Wednesday, November 25, 2015

Giving Thanks for Amazing Colleagues



Last year, in my first Thanksgiving week post, I gave public thanks for my students. I could just as easily have done that again this year.  My students continue to impress and inspire me.  And that is certainly something to be grateful for--year in, and year out.

This year, however, I also want to acknowledge my thanks for all of the special colleagues I have in the academy (and yes, fellow BLPB editors, that includes you!) and the bar that make my job complete.  When I have needed assistance, support, or just a good laugh, it is my fellow law peeps--and especially my business law peeps--to whom I most often turn and on whom I almost always rely.

You, my law teacher and lawyer friends, have:

  • read and edited my early syllabi, exams, and assignments, preventing me from making mistakes that new law professors often make;
  • taught my Business Associations class when my mother was dying so I could be by her side;
  • helped my son learn about e-discovery and various types of law practice so that he could launch his career;
  • provided assistance to my Corporate Finance students when they needed specialized guidance or advice on their planning and drafting projects;
  • reviewed innumerable drafts of law review articles and provided honest, insightful criticism and comments;
  • supplied (whether knowingly or unknowingly) material that I can and do use to help educate my students about real-world legal problems that impact businesses and the people who engage with them;
  • forgiven me when I have done stupid sh*t in conducting my professional activities that doesn't warrant mercy or amnesty;
  • stayed up with me late at night to draft portions of self-study reports, legislation, and other important documents; 
  • invited or elected me to serve in professional leadership positions, on academic panels, on professional association and bar committees, and in other capacities that have enabled me to both serve and continue to learn;
  • collaborated with me on materials and presentations for important continuing legal education programs; 
  • extended publication or submission deadlines to give me time and space to handle emergent personal or professional obligations that I determined were important; and
  • built solid foundations in theory, policy, and doctrine from which I can build my teaching and scholarship.

I am sure I am forgetting important things, large and small, in this list.  But you get the picture and the point.  And I am sure that each of you reading this could come up with your own similar list of things about which you are thankful relative to our colleagues--truly remarkable, extraordinary people.

In any event, I am grateful for you all.  Have a blessed Thanksgiving.

November 25, 2015 in Joan Heminway | Permalink | Comments (1)

Tuesday, November 24, 2015

Contract Is King Micro-Symposium Wrap Up

This post concludes the Contract Is King, But Can It Govern Its Realm? Micro-symposium.  The symposium was hosted as part of the AALS section on Agency, Partnership, LLCs and Unincorporated Associations in advance of the section meeting on January 7th at 1:30 where the conversation will be continued.

I summarized the conversation and provided links to all of the individual posts.  Bookmark this page-- there is great commentary at your finger tips on a range of topics.  Please keep reading (and commenting) on these great contributions by our insightful participants to whom we are very grateful.

Jeffrey Lipshaw kicked off the symposium conversation with his post (available here) questioning, in practice, how different LLCs are from traditional corporations.  He used a great map analogy to talk about the role of formation documents and default rules as gap fillers. 

“The contractual, corporate, and uncorporate models are always reductions in the bits and bytes of information from the complex reality, and that’s what makes them useful, just as a map of Cambridge, Massachusetts that was as complex as the real Cambridge would be useless.” 

After asserting that LLCs differ from corporations only in matters of degrees, Jeff went on to to them illustrate how degrees of difference may still matter.  He provided a good example of a situation where the ability to eliminate fiduciary duties may produce the right result—an option only available in alternative entities not corporations.  

Mohsen Manesh contributed two posts (available here and here).

Mohsen argued that if contract is king, business revenue rules the reign in Delaware.  Franchise taxes and revenues generated from being the business domicile of so many businesses, in all forms, is a source of riches, one that Mohsen argued will be protected by preserving a commitment to freedom of contract.

“Delaware’s annual tax charged to alternative entities is flat. All LLCs and LPs, no matter how large or small, whether publicly traded or closely held, pay the state only $300 annually for the privilege of being a Delaware entity. Thus, unlike the corporate context, where Delaware’s business is dependent on attracting large, publicly traded corporations, in the alternative entity context, Delaware’s business depends on volume alone.”

In his first post, Mohsen also addressed Delaware Chief Justice Strine and Vice Chancellor Laster’s provocative “Siren Song” book chapter, where the pair advocate for mandatory fiduciary duties in publicly traded LLCs and LPs.  Mohsen questioned the limitation arguing that

“[M]any of critiques that Strine and Laster levy at publicly traded alternative entities– unsophisticated investors, the absence of true bargaining, and confusing contract terms that often unduly favor the managers—could be levied at many private entities as well. If so, then why should Strine & Laster’s proposal be limited to public entities?”

