Thursday, October 1, 2015
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.
Friday, September 25, 2015
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 (Thomas.email@example.com) 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.
Thursday, September 24, 2015
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?
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
Wednesday, September 23, 2015
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.
Wednesday, September 16, 2015
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.
Thursday, September 10, 2015
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 . . . .
Wednesday, September 9, 2015
A while back, the CLS Blue Sky Blog featured a post by Michael Peregrine on an article authored by Delaware Supreme Court Chief Justice Leo Strine (Documenting The Deal: How Quality Control and Candor Can Improve Boardroom Decision-making and Reduce the Litigation Target Zone, 70 Bus. Law. 679 (2015)) offering pragmatic advice to corporate directors in deal-oriented decision making. Michael's post summarizes points made by Justice Strine in his article, including (of particular importance to legal counsel) those set forth below.
- "Counsel can play an important role in assuring the engagement of the strongest possible independent financial advisor, and structuring the engagement to confirm the provision of the full breadth of deal-related financial advice to the board; not simply the delivery of a fairness opinion or similar document."
- "[I]n the M&A process, it is critical to be clear in the minutes themselves about what method is being used, and why."
- "Lawyers and governance support personnel should be particularly attentive to documenting in meeting minutes the advice provided by financial advisors about critical fairness considerations or other transaction terms, and the directors’ reaction to that advice."
- "[P]laintiffs’ lawyers are showing an increasing interest in seeking discovery of electronic information that may evidence the attentiveness of individual directors to materials posted on the board portal."
Michael concludes by noting the thrust of Justice Strine's points--that "a more thoughtful approach to the fundamental elements of the M&A process will enhance exercise of business judgment by disinterested board members, and their ability to rely on the advice of impartial experts." All of the points made reflect observations of the Chief Justice emanating from Delaware jurisprudence. Michael also notes that the points made by Justice Strine have application to decision making in other forms of business association as well as the corporation.
I could not agree more with the thesis of the post and the article. Maybe it's just my self-centered, egotistical, former-M&A-lawyer self talking, but good lawyering can make a difference in M&A deals and the (seemingly inevitable) litigation that accompanies them. I wrote about this in my article, A More Critical Use of Fairness Opinions as a Practical Approach to the Behavioral Economics of Mergers and Acquisitions, commenting on Don Langevoort's article, The Behavioral Economics of Mergers and Acquisitions. We should be teaching this in the classroom as we frame the lawyer's role in M&A transactions. I use a quote from Steve Bainbridge to introduce this matter to my Business Associations, Corporate Finance, and Cross-Border M&A students:
Successful transactional lawyers build their practice by perceptibly adding value to their clients’ transactions. From this perspective, the education of a transactional lawyer is a matter of learning where the value in a given transaction comes from and how the lawyer might add even more value to the deal.
Stephen M. Bainbridge, Mergers and Acquisitions 4 (2003). Great stuff, imv. I am sure this quote or one like it is in the current version of this book somewhere, too. But I do not have that with me as I write this. Perhaps if Steve reads this he will add the current cite to the comments . . . ?
At any rate, I want to make a pitch for highlighting the role of the lawyer in guiding the client through the legal minefields--territory that only we can help clients navigate most efficaciously. As business law educators, we have a podium that enables us to do this with law students who are lawyers-in-training about to emerge from the cocoon-like academic environment into the cold, cruel world in which fiduciary duty (derivative and direct) and securities class action litigation is around every transactional corner. Let's give them some pointers on why and how to take on this task!
Wednesday, September 2, 2015
As many readers already know, I teach Corporate Finance in the fall semester as a three-credit-hour planning and drafting seminar. The course is designed to teach students various contexts in which valuations are used in the legal practice of corporate finance, the key features of simple financial instruments, and legal issues common to basic corporate finance transactions (including M&A). In the process of teaching this substance, I introduce the students to various practice tips and tools.
