Tuesday, December 6, 2016

U.S. Supreme Court Simply and Elegantly Affirms Dirks in Salman

In a relatively brief opinion released this morning, the U.S. Supreme Court affirmed the Ninth Circuit's judgment in Salman v. United States.  The decision of the Court was unanimous.  The big take-aways include:

  • doctrinally, the Court's complete, unquestioning reliance on the language in Dirks v. Sec's Exch. Comm'n, 463 U. S. 646 (1983), as to when the sharing of information through a tip is improper, and therefore a basis for insider trading liability (quoting from the text on page 662 of the Dirks opinion: “'[T]he test,' we explained, 'is whether the insider personally will benefit, directly or indirectly, from his disclosure.'”);
  • factually, the emphasis placed by the Court on the value proposition represented by the information-sharing between the close brothers, Maher and Michael--that information passed on with the knowledge that it will be traded on was effectively a substitute for a monetary gift ("In one of their tipper-tippee interactions, Michael asked Maher for a favor, declined Maher’s offer of money, and instead requested and received lucrative trading information."), noting "[a]s Salman’s counsel acknowledged at oral argument, Maher would have breached his duty had he personally traded on the information here himself then given the proceeds as a gift to his brother.";
  • constitutionally, the Court finding no vagueness ("Dirks created a simple and clear 'guiding principle' for determining tippee liability") and also rejecting on a similar basis application of the rule of lenity; and
  • procedurally, because of the Court's ruling on the merits, the Court finding the jury instructions entirely proper.

The opinion offers some clarity on the application of U.S. insider trading doctrine by unanimously affirming the "gift" language from Dirks in a solid way: "To the extent the Second Circuit held that the tipper must also receive something of a 'pecuniary or similarly valuable nature' in exchange for a gift to family or friends, . . . we agree with the Ninth Circuit that this requirement is inconsistent with Dirks."  Having said that, the Court also hints in several places that the facts in these cases do matter.  The following quote is particularly relevant in this respect:

Salman’s conduct is in the heartland of Dirks’s rule concerning gifts. It remains the case that “[d]etermining whether an insider personally benefits from a particular disclosure, a question of fact, will not always be easy for courts.” . . .  But there is no need for us to address those difficult cases today, because this case involves "precisely the ‘gift of confidential information to a trading relative’ that Dirks envisioned.”

In that context, the Court reminds us that "the disclosure of confidential information without personal benefit is not enough."  This, indeed, places continuing pressure on the nature of the relationship between the tipper and the tippee and other facts relevant to the transmission of the information, all of which must be ascertained and then proven at trial.  And so, it goes on . . . .

December 6, 2016 in Joan Heminway, Securities Regulation, White Collar Crime | Permalink | Comments (0)

Monday, November 28, 2016

Last Class? Coggins to the Rescue!

Today, I share a quick teaching tip/suggestion.

I taught my last classes of the semester earlier today.  For my Business Associations class, which met at 8:00 am, I was looking for a way to end the class meeting, tying things from the past few classes up in some way.  I settled on using the facts from a case that I used to cover in a former casebook that is not in my current course text:  Coggins  et al. v. New England Patriots Football Club, Inc., et al.  Here are the facts I presented:

  • New England Patriots Football Club, Inc. (“NEPFC”), the corporation that owns the New England Patriots, has both voting and nonvoting shares of stock outstanding.
  • The former president and owner of all of the voting shares of NEPFC, Sullivan, takes out a personal loan that only can be repaid if he owns all of the NEPFC stock outstanding.
  • The board and Sullivan vote to merge NEPFC with and into a new corporation in which Sullivan would own all the shares.
  • In the merger, holders of the nonvoting shares receive $15 per share for their common stock cashed out in the merger.

From this, I noted that three legal actions are common when shareholders are discontented with a cash-out merger transaction: appraisal actions, derivative actions for breach of fiduciary duty, and securities fraud actions.  Shareholders in NEPFC brought all three types of action.  (Footnote 9 of the Coggins case and the accompanying text explain that.)  

Having just covered business combinations, including approval and appraisal rights, and wanting to address some new information about the process of derivative litigation, the facts from the case worked well.  I am sure there are other cases or materials that also could have done the job.  (Feel free to leave suggestions in the comments.)  But adding a little football and conflicting interests to the last class seemed like the right idea . . . .

 

 

November 28, 2016 in Business Associations, Corporations, Joan Heminway, M&A, Teaching | Permalink | Comments (0)

Monday, November 21, 2016

Still Worried About Teaching Business Associations . . . .

Thanks to all who responded to my query two weeks ago on teaching corporate fiduciary duties.  I continue to contemplate your suggestions as I recover from the cold that has consumed me now for a week.  Don't catch this version of the common cold!  It's a bear.

