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.
Tuesday, September 1, 2015
A couple weeks ago, I wrote Ten Promises For New Law Students to Consider, which discussed the promises I made to myself when I went to law school. It seems to me appropriate that I should follow up with something applies to me now.
This list for law professors (or at least, this law professor) includes some of the promises I made myself when I left practice, and some that have evolved over the almost decade I have been teaching. It's hard to believe this is my tenth year as a full-time teacher.
To that end, here are my suggestions for faculty members, based on my experience. I don't always keep these promises, but (as I did with the law school promises) I try. This list is even less exhaustive than my last effort, and I welcome additions to the list in comments. I am not going to lie, this was a harder list to make, and it's a challenge to fulfill them all (especially #6).
(1) To be intentional. That is, I will choose books, assign readings and exercises, and draft paper assignments and exams with a purpose. They may not always be the best choice, but there will be a reason (supported by good intent) they were chosen.
(2) To remember, whether it's related to demeanor, effort, or analysis, that I cannot be the benchmark for all my students. They are not me, and I am not them. We all have a story, and it is (in some way) unique.
(3) To remember that, while kindness, sympathy, and empathy are essential skills to being a good teacher, colleague, and human being, they are not inconsistent with high expectations.
(4) To keep connected to practice and to people with non-academic jobs so that I can keep current and grounded in the practical realities of life as an attorney and member of a broader community.
(5) To take pride (and risks) in my work in an effort to be better at what I do and to evolve in all aspects of my work -- teaching, research, and service. (Old dogs can learn new tricks.)
(6) To recognize boundaries and to be kind and patient with my family because who I am at home impacts who I am at work (and vice versa).
(7) To do my best to get enough sleep and enough exercise.
(8) To find the fun in my work when I can, and not forget that one of the best parts of being an academic is writing about things I choose (not that my clients choose) and taking positions I think are right.
(9) To be friendly and helpful to build relationships so that the community I know is a community I want. This includes my faculty colleagues, our staff and support colleagues, and our student colleagues.
(10) To understand that I cannot be everything to everyone and that opportunity costs are real. Thus, as I seek to fulfill John Wooden's ideal -- "Don't measure yourself by what you have accomplished, but by what you should have accomplished with your ability."-- I will keep in mind that accomplishments are more than articles written and classes taught. They include those, but they also include things like laughs, hugs, bike rides, soccer games, swing sets, sunsets, beaches, and good food. Beer, wine, and cocktails, are sometimes a nice touch, too.
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.
Monday, August 24, 2015
I begin my 30th year of law teaching today. I can still remember that hot August day I first stepped into the huge, tiered classroom at SMU. Standing on the raised platform facing a mob of over a hundred eager students. The low hum generated by dozens of pre-class conversations. The feeling of inferiority as all those pairs of eyes checked out the newest professor.
I was scared to death. I had spent the summer reviewing the law of business associations—reading and highlighting the casebook; reading a corporate law treatise; reading law review articles. I had extensive teaching notes in front of me that first day, some of them cribbed from class notes that the late Alan Bromberg had generously shared with me. But I didn’t have a clue how to teach. For the most part, I was mimicking what my own law school professors had done, without realizing why they had done what they did.
It didn’t go well at first. I was shy and hesitant, and students could sense my lack of confidence. Many of the students weren’t as prepared as I’d hoped, and I wasn’t sure how to draw them out and build on what they understood. Some of the students weren’t that eager to learn the law of business associations, and I didn’t have a clue how to motivate them. My first-semester evaluations were horrible.
Things have changed significantly since I began teaching. I’ve changed. I’m no longer afraid as I walk into the classroom; decades of teaching have turned my fear into just a slight tinge of anxiety. The evaluations aren’t as bad; I’ve learned how to teach, and I succeed more often than not. I have even won teaching awards.
The classroom has also changed. When I started teaching, I wasn’t competing with Facebook, online shopping, and email. I don’t think anyone in my first class had a laptop. When I started teaching, PowerPoint wasn’t an option. SMU didn’t even have whiteboards; I had to regularly brush chalk off my clothes. When I started teaching, professors distributed syllabi and supplemental reading via photocopy and e-books weren’t available. Today, I distribute all supplemental material over the Internet and one of my courses is wholly online.
Some things haven’t changed that much. Some of the students are still underprepared. Some of them still aren’t that interested in business associations, taking the class only because they know it will be on the bar. And it’s still a chore to end that hum of pre-class conversations when it’s time to start.
But it’s been a great career. I enjoy what I’m doing, except when administrative hassles interfere with my teaching and research—something that, unfortunately, seems to happen more often with seniority.