As part of teaching M&A in this course and in my Advanced Business Associations course, I briefly cover the anatomy of an M&A transaction and the structure of a typical M&A agreement. For outside reading on these topics, I am always looking for great practical summaries. For example, Summary of Acquisition Agreements, 51 U. Miami L. Rev. 779 (1997), written by my former Skadden colleagues Lou Kling and Eileen Nugent (together with then law student, Michael Goldman) has been a standard-bearer for me. In recent years, practice summaries available through Bloomberg, LexisNexis, and Westlaw (Practical Law Company) have been great supplements to the Miami Law Review article. In our transaction simulation course, which is more advanced, I often assign part of Anatomy of a Merger, written many moons ago by another former Skadden colleague, Jim Freund. Just this past week, I came across a new, short blog post on the anatomy of a stock purchase agreement on The M&A Lawyer Blog. Although I haven't yet given the post a review for teaching purposes, it is a nice summary in many respects and makes some points not made in other similar resources.
I will be revisiting my approach to the M&A part of my Corporate Finance course in the coming weeks. I am curious about how others teach M&A in a context like this--where the topic must be covered in about three-to-five class hours and include practice points, as well as a review of doctrine, theory, and policy. I am always interested in new materials and approaches that may reach more students better. I invite responses in the comments that may be useful to me and others.
Wednesday, August 26, 2015
Yesterday, my husband and I celebrated our 30th wedding anniversary. I am married to the best husband and dad in the entire world. (Sorry to slight all of my many male family members and friends who are spouses or fathers, but I am knowingly and seriously playing favorites here!) My husband and I bought the anniversary memento pictured below a few years ago, and it just seems to be getting closer and closer to the reality of us as a couple (somewhat endearing, but aging) as time passes . . . .
Of course, our wedding was not the only important event in 1985. There's so much more to celebrate about that year! In fact, it was a banner year in business law. Here are a few of the significant happenings, in no particular order. Most relate to M&A doctrine and practice. I am not sure whether the list is slanted that way because I (a dyed-in-the-wool M&A/Securities lawyer) created it or whether the M&A heyday of the 1980s just spawned a lot of key activity in 1985.
- Smith v. Van Gorkom was decided. It was my 3L year at NYU Law. I remember the opinion being faxed to my Mergers & Acquisitions instructor during our class and being delivered--a big stack of those goofy curly thermal fax paper sheets--to the table in the seminar room where we met. Cool stuff. As I entered practice, business transactional lawyers were altering their advisory practices and their board scripts to take account of the decision.
- Unocal v. Mesa Petroleum was decided. The Delaware Supreme Court established its now famous two-part standard of review for takeover defenses, finding that "there was directorial power to oppose the Mesa tender offer, and to undertake a selective stock exchange made in good faith and upon a reasonable investigation pursuant to a clear duty to protect the corporate enterprise. Further, the selective stock repurchase plan chosen by Unocal is reasonable in relation to the threat that the board rationally and reasonably believed was posed." (The italics were added by me.) More changes to transactional practice . . . .
- Moran v. Household International was decided. As a result, I spent a large part of my first five years of law practice promoting and writing poison pills that innovated off the anti-takeover tool validated in this case. The firm I worked for was on the losing side of the Moran case, so we determined to build a better legal mousetrap, which then became the gold standard.
- The Revised Uniform Limited Partnership Act (RULPA) was amended by the Uniform Law Commission. Among the 1985 changes was an evolution of the rules relating to the liability of limited partners for partnership obligations. The 2001 version of the RULPA took those evolutions to their logical end point, allowing limited partners to enjoy limited liability for partnership obligations even if the limited partners exercise management authority over the partnership.
- Landreth Timber Co. v. Landreth was decided. Stock is a security under the Securities Act of 1933, as amended, unless the context otherwise requires. The Court determined that instruments labeled stock that have the essential attributes of stock should be treated as stock in an offering context, even when the stock is transferred to sell a business. Bye-bye "sale of business" doctrine . . . .
That's enough on 30th anniversaries for this post. I am sure you all will think of more 30th anniversaries in business law that we can celebrate in 2015. Feel free to leave those additional 1985 memories in the comments.
