[49] IRAC2 - A Lawyer’s Ninja Trick for Getting to the Bottom of Things

In the first year of law school, lawyers-to-be learn the acronym IRAC. It’s a handy tool that has served me well throughout my legal career.?

IRAC is my starting point of first principles thinking whenever I need to do a quick-and-dirty legal analysis.?

It stands for:

• Issue
• Rule
• Application
• Conclusion

I add "squared" at the end since we're going to do the Conclusion twice.

IRAC2

Here’s how it works:

ISSUE

The first step is to spot the issue.?

The issue is best presented in the form of a question, but not just any old question. It’s a finely-tuned question, specific to your circumstances.?

Here’s a bad example: Is there a breach of contract?

Here’s a better example: Whether there’s a breach of contract when Party A refused to pay after Party B failed to deliver the services on the delivery date designated by contract, even though there was a major rainstorm that day and Party B has promised to deliver at a later date?

See the difference?

Articulating the issue carefully is the most important step. The issue question should include a description of who is involved and a few important facts. It’s kind of like writing a good prompt on ChatGPT.

Once you've laid out the issue properly, turn to the Rule.

RULE

The second step is to find the Rule. There are a few layers to dig through to find it.

First layer: Is there a written contract? Or some exchange of written communications between parties that govern the situation? If yes, start there. This applies to commercial transactions - where there's a contract between two parties - as well as corporate situations where there's partnership or shareholder paperwork between business owners.?

Simply put, find whatever you have in writing that pertains to the question you're asking in the Issue. If what you have in writing is clear and seems to lay out the Rule, you probably don’t need to go down to the second layer.

Second layer: Contracts are supported by law found in statutes. Statutes are formed when legislators have come to an agreement on a common set of rules, called "codes" and we, through our representatives in the government, have all agreed to follow those rules. Each state has a set of statutes. The federal government has one too.?

So in the second layer, you search through the statutes for the Rule applicable to your situation.?

The state codes will cover nearly all your run-of-the-mill business IRAC2 analysis needs, with the federal code being more handy for broader issues or for situations regulated at the federal level.?

These statutes act as support beams underneath your written contracts from layer one. And, in a few outlier situations could even trump whatever it is that you agreed on in your contracts.

Third layer: Underneath the code layer, you find case law.

Case law is when parties litigate in court and a judge issues a ruling about how the law applies. So a judge has looked at a particular situation and reviewed all three layers. They’ve analyzed (1) the written contracts in layer one, (2) the statutes in layer two, and (3) the previous case law in layer three (also known as precedent). Then they made a judgment based on what happened, laid it out in a written opinion, and added that opinion to layer three.?

The need to dig down into the third layer for case law is rare and only needed in idiosyncratic situations - or when you feel like what you’ve found in layers one and two aren’t sufficient. You need a lawyer for layer three unless you really know where to look.

In sum, dig down as far as you need to until you understand the Rule that applies to the question raised by the Issue. And don’t forget to note any stated exceptions to the Rule - they are often built into the law for a reason.?

“The young man knows the rules, but the old man knows the exceptions.” – Oliver Wendell Holmes, Sr.

Now it’s time to turn to Application.

APPLICATION?

The Application step is an exercise of applying the Rule to the facts of your situation. Some IRAC frameworks use the word “Analysis” instead. I find them interchangeable.

The first step in performing the Application is to become a detective. Go through all the information you have about your particular situation. Hunt through your emails, contracts and files. Ask people close to you what they remember about what happened, and whether they have anything in writing. Do web research. Make a list of all the people and companies involved.?

Gather everything you possibly can and organize it into a timeline and a summary. Call it the Statement of Facts.?

IMPORTANT: Be objective here - don't just cherry pick facts that you think present your side in a favorable light. Include everything you can find in the statement of facts - the good and the bad - regardless of how it makes you feel. Facts don't have feelings.

Once you have your Statement of Facts, turn to Conclusion.

CONCLUSION

Starting from the top, re-read the Issue, then the Rule, and then your Statement of Facts.?

How do you answer the question posed in the Issue? What's your initial reaction??

Often you'll find that you can easily answer the question posed in the Issue and come to a Conclusion.?

Congratulations, you’ve just completed your first IRAC.?

But there's one more step to double check that you aren't letting your emotions hijack your rationality.

CONCLUSION2

The final step is to double check your Conclusion.?

Munger says: "I never allow myself to hold an opinion on anything that I don't know the other side's argument better than they do."?

Review your Statement of Facts and imagine that you're the guy or gal on the other side of the situation. How would you interpret the facts differently if you argued against yourself??

Does it change how you would apply the Rule?

This last step - Conclusion2 - is often overlooked. We tend to build our Conclusion as we go along - interpreting the Rule favorably against a cherry-picked Statement of Facts. So we land on a Conclusion that suits us. But this misses the point of how Rules work, and why we have them.?

Imagine you're watching football and your team is playing in a big playoff game. With only seconds left on the clock, the referee throws the flag. If the call goes your team's way, they win. If not, they lose.?

Using IRAC2, you have to be the referee, not a fan. The second pass at the Conclusion is there to force you to argue the viewpoints of both sides, giving each equal merit.?

Munger was smart enough to realize that humans naturally fool ourselves to be biased towards our own desired outcomes. This is why I add the "squared" to IRAC, so I don’t trick myself.

-----------------

So there you have it.

IRAC2

If you find yourself in a business dispute with someone reasonable, going through IRAC together will solve 95% of your problems.?

But if you’re dealing with someone who’s only willing to be a fan and not a referee, it probably won't work.