we are going to cover in the near future. Many students appreciate a reminder of the big picture.

Ok experienced professor-readers, is there something we’ve yet to mention that you think important to share with new business law professors?  If so, please help us out with a comment!    

 

Greetings from sunny Portugal.   I am enjoying some vacation time here after attending and presenting at the European Academy of Management conference in Lisbon this past week.   I will have more to say about that conference in a later post.   But for today, I offer some light thoughts and an Internet “treasure hunt” relating to mergers and acquisitions.

I arrived at my hotel in Sintra earlier today to find a notice in the room stating that “[o]n the 30th June 2019, the Hotel Tivoli Sintra will be changing the legal business entity which will be reflected in future invoices.”  The notice went on to ask that, “to avoid possible delays relating to the billing” each guest pay up his or her bill to date on June 30th “in a partial invoice,” noting that “[t]he remaining services will be invoiced at the departure time with the new entity.”  Apologies were made for “the inconvenience” and thanks were offered for “the understanding.”

Of course, as an M&A practitioner and instructor, I wanted to know what led to this change in “legal business entity.”  I suspected a merger or acquisition transaction.  Was it an asset transaction in which the hotel brand was being changed?  That’s what I suspected.  Since I ask my advanced business law students to try to identify the nature of business combination transactions from news reports and public filings, I thought I would see what I could find out by doing a bot of Internet research.  Here’s what I learned.

Minor Hotels “completed the acquisition of the entire Tivoli portfolio in early 2016.”  I read this in the Minor International Public Company Limited 2016 Annual Report.  See also here.  The Tivoli Hotel Sintra was part of this final stage in acquiring the Tivoli hotels.  See here.  Minor International (known as MINT) is registered under the laws of the Kingdom of Thailand.

In the fall of 2018, MINT launched a compulsory tender offer for shares of NH Hotel Group SA.  The tender offer was commenced as a result of MINT’s acquisition of a >30% equity stake in NH Hotel Group in a series of transactions earlier in the year.  A news report reveals that MINT’s significant stock acquisitions were part of an initial unsolicited bid for NH Hotel Group, which Hyatt Hotels & Resorts also desired to acquire.  (Spain has a compulsory tender offer law that kicks in when control of a public company–which includes the direct or indirect acquisition of 30% or more of the public company’s voting rights–changes.  See here.)  By the end of October, MINT had acquired sufficient additional shares of NH Hotel Group’s common stock to bring its equity stake in NH Hotel Group to over 94%.  See here and here and here.  A subsequent news report indicates that “NH Hotels and Minor Hotels are seeking to further integrate their brands.”  The same posting noted that “[p]lans are already underway in Brazil and Portugal to rebrand some Minor Hotels as NH Hotels, with 15 hotels in the two countries undergoing the transformation.”

Accordingly, it seems that I may be among the last hotel guests to stay at the Tivoli Hotel Sintra as a Tivoli branded hotel.  At least that’s my guess based on what I have read.  Although I was not correct in my original guess as to the nature of the transaction that led to the change in “legal business entity” of my Sintra hotel, if my assessment is correct, I wasn’t far off.  An asset acquisition was involved at the outset, but the posited rebranding happened later and was more the result of a series of stock acquisitions in a hostile, competitive takeover environment.  Not a bad day’s work in M&A sleuthing.  Just call me Nancy Drew, right, Ann?  

Posted in M&A

Last week, the Delaware Supreme Court issued an opinion, Marchand v. Barnhill, which is notable for two reasons.  First, it furthers the Court’s project of reinvigorating director independence standards, and second, it is one of the very few decisions to find that the plaintiffs properly pled a claim for Caremark violations.

The facts are these.  Blue Bell Creameries suffered a listeria outbreak in 2015 that killed three people and nearly bankrupted the company, and shareholders brought a derivative lawsuit alleging that the directors failed to oversee corporate compliance with FDA and other requirements.  First, they alleged that the CEO Paul Kruse, and the VP of Operations Greg Bridges, actually received notification from various agencies of the company’s lack of compliance and took no remedial action.  In so doing, Kruse and Bridges violated their fiduciary duties to the company, and a litigation demand on the board would be futile because of their close ties to the board members.