Thursday, August 6, 2015
We here in Tennessee took a strong interest in the decision in Obergefell v. Hodges, since one of the cases being decided was from Tennessee (Tanco v. Haslam). We at The University of Tennessee were especially interested. The plaintiffs in the Tanco case are University of Tennessee faculty members at the College of Veterinary Medicine, located on our adjacent sister campus (for The University of Tennessee Institute of Agriculture) here in Knoxville. As East Tennessee awaited the Supreme Court's decision--and in the aftermath of the opinion's release, the press sought for and found many angles on the case.
Of interest to me, as a business lawyer, was the interaction of the case with local business--existing and potential. As with most things, there were (and are) two sides to this coin. Locally, and nationally, both have gotten some play. For opportunistic business lawyers, both sides present advisory possibilities.
Some press time was spent on what I call the "Sweet Cakes" issue (covered by blogs as well as the traditional press, with my favorite law coverage coming from Eugene Volokh over at The Volokh Conspiracy, including this post). Sweet Cakes is, of course, the now-famous family-owned-and-run Oregon wedding cake purveyor that expressly refused to sell wedding cakes to same-sex couples. Eugene outlines a number of interesting legal issues in his posts, and regardless of whether you agree with his conclusions, you can see there is much lawyering involved in the business decisions of those who are intent on being conscientious objectors to same-sex marriage through their business activities. In Tennessee, the Obergefell decision has been famously followed with reports of anti-same-sex marriage signage, like this press item on a sign posted by the owner/proprietor of a hardware store.
The other side of the coin is, of course, the new opportunities that same-sex marriage creates for existing businesses and entrepreneurs. In the run-up to the Supreme Court's ruling, The Tennessean reported that "[o]pening marriage to same-sex couples would yield an additional $36.7 million in spending in Tennessee in three years as more than 5,400 same-sex weddings are expected to be held in the state during that period, according to estimates from the Williams Institute, a think tank at UCLA Law dedicated to sexual orientation and gender identity research." And after the decision, the Nashville Business Journal reiterated the message. New businesses formed to take advantage of this new market for marriages in the state will need--you guessed it--lawyers! Since Gatlinburg--in the Smoky Mountains just a stone's throw from Knoxville--is a wedding destination, our end of the state should see its fair share of that "action," assuming the business environment is welcoming . . . . This article indicates there may be some businesses in that part of the state that are willing to participate in same-sex weddings.
So, as with other legal changes of any magnitude, we may conceptualize Obergefell as a full-opportunity-for-lawyers act, and those opportunities will likely enure to business lawyers as well as others.
Wednesday, August 5, 2015
I am sure that many of you, like me, are deluged with email messages at this point in the year from well-meaning students taking your fall courses who ask whether a particular text--or version of a text--marked as "required" on the book list is really required. There are many ways to respond to these requests. A number of my my Facebook friends--including former students--suggest a simple response, something akin to: "What part of required do you not understand?"
While that kind of a response sometimes is very appealing (especially when I get two emails asking about this kind of thing on the same day), I have decided to use these interactions as a teaching moment--of sorts. Set forth below is a version of a message that I send, in case it is of some use to you in this or another similar context. The specific inquiry to which I am responding relates to a student's question about using a 2013 "statutory supplement" in my Fall 2015 Business Associations course.
Hey, [name of student]. Thanks for reaching out to me. This is a common question. It has an easy (although perhaps unpalatable) answer. I marked the 2015 statutory resource book (not really a supplement, but the core of our work in this course) as required for the course. I will be working from the 2015 version in and outside class. I cannot ensure that the 2013 version—or even the 2014 version—will have everything you need. While I know the authors, I do not control and am not privy to what they include and exclude every year. So, I cannot recommend your use of the 2013 version, and if you use it, you will be responsible for noting where the gaps or changes are. There may be none, but I cannot guarantee that.
I regret making students pay the money for a new paperback every year. But I have come to consider it an investment. Of course, as you already know, lawyers should never use an outdated version of the law for their research. It can be the basis of a claim of malpractice or sanctions on the basis of incompetence or a lack of diligence. So, my required use of a current version of the restatement provisions, statutes, rules, and other materials in the statutory resource book is also a way of encouraging professionally responsible, low-risk legal practice.
