Friday, April 18, 2014

Student Business Plan Competitions

Earlier this semester, Belmont undergraduate students competed for a total of $8,000 in a business plan competition.  The first place team, What’s Hubbin’, won $5,000.  Law firm Baker Donelson was one of the sponsors. 


Each competition team was required to provide: (1) an executive summary, (2) a description of the business (including mission and vision), (3) plans for marketing, operating, finances, and growth, and (4) financial statements (historical, if applicable, and projected).  The finalists presented in front of a team of judges, which included local attorneys, investors, and entrepreneurs.  The event also attracted a strong audience of faculty members (myself included), staff, and students. 

Given the evolving legal industry, and the increasing focus on Law & Technology and Law & Entrepreneurship, I could see business plan competitions like this one being a success at law schools (perhaps in coordination with their sister business schools).

One of the three What’s Hubbin’ team members is Makenzie Stokel.  She is also one of my undergraduate business law students.  I asked her if she would mind answering a few, short questions about the competition and about her team's business, which is one of the competition’s businesses that is already up and running.  My questions and her answers are below.

HM: Will you please briefly describe your business, What’s Hubbin’, for our readers?

MS: What's Hubbin’ is a website that promotes music here in Nashville.  We highlight local artists and promote events going on around town.  Our site allows users to "hub" (RSVP) events and artists and have an organized profile of their music preferences.  We also allow users to filter events based on their preferences to ensure that everyone finds something that they will want to do.  We host events around Nashville and will be hosting a day-long festival at the end of this month.  Our goal is to have everything music related all in one place so users don't have trouble finding events or discovering new music. You can find us online at and on Twitter at @WhatsHubbin

HM: How has participating in the competition helped your business?

MS: Participating in the business plan competition has helped promote our business a great deal.  We have had multiple blogs write about us, and were even named Belmont's hottest start-up by Southern Alpha.  It has really helped us get our name out there with the Belmont community and provided some validation of our business.  

HM:  How has participating in the competition enriched your college experience, especially your experiences in your classes?

MS: I am so glad that the What's Hubbin' team was able to participate in this competition.  The competition definitely helped us with our public speaking skills, which is necessary to have in classes and after college. It also forced us to think quickly when answering the judges’ questions.  When preparing for the questions that we thought they might ask, we had to determine who was best at the different aspects of our business. The competition, and the start-up process part in general, has been more relevant to some classes than others.  Business Law and Foundations of Entrepreneurship are two examples of relevant classes.  Also, as a result of being involved in What’s Hubbin’, I have seen ways to apply what I am learning in classes outside of school. 

HM: Congratulations and best of luck.

MS: Thank you!

April 18, 2014 in Business Associations, Business School, Haskell Murray, Law School, Teaching | Permalink | Comments (0)

Thursday, April 17, 2014

Banks, Legal Costs, and ADR

Back in August, Bloomberg reported that the legal costs for the six largest U.S. banks since 2008 totaled over $100 billion. (Yes, billion with a "B.")  Bloomberg included settlement amounts in that huge number, as well as fees to lawyers.

The financial and emotional costs of litigation, not to mention the tremendous amount of time required, amazes me.  Litigation has its place, but the vast majority of disputes eventually settle and many times all parties would have been better off settling earlier using some form of alternative dispute resolution (ADR). 

A former colleague recently pointed me to the University of Missouri School of Law's listserv for ADR educators. 

I know many of our readers only teach business law courses, but adding negotiations to my teaching package has made me see the various intersections between negotiations and business law.  This semester, I set aside some time in my business law classes to discuss a bit of the negotiations literature, and the students seemed to appreciate it.  I just signed up for the listserv, so I cannot speak to its quality yet, but I do think more business law professors should consider exploring the world of ADR.