Sandra Miller blogged here about investor sophistication and its relationship to fiduciary duty waivers.  She highlighted her scholarship in the area and provided helpful links to her papers discussing her points in greater detail.

“[T]here are asymmetries in the marketplace that make it unlikely that the marketplace will efficiently discount the effects of waivers.  Given the investor profile, at a very minimum, the duty of loyalty should be non-waivable for publicly-traded entities.” 

Joan Heminway questioned whether LLC operating agreements are contracts, and if not the implication for fiduciary duties, statue of frauds, capacity and public policy challenges and enforceability against third parties.

“[W]ith judicial and legislative attention on freedom of contract in the LLC, the status of the LLC as a matter of contract law may shed light on the extent to which contract law can or should be important or imported to legal issues involving LLC operating agreements...So, while contract may be king in LLC law, we may question whether a contract even exists under LLC law.”

Joan also highlighted her recent appearance at the ABA LLC Institute in a related post available here and shared the many functions of an operating agreement (whether contract or not!).

Daniel Kleinberger contributed to the conversation in four parts (appearing in three separate posts here (1), here (2) and here(3)).  Daniel focused on Delaware’s implied contractual covenant of good faith and fair dealing and the covenant’s role in Delaware entity law.  He carefully distinguished the covenant from the UCC implied covenant of good faith and fair dealing and from the corporate standards of good faith as articulated in Stone v. Ritter and Smith v. Van Gorkum.  Thirdly he addressed waivers of good faith and fair dealing both in the governing agreement and arising from contract in Delaware and under the Uniform Limited Partnership Act. 

“Perhaps ironically (or some might even say “counter-intuitively”), the Uniform Limited Liability Company Act (2006) (Last Amended 2013) permits an ULLCA operating agreement to go where a Delaware operating agreement cannot.” 

In his final post, available here, Kleinberger addressed interpretation questions with implied covenants analogizing the analysis to that used with impracticability. 

“For impracticability or a breach of the implied covenant to exist, the situation at issue must have been fundamentally important to the deal and yet unaddressed by the deal documents.  Put another way:  the notion of a “cautious enterprise” means that only a condition that is egregious or at least extreme is capable of revealing a gap to be remedied by the implied covenant.”

BLPB editor, Joshua Fershee, was inspired by the topic and contributed his own post to the micro-symposium.  In his post, he declared himself a Larry Ribstein devotee and highlighted how the structural differences in the LLC form, as opposed to the corporate form, provide business benefits for LLC members.

“The flexibility of the LLC form creates opportunity for highly focused, nimble, and more specific entities that can be vehicles that facilitate creativity in investment in a way that corporations and partnerships, in my estimation, do not.”

Greg Day, another BLPB-generated contribution to the conversation, blogged about sophisticated parties’ utilization of freedom of contract in LLC, and sophisticated investors demand for the conformity of traditional corporate formation over LLCs.

“[W] hen Delaware LLCs become big, and attract big funds, a condition of investment almost always requires an LLC to convert into a Delaware corporation. It seems that the lack of predictability associated with the freedom of contract scares potential investors who prefer the comforts of fiduciary duties, among other corporate staples. …So the parties who ostensibly are best served by contractual freedoms—i.e., sophisticated parties—appear to be the ones most likely to demand the traditional corporate form. And on a related note, this helps to explain why such a paltry number of LLCs and LPs have become public companies.”

Finally, Peter Molk & Verity Winship also contributed a last-minute addition to the symposium highlighting their empirical work on LLC operating agreement dispute resolution provisions as it relates to the question of contracting rights in unincorporated entities.  They reported some of their early findings and linked it to the discussion about contractual freedom and the implications of mandatory fiduciary duties. 

“More than a third of the agreements in our sample selected the forum for resolving disputes, primarily through exclusive forum provisions or mandatory arbitration provisions.  The agreements also modified litigation processes through terms that imposed fee-shifting, waived jury trials, and, less commonly, through other means like books and records limitations.”