I will not be policing the use of outdated or other supplements—or even online versions of the statutes, rules, and other materials (which include a sample corporate charter and bylaws, for example)--instead of the assigned statutory resource book for class. So, it's all up to you. Others have used outdated or online or photocopied versions of the materials in the statutory resource book in the past and done very well in the course. But they typically put in significant work on their own to ensure they had what they needed for the exams and assignments.
See you in a few weeks. I will look forward to having you in class. You already have exhibited professionally responsible behavior in contacting me in advance and asking about the resource book. That's a great start to the semester.
Incidentally, in case you wondered, most students respond to my email thanking me and noting they will acquire the 2015 edition. Many students do not contact me at all about this issue and just go ahead and use outdated materials. Some of these non-communicative students have later admitted to me they regretted that decision.
Also, I have tried in the past to just assign online versions of the restatement provisions, statutes, and rules. There are two main disadvantages that I identified to this approach. First, I found that students did not bring the necessary legal provisions to class with them in electronic or hard-copy form or did not bring a computer to access rules that come up in class in an unplanned manner. Relatedly, it is important to note that, when the students take my open-book midterm (oral) and final (written) exams, they really need to have hard copies of the relevant rules with them, which means printing them out and collecting them in a book or folder anyway (since I do not allow electronic devices, other than ExamSoft-modified computers, in my examinations). Second, my statutory resource book has materials other than restatement, statutory, and regulatory provisions in it. If the book is not required, I must supplement the text with these additional materials, where necessary or desired.
Let me know your thoughts and share comments for improvement. Or tell me I am being too nice and should push back harder at my students. The type of response I have included above is generally consistent with my overall communication style with my students, which could be characterized as compassionate but direct. Others may have very different approaches to instructor-student communications or course objectives that make my response undesirable or even counterproductive. Please do share those kinds of reactions in the comments.
Saturday, August 1, 2015
As you may have seen elsewhere already (but just to make it abundantly clear):
THE UNIVERSITY OF TENNESSEE COLLEGE OF LAW invites applications from both entry-level and lateral candidates for as many as two full-time, tenure-track faculty positions to commence in the Fall Semester 2016. The College is particularly interested in the subject areas of business law, including business associations and contracts; gratuitous transfers/trusts and estates; and health law. Other areas of interest include legal writing, torts, and property.
A J.D. or equivalent law degree is required. Successful applicants must have a strong academic background. Significant professional experience is desirable. Candidates also must have a strong commitment to excellence in teaching, scholarship, and service.
In furtherance of the University’s and the College’s fundamental commitment to diversity among our faculty, students body, and staff, we strongly encourage applications from people of color, persons with disabilities, women, and others whose background, experience, and viewpoints would contribute to a diverse law school environment.
The Faculty Appointments Committee will interview applicants who are registered in the 2015 Faculty Appointments Register of the Association of American Law Schools at the AALS Faculty Recruitment Conference in Washington, D.C. Applicants who are not registered in the AALS Faculty Appointments Register are advised to send a letter of interest, resume, and the names and contact information of three references by September 30, 2015 to:
On behalf of Becky Jacobs and Michael Higdon
Co-Chairs, Faculty Appointments Committee
The University of Tennessee College of Law
1505 W. Cumberland Avenue
Knoxville, TN 37996-1810
All qualified applicants will receive equal consideration for employment and admissions without regard to race, color, national origin, religion, sex, pregnancy, marital status, sexual orientation, gender identity, age, physical or mental disability, or covered veteran status. Eligibility and other terms and conditions of employment benefits at The University of Tennessee are governed by laws and regulations of the State of Tennessee, and this non-discrimination statement is intended to be consistent with those laws and regulations. In accordance with the requirements of Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act of 1990, The University of Tennessee affirmatively states that it does not discriminate on the basis of race, sex, or disability in its education programs and activities, and this policy extends to employment by the University. Inquiries and charges of violation of Title VI (race, color, and national origin), Title IX (sex), Section 504 (disability), ADA (disability), Age Discrimination in Employment Act (age), sexual orientation, or veteran status should be directed to the Office of Equity and Diversity (OED), 1840 Melrose Avenue, Knoxville, TN 37996-3560, telephone (865) 974-2498. Requests for accommodation of a disability should be directed to the ADA Coordinator at the Office of Equity and Diversity.