April 17, 2014 in Business Associations, Business School, Haskell Murray, Law School, Negotiation, Teaching | Permalink | Comments (0)

Friday, April 11, 2014

Delaware Court of Chancery Mediation

On March 24, the petition for certiorari was denied in the Strine v. Delaware Coalition For Open Government, Inc. case, ending the Delaware Court of Chancery's experiment with arbitration by their sitting judges.  (H/T Brian Quinn). 

As far as I know, however, sitting judges on the Delaware Court of Chancery still conduct mediation.  A Chancellor or Vice Chancellor does not mediate his own cases, but rather mediates the cases assigned to one of the other four judges on the court (if the parties agree to submit to mediation). 

More information about the Delaware Court of Chancery's mediation process is here.  The benefits of the mediation include:

  • Expertise.  You would be hard pressed to find someone more knowledgable about Delaware corporate law and the merits of a Delaware Court of Chancery case than a sitting Delaware Chancellor or Vice Chancellor. 
  • Relatively Inexpensive.  The fee is only $5,000 a day, for cases that are already on the Chancery docket, which is a decent amount of money, but is dwafted by the legal fees spent in almost all of these cases.  For mediation only cases (cases not already on the docket), there is a $10,000 initial fee and a $5,000 for each additional day.  
  • Confidential.  All mediation proceedings are strictly confidential.

These are many of the same main benefits as the Delaware Court of Chancery arbitration, but, of course, in mediation, the judge is not making a decision, but rather assisting the parties in reaching a voluntary settlement.  

According to Steven Davidoff, in the Strine case, "the federal court found that the arbitration proceedings were effectively a civil trial, with no difference in judges, place or proceeding except the secrecy and the arbitral nature." 

Mediation, however, is quite a bit different than a civil trial.  While the comments of a sitting Chancellor may carry a lot weight with the parties, a mediator does not come to a determination for the party and the parties are able to walk away from the mediation at any time.

In short, judicial mediation carries many of the benefits of judicial arbitration, but the practice of judicial mediation seems to be more difficult to challenge. 

April 11, 2014 in Business Associations, Delaware, Haskell Murray, Negotiation | Permalink | Comments (0)

Legal Studies Professor Position: Washburn University

Washburn University has posted an opening for an Assistant Professor of Legal Studies.

I know not everyone can move to Kansas, but when I was first on the market, I even applied to jobs like this one in Kuwait.  If you really want to be a professor, you can't let location get in your way.  Granted, I know I would have had to use my best negotiating skills to convince my wife to move to Kuwait (or Kansas).

The details of the Washburn University position can be found after the break. 

Continue reading

April 11, 2014 in Business School, Haskell Murray, Jobs | Permalink | Comments (0)

Friday, April 4, 2014

Givers Finish Last…And First

Or at least that appears to be the thesis of Wharton professor Adam Grant’s (relatively) new book Give and Take (2013).  (Disclosure: I received a free copy from the publisher).

According to Professor Grant, giving, matching, and taking “are three fundamental styles of social interaction.”  Givers give without thought of what they will get in return; givers are generous, other-focused, and give without keeping score.  Matchers give expecting quid pro quo; matchers “believe in tit for tat…and believe in an even exchange of favors.”  Takers give expecting a positive return; takers put “their own interests ahead of others’ needs.” (pgs. 4-5). 

Grant is quick to admit that, “the lines between [giving, taking, and matching] are not hard and fast.” (pg. 5)  Most of us fall somewhere in the middle, as more exacting or less exacting "matchers."

In his book, Grant cites studies of medical students, engineers, salespeople, and others to support his thesis that the “worst performers and the best performers are givers; takers and matchers are more likely to land in the middle.” (pg. 7) (emphasis added).  (While Grant cites a number of academic studies, this book is written for a popular audience.)

If "givers" end up at both ends of the success spectrum, the key question becomes:  what distinguishes successful givers from unsuccessful givers? 