Participants in the Micro-Symposium were asked to respond to a series of questions (available here) that will be further discussed at the AALS section meeting.  Joan MacLeod Heminway (BLPB editor), Dan KleinbergerJeff LipshawMohsen Manesh, and Sandra Miller.will be panelists at the AALS meeting and joined by Lyman Johnson and Mark Loewenstein

November 24, 2015 in Anne Tucker, Conferences, Corporate Governance, Corporations, Delaware, Joan Heminway, Joshua P. Fershee, LLCs, Partnership, Unincorporated Entities | Permalink | Comments (0)

Thursday, November 19, 2015

Contract Law, Fiduciary Duties, Good Faith, Fair Dealing, and the Legal Status of LLC Operating Agreements (Contract Is King Micro-Symposium)

The title of this post undoubtedly promises too much.  But that won't prevent me from trying to establish a few points that approach the many topics that could be discussed under a title that includes this much great stuff.  I make that attempt here.

I start with contract law.  As I noted in my prior post for this micro-symposium, one of my appearances at last week's ABA LLC Institute included a debate on whether an operating agreement is a common law contract.  This question arose in connection with my teaching of operating agreements (and also has arisen in my teaching of partnership agreements) in Business Associations.  Of course, lawyers understand that not all agreements are contracts.  A significant amount of energy is spent on this matter in the beginning of the standard contracts course in law school.  

Is an LLC operating agreement a contract?  I like the question not just for its face value, but because I believe that the answer does or may matter for purposes of resolving other questions arising in and outside LLC law.  I captured some thoughts about this question in a draft essay soon to be published in revised form in the SMU Law Review.  (I blogged about it here over the summer.)  Among other things, with judicial and legislative attention on freedom of contract in the LLC, the status of the LLC as a matter of contract law may shed light on the extent to which contract law can or should be important or imported to legal issues involving LLC operating agreements.

Continue reading

November 19, 2015 in Business Associations, Joan Heminway, LLCs | Permalink | Comments (2)

What is an LLC Operating Agreement, Anyway? (Contract Is King Micro-Symposium)

I so appreciate the opportunity to be a part of this micro-symposium, in which we can explore important issues at the intersection of contract law and fiduciary duties in the fastest growing form of business entity in the United States: limited liability companies (LLCs).  Today, I contribute some foundational information relating to, but not directly responding to, the micro-symposium questions.  These observations come from a panel discussion at the 2015 ABA LLC Institute in Washington, DC in which I was a participant.  I blogged from the Institute last week and promised this post in that first post.

The session at the Institute that I feature in today's post explored the legal and practical nature of an operating agreement (a/k/a, a limited liability company agreement).  Since the operating agreement is the typical locus of private ordering in the LLC form, its status under LLC and other law should be of interest to us.  Among other things, understanding the operating agreement may better enable us to understand when it is a valid, binding, and enforceable obligation among the parties.  That's an issue I have been exploring in some of my work.  But there is more in the legal status of the operating agreement than meets the eye . . . .

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November 19, 2015 in Business Associations, Joan Heminway, LLCs | Permalink | Comments (13)

Friday, November 13, 2015

ABA LLC Institute: A Great Bunch of LLC Nerds--I Mean Wonks!

Just a quick report from the 2015 ABA LLC Institute, an annual event held in the fall in Washington, DC that attracts anally compulsive (and I do mean that in the most positive way possible) business lawyers (academics and practitioners) interested in limited liability companies (LLCs) and other alternative business entities.  The agenda for this year's program is full of nifty stuff and great presenters (present company excepted).  Co-blogger Josh Fershee would love the LLC Institute.  No one here confuses the LLC with the corporation!  (I will just link to one of Josh's fabulous posts on that topic as a reference point.)

For this year's institute, I chaired a panel on dissolution in the LLC and also participated in a panel that explored just what an LLC operating agreement really is.  I was wowed in each case by my co-paneleists.  Because the norm at this conference is to interrupt the panelists and comment on their presentations as they speak, the discourse was engaged and lively.

I will save my comments on the operating agreement panel for next week's micro-symposium.  Today, I want to briefly cover highlights from  the dissolution panel.  Specifically, we focused a lot of attention on the evolution of dissolution events under the uniform and prototype LLC acts and various state LLC statutes since the adoption of the federal income tax "check the box" rules.  There's more in and related to that topic than you might think . . . .

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November 13, 2015 in Business Associations, Conferences, Joan Heminway, Joshua P. Fershee, LLCs | Permalink | Comments (2)

Tuesday, November 10, 2015

National Business Law Scholars Conference - Call for Papers

National Business Law Scholars Conference (NBLSC)

Thursday & Friday, June 23-24, 2016

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Thursday and Friday, June 23-24, 2016, at The University of Chicago Law School. 