I hope a number of our readers will be interested in applying. Feel free to contact me if you have questions or need more information (although please note that I am not on the Faculty Appointments Committee).
Wednesday, July 29, 2015
My friend and corporate law colleague Marco Ventoruzzo (Penn State Law and Bocconi University) recently let me know that he and several others--Pierre-Henri Conac, Gen Goto, Sebastian Mock, Mario Notari, and Arad Reisberg--have published a coauthored teaching text entitled (and focused on) Comparative Corporate Law. As someone who has taught that subject (as well as comparative and cross-border mergers and acquisitions) in the past, I have been very interested in taking a look at the book--the first of its kind, as far as I know. Luckily, I was able to grab a review copy from the publisher, West Academic Publishing (American Casebook Series), at the Southeastern Association of Law Schools (SEALS) conference, which I am attending this week. This post shares a bit about the book (based on a relatively quick examination--peeking more closely into some chapters than others) and my ideas for teaching from it.
I recommend the book and would use it in a course I would teach on the subject matter. The content is really wonderful. Nearly everything I need as a foundation for a course in comparative or cross-border corporate law is included. However, I have a few general criticisms, primarily based on my personal teaching perspective, that I will note in this post.
Wednesday, July 22, 2015
For a number of years now, I have been using group (3-person teams) oral midterm examinations in my Business Associations course. I have found these examinations to be an effective and rewarding assessment tool based on my teaching and learning objectives for this course. At the invitation of the Saint Louis University Law Journal, as part of a featured edition of the journal on teaching business associations law, I prepared a short article giving folks the "why, how, and what" of my experience in taking this approach to midterm assessment. The article was recently published, and I have posted it to SSRN. The abstract reads as follows:
I focus in this Article on a particular way to assess student learning in a Business Associations course. Those of us involved in legal education for the past few years know that “assessment” has been a buzzword . . . or a bugaboo . . . or both. The American Bar Association (ABA) has focused law schools on assessment (institutional and pedagogical), and that focus is not, in my view, misplaced. Until relatively recently, much of student assessment in law school doctrinal courses was rote behavior, seemingly driven by heuristics and resulting in something constituting (or at least resembling) information cascades or other herding behaviors.
In the fall of 2011, I began offering an oral midterm examination to students in my Business Associations course as an additional assessment tool. This Article explains why I started (and have continued) down that path, how I designed that examination, and what I have learned by using this assessment method for three years. Although some (probably most) will not want to do in their Business Associations courses exactly what I have done in mine (as to the midterm examination or any other aspects of the course described in this Article), I am providing this information to give readers ideas for, or courage to make positive changes in, their own teaching (for a course on business associations or anything else).
You may think I am crazy (even--or especially--after reading this article). Regardless, I do hope the article sparks something positive in you regarding your teaching in Business Associations or some other course. Since I am working on finishing a long-overdue book on teaching business associations for Aspen this summer, I would welcome your honest reactions to the article and your additional thoughts on assessment or other aspects of teaching Business Associations.
Wednesday, July 15, 2015
I read with interest the recently released opinion of the U.S. Court of Appeals for the Third Circuit in Trinity Wall Street v. Walmart Stores, Inc. The Wall Street Journal covered the publication of the opinion earlier in the month, and co-blogger Ann Lipton wrote a comprehensive post sharing her analysis on the substance of the decision over the weekend. (I commented, and Ann responded.) Of course, like Ann, as a securities lawyer, I was interested in the court's long-form statement of its holding and reasoning in the case. But I admit that what pleased me most about the opinion was its use of legal scholarship written by my securities regulation scholar colleagues.