Grant claims that successful givers switch to a matching strategy when they interact with takers (to avoid becoming doormats for the takers), but the successful givers only make the switch to “generous tit for tat” not an unforgiving version of tit for tat.  Successful givers also draw appropriate boundaries.  See below for Professor Grant’s video clip on avoiding the doormat effect:


Grant’s thesis likely holds for professors.  I know a number of givers who have risen to the top of the professorial ranks.  I am less optimistic about large law firm partners, though I know a small handful of partners who have done well as givers.

A related Authors at Google talk by Professor Grant is below.  (Side note, I wish more companies did events like Authors at Google...and posted them for us to watch.)


April 4, 2014 in Books, Haskell Murray | Permalink | Comments (0)

Thursday, April 3, 2014

Alberto Gonzales To Become New Belmont Law Dean

Alberto Gonzales has been named the new dean of Belmont University's College of Law.  He is currently on the Belmont law school faculty, and his appointment is effective June 1, 2014.

The Tennessean story is here.

While Alberto Gonzales is certainly a controversial figure in some circles, I believe that people should be given multiple chances in life.  He brings a wealth of high level experience to his new position, including:

  • Partner at Vinson & Elkins, 
  • Justice on the Texas Supreme Court,
  • Texas Secretary of State,
  • General Counsel to the Governor of Texas,
  • Counsel to the President of the United States,
  • 80th Attorney General of the United States, and
  • Visiting Professor at Texas Tech University

My office is across campus at Belmont University's business school, but I will teach Business Associations in the law school this fall (in addition to my courses in the business school), and I look forward to interacting with our new law school dean. 

April 3, 2014 in Current Affairs, Haskell Murray, Law School | Permalink | Comments (0)

Tuesday, April 1, 2014

FOMO and Family

A friend with two small children recently told me that he has a bad case of FOMO (“fear of missing out”) at work because of his obligations at home.  His comment struck a chord with me because I recently turned down an opportunity to present a paper because the conference falls on my son’s upcoming first birthday.  Last year, I passed on another wonderful opportunity because it was extremely close to my son’s due date.  (Privileged, first world problems, I realize).  Unlike some of our readers, I am not usually inundated with requests to speak, so both of these opportunities were difficult to turn down. 

Do not get me wrong, the flexibility provided by a career as a professor is fabulous for raising a family.  However, while the baseline day-to-day work requirements for professors are relatively limited, the possible uses of our time are infinite.  For Type-A people like me (and most business and law professors I know), it can be difficult to know where to draw the line at work.  And even when we do draw the line, like I did in the two cases mentioned above, there can be nagging feelings that we are missing out, that those types of opportunities will not surface again, and that we will “fall behind” our peers.

My FOMO is exacerbated by the fear that I am simply not good enough.  Surrounded by brilliant Harvard-Yale-Stanford graduates, I have a gigantic state-school chip on my shoulder.  With no disrespect to my alma mater intended, every time I am introduced at a conference as a graduate of Georgia State University School of Law – usually surrounded by people with much more impressive resumes – I fear I will be taken a bit (or a lot) less seriously than others.  I am also (constantly) reminded how incredibly fortunate I am to have a tenure-track professor position. 

I have plenty on my plate for the rest of 2014, but missed opportunities still eat at me. 

Yes, I know, I am experiencing only a very small fraction of what female professors experience.  I do not approach Professor Usha Rodrigues’ schedule and sacrifices that she blogged about in January 2013.  That said, as a man who wants to be deeply involved at home, but also wants to excel as a professor—I live in that family-work tension.

April 1, 2014 in Haskell Murray, Travel | Permalink | Comments (2)

Sunday, March 30, 2014

The Conglomerate on Hobby Lobby

Our friends at The Conglomerate recently conducted an excellent online symposium on the Hobby Lobby case.

All of the posts have been collected here.

It was refreshing to read such a thoughtful and balanced set of posts.

March 30, 2014 in Business Associations, Constitutional Law, Corporate Governance, Corporations, Current Affairs, Haskell Murray | Permalink | Comments (0)

Friday, March 28, 2014

Harvard Negotiation Institute


Just received my confirmation for the Harvard Negotiation Institute, which takes place this June at Harvard Law School.