Second, plaintiffs alleged that the Board violated its Caremark duties by failing to institute a system for monitoring the company’s compliance.

Chancery dismissed both claims, and the Delaware Supreme Court reversed.

Starting with the issue of director independence, as Delaware-watchers are well-aware, in the past few years, the law has undergone something of a revolution.  Once upon a time, only clear financial ties or the equivalent of blood relations would be sufficient to show that one director lacked independence from another, but more recently, Delaware has begun to recognize how less concrete social and business ties, traveling in similar circles, ongoing professional and personal contacts, and so forth, can collectively create feelings of obligation that prevent one director from making an objective decision about whether to sue another.

Thus, in Marchand, the Court held that a particular director was likely biased in favor of Kruse because the Kruse family – not Paul Kruse personally – had mentored him throughout his business career, going so far as to make a sizeable donation to a local college that somehow ended up with the director in question getting a facility named after him.  Significantly, the Court emphasized that “independence” may vary depending on the type of decision at issue – directors may be willing to vote against close friends on some matters, but that’s a far cry from being willing to sue the friend for breach of duty, and judges need to be sensitive to the difference.

This entire line of caselaw might be described as Strine’s revenge: it’s a direction he recommended with In re Oracle Corp. Derivative Litig., 824 A.2d 917 (Del. Ch. 2003) when he was on the Chancery court, and that the Delaware Supreme Court rejected in Beam v. Stewart, 845 A.2d 1040 (Del. 2004).  Now in the Chief Justice spot, Strine has apparently persuaded his colleagues as to the correctness of his views and is moving full steam ahead, going so far in Marchand as to cite his Oracle decision, thus retroactively making it authoritative. 

As to the Caremark issue, what’s striking here is not only the rarity with which Caremark claims make it past a motion to dismiss, but the fact that the Court accepted the plaintiffs’ claim that no monitoring system at all had been put into place.  The Court highlighted that despite various compliance problems that arose over the years, the Board had no committee in place to address these matters and Board minutes did not indicate any discussion of them.

By contrast, in the few cases where Caremark claims have had some success – think something like In re Massey Energy Co., 2011 WL 2176479 (Del. Ch. May 31, 2011), where the claim was properly pled but lost in a merger – plaintiffs demonstrated that the Board didn’t simply fail to monitor, but was actually complicit in the legal violations.  They knew of the red flags and either ignored them or directly encouraged the misbehavior.  They were, in Elizabeth Pollman’s framework, actually disobedient regarding their legal obligations. (And to give credit where credit is due, I’ll say that Elizabeth Pollman is the one who has observed that successful Caremark complaints tend to plead willful violations of the law, and the paper she eventually releases on the subject is something to stay tuned for).  But notwithstanding that general tendency, in Marchand, the Delaware Supreme Court did not hold that the Board was complicit, or that it had actual knowledge of potential legal violations; instead, it held that the Board simply had no monitoring system in place at all – a much harder claim since just about any monitoring system will do, and its design is within the directors’ business judgment.  The Marchand Court went so far as to point out that monitoring systems in place at the management level were insufficient to absolve the Board, because there was no indication that the Board was monitoring at all – even to make sure that management did its job.

The thing to note about this aspect of Marchand is that the Court did not have to go that way, because Paul Kruse and Greg Bridges – who actually knew about the various problems – were both directors themselves, and Kruse later became Chair of the Board.  That is, the Court could have said that the Board, via Kruse and Bridges, did have a monitoring system, and that, via Kruse and Bridges, the Board was aware of problems but refused to take action to remedy them.  Yet the Court chose not to go this route – it didn’t even mention that Kruse was a director throughout the period and Bridges was a director for most of it (you have to look at the Chancery decision for those tidbits), and only grudgingly indicated that Kruse eventually became Chair of the Board – a fact to which the Court attaches no significance (and indeed, he only became Chair just before the problem reached crisis point).  Instead, ignoring the fact that at least two members of the Board were part of management and directly received notice of compliance issues, the Court simply declared that no monitoring system was in place.