This is the seventh annual meeting of the NBLSC, a conference that annually draws legal scholars from across the United States and around the world.  We welcome all scholarly submissions relating to business law.  Junior scholars and those considering entering the legal academy are especially encouraged to participate. 

To submit a presentation, email Professor Eric C. Chaffee at with an abstract or paper by February 19, 2016.  Please title the email “NBLSC Submission – {Your Name}.”  If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance.”  Please specify in your email whether you are willing to serve as a moderator.  We will respond to submissions with notifications of acceptance shortly after the deadline.  We anticipate the conference schedule will be circulated in May. 

Keynote Speakers:

Professor Steven L. Schwarcz, Stanley A. Star Professor of Law & Business, Duke Law School

Chief Judge Diane P. Wood, The United States Court of Appeals for the Seventh Circuit

Conference Organizers:

Tony Casey (The University of Chicago Law School)
Eric C. Chaffee (The University of Toledo College of Law)
Steven Davidoff Solomon (University of California, Berkeley School of Law)
Joan Heminway (The University of Tennessee College of Law)
Kristin N. Johnson (Seton Hall University School of Law)
Elizabeth Pollman (Loyola Law School, Los Angeles)
Margaret V. Sachs (University of Georgia School of Law)
Jeff Schwartz (The University of Utah, S.J. Quinney College of Law)

November 10, 2015 in Call for Papers, Conferences, Joan Heminway | Permalink | Comments (0)

Thursday, November 5, 2015

Bar Passage and the Business Law Professor

With the recent release of bar results in many states, I have been obsessed of late about the sorry state of bar passage across the country--as well as specific bar passage issues relating to our graduates.  So, rather than (as I should and will do soon) responding to Steve Bradford's prompting post on the final JOBS Act Title III crowdfunding rules and the related proposals regarding Rules 147 and 504 under the Securities Act of 1933, as amended (as well as his follow-up post on the Rule 147 proposal), I have decided to focus on bar passage for my few minutes of air time this week.  Specifically, I want to begin to explore the question of what we can do, if anything, as business law professors to help more of our students succeed in passing the bar on the first attempt.

At a base level, this means we should endeavor to understand something about the reasons why our individual students fail the bar the first time around.  A lot has been written about the national trends (inconclusively, as a general rule).  And I am sure every law school is now analyzing the data on its own bar passage shortcomings.  But my experience teaching Barbri and my conversations with former students who have not passed the bar indicate a number of possible causes.  They include (and these are my descriptions based on that experience and those conversations, in no particular order):

  • Failing to state the applicable legal rule(s) and apply them to the facts;
  • Difficulty in processing legal reasoning in the time allotted;
  • Nerves, sleep deprivation, illness and the like; and
  • Engaging insufficiently with study materials and practice examinations.

Assuming that these anecdotal observations are, in fact, causes contributing to bar exam failures for at least some students, how might we be able to help?

Continue reading

November 5, 2015 in C. Steven Bradford, Joan Heminway, Law School, Teaching | Permalink | Comments (7)

Friday, October 30, 2015

SEC Adopts Title III Crowdfunding Rules

I am relying on this report.  More on this as news emerges.

Postscript: the SEC's press release has been posted.

October 30, 2015 in Corporate Finance, Crowdfunding, Joan Heminway | Permalink | Comments (0)

Wednesday, October 28, 2015

Preventing Client Executives from Violating Compliance Policies and the Law

I had the honor of being invited to speak at the annual symposium for the Wayne Law Review two weeks ago.  The event, which focused on Corporate Counsel as Gatekeepers, was well organized and attended--and also very stimulating.  Speakers included Tony West as a keynote, a few of us academics, and a bunch of current and former practitioners--prosecutors, in-house counsel, and outside counsel.

My presentation focused on a story that bugs me--a story built on an experience I had in practice.  In the story (which modifies the true facts), an executive flagrantly violates a securities trading compliance plan that I drafted in connection with a subsequent transaction that I worked on for the executive's firm.  Specifically, the executive informs a friend about the transaction the day before it is announced, believing that the friend will never trade on the information.  The friend trades.  The incident results in a stock exchange and Securities and Exchange Commission (SEC) inquiries.  No enforcement is undertaken against the firm.  However, the executive signs a consent decree with--and pays a cash penalty to--the SEC and, together with the firm, suffers public humiliation via a front-page article in the local newspaper (since the SEC would not agree to forego a press release).  This fact pattern gnaws at me because I wonder whether there is anything more legal counsel can do to prevent an executive from violating a compliance policy to the detriment of himself and the firm . . . .