Anyway, the weekend after I published that post, I presented at a super symposium on shareholder rights at the University of Oklahoma College of Law--"Confronting New Market Realities: Implications for Stockholder Rights to Vote, Sell, and Sue," hosted by the Oklahoma Law Review.  (I spoke on rights to sell securities purchased in an offering exempt from registration under the CROWDFUND Act, Title III of the JOBS Act.)  Although it was not part of the formal agenda for the symposium, I got a chance to chat informally with a group of folks at and after the conference, including our host, Megan Shaner, along with Jessica Erickson, Gordon Smith, and Vice Chancellor Travis Laster from the Delaware Chancery Court (among others) about fiduciary duty complexity.  All, even the Vice Chancellor, had sympathy, offering ideas for simplifying corporate fiduciary duty law (as opposed to merely the teaching of it) that made sense.  And it seems that among those of us in the academy, there are many ways this material currently is taught in an introductory Business Associations/Organizations or Corporations course.

Of course, I am not the only one worried about teaching the law of business associations.  In extended discussions on the topic, co-blogger Marcia Narine raised a great question.  In general, she asked how one might teach business associations law to a relatively small class.  I understand that she in the past has taught 60-75 students in a four-credit-hour course.  That's similar to my situation at UT Law.  I typically teach up to 72 students (although I teach a three-credit-hour-course).  But in the future, Marcia may teach as few as 30 students in her four-credit-hour offering.  

She noted that she doesn't want to overburden the students or herself, but she wants to think about doing things differently.  She floated the idea of more peer grading.  I suggested in response that my oral midterm exam becomes more palatable in a smaller class.  I also noted that I would generally use more skills training in that environment and maybe even introduce current events or group presentations (2-3 students in each group) over the course of the semester.  But I also allowed as how I wouldn't try too many things all at once.  In fact, I noted that she might be better off just deepening what she already does that works.

What ideas do you have?  Do some of you teach a Business Associations class that includes as few as 30 students?  Do you use any specific pedagogies or tools that may be especially useful in a course like Business Associations/Organizations--a basic doctrinal upper-division course--when taught to a 30-student class?  Do you have any tricks of the trade you would feel comfortable offering?  If so, please post them in the comments.

In other Business Associations teaching news, I requested and have received permission to increase my Advanced Business Associations offering to three credit-hours from two.  This is great news.  I use this course to focus in more on publicly held and closely held firms, business combinations, derivative and securities litigation, and social enterprise and corporate social responsibility topics.  I ask the students to describe and assess the interaction among policy, theory, doctrine, and practice skills in corporate governance.  I like to have the students read full cases and law review articles, in addition to teaching text and excerpts.  (And I now plan to add Ann Lipton's new book chapter to the reading list this spring for the part of the course in which we cover the importance of bylaw amendments to contemporary corporate governance.  Great timing.)  

Bottom line?  The course, structured this way, just felt too densely packed with only two hours per week of teaching time.  So, my last two-credit-hour version of the course will be taught this spring.  Then, I will revamp the syllabus to add the extra credit-hour for 2018.  Interestingly, it was my students who came to me originally asking for the change, because they wanted to pause more over some of the material.  I did, too.  So, now I am not worried about this any more.  One thing to take off the ever-growing list of Business Associations teaching worries . . . .

 

November 21, 2016 in Business Associations, Joan Heminway, Marcia Narine Weldon, Teaching | Permalink | Comments (6)

Tuesday, November 8, 2016

Teaching Corporate Fiduciary Duty Law; Teaching Complexity

Each year, I rethink how I teach fiduciary duties in the corporate law context in my Business Associations course.  My learning objectives for the students are both limited and involved.  On the one hand, there's little room in my three-credit-hour course for a nuanced understanding of all of the contexts in which corporate fiduciary duty claims typically occur.  In particular, I have determined to leave out the public company mergers and acquisitions context almost completely.  On the other hand, I find myself juggling uncertain classifications of duty components, explanations of seemingly mismatched standards of conduct and liability, and judicial review standards in and outside the Delaware corporate law context.  It's a handful.  It's teaching complexity.

Of course, fiduciary duty is not the only complex matter that one must teach in Business Associations.  But it is, for me, one of the topics I am least confident that I "get right" in my interactions with students in and outside the classroom.  Accordingly, as I again head toward the end of the semester, I find myself wondering whether I could have done--or could do--more with the students in my Business Associations course this semester.  This leads me to ask my fellow business law professors (that's you!) whether any of you have materials, teaching techniques, exercises (in-class or out-of-class), etc. that you find to be particularly effective in educating law students the basics and nuances of corporate fiduciary duties.  

So, have at it!  Share your corporate fiduciary duty teaching successes in the comments, if you would.  I am all ears.  I know that what you report will benefit me and others (including our students), and I hope that your comments will generate a continuing conversation . . . .

 

November 8, 2016 in Business Associations, Corporate Governance, Corporations, Joan Heminway | Permalink | Comments (7)

Monday, October 31, 2016

Tricks and Treats: My October as a Law Professor

My October included some signifiant tricks and a bunch of parallel treats.  I will highlight but a few of each here.  They illustrate, in my view, the busy mid-semester lives that law professors may have.