Tom Hazen's Treatise on the Law of Securities Regulation is cited frequently for general principles. This is, as many of you likely already know, an amazing securities regulation resource. I also will note that many of my students find Tom's hornbook helpful when they are having trouble grappling with securities regulation concepts covered in the assigned readings in my class.
Donna Nagy's excellent article on no-action letters (Judicial Reliance on Regulatory Interpretation in S.E.C. No-Action Letters: Current Problems and a Proposed Framework, 83 Cornell L. Rev. 921 (1998)) also is cited by the court. This piece is not praised enough, imho, for the work it does in the administrative process area of securities law. I see the citations in the opinion as an element of needed praise.
And finally, Alan Palmiter's scholarship also is cited numerous times in the opinion. Specifically, the court quotes from and otherwise cites to The Shareholder Proposal Rule: A Failed Experiment in Merit Regulation, 45 Ala. L. Rev. 879 (1994). Again, this work represents an important, under-appreciated scholarly resource in securities law.
At least one other law review article is cited once in the opinion.
[Note: Alison Frankel also points out that Vice Chancellor Laster cites formatively to a paper co-authored by Jill Fisch, Sean Griffith, and Steve Davidoff Solomon in a recent opinion. More evidence that our work matters, at least to the judiciary.]
As Ann's post notes, the Trinity opinion also is worth reading for its substance. In addition to the matters Ann mentions, the opinion includes, for example, a lengthy, yet helpful, history of the ordinary business exclusion under Rule 14a-8. And the analysis is instructive, even if unavailing (unclear in its moorings and effect in individual cases).
Finally, it's worth noting that the opinion is drafted with a healthy, yet (imv) professional, dose of humor. The opinion begins, for example, as follows:
“[T]he secret of successful retailing is to give your customers what they want.” Sam Walton, SAM WALTON: MADE IN AMERICA 173 (1993). This case involves one shareholder’s attempt to affect how Wal-Mart goes about doing that.
And the conclusion of the opinion includes the following passage that made me smile:
Although a core business of courts is to interpret statutes and rules, our job is made difficult where agencies, after notice and comment, have hard-to-define exclusions to their rules and exceptions to those exclusions. For those who labor with the ordinary business exclusion and a social-policy exception that requires not only significance but “transcendence,” we empathize.
(This is part of the "scolding" Ann references in her post.)
Read the concurring opinion of Judge Shwartz, too. It is thoughtful (even if not entirely helpful, as Ann notes) in making some nice additional points worth considering.
Saturday, July 11, 2015
I noted with favor the other day (to myself, privately) the helpful and interesting commentary on The Glom of our trusted colleague and co-blogger, Usha Rodrigues, regarding the recent press reports on Mylan N.V.'s related-party disclosures. As the story goes, a firm managed and owned in part by the Vice Chair of Mylan's board of directors sold some land to an entity owned by one of the Vice Chair's business associates for $1, and that entity turned around the same day and sold the property to Mylan for its new headquarters for $2.9 million. Usha's post focuses on both the mandatory disclosure rules for related-party transactions and the mandatory disclosure rules on codes of ethics. Two great areas for exploration.
A reporter from the Pittsburgh Tribune-Review called me Thursday to talk about the Mylan matter and some related disclosure issues. He and I spoke at some length yesterday. That press contact resulted in this story, published online late last night. The reporter was, as the story indicates, interested in prior related-party disclosures made by Mylan involving transactions with family members of directors. This led to a more wide-ranging discussion about the status of family members for various different securities regulation purposes. It is from this discussion that my quote in the article is drawn. But our conversation covered many other interesting, related issues.
