Recently, I had the pleasure of talking with Lawrence Cunningham, esteemed professor of law at George Washington University. Professor Cunningham has written numerous books about investing and business, including one of my all-time favorites, The Essays of Warren Buffett: Lessons for Corporate America. His latest work, a collaboration with former AIG CEO Maurice Greenberg, is titled The AIG Story.

Cunningham’s classic on Buffett is a seminal text here at The Motley Fool, so that was the main focus of our discussion. Here’s the full transcript of our chat:

Buck Hartzell: You’re a prolific writer, in addition to all your teaching duties. We’re here today to talk about the third edition of The Essays of Warren Buffett: Lessons for Corporate America. Thanks for joining us, Lawrence.

Lawrence Cunningham: It’s a pleasure, Buck. Thanks for having me.

Hartzell: This is one book that the Fool uses to train all of its managers. It’s required reading, and we think anybody that’s a student of business, or certainly an investor or a manager anywhere should definitely read this book. We use it as a textbook for how we go about things in our business.

Cunningham: Yes, we use it, too, as a textbook. We teach a couple of different courses at GW. George Washington University is where I teach. We teach a little bit in the business school on corporate governance, and they use it in the Applied Portfolio Management course to train students in value investing.

Hartzell: As you reflect back on the first book, and now through the third version, is there a lesson or two that really resonates with you as an investor or a student of business?

Cunningham: Oh, yes. I guess probably the favorite (there are a dozen and they appear in different ways on different readings) and it applies in investing, business and life, is what I call the “son-in-law‘s test.” This is his principle about only going into business to work with people that you would be happy to have your daughter marry.

Hartzell: OK…

Cunningham: He avoids working with people unless he likes them, admires them, and trusts them. That resonates with me, so I try to avoid working with people that I wouldn’t want to have my daughter marry and avoid getting into businesses relationships with them. I think it’s a wonderful test and a great principle to apply.

Hartzell: Absolutely.

Cunningham: I think the second thing was once you have that principle in place, it will take you a long way. A great example of that concerns the original publication of this book. When I first compiled it, he and I talked about publishing arrangements. He discouraged me from going with the big publishing houses who are these big, anonymous institutions that have their own set of interests and so on, and encouraged me, instead, to think about publishing it myself, which I did.

And then I went and teamed up with some friends of mine who run a …read more

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