The Tricks

It was a real trick for me to give three distinct presentations in three cities (two in person and one virtually) in a two-day period early in the month.  On the morning of October 6, I participated in a panel discussion at The Crowdfunding Conference in New York City (New York).  That afternoon, I jumped on a plane for Little Rock (Arkansas), where I gave a continuing legal education presentation on crowdfunding for the Arkansas Bar Association as part of a program on "Capital Raising Today and Securities Law Issues."  Finally, later that day, I was Skyped into a the North Carolina Law Review 2016 annual symposium in Chapel Hill (North Carolina) on "The Role of Law in Entrepreneurship," at which I presented a draft paper, forthcoming in the North Carolina Law Review, on the important role of business finance lawyers in entrepreneurial enterprise.  

It then was a trick to refocus my energy on faculty hiring a few days later.  That next week, I jetted off to Washington (DC) with my fellow Appointments Committee members and our Dean and Associate Dean for Academic Affairs for a UT Law alumni reception and the Association of American Law Schools (AALS) 2016 Faculty Recruitment Conference.  We were successful in interviewing a variety of folks for our two business law openings--one in the clinic and one in the doctrinal faculty.

After only a few nights home in my own bed, it was (again) a trick to haul my body into the car to drive to Lexington (Virginia) to participate in and attend the Washington and Lee Law Review's 2016 Lara D. Gass Annual Symposium, an event focusing on "Corporate Law, Governance, and Purpose: A Tribute to the Scholarship of Lyman Johnson and David Millon."  At that symposium, my presentation addressed shareholder wealth maximization as a function of firm-level corporate governance.  My essay on that topic will be published in a forthcoming issue of the Washington and Lee Law Review.

Before the next week was out, I accomplished yet another trick.  I drove up to Louisville (Kentucky) to offer my thoughts on current securities litigation issues for the Kentucky Bar Association 2016 Securities Law Conference.  I was asked to cover insider trading and liability under federal and state securities laws.  In fulfillment of this charge, I delivered a presentation entitled "Where There’s a Securities Market, There’s Fraud (and Other Misconduct): Hot Topics in Federal Securities Litigation."

My final October trick?  Fitting in my Business Associations oral midterm examinations and my Monday and Wednesday class meetings for Business Associations and Corporate Finance with all these trips.

The Treats

All of that effort was an investment, however.  The trips, presentations, and other interactions all yielded multiple benefits.  Most of them may be obvious, but I will list a few in any case.

  • I met lots of new and interesting folks from the crowdfunding industry, local bar associations, the AALS applicant pool, and the law academy (from the United States and abroad).
  • I got great feedback on my current work and new ideas, research avenues, and citation sources for my ongoing work.
  • I was able to honor two amazing colleagues, Lyman Johnson and David Millon.
  • I participated meaningfully in the important task of recruiting new faculty to UT Law.
  • I squeezed in some important family and personal time around the edges, including in attending the Knoxville Brewers Jam with my hubby (the tickets having been part of my anniversary gift to him back in August).

I am grateful for safe travels throughout the month.  Having said that, I admit that I am relieved all that travel and activity is over and done.  I look forward to a more calm November and a fun holiday season to follow.  In the mean time, however, I will continue to enjoy the fall, with pumpkins being among my favorite hallmarks of the season.

Bigstock-Pumpkin-Patch-68311816

October 31, 2016 in Conferences, Crowdfunding, Entrepreneurship, Joan Heminway, Law School, Teaching | Permalink | Comments (0)

Tuesday, October 25, 2016

Business Law Faculty Opening - Washington and Lee University School of Law

The Washington and Lee University School of Law seeks to hire a faculty member with research and teaching interests in the fields of corporate law, securities regulation, and regulation of financial industries. Our school has a long history of distinction in these areas, and we are excited to advance our trajectory with this new hire. In addition to this subject area focus, we look for an individual who will embrace and meaningfully contribute to our close-knit, collegial, and intellectually vibrant community.

We warmly invite applications for a tenure-track or tenured position beginning July 1, 2017, and we are particularly focused on lateral candidates. In all cases, candidates for the position must clearly demonstrate a record of excellence in teaching and scholarship. Appointment rank would be commensurate with the candidate’s qualifications and experience.

Washington and Lee University School of Law is an Equal Opportunity employer that adheres to a robust nondiscrimination policy. Our school has a firm commitment to enhancing the diversity of our faculty and, in that regard, we welcome candidates who are members of communities traditionally under-represented in the legal profession and academia.

Kindly direct applications and questions to the Chair of the Faculty Appointments Committee. Applicants should submit (by e-mail) a current cv, a statement of teaching interests / experience, a research agenda, and a letter of interest by email to:

Mark Drumbl
Chair, Faculty Appointments Committee
Washington and Lee University, School of Law
Lewis Hall
Lexington VA 24450 USA
540-458-8531
drumblm@wlu.edu

All inquiries will be treated with the strictest confidence and discretion.

Review of applications will begin immediately and continue until the position is filled.

October 25, 2016 in Joan Heminway, Jobs | Permalink | Comments (0)

Monday, October 24, 2016

The In-House Business Law Practice Alternative, A Personal Reflection

The summer before I entered law school, I worked in the legal department of a major international business firm.  I learned a lot.  But I realized by the end of the summer that most of the interesting legal questions and matters that the business firm generated (requiring transactional and litigation work) were farmed out to a veritable stable of law firms that represented the business firm on a regular basis.  I then determined (based on my very unscientific single-firm study) that in-house work was not for me.  That was 1982.