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October 28, 2015 in Compliance, Corporate Governance, Corporations, Joan Heminway, Lawyering, Research/Scholarhip, Securities Regulation, Teaching, White Collar Crime | Permalink | Comments (4)

Tuesday, October 27, 2015

SEC to Vote on Crowdfunding Rules

This hit my mailbox this morning.  If the report is correct, we'll know in a few days whether we have a path to unregistered, broad-based securities crowdfunding in the United States.  More as news is reported . . . .

[Additional information:  Based on the link to the SEC's notice of meeting in Steve Bradford's comment to this post, it also appears that the SEC is considering amendments to Rules 147 (intrastate offerings) and 504 (limited offerings under Regulation D of up to $1,000,000).]

October 27, 2015 in Corporate Finance, Crowdfunding, Joan Heminway, Securities Regulation | Permalink | Comments (1)

Wednesday, October 21, 2015

Crowdfunding and Venture Capital - A Response

As Steve Bradford mentioned in his post on Monday (sharing his cool idea about mining crowdfunded offerings to find good firms in which to invest), our co-blogger Haskell Murray published a nice post last week on venture capital as a follow-on to capital raises done through crowdfunding.  He makes some super points there, and (although I was raised by an insurance brokerage executive, not a venture capitalist), my sense is that he's totally right that the type of crowdfunding matters for those firms seeking to follow crowdfunding with venture capital financing.  I also think that, of the types of crowdfunding he mentions, his assessment of venture capital market reactions makes a lot of sense.  Certainly, as securities crowdfunding emerges in the United States on a broader scale (which is anticipated by some to happen with the upcoming release of the final SEC rules under Title III of the JOBS Act), it makes sense to think more about what securities crowdfunding might look like and how it will fit into the cycle of small business finance.

Along those lines, what about debt crowdfunding as a precursor to venture capital funding?  Andrew Schwartz has written a bit about that.  Others also may have taken on this topic.  Professor Schwartz may be right that issuers will prefer to issue debt than equity--in part because it may prove to be less of an impediment to later equity financings.  But I don't necessarily have a warm feeling about that . . . .

And what about the crowdfunding of investment contracts (e.g., what I have previously called "unequity" in this article (and elsewhere, including in this further article) and perhaps even the newly popular SAFEs)?  There is no equity overhang with unequity and some other types of investment contract, but crowdfunded SAFEs, which are convertible paper, may be viewed negatively in later financing rounds--especially if the conversion rights are held by a wide group of investors.  While part of me is surprised that people are not taking the investment contract part of the potential securities crowdfunding market seriously (since folks were crowdfunding investment contracts before the JOBS Act came along--not knowing it was unlawful), the other part of me says that crowdfunded investment contracts would have a niche market at best.

So, thanks, Haskell, for the food for thought.  No doubt, more will be written about this issue as and if the market for crowdfunded securities develops.  Coming soon, says the SEC . . . .

October 21, 2015 in C. Steven Bradford, Corporate Finance, Crowdfunding, Haskell Murray, Joan Heminway, Securities Regulation, Venture Capital | Permalink | Comments (0)

Tuesday, October 20, 2015

Newsflash! Lisa Fairfax Nominated to Serve as a Member of the Securities and Exchange Commission

See the news here and elsewhere.  Way to go, Lisa!  We entered the law academy together, and she is one of my all-time favorites.

October 20, 2015 in Current Affairs, Joan Heminway, Securities Regulation | Permalink | Comments (0)

Wednesday, October 14, 2015

Encouraging Student "Thriving" Through Group Simulations

Last week was the oral midterm examination week for students in my in Business Associations class.  I admit to exhaustion and jubilation at the end of that week every year.  I think the students feel about the same way . . . .

This year's examination related to an expulsion of members in a member-managed limited liability company (LLC).  The facts were based on an interesting Tennessee case with which many LLC aficionados are no doubt familiar: Anderson v. Wilder.  The exam questions related to the validity and effects of the expulsion under the Revised Uniform Limited Liability Company Act and the LLC's operating agreement, the potential breaches of fiduciary duty and failure to comply with the contractual obligation of good faith and fair dealing, and the possible resulting causes of action and remedies--including any effects of the members' dissociation.