So the opinion seems, in a way, motivated.

That impression is reinforced by the types of compliance problems that the Court identifies to establish that that Blue Bell had longstanding sanitation issues.  The Court lists regulatory citations that Blue Bell factories received dating back to 2009, but – to my untutored eye – they all read like, well, flyspecking.  You know, periodically an agency inspects, and they always find a problem to write up, and it’s quickly resolved.  Now, just to be clear, I am not an expert in the regulation of food safety and I may very well be misreading this, but a handful of problems like “equipment left on the floor and a ceiling in disrepair in the container forming room” just don’t strike me as the kind of thing to suggest systemic noncompliance.  Matters only get serious when listeria is first detected in 2013, and after that, though listeria is identified several other times, nothing in the opinion indicates that the company was ignoring regulatory complaints or failing to attempt to remediate the problem before it issued a general recall in early 2015.

The point being, it almost seems as though the Court is going out of its way to justify a “failure to monitor” theory and seizes upon (again, to my untrained eye) fairly minor problems as evidence that the Board was not paying sufficient attention.

That said, I do have to highlight this aspect of the Court’s reasoning:

In answering the plaintiff’s argument, the Blue Bell directors also stress that management regularly reported to them on “operational issues.” This response is telling. In decisions dismissing Caremark claims, the plaintiffs usually lose because they must concede the existence of board-level systems of monitoring and oversight such as a relevant committee, a regular protocol requiring board-level reports about the relevant risks, or the board’s use of third-party monitors, auditors, or consultants…Here, the Blue Bell directors just argue that because Blue Bell management, in its discretion, discussed general operations with the board, a Caremark claim is not stated.

But if that were the case, then Caremark would be a chimera. At every board meeting of any company, it is likely that management will touch on some operational issue….

I admit, if defendants just argued that the Board discussed “operational issues,” that’s pretty damning.

Okay, so what do we make of all of this?

Well, I have to go back to an argument I’ve previously made in this space, namely, that with decisions like Corwin, Delaware has transformed itself into something like a mini-SEC.  Suddenly, instead of emphasizing a Board’s substantive obligations, courts are scouring disclosures to determine if a shareholder vote was fully informed.  Except, of course, we already have an SEC – we don’t need Delaware to do that job. (But see Reza Dibadj, Disclosure as Delaware’s New Frontier, 70 Hastings L.J. 689 (2019)).  A contextual, nuanced take on independence carves out a space for Delaware that the SEC can’t replicate – and perhaps the same might be said of a more muscular approach to Caremark.

Arizona State’s Laura N. Coordes has a new paper up making a powerful case for overhauling bankruptcy laws for health care.  Despite the soaring, and seemingly irrational medical costs paid by patients, health care bankruptcies have been on the rise.  Since 2010, health care bankruptcies have increased by 123% while bankruptcies across all sectors have declined by 58%. The problems are not evenly distributed.  Financial distress may be most concentrated in rural hospitals.  If these hospitals continue to fail and close because they cannot address financial problems through bankruptcy, many people will be left without access to basic medical care.  As the boomer population continues to age and require ever more medical care, these problems are likely to get worse and worse.

Coordes convinced me that health care organizations differ from other entities in need of bankruptcy relief.  These bankruptcy misfits have state and federal regulators and patient communities as key stakeholders, making it a challenge for bankruptcy courts charged with maximizing a bankruptcy estate’s financial value to balance competing interests. 

Looking down the road, additional health care bankruptcies appear likely.  And as they mount, the need to put a solid, health-care-specific framework in place to address them will increase.  Hopefully, this is an area where we’ll be able to get some reforms done before too many providers close.

I’m not great at unplugging. That’s a trait I suspect rings true with a lot of people, especially lawyers. I am working on it. Writing this post while on vacation is not a great example of that, though I’m writing this while I’m on a plane, and the kids are occupied with their own electronic flashy things. 

 

I have tried very hard to put most anything that can wait to the side during our travels. I’ve not always succeeded, but I’m doing better than I usually do, so that’s good. 