If you’re new to law teaching, persevere through the challenges. Learn as your students learn and try to have fun. Law teaching is an awesome responsibility, but, in spite of the struggles, it can be an incredibly rewarding experience. I hope you too can look back after thirty years with a feeling of satisfaction and accomplishment.
If you're a student, give those new teachers a break. They're learning, just like you. Take out your frustrations on the old fogies like me.
Monday, August 17, 2015
Bad PowerPoint is ubiquitous. PowerPoint presentations are like writing: anyone can do them, but few people can do them well. And the number of people who think they do them well is much greater than the number of people who actually do.
As anyone who has attended a legal conference can attest, many of us don't have a clue about how to design effective PowerPoint presentations. The result is distracted audiences, confusing presentations, and ineffective teaching.
The fault is not in the PowerPoint tool. The fault is in how people use the tool. As Peter Norvig has said,
PowerPoint doesn’t kill meetings. People kill meetings. But using PowerPoint is like having a loaded AK-47 on the table: You can do very bad things with it.
As I mentioned in an earlier post, I spoke at this summer’s annual conference of the Center for Computer-Assisted Legal Instruction (CALI). My topic was How to Ruin a Presentation with PowerPoint. That presentation is now available on YouTube.
My presentation focuses on some of the most common mistakes people make in creating PowerPoint presentations and discusses how to improve your PowerPoint presentations. My comments aren’t limited to the Microsoft product. Almost everything I say is also applicable to other presentation software and most of what I say also applies to graphics created for videos.
My focus is on slide design and content, not on the intricacies of PowerPoint. I don’t try to teach you all the magic things PowerPoint can do or make you a power user of PowerPoint. In fact, many of the amazing things PowerPoint can do aren't particularly good for presentations. Instead, I point out the horrors of bad PowerPoint and give people some simple hints for making more effective presentations.
The hour-long presentation is here, if you want to watch it.
The CALI conference, as usual, included a number of excellent presentations on teaching with technology and innovations in legal education. You can see all of the videos here.
If you're an academic interested in technology, you really ought to attend one of the CALI annual conferences. There's a nice mix of law school technologists, librarians, and faculty. I always learn something new. Everyone I know who has gone has come away wanting to go again.
Thursday, August 13, 2015
Apparently the corporate tax inversion crackdown by the Obama administration is not working. The Financial Times reported this week that three companies have announced plans to redomicile in Europe in just one week. I’m not sure that I will have time to discuss inversions in any detail in my Business Associations class, but I have talked about it in civil procedure, when we discuss personal jurisdiction.
From my recent survey monkey results of my incoming students, I know that some of my students received their business news from the Daily Show. In the past I have used Jon Stewart, John Oliver, and Stephen Colbert to illustrate certain concepts to my millennial students. Here are some humorous takes on the inversion issue that I may use this year in class. Warning- there is some profanity and obviously they are pretty one-sided. But I have found that humor is a great way to start a debate on some of these issues that would otherwise seem dry to students.
1) Steve Colbert on corporate inversions-1- note the discussion on fiduciary duties
3) Jon Stewart- inversion of the money snatchers and on corporate personhood toward the end.
For those of you who are political junkies like me, I thought I would share a video that I showed when I taught a seminar on corporate governance, compliance, and social responsibility. This video focuses on political campaigns, and for a number of reasons, this campaign season seems to be in full gear already. Indeed, Professor Larry Lessig from Harvard is mulling a run for president in part to highlight the need for reform in campaign financing. Below is Stephen Colbert’s take on SuperPACs and political financing.
1) Colbert's shell corporation- note the discussion of the incorporation in Delaware and the meeting of the board of directors
Enjoy, and best of luck for those starting classes next week.
August 13, 2015 in Business Associations, Compliance, Corporate Governance, Corporate Personality, Corporations, Current Affairs, International Business, Law School, Marcia Narine, Teaching, Television | Permalink | Comments (0)
Wednesday, August 12, 2015
This weekend I will be in Panama filling in at the last minute for the corporate law session for an executive LLM progam. My students are practicing lawyers from Nicaragua, El Salvador, Costa Rica and Paraguay and have a variety of legal backgrounds. My challenge is to fit key corporate topics (other than corporate governance, compliance, M & A, finance, and accounting) into twelve hours over two days for people with different knowledge levels and experiences. The other faculty members hail from law schools here and abroad as well as BigLaw partners from the United States and other countries.
Prior to joining academia I spent several weeks a year training/teaching my internal clients about legal and compliance matters for my corporation. This required an understanding of US and host country concepts. I have also taught in executive MBA programs and I really enjoyed the rich discussion that comes from students with real-world practical experience. I know that I will have that experience again this weekend even though I will probably come back too brain dead to be coherent for my civil procedure and business associations classes on Tuesday.