I decided to jump right into the "Advanced Negotiation" workshop, so we will see how that goes.  It is pricey, but I hope it to be a good investment for my institution and something I can draw on in my classes.

Like I have said before, I believe that negotiation should be a required course at law schools and business schools everywhere (though I realize that is now a self-interested opinion).  Every lawyer and business person spends a great deal of time negotiating. 

After the Institute, I am sure I will blog about the experience. 

March 28, 2014 in Haskell Murray, Negotiation, Teaching | Permalink | Comments (0)

Northwestern, NCAA, and Negotiation

Now that I am teaching MBA courses in negotiation, I see negotiations everywhere.

For example, in reading about the extremely interesting NLRB ruling in favor of the Northwestern University football players – holding that the players are “employees” and can unionize – I came across this Sports Illustrated article:  Northwestern ruling sends clear message: NCAA, it's time to negotiate.

Former Northwestern quarterback Kain Colter does a nice job articulating some of the interests from the players’ side of things in this video.

Given this ruling, which will be appealed, and the O’Bannon v. NCAA case which is set for trial on June 9, there is likely to be a great deal of negotiation between the NCAA and players outside of the courtroom over the next few months.  As the cases move closer to potential resolutions in favor of the players, the NCAA’s BATNA (best alternative to a negotiation) weakens.   The NCAA, however, may raise doubts about the players’ BATNA, by raising things like the possible tax implications of a court victory.

These will be complex, multi-party, multi-issue negotiations.  The parties with interests at stake include current and former players, coaches and athletic directors, colleges and universities, the NCAA, and the lawyers on either side.  The sports fans also have interests at stake, but while we may be considered, I doubt we will get an actual seat at the negotiation table. 

The interests of all these groups create quite the confusing web.  The NCAA and the players would be wise to ask questions aimed at uncovering all of the underlying interests of the other parties and try to reach a mutually beneficial resolution outside of court.

For more information, from other professors, on the NLRB ruling in favor of the Northwestern football players see below:

March 28, 2014 in Haskell Murray, Negotiation, Sports, Teaching | Permalink | Comments (2)

Networking, Selfishness, and Friends in Business

Recently, I came across a post on the Wall Street Journal’s website by Warby Parker co-founder Neil Blumenthal entitled My Advice? Stop “Networking.”

This short post caught my eye for two reasons.

First, Warby Parker is a certified B corporation and one of the more visible (they sell glasses… humor is not my strong suit) and successful companies in the for-profit social enterprise movement. 

Second, since my move to a business school last fall, I have heard the term “networking” with increasing frequency.  Sure, “networking” is discussed in law schools and there are some networking events, but in business schools the term “networking” is ubiquitous and the events focused on “networking” are constant. 

"Networking" has some negative connotations, but I think Blumenthal’s attack is misplaced.  Instead of attacking “networking,” Blumenthal would have done better to attack “selfishness.”  

There is nothing wrong, and much good, in the dictionary definition of “networking”:

the exchange of information or services among individuals, groups, or institutions; specifically: the cultivation of productive relationships for employment or business.

Networking can be a wonderful thing, for everyone involved, if you can keep the selfishness at a minimum.  Unfortunately, many people network in a selfish manner. 

Blumenthal also writes about breaking down the walls between our work and personal lives, but sometimes those walls are healthy.  He writes about the joys of involving friends in business, but sometimes involving friends in business is unwise.  

Those of us in the corporate law world have seen and read about countless businesses that turned friend against friend, mentor against mentee, and family member against family member. 

I am thankful that my professional and personal contacts overlap significantly.  Just yesterday, I had two long phone conversations with people I consider both professional contacts and valued personal friends.  That said, I am also thankful that I have friends who have nothing to do with work and some professional contacts who never venture outside of my work circles. 