In a blog post last weekend from Lou Sirico and our other friends at the Legal Skills Prof Blog, I divined support for all of us who engage in practice-focused legal education: these teaching/learning methods can help students to thrive, not merely survive.  It has been my (admittedly anecdotal) observation that students who engage in simulations (as well as those who participate in clinics and internships/externships) in law school are happier and more well-adjusted about their education and their post-graduation employment.  Last week's oral midterms--conducted in groups of three--gave me some windows on that world.  I will share a few here.

Continue reading

October 14, 2015 in Business Associations, Clinical Education, Joan Heminway, Law School, Lawyering, LLCs, Teaching | Permalink | Comments (0)

Wednesday, October 7, 2015

More on Berkshire Hathaway, Financial Intermediation, and The Like

As some of you may know, I have been focused on crowdfunding intermediation in my research of late.  My articles in the U.C. Davis Business Law Journal and the Kentucky Law Journal both touch on that topic, and a forthcoming chapter in an international crowdfunding book and several articles in process follow along that trail.  (I also have the opportunity to look into gatekeeper intermediary issues outside the crowdfunding context at an upcoming symposium at Wayne State University Law School, about which I will say more in a subsequent post.)  The underlying literature on financial intermediation is super-interesting, and it continues to grow in breadth and depth as I research and write.

Given my interest in this area, I was delighted to see that Larry Cunningham is contributing to the debate, following on his already-rich work relating to Warren Buffett and Berkshire Hathaway.  As you may recall, Larry was our guest here at the Business Law Prof Blog back in 2014.  You can read my Q&A with him here and his posts here and here.

Larry recently posted an essay responding to Kathryn Judge's Intermediary Influence, 82 U Chi L Rev 573 (2015).  In her article, Professor Judge shows "how intermediaries acquire influence over time and how they have used that influence to promote high-fee arrangements."  She then uses this descriptive analysis both to explain existing phenomena in the financial markets and to identify significant implications for the same.

Forthcoming in the University of Chicago Law Review Dialogue, Larry's responsive essay, Berkshire versus KKR: Intermediary Influence and Competition, compares the infamous private equity firm Kohlberg Kravis Roberts to his beloved Berkshire Hathaway.  His focus?  The M&A market.  His bottom line?

I have extended Judge’s insights with an illustration from the acquisitions market, depicting one firm (KKR) that epitomizes intermediary influence, in contrast to a rival (Berkshire)—the anti-intermediary par excellence. The juxtaposition affirms the portrait of intermediary influence that Judge paints as well as the potential for correction through lower-priced competition and fee disclosure she posits.

I have given Larry's essay a skim, and that quick pass has enticed me into giving both it and Professor Judge's article a good, thorough read in the not-too-distant future.

October 7, 2015 in Corporate Finance, Corporate Governance, Joan Heminway, Research/Scholarhip | Permalink | Comments (5)

Thursday, October 1, 2015

Illusionists and Scammers

Last night, I took my husband (part of his birthday present) to see The Illusionists, a touring Broadway production featuring seven masters of illusion doing a three-night run in Knoxville this week.  I admit to a fascination for magic shows and the like, an interest my husband shares.  I really enjoyed the production and recommend it to those with similar interests.

At the show last night, however, something unusual happened.   I ended up in the show.  I made an egg reappear and had my watch pilfered by one of the illusionists.  It was pretty cool.  After the show, I got kudos for my performance in the ladies room, on the street, and in the local gelato place.

But I admit that as I thought about the way I had been tricked--by sleight of hand--into performing for the audience and allowing my watch to be taken, I realized that these illusionists have something in common with Ponzi schemers and the like--each finds a patsy who can believe and suckers that person into parting with something of value based on that belief.  That's precisely what I wanted to blog about today anyway--scammers.  Life has a funny way of making these kinds of connections . . . .

So, I am briefly posting today about a type of affinity fraud that really troubles me--affinity fraud in which a lawyer defrauds a client.  Most of us who teach business law have had to teach, in Business Associations or a course on professional responsibility, cases involving lawyers who, e.g., abscond with client funds or deceive clients out of money or property.  I always find that these cases provide important, if difficult, teaching moments: I want the students to understand the applicable law of the case, but I also want them to understand the gravity of the situation when a lawyer breaches that all-important bond of trust with a client.