Fast-forward 15-or-so years.  By then, I had been working at a major international law firm for twelve years doing transactional work I enjoyed.  A client asked me to interview for an open in-house position.  I did.  I was ready to focus my attention on one business and had a good relationship with the in-house lawyers at the client firm.  Many friends had successfully moved to in-house jobs and were happy and well-adjusted in them (some after trying several to get the right fit).  I was in line to get the job.  But the client then determined to downsize and eliminated the open position.  

Several years later, I resolved to pursue a different path.   I decided to spend my second career teaching and writing about business law--a road well suited to me in many ways but less traveled by business law colleagues.  This was a harder decision to reach in many ways.  But I knew it was right, and in the end, I jumped in with two feet.  In 2000, The University of Tennessee College of Law gave me that opportunity.  The rest is a history that readers likely already know well.

What of the in-house road not taken?  

Continue reading

October 24, 2016 in Joan Heminway, Jobs | Permalink | Comments (6)

Monday, October 17, 2016

Research and Writing Question of the Day . . . .

Assume a state trial court issues an opinion in a particular case and the case is not appealed.  Should a legal scholar using the opinion to support or refute a key point (in the text of a written work) characterize the weight or status of the opinion (e.g., noting that it is a trial court opinion and that is has not been appealed)?  Justify your answer.

If the trial court at issue is the Delaware Chancery Court and the opinion addresses matters under the Delaware General Corporation Law, does that alter your answer?  Why?  Why not?

I am having fun considering these issues today in connection with my work on a symposium paper.  I have not yet decided how to handle the specific matter that raises the questions.  Accordingly, it seemed like a good idea at this juncture to share my questions and seek collaboration in answering them . . . .

October 17, 2016 in Corporate Governance, Corporations, Joan Heminway, Research/Scholarhip, Writing | Permalink | Comments (8)

Monday, October 10, 2016

2017 National Business Law Scholars Conference (NBLSC): Call for Papers

National Business Law Scholars Conference (NBLSC)
Thursday & Friday, June 8-9, 2017

Call for Papers

The National Business Law Scholars Conference (NBLSC) will be held on Thursday and Friday, June 8-9, 2017, at the University of Utah S.J. Quinney College of Law. 

This is the eighth meeting of the NBLSC, an annual conference that 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 eric.chaffee@utoledo.edu with an abstract or paper by February 17, 2017.  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 Speaker:

Lynn A. Stout, Distinguished Professor of Corporate & Business Law, Cornell Law School


Plenary Author-Meets-Reader Panel:

Selling Hope, Selling Risk: Corporations, Wall Street, and the Dilemmas of Investor Protection by Donald C. Langevoort, Thomas Aquinas Reynolds Professor of Law, Georgetown Law School

Commentators:

Jill E. Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School

Steven Davidoff Solomon, Professor of Law, University of California, Berkeley School of Law

Hillary A. Sale, Walter D. Coles Professor of Law, Washington University School of Law


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 (University of Utah S.J. Quinney College of Law)


Please save the date for NBLSC 2018, which will be held Thursday and Friday, June 21-22, at the University of Georgia School of Law

October 10, 2016 in Call for Papers, Conferences, Joan Heminway, Research/Scholarhip | Permalink | Comments (0)

Monday, October 3, 2016

SLR Online - Salman v. United States: Changing the Course of Insider Trading Law?

The Stanford Law Review Online has just released a series of essays on Salman v. United States, scheduled for oral argument on Wednesday.  I plan to blog more about the Salman case as/if I can find time this week, but I wanted you to have this link right away--first thing this morning.  The essays are a veritable insider trading feast and are written by some of the most thoughtful scholars in the area: Jill Fisch, Don Langevoort, Jonathan Macey, Donna Nagy, and Adam Pritchard.  There's something in at least one of the essays for almost everyone out there.

October 3, 2016 in Joan Heminway, Securities Regulation | Permalink | Comments (0)

Monday, September 26, 2016

More On Salman As The Date For Supreme Court Oral Argument Approaches . . . .

In recent weeks, co-bloggers Ann Lipton and Anne Tucker both have posted on issues relating to the upcoming Supreme Court oral argument in Salman v. U.S.  Indeed, this is an important case for the reason they each cite: resolution of the debate about whether the receipt of a personal benefit should be a condition to tippee liability for insider trading (under Section 10(b) of/Rule 10b-5 under the Securities Exchange Act of 1934, as amended), when the tipper and tippee are close family members.  Certainly, many of us who teach and litigate insider trading cases will be watching the oral argument and waiting for the Court's opinion to see whether, and if so, how, the law evolves.

Having noted that common interest (as among many) in the Salman case, as I earlier indicated, I have a broader interest in the Salman case because of a current project I am working on relating to family relationships and friendships in insider trading--both as a matter of tipper-tippee liability (as in Salman) and as a matter of the duty of trust and confidence necessary to misappropriation liability.  The project was borne in part of a feeling that I had, based on reported investigations and cases I continued to encounter, that expert network and friends-and-family insider trading cases were two very common insider trading scenarios that implicate uncertain insider trading doctrine under U.S. law.

