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Moot court is an extracurricular activity designed to simulate courtroom practice. Think of it as the legal drama club.
Second only to law review (or perhaps another very distinguished journal sponsored by your law school), becoming a member of a moot court team is one of the best things you can do for your resume.
You'll probably have to audition in order to make moot court. The audition consists of a very short oral argument in front of faculty members and current moot court members, as well as a written brief on a fictional case. Many students use the final paper from their first-year legal writing class. If you are selected for one of the handful of moot court teams sponsored by your law school, you and your teammates will write two appellate briefs in response to a legal problem that doesn't really exist—one for the fictional plaintiff and another for the fictional defendant.
Moot court teams attend competitions sponsored by bar associations and other groups across the United States. At these competitions you'll use your legal research and writing skills to compose briefs designed to convince a bogus court of the merits of your arguments. After submitting your briefs, you'll spend a great deal of time practicing and honing your oral arguments to deliver in front of a "judge." You have to be prepared to argue both sides of the case. Ideally, you and your teammates will have a quick, concise answer ready for every conceivable question that could possibly be asked by the judge.
At some law schools, there is a mandatory moot court competition for all students. You will be required to participate in this competition regardless of whether or not you're on an extracurricular moot court team.