 

Setting work aside (especially cellphones/email) is something a lot of try to do on vacation, but I also know I need to do a better job of it on a daily basis. If I’m accessible to people all the time electronically, I am necessarily less available to those right in front of me. There are times when that’s a necessary balancing act, but not always. 

 

In some ways, that’s a lesson I learned a long time ago (though I continue to need reminders), and I have done better in certain settings, such as individual meetings with students and colleagues. But even for myself, when I am writing or reading, I often let the possible get in the way of the immediate task before me. I’m trying to set up some better habits so I can be more focused — more in — in whatever it is I am doing. 

 

I am also contemplating additional efforts to protect other people’s time. The main one I’m thinking about relates to communication timing. I’m someone who tends to be connected, so I’m also one who tends to both reply and initiate emails at all hours. That can imply to others an expectation of similar accessibility, even if that’s not the intent. 

 

At a minimum, I plan to make sure people know when I send an email during off hours if it’s actually urgent or if it’s just me catching up. It’s almost always the latter.  But I’m also thinking strongly about using delayed timing for non-urgent emails, so they send during regular business hours, even if they were written on the weekend or in the evening. 

 

The challenge with that is that some people would prefer to have emails during non-business hours. I’m one of them, as I often like to work through email early in the morning, so delayed emails might actually set me back a bit. And while I’d like people to unplug more, I’m not one to tell others how they should work or when. 

 

At a minimum, I’ll be thinking a lot more about ways to make sure what I ask of people is reasonable and ensure that people know what I actually expect. It is not just students who appreciate transparency. 

 

My first order of business is trying to let myself know what I expect of me. Fortunately, I’ve got just a little more time to sort that out.  

One of the things that I obsessed over (alone and together with other new business law prof colleagues) as I began my teaching career was how to teach the first day of classes in my courses.  I was given some great advice by many folks.  Here are a few of the most valuable things people told me–advice that I use all the time, in my first-class sessions and, in some cases, beyond.

Have a solid class plan.  This may go without saying, but my obsession paid off in that I was prepared, and therefore more confident (although my legs were shaking behind the podium anyway . . . ).  I actually typed up my class notes for the first semester’s worth of classes I taught.  (I learned that, while I can read class notes competently, I always extemporaneity anyway . . . .  I no longer read typewritten class notes, but many of my colleagues who are experienced and effective teachers still do.)  But typing up my notes helped to reinforce key parts of the material for me and identify course themes.

Use the first class as an opportunity to introduce the semester’s task, including both substantive law coverage and other learning objectives.  I use a device in each doctrinal and experiential course to offer students a window on what we are covering and how that will be done.  I include a piece on my expectations (e.g., reading the syllabus, frequently checking the course management site, reading email, producing timely and thoughtful work).  Be as clear as possible about your expectations for your students.  (As Josh Fershee said, “it’s important to be as clear as possible about the what and the why.”)  Write them into your syllabus, of course; but also reinforce them verbally on the first day and at every logical juncture in the course where they may be relevant.

Consider using a motivating hypothetical or in-class project to help launch the course or illustrate coverage or themes.  In my Business Associations course, after using a PechaKucha presentation as a brief introduction, I assign a few students in key roles in a new business with each other, and we use the remaining class time to talk through their expectations and how the law might address them.  In my Corporate Finance course (which I teach as a planning and drafting seminar), we begin with a nebulous drafting assignment.  In my Securities Regulation course, we begin with the financing of a vaguely described business in which the students are invited to invest.  These three sample introductory sessions are just few among the many that could be used for these or related courses.  Use your knowledge of where your course is headed to construct something relevant to your materials and course plan.

Arrive at class ten minutes early.  Engage the students in an informal way as they arrive and get settled.  Ask about how they are, what they did last summer, compliment them genuinely on something, what kind of coffee they are enjoying, etc.  Anything that comes naturally in the way of light personal banter can work.  (Continue this in subsequent classes, by the way.  It’s a great way to develop a deeper relationship and trust network with your students.  This can come in handy when you flub up on something–which you inevitably will do, based on my experience and the experiences of folks I know.)

I am sure there is more I could say, but these items are the key ones, from my vantage point.  What can you add?  Leave comments to help our new colleagues along a bit.