While I have been distracted by other things, my research assistant has begun to gather and reflect on the data we are assembling about publicly reported friends and family insider trading acting between 2000 and today.  Here are some preliminary outtakes that may be of interest based on the first 40 cases we have identified.

  • 16 of the cases involve friendships;
  • 7 cases involve marital relationships;
  • 7 cases involve romantic relationships outside marriage (e.g., lover, mistress, boyfriend); 
  • 5 cases involving siblings;
  • 3 cases involve a parent/child relationship; and
  • 3 cases on involve in-laws.

Those categories capture the vast majority of cases we have identified so far.  The cases represented in the list are primarily from 2011-2016.  Some cases involve more than one type of relationship.   So, the number of observations in the list above exceeds 40.

Another key observation is that most initial tippers in these cases are men.  Notable exceptions are SEC v. Hawk and SEC v. Chen, described in this 2014 internet case summary. Six cases found and analyzed to date involve female tippees.

Theories in the cases derive from both classical and misappropriation scenarios.  I will say more on that in a subsequent post.  For now, however, perhaps the most important take-away is that my intuition that there are many cases involving exchanges of material nonpublic information in family relationships and friendships appears to be solid.  Hopefully, the Court will help resolve unanswered questions about insider trading doctrine as applied in these cases, starting with the personal benefit question raised in Salman.

September 26, 2016 in Ann Lipton, Anne Tucker, Joan Heminway, Securities Regulation | Permalink | Comments (0)

Monday, September 19, 2016

Crowdfunding and Creatives

This Friday, I will co-present on a continuing legal education panel on "The New Crowdfunding Laws for Private Investors & Other Ways to Legally Raise Money For Your Project" at the Americanafest--the Americana Music Festival and Conference.   The program description is set forth below.

There have been significant changes in federal and state laws related to soliciting investors through crowdfunding and other types of investment activities.  These new changes are designed to make certain types of investments easier and more accessible to people and businesses who seek investors for their projects. This panel will discuss those new laws and strategies of how to seek small to moderate size investments under today’s federal and state law. The panel will also discuss “dos” and “don’ts” for those seeking out investors and what to look for when offered an investment opportunity.

I love cultivating this ground, even if I have done much of it in the past with different audiences.  I will prepare some specialized information relating to financing music and other creative projects, for example, for this program.  I also plan to discuss important traps for the unwary.

What I really want to know is: what else might folks working with and in the music industry (or with other artistic and creative business venturers) want to know?  I have some ideas based on my research on crowdfunding to date.  But send me your ideas . . . .  No doubt, a whole new discussion may be generated from audience questions.  But I would love to be as prepared as possible.

September 19, 2016 in Conferences, Crowdfunding, Joan Heminway | Permalink | Comments (4)

Monday, September 12, 2016

[Over]confidence in the C-Suite, Politics, and the Employment Interview Process

Interesting research has been done on overconfidence in business leadership (see, e.g., herehere, and here) and political behavior (see, e.g., here and here).  I periodically consult the literature in this area for use in my work.  It is fascinating and often helpful.

In my continuing career development advice to law students, and as a member of our faculty appointments committee at UT Law this year, however, I recently have come to notice and be concerned about overconfidence in job searches.  Specifically, I see law students who, in testing out a new confidence in their knowledge and skills, overdo it a bit and over-claim or come across as unduly self-important.  I also see faculty candidates who have registered for the Association of American Law Schools Faculty Appointments Register (FAR) puff and oversell--using the comment areas to make cringe-worthy self-aggrandizing statements about their teaching or scholarly background or abilities.

Most of us prefer to associate with confident people.  Confidence in a leader or colleague is an attractive trait--one that we associate with strong governance and high levels of performance.  Confidence wins appointments, elections, and jobs.  Yet overconfidence, if recognized, is unattractive and often means lost opportunities.

Overconfidence is common.  Don Moore, a faculty member at Berkeley's Haas School of Business, notes this in a recent blog post on Overconfidence in Politics.

I study overconfidence among all sorts of people, from business leaders and politicians to college students and office workers. And my research shows that most people are vulnerable to overconfidence. We are excessively confident that we know the truth and have correctly seen the right path forward to prosperity, economic growth and moral standing. Research results consistently show that people express far more faith in the quality of their judgment than it actually warrants. . . .

How do those of us who advise law students enable them to be confident and show confidence without becoming overconfident--or projecting overconfidence?  In his post on résumés and interviews two years ago, co-blogger Haskell Murray advised students to avoid overstating their accomplishments.

Lawyers, perhaps more than other professionals, will call you out on any overstated items on your resume. While I have met plenty of arrogant lawyers, and perhaps was one, arrogance isn’t going to win you many supporters in the interview. Avoid vague self-congratulations (e.g., “provided excellent customer service.”). Stick to the specific, verifiable facts (e.g., “voted employee of the month in April 2012” or “responsible for a 35% increase in revenue from my clients.”).

I totally agree.  I also made a related point regarding the written word in my post on cover letters back in January.

