If people tell you that there is a strategy that pays excellent returns, you have to ask “What am I missing?” There is no “free lunch.” Without added risk, you won't have the added return. Yet senior managers ignored that most basic of risk models. You can never let your profit motive blind you.

Zong: Sales and trading must require different skill sets. What do you think of the difference?

Brown: The big difference between a sales person and a trader should be zero, because if you are good, you can do either of these jobs. If you think like a trader, your clients will find you more valuable. You know what information is important, you know where the risks lie. And, if you think like a salesperson, you understand how to solve a wider variety of problems.

Each morning, I would identify an important theme that was otherwise being ignored. I would call my first client to start the ball rolling. They would reflect on it, discuss it, and I would call the next client. After a while, the theme takes on a life of its own. It's like putting a stone in a lapidary: at the beginning it is rough and ill-formed, but after a while it becomes polished. In this case, the good salesperson has taken a trading idea, spoken with clients (who are themselves traders) and at the end understands what part of that idea is valued by the market and what part of that idea does not make sense. Again, the difference between a good salesperson and a trader should be zero.

This is especially important today. It used to be that a salesperson was more about entertaining than thinking. Those days are long gone. Customers these days are really discriminating. They are bombarded with so much information, they have so much liquidity. If a client goes to dinner, the dinner is usually secondary and the focus is usually on the markets or the business of the clients. Let's face it, these days clients would rather have dinner with their family unless you really have something important to offer.

We always look for ways to enrich the thinking of our clients.

Zong: You once said: a good lawyer needs to understand business; a good business man needs to know law. Could you please elaborate?

Brown: When I was a lawyer, I didn't fully appreciate some of the business aspects of the deals. I now realize that clients have view their lawyers as a source of both legal and business advice. Otherwise, the client fails to involve the lawyer early enough in the transaction. This is because they are not viewed as a source of important business advice. But, for the lawyer who is respected for their business acumen, they will be brought in earlier and help avoid a number of issues that might otherwise be baked into the deal. I didn't full appreciate that dynamic until later on.

In the course of my career, I have had some good lawyers, but many lawyers don't understand business. When Dean Levi asked me to come to Duke, he asked me to teach what I wanted to teach. So, I taught all the courses I wish I had learned when I was in law school. So, I have taught two highly quantitative classes: Fixed Income Markets and Quantitative Methods, and Equity Valuation and Advanced Financial Statement Analysis. These classes are for advanced finance students. Then I taught a class entitled Essential Analytical Techniques for Lawyers. This is a class to help all law students become more comfortable with numbers. And, in additional to a year-long class on the credit crisis, I taught a class on Mergers & Acquisitions: Structuring Venture Capital, Private Equity and Entrepreneurial Transactions.

My goal is that my students will be better prepared for the legal and business world than students from any other law schools.

Zong: Great! So your journey went a full circle and came back to North Carolina. Students are fortunate to take advantage of your expertise.

Brown: I often look at it the other way, I am fortunate to take advantage of the students' experience and knowledge. I believe experience is not a prerequisite to have deep and important thoughts. So I am very receptive to and respect my students. A number of people underestimate the power of students. Students know that my door is always open, and when they walked out the door, I often feel that I might have gotten the better end of the bargain in the conversation I just had. I feel really fortunate.