Continue reading

October 1, 2015 in Ethics, Joan Heminway, Securities Regulation, Teaching | Permalink | Comments (0)

Friday, September 25, 2015

2015 ABA LLC Institute

The 2015 American Bar Association LLC Institute will be held November 12-13 in Arlington, Virginia.  I’m speaking this year (on LLC dissolution with Carter Bishop and Doug Moll and on a panel hashing out issues at the intersection of LLC [operating] agreements and contract law), and have attended/spoken at several earlier Institutes.  The complete program is available on Tom Rutledge’s blog.

If you would like to attend this year and need information on how to get registered, you can reach out to Tom ( and he will get you whatever you need.  Tom is very user-friendly and an amazing colleague, if you haven't yet met him.  He is particularly adept (among his many talents) at bringing the law academy and the law practice community together in productive ways.  The LLC Institute is a great example.

Also, if you are working on issues relating to LLC law or are considering wading into those waters, be thinking about program ideas for future Institutes.  Planning for the 2016 LLC Institute already is underway.  Many of the sessions at the Institute focus or are based on the scholarship of law academics on LLCs and other unincorporated business associations.  For example, at the 2014 LLC Institute, programs centered on articles written by our business law colleagues Benjamin Means and Colin Marks.  The LLC Institute is a great environment (comprising academics and high-level, focused practitioners) in which to exchange ideas.  I highly recommend it.

September 25, 2015 in Conferences, Joan Heminway, LLCs | Permalink | Comments (0)

Thursday, September 24, 2015

Upcoming Program of Potential Interest: Business and Family

This comes to us courtesy of Rachel Ezrol at Emory Law:


A Vulnerability and the Human Condition Initiative & Feminism and Legal Theory Workshop Project

A Workshop on Vulnerability at the Intersection of the Changing Firm and the Changing Family

When: October 16-17, 2015
Where: Emory University School of Law

 Registration is FREE for Emory students, faculty, and staff.

From the Call for Papers:

Theories of dependency situate the limitations that attend the caregiving role in the construction of the relationship between work and family.  The “worker,” defined without reference to family responsibilities, becomes capable of autonomy, self-sufficiency, and responsibility through stable, full-time employment.  The privatized family, created by the union of spouses, is celebrated in terms of a self-sufficient ideal that addresses dependency within its own ranks, often through the gendered assumptions regarding responsibility for caretaking.   The feminist project has long critiqued these arrangements as they enshrine the inequality that follows as natural and inevitable and cloak the burdens of caretaking from examination or critique. The interpenetrations of the family and the firm have thus been understood as both multiple and wide-ranging. Both this system and the feminist critique of it, however, are associated with the construction of wage labor that arose with industrialization.  This workshop will apply the lens of vulnerability to consider the implications that arise from large scale changes in the structure of employment - changes that place this prior ideal of stable self-sufficiency beyond the reach of much of the population.

Issues For Discussion May Include:

This workshop will use vulnerability theory to explore the implications of the changing structure of employment and business organizations in the information age.  In considering these changes, we ask in particular:

  • How does the changing relationship between employment and the family, and particularly the disappearance of the breadwinner capable of earning a stable “family wage,” affect our understanding of the family and its association with care and dependency?             
  • How does the changing structure of employment and business organization affect possibilities for reform? What should be the role of a responsive state in directing these shifting flows of capital and care?
  • How might a conception of the vulnerable subject help our analysis of the changing nature of the firm? What relationships does it bring into relief?
  • What kind of legal subject is the business organization?  Are there relevant distinctions among business and corporate forms in regard to understanding both vulnerability and the need for resilience?
  • How are business organizations vulnerable? The family? Have these vulnerabilities shifted over time, and what forms of resilience are available for both institutions to respond to new economic realities?
  • What, if any, should be the role of international and transnational organizations in a neoliberal era? What is their role in building both human and institutional resilience?
  • Is corporate philanthropy an adequate response to the retraction of state regulation? What forms of resilience should be regulated and which should be left to the ‘free market’?
  • How does the Supreme Court's willingness to assign rights to corporate persons (Citizen's United, Hobby Lobby), affect workers, customers and communities?  The relationship between public and private arenas?