In short, while I understand Blumenthal’s negative reaction to “networking,” I think "selfishness" is the real problem.  Further, I understand the great happiness he may be experiencing by involving friends in his business, but I also hope he recognizes that business may put great strain on those personal relationships. 

March 28, 2014 in Business Associations, Business School, Haskell Murray, Law School, Social Enterprise | Permalink | Comments (2)

Friday, March 21, 2014

The Number of Delaware Public Benefit Corporations

Statutory provisions allowing for the formation of Delaware Public Benefit Corporations ("PBCs") went effective August 1, 2013.  According to the latest data I have, 87 PBCs have been formed in Delaware .

While 87 is an extremely small number when compared to the more than 1 million entities formed in Delaware, Delaware has already bested all states that have passed a benefit corporation statute, except for California.  California, which has a 20 month head-start on Delaware, has 139 benefit corporations.

Some states, like New Jersey and South Carolina have been stuck at fewer than 5 benefit corporations for well over a year.

The group of researchers I am working with now estimates that there are about 350 benefit corporations in the U.S. (including PBCs), though the data is relatively difficult to obtain from the secretary of state's offices and obtaining reliable, complete data is even more difficult.

Currently, there are no significant tax benefits (at the state or federal level) for social enterprises (like PBCs and benefit corporations) in the U.S., but the U.K. recently announced 30% tax relief for their social enterprises. (The U.K. social enterprises are a good bit different than those in the U.S.). 

It will be interesting to see if the benefit corporation form increases in popularity or languishes. 

Obviously, if tax breaks were given to benefit corporations in the U.S., popularity would likely rise.  That said, tax breaks would also likely lead to misuse of the form and the need for additional oversight.  (Additional oversight is already in place in the U.K.)

March 21, 2014 in Business Associations, Delaware, Haskell Murray, Social Enterprise | Permalink | Comments (0)

Andrew Carnegie, Struggle, and Failure

On spring break, I found a hardcover copy of Professor David Nasaw’s biography of Andrew Carnegie in a Boone, NC thrift shop for $1.  (Good books and good deals are two of my favorite things).  A New York Times book review is available here.

I only made it about 200 pages into the fascinating 801 page biography before returning to work.  I am currently on page 293, but already have some thoughts to share.

Before digging into this book, “failure” was one of the last words I would have associated with Andrew Carnegie.  Carnegie is well known as one of the “captains of industry” (in the steel business) and as an extremely generous philanthropist.  Even the word “struggle” is not a word I would have associated with Andrew Carnegie; from a distance, everything seemed to come easily for him.

But, like most of us, Carnegie experienced failure, and his life was marked by numerous struggles.

[More after the break] 

Continue reading

March 21, 2014 in Business Associations, Corporations, Haskell Murray | Permalink | Comments (0)

Thursday, March 20, 2014

Bouchard Nominated to Replace Strine as Chancellor

News from (H/T Broc Romanek):

Governor Markell today announced the nomination of Andre G. Bouchard, widely recognized as one of the country’s premier corporate law practitioners, to serve as the 21st Chancellor of the Court of Chancery. If confirmed by the Delaware Senate, Bouchard would succeed the Honorable Leo E. Strine, Jr., who was sworn in as Chief Justice of the Delaware Supreme Court in February.

Bouchard is a graduate of Boston College and Harvard Law School.  Currently, he is the managing partner of Bouchard Margules & Friedlander, P.A in Wilmington, Delaware. 

Looks like my friends in Delaware accurately predicted this nomination back in January.

March 20, 2014 in Business Associations, Delaware, Haskell Murray | Permalink | Comments (0)

Business Law Professors on Twitter List (Updated)

I have updated the Business Law Professors on Twitter List here.

The new names include our own BLPB editor Professor Anne Tucker (@Anne_M_Tucker).

Feel free to send me any additions.  I will continue to update the list from time to time.