. . . I see a significant number of cover letters that use strident adjectives and adverbs to help make their points. The sentences in these letters tend to smack of over-claiming. Also, in many cases, these adjectives and adverbs represent poor substitutes for well-chosen . . . stories. Most employers are likely to be more favorably disposed to the documentation of specific facts substantiating an applicant's suitability for an open position than they would be to sentences consisting of self-selected (and sometimes over-blown) characterizations of the applicant's suitability for that position.

But I have learned that the line between confidence and overconfidence, as important as it is in the job search process, can be a thin one.  And decisions about how to confidently--but not overconfidently--communicate with contacts, mentors, and prospective employers (among others) often must be made on one's own and quickly.  So, my bottom line advice to students is to focus generally in all communications, oral and written, on being other-regarding.  This article written by a Forbes Contributor makes some great observations and offers tips along those lines.  And if you can ask a trusted mentor to help you prepare for common questions or review the text of emails or letters, that's great.  

What else?  You tell me.  I am not confident that I know more . . . .  :>)

September 12, 2016 in Behavioral Economics, Joan Heminway, Jobs, Psychology | Permalink | Comments (8)

Friday, September 9, 2016

Nifty Student Question Regarding Career Communications By Email

As many of you already know, I regularly advise students (as so many of us do) on career planning and job searches.  This advice extends to communications in connection with career planning and job searches.  And I have blogged about all this.  I have posted in the past, for example, on networking letters (my post is here) and cover letters, for example (my most recent post is here). 

Yesterday, I got an email message from a student with a great question related to all this.  Here is the question: "What would you recommend as the subject line of an email to a contact you have been referred to by someone else?"  Nice.  Here's what I ended up writing back, in pertinent part.

 . . . Email titles are tricky.

The first thing I would do is ask if the person making the connection can e-introduce you with an email message and copy you in.  I have done that many times.  My script usually goes something like this:

[X], e-meet [Y].  As I explained to you earlier today, [Y] is the [title & affiliation].

[Y], [X] is a [year] at UT Law who is considering [career goal].  [X] is especially interested in working with [specific practice interest].  S/he has M/W/F time free in her/his academic schedule this fall, and she/he would love to find a targeted internship involving all or part of that time.  I thought you might be able to help me identify opportunities for [X}.  So, I offered to introduce you to each other by email in the hopes that you could help [X] find something suitable.

[Y], I know that you are always busy.  If this request is unduly burdensome, I fully understand.  Just let us know.  But if you have a little bit of time to make some suggestions to me and [X] on this, I hope that you will do so.

Best to all,

Joan Heminway

If that doesn't work, we're back to you sending the email on your own.  You may want to ask the person who gave you the connection if it's OK to copy him or her on the message you send, btw.  I think that adds credibility and can have other advantages, too.

As with many things, the answer to your question about recommended email subject lines is "it depends."  More specifically, it depends on the precise content, the context, and your style.  Sometimes, and this is consistent with my style, I will entitle an email like this--one to a stranger with whom I have some affinity--by referring to this affinity relationship in some way.  So, if the person is, e.g., an alum of UT Law, I might entitle the message: "Greetings from the UT College of Law."  If the only affinity is the mutual friendship, a similar approach might lead to a title like:  "E-introduction with Regards from Joan Heminway."

Do those kinds of suggestions resonate with you?  Let me know.  We can consider this the start of a conversation . . . .

I am not wholly satisfied with this response.  The first suggested subject line may be too generic (even though I have used it in the past) and the second sounds a bit formal for most students.  Maybe the second one is better cast this way: "E-introduction (and Warm Regards from Joan Heminway)."  At any rate, your ideas are most welcomed.  As I noted in my response to the student, I think this is an ongoing conversation . . . .

September 9, 2016 in Joan Heminway, Jobs | Permalink | Comments (3)

Tuesday, September 6, 2016

Private Ordering in the Uncorporation: Modified and Eliminated Fiduciary Duties Are Often the Same Thing

What does it mean to opt out of fiduciary duties?  In follow-up to my co-blogger Joan Heminway's post, Limited Partnership Law: Should Tennessee Follow Delaware's Lead On Fiduciary Duty Private Ordering?, I will go a step further and say all states should follow Delaware's lead on private ordering for non-publicly traded unincorporated business associations. 

Here's why:  At formation, I think all duties between promoters of an unincorporated business association (i.e., not a corporation) are always, to some degree, defined at formation. This is different than the majority of other agency relationships where the expectations of the relationship are more ingrained and less negotiated (think employee-employer relationship).  

As such, I'd make fiduciary duties a fundamental right by statute that can be dropped (expressly) by those forming the entity.  I'd put an additional limit on the ability to drop fiduciary duties: the duties can only be dropped after formation if expressly stated in formation documents (or agreed unanimously later). That is, if you didn't opt out at formation, tell all those who could potentially join the entity how you can change fiduciary duties later. This helps limit some (though not all) freeze-out options, and I think it would encourage investors to check the entity documents closely (as they should).