Rachel Ezrol
Program Coordinator | Emory University School of Law
1301 Clifton Road | Atlanta, GA 30322 | Room G500 Gambrell Hall
404-712-2420 (t) | 404-727-1973 (f)
Vulnerability and the Human Condition Initiative
Feminism and Legal Theory Project

September 24, 2015 in Business Associations, Conferences, Corporate Finance, Corporate Governance, Employment Law, Family Business, Joan Heminway | Permalink | Comments (0)

Wednesday, September 23, 2015

Crowdfunding Chattanooga Style

As I earlier noted, I participated in a continuing legal education program at The University of Tennessee College of Law last Friday on the basics of crowdfunding.  My partners in crime for the last hour of the event were two folks from Chattanooga, Tennessee (yes, home of the famous choo choo) who have been involved in crowdfunding efforts for local businesses.  One used crowdfunding to finance a change in the location of a business; the other used crowdfunding to gauge interest in his business concept and raise seed capital.  They described their businesses and financing efforts in the second segment of the program (after a foundational hour on crowdfunding from me). 

The business location change was for The Camp House, a coffeehouse owned and operated as part of The Mission Chattanooga, a local church.  Private events, including music performances, also take place at the venue.  The Camp House raised over $32,000 through a crowdfunding campaign on Causeway.  Matt Busby, Director of The Camp House, educated us on donation crowdfunding through a non-profit platform.

The new business concept and capital raise was for Treetop Hideaways (a/k/a, The Treehouse Project), a business that designed, built, and rents time in a luxury treehouse.  The principals raised over $34,000 on Kickstarter.  One of the two men behind this project, Enoch Elwell, offered us practical information about reward crowdfunding.  Enoch also told attendees about his work with local entrepreneurs through CO.LAB and CO.STARTERS.

In the last hour of the program, the three of us reflected on crowdfunding successes and failures and speculated about the future of crowdfunding (using their experiences and my research as touchstones).  It was a wide-ranging discussion, filled with disparate tidbits of information on business formation, finance, and governance, as well as professional responsibility and the provision of practical, cost-sensitive legal advice.  Both Matt and Enoch turned out to be great folks to talk to about business finance, choice of entity, and the role of lawyers in small business formation and operation.  Their observations were thoughtful and sensible.  I learned a lot from them, and participants (practitioners and students) also indicated that they learned a lot.  Everyone had fun.  It was pure business lawyer/law student joy on a Friday afternoon!  :>)

For those who were not at the program on Friday and would have liked to have been there, all is not lost.  We plan to post a recorded version of all three program segments here in a few weeks.  Continuing legal education credit will be available in Tennessee for viewing the online recording, upon completion of the test provided and payment of the applicable fee.

September 23, 2015 in Corporate Finance, Corporate Governance, Entrepreneurship, Joan Heminway, LLCs, Nonprofits, Social Enterprise | Permalink | Comments (4)

Wednesday, September 16, 2015

Peer Review for Law Reviews: What's Up with That?

Last month, a colleague of mine received a request from a law review (one unaffiliated with her or our institution) to perform a peer review of an article that the law review was considering for publication.  The period for the requested review was short--about a week--and arrived with no prior notice two weeks before classes started.  No compensation was offered.  While she (an acknowledged expert in the overall field and on the specific topic covered in the article) was, indeed, flattered by the request and very interested in the article, she had to turn the request down given the nature and extent of her commitments here.  

She wondered, and I did, too, how prevalent these kinds of requests are from law reviews.  I have performed peer reviews of articles for our journals here at UT Law from time to time and have considered it part of my service to the institution.  But the only other peer reviews I have done have been of books or book proposals for publishers, for which I have received some (not a lot of) compensation for my trouble.  So (given that I know I sometimes have blinders on and miss things that are going on outside my narrow span of activity), I asked around . . . .  My co-bloggers and other colleagues contributed to the facts and ideas I share here.

Continue reading

September 16, 2015 in Joan Heminway, Law Reviews | Permalink | Comments (1)

Thursday, September 10, 2015

Crowdfunding CLE in Knoxville

Transactions: The Tennessee Journal of Business Law is sponsoring a continuing legal education program on the afternoon of Friday, September 18 entitled "Crowdfunding: The Basics."  If you will be in or near Knoxville at the end of next week (maybe because you're arriving early for a certain football game on Saturday night versus Western Carolina . . . ), come on over and check it out.  I am presenting for the introductory session.  The second session will feature entrepreneurs from two local (Chattanooga-based) crowdfunded social enterprises, and the third session will be a discussion among the three of us about successful and unsuccessful crowdfunding efforts.  

I am excited to be able to participate in this program with local entrepreneurs and have the opportunity to talk to them about the future of crowdfunding.  I will post important out-takes from the program in the future. I assume there will be a number of them . . . .

September 10, 2015 in Corporate Finance, Entrepreneurship, Joan Heminway, Social Enterprise | Permalink | Comments (3)