March 20, 2014 in Haskell Murray | Permalink | Comments (0)

Wednesday, March 19, 2014

Casetext: Crowdsourcing and Legal Research

One of my attorney friends passed along information about a new, free legal research tool called "Casetext."  (Disclosure: my attorney friend and her husband have an investment in the company.)

A description from Casetext CEO follows:

Casetext ( is a legal research platform dedicated to interpreting and understanding the law. Casetext contains millions of cases, statutes, and regulations, and benefits from user-generated annotations from attorneys and professors who add analysis and insight. Contributors demonstrate thought leadership to Casetext’s 100,000 monthly users, including general counsels, law firms, and law students. Paid versions of the tool, still under development, will enable law firms to use the site’s annotations technology privately and internally for knowledge management.

Casetext and Google Scholar are both useful free resources for legals studies professors in business schools because our students often do not have Lexis/Westlaw access (or at least not full access to all the legal materials.)

Casetext uses the crowd for help with annotations and citations. Attorneys at law firm Bingham McCutchen LLP are featured annotators.  Citations can be voted up or down. 

In addition to citations from cases, Casetext also includes citations from law firm client alerts and blog posts.  One of the citations to eBay v. Newmark was from a post on Professor Bainbridge's blog.  While I could see citations from client alerts and blogs becoming overwhelming, Casetext does seem to be doing a good job, so far, limiting it to substantive, helpful posts from reputable sources. 

Supposedly, law students at Columbia, Stanford, Nebraska, Brooklyn, Cardozo, Vanderbilt, Texas Tech, and Loyola have all had advanced legal research assignments tied to contributing to the Casetext website.

Anyway, I have played around on the website a bit, may design a classroom assignement around the website, and may contribute some myself.  

Hope other readers find the website interesting and useful as well.   

March 19, 2014 in Business School, Haskell Murray, Law School | Permalink | Comments (0)

University Sports and Academics

Last night Belmont's men's basketball team beat a very good UW-Green Bay team 80 to 65 in the first round of the NIT.  Both teams were extremely close to making the NCAA tournament this year. Earlier this year, Belmont beat highly ranked UNC and UW-Greenbay beat ACC-Champs UVA.

[Photos courtsey of Belmont University Basketball]


Why is Belmont basketball relevant to this blog?

Well, actually, I just wanted to brag on my school's team, but I will try to make a connection.

Some extremely interesting studies have been done tying atheletic success to increased applications, increased selectivity, and/or higher (academic) rankings.  See, e.g., Jain (Wharton) and Toma & Cross (UMKC & Michigan).  (While my co-blogger Steve Bradford called the U.S. News rankings of law schools "meaningless" earlier this week, even he admitted that rankings influence some student decisions.) 

In a similar study, a personal friend of mine and University of Georgia doctoral candidate, Michael Trivette, co-authored a paper in 2012 with Dennis Kramer (UVA) about the increases in selectivity and accepted student standardized test scores experienced by schools that switched athletic conferences.

Whether the time and money put into college sports is worthwhile makes for heated debate, and I am sure there are studies challenging some of the findings in the papers I linked to above. 

Personally, I love being at a school with competitive Division-I sports (even though we do not have a football team...).  First, I am convinced our sports teams are helping us recruit better students, Second, I think the teams help create community and school loyalty.  Third, I think our basketball team is one of the handful of things that has given our relatively unknown (but wonderful) school national attention (a few of the other ventures onto the national stage include our school's appearances on the TV show Nashville, the annual airing of Christmas at Belmont on PBS, and the hosting of a 2008 presidential debate...not necessarily in order of importance).

A few of my co-bloggers teach at schools with some of the most successful athletic programs in the country (Duke, Nebraska, West Virginia).  I imagine they may have their own views, and I know that the relationship between university sports and academics is a complex one. 

Update: As noted in the comments, here is an article on Butler University's 40% increase in applications following their NCAA tournament runs.  The article's author also claims that Butler received $1 billion worth of media attention.  (Granted, making the NCAA finals is very different than a first round NIT win, or even a win over UNC, but we have to start somewhere).