At formation, the concerns we might have of, for example, an employee without fiduciary duties, are not the same as they are for co-venturers. Those starting an entity have long negotiated what is a breach of the duty of loyalty, for example.  In contrast, I think fiduciary duties in most employer-employee (and similar) relationships reflect the majoritarian default and they facilitate the relationship existing at all. For LLCs and partnership entities, I think that's less clear. Entity formation is relatively rare compared to how often we enter other agency relationships, and they almost always involve significant negotiation (if not planning).  And if they don't, the rules we expect traditionally should be the default. But where the parties talk about it, and they usually do, allowing a more robust sense of freedom of contract has value.  

Even in Delaware, where one can negotiate out of fiduciary duties, there remains the duty of good faith and fair dealing. I think of that as meaning that the parties still have a right to the essence of the contract.  That is, the contract has to mean something.  It has to have had a purpose and potential value at formation, and no party can eliminate that.  But, the parties only have a right to what was bargained for.  As such, what we might traditionally consider a breach of the duty of loyalty could also breach the duty of good faith and fair dealing, but a traditional breach of the duty of loyalty might not be sufficient to find liability where there is expressly no duty of loyalty. Instead, the act must so contradict the purpose of the contract that it rises to the level of a breach the duty of good faith and fair dealing. 

Part of the reason I support this option is that I think case law has already validated it, but in such an inartful manner that it confuses existing doctrine. See, e.g.McConnell v. Hunt Sports Enterprises132 Ohio App. 3d 657, 725 N.E.2d 1193 (Ct. App. 1999) (“An LLC, like a partnership, involves a fiduciary relationship. Normally, the presence of such a relationship would preclude direct competition between members of the company. However, here we have an operating agreement that by its very terms allows members to compete with the business of the company.”).

In closing, I will note that I am all for express provisions that require investors to pay attention at the outset. I don't believe in helping cheaters hide the ball. I just think law that encourages investors and others joining new ventures to pay attention is useful and will provide long-term value to entities.  I don't think that eliminated fiduciary duties at formation raise any more of a risk than we already have with limited or modified fiduciary duties at formation. With the more limited protections described above, freedom of contract should reign. 

September 6, 2016 in Corporations, Delaware, Joan Heminway, Joshua P. Fershee, Legislation, LLCs, Negotiation, Partnership, Unincorporated Entities | Permalink | Comments (1)

Monday, September 5, 2016

Limited Partnership Law: Should Tennessee Follow Delaware's Lead On Fiduciary Duty Private Ordering?

I originally was going to write about overconfidence today.  But I will reserve that post for a later date.  Instead, for today, I am sharing with you a Tennessee legislative drafting issue on which my voice (together with the voices of others) has been solicited and asking for your views and comments.

A committee of the Tennessee Bar Association has been working on proposed revisions to the Tennessee Revised Uniform Limited Partnership Act.  Several thorny issues remain for consideration and final decision making, among them, whether Tennessee law, like Delaware limited partnership and limited liability company law, should allow for the elimination of general partner fiduciary duties.  The committee soon will be voting on this issue, and we are circulating among us our current views (having earlier debated the matter in telephone conference calls).  I took a shot at writing down my views for the group and circulated them last night.  I am including the main substantive part of what I wrote here, minus some typos that I caught after the message was sent (and please forgive the disfluencies in places), and requesting comments from you:

Continue reading

September 5, 2016 in Business Associations, Joan Heminway, Legislation, Partnership | Permalink | Comments (4)

Sunday, September 4, 2016

A Toast To Laborers On Labor Day

Although I knew that Labor Day was a creation of the labor movement (about which I have mixed views), I had never looked up the history of the holiday in the United States.  The Department of Labor, unsurprisingly, has a nifty, short webpage with some nice historical facts.  Among them: the holiday has roots back into the 1880s and was originally a municipal creation, then became a state holiday in a number of states before Congress approved the holiday in 1894.  The brief history on the webpage concludes with the following paragraph:

The vital force of labor added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute on Labor Day to the creator of so much of the nation's strength, freedom, and leadership — the American worker.

Great stuff.  

Labor and employment lawyers have focused commentary over the past week on legal matters relating to their spheres of influence in acknowledging Labor Day.  Proskauer partner Mark Theodore posted a piece on a pair of recent NLRB decisions, and a union commentator, executive director of the Center for Union Facts, posted an advocacy piece promoting proposed federal legislation--the Employee Rights Act (which, according to the article, is "legislation which would protect employees from out-of-touch union bosses.").  

All of this may be of interest to business lawyers.  Or it may not.  But tomorrow, I will honor the holiday by working--at least for part of the day.  And that does seem, somehow, fitting . . . .

September 4, 2016 in Employment Law, Joan Heminway, Legislation | Permalink | Comments (0)

Monday, August 29, 2016

First time this has happened in 16+ years of law teaching . . . .

Imagine this: Professor walks into Business Associations class Monday morning at 8:00 am having prepared to cover 14 pages of reading when she assigned only three (intending, when creating the syllabus, as she later recalled, to use the time to summarize, contrast, and compare agency law rules that will again come into play in partnership and other entity law--and to catch up, if need be).  OK.  The professor is me.  First lesson (which I thought I had learned many moons ago): always double-check the syllabus on what you've assigned.
 