Wednesday, July 8, 2015
Last September, I authored a post here on the BLPB on judicial opinions and related statutes regarding LLCs as non-signatories to LLC operating agreements (simply termed "LLC agreements" in Delaware and a number of other states). I recently posted a draft of an essay to SSRN that includes commentary on that same issue as part of a preliminary exploration of the law on LLC operating agreements as contracts. (Readers may recall that I mentioned this work in a post last month on the Law and Society Association conference.) I am seeking comments on this draft, which is under editorial review at the SMU Law Review as part of a symposium issue of essays in honor of our departed business law colleague, Alan R. Bromberg, who had been an SMU Dedman School of Law faculty member for many years before his death in March 2014. My SSRN abstract for the essay, entitled "The Ties That Bind: LLC Operating Agreements as Binding Commitments," reads as follows:
This essay, written in honor and memory of Professor Alan R. Bromberg as part of a symposium issue of the Southern Methodist University Law Review, is designed to provide preliminary answers to two questions. First: is a limited liability company (“LLC”) operating agreement (now known under Delaware law and in certain other circles as a limited liability company agreement) a contract? And second: should we care either way? These questions arise out of, among other things, a recent bankruptcy court case, In re Denman, 513 B.R. 720, 725 (Bankr. W.D. Tenn. 2014).
The bottom line? An operating agreement may or may not be a common law contract. But that legal categorization may not matter for purposes of simple legal conclusions regarding the force and effect of operating agreements. A state’s LLC law may provide that LLCs are contracts or are to be treated as contracts in general or for specific purposes and may establish the circumstances in which operating agreements are valid, binding, and enforceable. However, in the absence of an applicable statute, the legal conclusion that an operating agreement is or is not a common law contract may matter in legal contexts that depend on the common law of contracts for their rules. In either case, the bar may want to participate in clarifying the status of operating agreements as binding commitments.
Any and all comments on the essay are welcomed. Comments that decrease the length of the essay are especially appreciated, since I am admittedly over the allotted word limit. (These essays are meant to be very short pieces so that many of us can contribute to honoring Alan.) Of course, there's always time to write another, lengthier piece on this topic later, if there's enough more to be said . . . .
Also, I will note that the Association of American Law Schools Section on Agency, Partnership, LLC's and Unincorporated Associations is planning a program on the role of contract in LLCs at the 2016 annual meeting in January. I have been asked to participate, and the panel promises to have some additional members that will attack the embedded issues from a number of interesting angles. Stay tuned for more on that.
Wednesday, July 1, 2015
As I earlier noted, on June 23rd, I moderated a teleconference on proposals to shorten the Section 13(d) reporting period, currently fixed by statute and regulation at 10 days. If you don't mind registering with Proxy Mosaic, you can listen to the program. The link is here.
The discussion was lively--as you might well imagine, given that one of the participants represents activist shareholders and the other represents public companies. A number of interesting things emerged in the discussion, many (most) of which also have been raised in other public forums on Schedule 13D, including those referenced and summarized here, here, and here, among other places.
- Exactly how does the Section 1d(d) reporting requirement protect investors or maintain market integrity or encourage capital formation? Or is it just a hat-tipping system to warn issuers about potential hostile changes of control, chilling the potential for the market for corporate control to run its natural course? Of course, the answer to many questions about Section 13(d) depends on our understanding of the policy interests being served. It's hard to tinker with the reporting system if we cannot agree on the objectives it seeks to achieve . . . . (Read the remaining bullets with this in mind.)
- We're not in the 1960s, 1970s, or 1980s any more. If market accumulations are deemed to present dangers to investors today (and that case needs to be made), why are they not just an accepted risk of public market participation? Shouldn't every investor know that market accumulations are a risk of owning publicly traded securities? And how does the reporting requirement really protect them from harm? Is this just over-regulation that treats investors as nitwits?
- Not all activist investors are the same. Some act or desire to act as a Section 13(d) group; others don't. Some seek effective or actual control of an issuer; some don't.
- Provisions within the Section 13(d) filing requirements interact. So, can we really talk about decreasing disclosure time periods without also talking about triggering thresholds and mandatory disclosure requirements?
- Why is 5% beneficial ownership the triggering threshold for reporting? What's the magic in that number--and if it were to be changed, should it be lower or higher?
- Schedule 13D is a disclosure form fraught with complexity. Many important judgment calls may have to be made in completing the required disclosures accurately and completely, depending on the circumstances. Is all this complexity needed? In particular, can the Item 4 disclosure requirement be simplified? And is the group concept necessary?