March 19, 2014 in Business School, Haskell Murray, Law School, Sports | Permalink | Comments (3)

Monday, March 17, 2014

Pacella on Whistleblowers under Dodd-Frank

Professor Jennifer Pacella (CUNY-Baruch) recently posted an article entitled Bounties for Bad Behavior: Rewarding Culpable Whistleblowers under the Dodd-Frank Act and Internal Revenue Code.  The abstract is posted below:

In 2012, Bradley Birkenfeld received a $104 million reward or “bounty” from the Internal Revenue Service (“IRS”) for blowing the whistle on his employer, UBS, which facilitated a major offshore tax fraud scheme by assisting thousands of U.S. taxpayers to hide their assets in Switzerland. Birkenfeld does not fit the mold of the public’s common perception of a whistleblower. He was himself complicit in this crime and even served time in prison for his involvement. Despite his conviction, Birkenfeld was still eligible for a sizable whistleblower bounty under the IRS Whistleblower Program, which allows rewards for whistleblowers who are convicted conspirators, excluding only those convicted of “planning and initiating” the underlying action. In contrast, the whistleblower program of the Securities and Exchange Commission (“SEC”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which was modeled after the IRS program, precludes rewards for any whistleblower convicted of a criminal violation that is “related to” a securities enforcement proceeding. Therefore, because of his conviction, Birkenfeld would not have been granted a bounty under Dodd-Frank had he blown the whistle on a violation of the federal securities laws, rather than tax evasion. This Article will explore an area that has been void of much scholarly attention — the rationale behind providing bounties to whistleblowers who have unclean hands and the differences between federal whisteblower programs in this regard. After analyzing the history and structure of the IRS and SEC programs and the public policy concerns associated with rewarding culpable whistleblowers, this Article will conclude with various observations justifying and supporting the SEC model. This Article will critique the IRS’s practice of including the criminally convicted among those who are eligible for bounty awards by suggesting that the existence of alternative whistleblower incentive structures, such as leniency and immunity, are more appropriate for a potential whistleblower facing a criminal conviction. In addition, the IRS model diverges from the legal structure upon which it is based, the False Claims Act, which does not allow convicted whistleblowers to receive a bounty. In response to potential counterarguments that tax fraud reporting may not be analogous to securities fraud reporting, this Article will also explore the SEC’s recent trend of acting increasingly as a “punisher” akin to a criminal, rather than a civil, enforcement entity like the IRS. In conclusion, this Article will suggest that the SEC’s approach represents a reasonable middle ground that reconciles the conflict between allowing wrongdoers to benefit from their own misconduct and incentivizing culpable insiders to come forward, as such persons often possess the most crucial information in bringing violations of the law to light.

March 17, 2014 in Business Associations, Corporations, Current Affairs, Haskell Murray | Permalink | Comments (0)

Friday, March 14, 2014

Dirty Money? Universities and Their Donors

Last week The Atlantic ran an article entitled Dirty Money: From Rockefeller to Koch that detailed the controversy surrounding a $1 million dollar gift from the Charles Koch Foundation to Catholic University.  The article quoted a letter of protest that stated:

We are concerned that by accepting such a donation you send a confusing message to Catholic students and other faithful Catholics that the Koch brothers’ anti-government, Tea Party ideology has the blessing of a university sanctioned by Catholic bishops.

Despite the controversy, it appears Catholic University will keep the gift. A few weeks ago, the Catholic University president and the business school dean collaborated in an article entitled Why We're Keeping a $1 Million Koch Gift in The Wall Street Journal.  The authors conclude:

We're grateful for the $1 million, and we're keeping it, because it would be an unhealthy precedent for a university to refuse support for valuable research because the money, somewhere back up the line, once belonged to a donor whose views on other subjects were unpopular within the academic community.

I have not seen anything further from the school on this issue since the cited WSJ article.