So, what happened in class?  Well, the students didn't let on that the outline for the class plan that I scripted out on the whiteboard seemed to go beyond the reading.  But they might not have recognized that, since it was only an outline.  However, once I started covering the unassigned material, someone did alert me to my error.  Shocked (!), I told them that I had been too nice (weak response) and that--obviously--I had not checked the syllabus to confirm the day's reading assignment before scripting out the class plan and preparing for class.
 
I didn't then let the students go after learning of the mistake (having covered in summary fashion those three pages in about 15 minutes of class time). Instead, I constructed a hypothetical set of facts relating to a business conducted as a sole proprietorship from the facts of the partnership case on the syllabus for Wednesday (which I had prepared to cover for today) and asked the students to analyze contract and tort liability based on the hypothetical using the agency law rules we covered over the past four classes.  Detriment: people weren't prepared for this based on the prompts in the syllabus for today's class, and it took a while (and a board diagram) to establish the facts of the hypothetical with some (albeit far-from-perfect) clarity.  Benefit: many students learned that they don't yet know/understand agency law, and I got the opportunity to give the students a few pointers on how partnership law will be different from agency law.
 
Did I make the right choice?  I am following up with a post on the course TWEN site to capture the agency law rules we covered in class (to which the students did not have many salient citations).  What else can I do to take this lemon and turn it into lemonade?  All suggestions are welcomed.

August 29, 2016 in Agency, Business Associations, Joan Heminway, Partnership, Teaching | Permalink | Comments (9)

Monday, August 22, 2016

A Bit More Title III Crowdfunding Data . . . .

We are now more than three months into the Title III crowdfunding experiment.  I have been wanting to get back to posting on Title III crowdfunding since my "LIVE" post back in May, but so much other fun stuff has been going on!  So, to make me feel a bit better on that point, I will share some current crowdfunding data with you all in this post based on publicly available information obtained from a Westlaw search performed yesterday (Sunday, August 21, 2016).  [Note to the powers that be at the SEC:  EDGAR makes it hard to find the aggregated set of Form C filings unless you are collecting data on an ongoing basis.  I hope that changes as EDGAR continues to improve . . . .]  

At the outset, I will note that others have offered their own reports on Title III crowdfunding since I last posted (including here, here, and here).  These reports offer some nice summaries.  This post offers a less comprehensive data dump focusing in on completed offerings and withdrawn offerings.  At the end, I offer some limited observations from the information provided here about crowdfunding as a small-business capital-raising alternative, the need for EDGAR adjustments, inferences about the success of Title III crowdfunded offerings, and platform disclosure about withdrawn offerings.

First, however, the top-level Westlaw-based summary:

Total Form C filings: 85 (275 filings show on Westlaw, but only 85 are non-exhibit filings representing distinct offerings)
Total Form C/A filings (amendments, including exhibit filings): 153
Total Form C-U filings (updates): 4
Total Form C-W filings (withdrawals): 2

The remainder of this post takes a shallow dive into the updates and withdrawals.  Filings in each case are presented in reverse chronological order by filing date.  All referenced dates are in 2016.  Issuer names are copied from filings and may not be the actual legal names of the entities.

Continue reading

August 22, 2016 in Corporate Finance, Crowdfunding, Entrepreneurship, Financial Markets, Joan Heminway, Securities Regulation | Permalink | Comments (0)

Monday, August 15, 2016

Do Clothes Make the Lawyer? Maybe They Do . . . .

As many of you know, I often like to post on issues relating to advising students (witness my cover letter posts, the most recent of which can be found here).  I also like to post from time to time on issues relating to fashion and the law (e.g., this post).  And sometimes, I fuse the two in a single post.  This post is one of those fusion posts.

Many of us intuitively understand that clothing affects not only the perceptions others have of us but also the perceptions we have of ourselves.  Some of us may even have done research to unearth evidence that these intuitions have some empirical traction.  But can what you wear affect your performance?  Research provides some evidence that it can.

Researchers at Northwestern University have identified a "systematic influence that clothes have on the wearer's psychological processes" that they term "unclothed cognition."  Their research, published in the Journal of Experimental Social Psychology in 2012, found that the attentiveness of the subjects was higher when wearing a lab coat than it was when they were not wearing a lab coat or were wearing a lab coat described as a painter's coat. The research was fairly widely reported at the time.  Although the study explored the effects of wearing a lab coat, one can see how the results may also hold for people wearing other performance-linked clothing, like athletic wear or other professional clothing, including business suits.  (A subsequent study on the cognitive effects of business suits can be found here.  More general commentary is available here and elsewhere.)

Admittedly, the results of these studies and others like them are qualified and the research in this field is at an early stage.  Having said that, as our students start interviewing for jobs and engaging in clinical practice and other experiential learning in the new semester, the possible effect of clothing on performance may be a relevant footnote for them.  I admit that I am not a fan of dress codes, as a general rule.  However, I may mention these studies to my students so that they can use the information in their decision-making, if they so choose.

August 15, 2016 in Joan Heminway, Jobs, Psychology | Permalink | Comments (10)