- What is the value, if any, in looking at the issue from a comparative global regulatory viewpoint? Toward the end of the call, international comparisons were increasingly being made and used as evidence that a change in U.S. regulation is needed or desirable. But are other markets and systems of regulation enough like ours for these comparisons to work? E.g., although other countries require Schedule 13D-like filings fewer days after attainment of a triggering threshold of ownership, does that mean we also should reduce the time period for mandatory disclosure here in the U.S.?
Lots of questions; I am beginning to think through answers. Regardless there's much food for thought here. Any reactions? What do you think, and why?
Wednesday, June 24, 2015
I had the privilege of sitting in on a stimulating paper session on "Private Fiduciary Law" at the Law and Society Association conference in Seattle last month. The program featured some super work by some great scholars. My favorite piece from the session, however, is a draft book chapter written by Gordon Smith that he recently posted to SSRN. Aptly entitled The Modern Business Judgment Rule, the chapter grapples with the current state of the business judgment rule in Delaware by tracing its development and reading the disparate doctrinal tea leaves. Here is a summary of his "take," as excerpted from his abstract (spoiler alert!): "The modern business judgment rule is not a one-size-fits-all doctrine, but rather a movable boundary, marking the shifting line between judicial scrutiny and judicial deference."
In the mere 18 pages of text he uses to engage his description, analysis, and conclusion, Gordon gives us all a great gift. His summary is useful, his language is clear, and his analysis and conclusions are incredibly useful, imho. I am no soothsayer, but I predict that this will be a popular piece of work.
Gordon posted on his paper the other day on The Glom. He is inviting comments, and I know him to be serious in wanting to receive and incorporate them. So, have at it!
The Turtles continue to have salience in the music world. Now, they also are a "happening thing" in legal circles. Two recently published law review articles take on an interesting issue in copyright law relating to pre-1972 sound recordings that has been the subject of legal actions brought by members of The Turtles. The articles (both of which use the song Happy Together, a Turtles favorite, in their titles) are authored by my University of Tennessee College of Law colleague, Gary Pulsinelli, and Georgetown University Law Center Professor Julie L. Ross.
In his abstract, Gary summarizes the problem as follows:
Federal copyright law provides a digital performance right that allows owners of sound recordings to receive royalties when their works are transmitted over the Internet or via satellite radio. However, this federal protection does not extend to pre-1972 sound recordings, which are excluded from the federal copyright system and instead left to the protections of state law. No state law explicitly provides protection for any type of transmission, a situation the owners of pre-1972 sound recordings find lamentable. These owners are therefore attempting to achieve such protection by various means. . . .
[S]tate law cannot provide the remedy that the owners of pre-1972 sound recordings seek. Their concerns, however, should not be dismissed. The exclusion of pre-1972 sound recordings from the federal system does deprive the owners of such recordings of royalties received by similarly situated owners whose recordings happen to have been made after that date. Because state law cannot remedy the problem, federal law must. Pre-1972 sound recordings should be brought into the federal system, on essentially the same terms as other works from the same era that are already protected by federal copyright.
Professor Ross reaches the same conclusion, as summarized in her abstract:
[G]iven the delicate balancing that has gone into Congress’ recognition of a limited digital performance right and creation of a compulsory statutory licensing system, any remedy for the inequity to owners of pre-1972 sound recordings must be left to Congress. Allowing individual courts in individual states to craft a patchwork of inconsistent remedies would disrupt the balance struck by Congress and interfere with the functioning of the compulsory license system for digital sound recording performances. This is a result that the Supremacy Clause does not permit.
Last week, I posted on federal securities law reform. It looks like federal copyright law also is in need of some fixing . . . . However, the copyright issue addressed in these two papers seems like an easy one to fix efficiently and effectively, unlike some of the federal securities law issues on the current reform agenda. Regardless, I'll raise three cheers to fixing what's legally broken in the most efficacious way!
Imagine how the world could be
So very fine
So happy together . . . .