Many universities are facing financial challenges and are desperately looking for funds.  Last April, Catholic University announced a 20% budget cut due to falling revenue.  Schools could argue that they will put donated funds to good use, regardless of the source.  But are their limits on whose money universities should accept?  And if there are limits, how do we determine those limits?

To start, I think we should recognize that there are no perfect people, and schools looking for flawless donors should give up hope of finding any.  Further, I agree with the Catholic University president and business school dean that excluding donors merely because of their unpopular views sends the wrong message to our students and our community.  We should respect and expose our students to a variety of views, even views with which we disagree. 

Personally, I think schools should focus on two questions:

  1. Will the gift lead to improper influence?
  2. Does acceptance of the gift endorse unethical behavior?

Improper Influence.  We all have biases, but academics have the potential to be among the least biased voices in their communities.  Universities should be most focused on whether the gift will actually lead to improper influence, but university might also be wise to consider if the gift will lead to even an appearance of improper influence.  Individual scholars have been accused of “shilling for Wall Street”.  Similarly, claims of improper influence levied against entire universities could be harmful as well.

Tying this to business law, In re Oracle Corp. Derivative Litigation, 824 A.2d 917 (Del.Ch.2003) Vice Chancellor Strine (now Chief Justice of the Delaware Supreme Court) recognized the judgment clouding potential of large donations.  Regarding two Stanford University professors who sat on an Oracle special litigation committee (“SLC”) VC Strine wrote:

And, for both Grundfest and Garcia-Molina, service on the SLC demanded that they consider whether an extremely generous and influential Stanford alumnus should be sued by Oracle for insider trading. Although they were not responsible for fundraising, as sophisticated professors they undoubtedly are aware of how important large contributors are to Stanford, and they share in the benefits that come from serving at a university with a rich endowment. A reasonable professor giving any thought to the matter would obviously consider the effect his decision might have on the University's relationship with Lucas.

Of course, anyone can levy a claim of improper influence, and schools (and individual professors) should be most concerned about reasonable and supported claims.  Schools can attempt to reduce reliance on any single donor by expanding their donor base.  Each school should also make donors and the public aware that the school's professors do not plan to push donors' agendas, but plan to stay intellectually honest, write about their areas with as little bias as possible, and expose their students to a range of views.   

Improper Endorsement. Universities should be places where students are inspired and encouraged to act ethically.  Taking funds from notorious, unethical figures could be taken, by students and the public, as endorsement of unethical behavior.  Improper endorsement of unethical behavior is less likely, in my opinion, if the donor publicly admits to his/her mistakes and is taking steps to make amends.  Improper endorsement is also less likely, or at least weaker, if naming rights are withheld.  For an earlier debate on the endorsement issue, see the controversy at UCLA Law School over the $10 million gift from Lowell Milken in 2011.  Professor Bainbridge added his thoughts here.  (I note, as Professor Bainbridge does, that only Lowell’s brother Michael was charged with a crime).   

In short, I do think there are some limits on the universe of acceptable university donors, but based on what I know about the Koch Brothers, I would not label them as "off-limits donors" (assuming they do and will respect academic freedom).   According to the cited WSJ article, 270 universities evidently agree and have accepted gifts from the Charles Koch Foundation. 

If others have thoughts to add, I would love to hear them in the comments or via e-email. 

March 14, 2014 in Current Affairs, Ethics, Haskell Murray | Permalink | Comments (1)

Wednesday, March 12, 2014

Stanford Law School - Teaching Fellowship, Corporate Governance

Stanford Law School is looking for a full-time teaching fellow in the corporate governance area.
The teaching fellow will teach two courses, and a two-year commitment is required, with the possibility of a third year.  The position is intended for people who plan to go on the academic job market following the fellowship.  The application deadline is April 15, 2014. 
More details are available after the break for those who are interested.

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March 12, 2014 in Corporate Governance, Haskell Murray, Jobs | Permalink | Comments (0)