I have put together a draft list of topics with the help of my co-bloggers and based in part on conversations with some of our LLM and international students who have practiced law elsewhere but who now seek a US degree:
Agency- What are the different kinds of authority and how does that affect liability?
Key issues for entity selection
- ease of formation
- ownership and control
- tax issues
- asset protection/liability to third parties for obligations of the business /piercing the veil of limited liability
- attractiveness to investors
- continuity and transferability
Main types of business forms in the United States
-Partnership/General and Limited
- C Corporation
- S Corporation
- Limited Liability Company
Fiduciary Duties/The Business Judgment Rule
Basic Securities Regulation/Key issues for Initial Public Offering/Basic Disclosures (students will examine the filings for an annual report and an IPO)
The Legal System in the United States
-how do companies defend themselves in lawsuits brought in the United States?
-key Clauses to Consider when drafting dispute resolution clauses in cross border contracts
Corporate Social Responsibility- Business and Human Rights
Enterprise Risk Management/What are executives of multinationals worried about?
Yes, this is an ambitious (crazy) list but the goal of the program is to help these experienced lawyers become better business advisors. Throughout the sessions we will have interactive exercises to apply what they have learned (and to keep them awake). So what am I missing? I would love your thoughts on what you think international lawyers need to know about corporate law in the US. Feel free to comment below or to email me at email@example.com. Adios!
August 12, 2015 in Business Associations, Comparative Law, Compliance, Corporate Governance, Corporations, CSR, Human Rights, International Business, International Law, Lawyering, Litigation, LLCs, Marcia Narine, Securities Regulation, Teaching | Permalink | Comments (0)
Monday, August 10, 2015
As I continue my (futile?) quest to exhaust my electronic reading pile before the fall semester begins, I recently read a nice article on business lawyering: Praveen Kosuri, Beyond Gilson: The Art of Business Lawyering, 19 LEWIS & CLARK L. REV. 463 (2013), also available on SSRN here.
Kosuri asks what distinguishes great business lawyers, and develops a three-tiered pyramid of the skills that transactional business lawyers need. At the bottom of the pyramid are what Kosuri calls foundational skills: reading and understanding contracts; research and drafting; financial literacy; and a basic knowledge of business law. The next level of the pyramid, which Kosuri calls transitional skills, includes negotiation; structuring deals; risk management; and transaction cost engineering. The top level of the pyramid, which Kosuri calls optimal skills, includes understanding business; understanding people; problem-solving; and advising.
Kosuri then considers who would be best at teaching each of those categories of skills and how to teach them. I don’t agree with everything he says, but the article is insightful and certainly worth reading.
Here’s the abstract:
Thirty years ago, Ronald Gilson asked the question, “what do business lawyers really do?” Since that time legal scholars have continued to grapple with that question and the implicit question of how business lawyers add value to their clients. This article revisits the question again but with a more expansive perspective on the role of business lawyer and what constitutes value to clients.
Gilson put forth the theory of business lawyers as transaction cost engineers. Years later, Karl Okamoto introduced the concept of deal lawyer as reputational intermediary. Steven Schwarcz attempted to isolate the role of business lawyer from other advisors and concluded the only value lawyers added was as regulatory cost managers. All of these conceptions of business lawyering focused too narrowly on the technical skills employed, and none captured the skill set or essence of the truly great business lawyer. In this article, I put forth a more fully developed conception of business lawyer that highlights skills that differentiate great business lawyers from the merely average. I then discuss whether these skills can be taught in law schools and how a tiered curriculum might be designed to better educate future business lawyers.
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.
Monday, August 3, 2015
Should We Include More International Materials in the Basic Business Associations and Securities Regulation Courses?
Joan Heminway’s post last week about comparative corporate law got me thinking about international coverage in my own courses. Joan’s post reviewed a book designed for a stand-alone comparative corporate law course, but I’ve been wondering whether we should include more comparative material in the basic business associations and securities regulation courses.
The case for discussing the corporate and securities law of other countries is clear. Capital markets are becoming increasingly global. U.S. companies are selling securities in other countries and U.S. investors are investing in foreign companies. Initially, globalization affected primarily large multinational companies, but with the expanding use of the Internet to sell securities, even the smallest business can offer securities to investors in other countries.
Under the internal affairs rule, it’s the corporate law of the country of incorporation that’s important, no matter where the lawyer is practicing or where the corporation or the shareholder is located. And a company selling securities to investors outside the U.S. needs to consider the effect of other countries’ securities laws. Foreign counsel may be retained to deal with such issues, but shouldn’t the U.S. lawyer have at least a rudimentary understanding of foreign corporate and securities laws and how they differ from U.S. law?
I spend no time on comparative analysis in either my business associations or my securities regulation course.
I could blame the textbook authors. The book I use in Business Associations includes almost nothing about corporate law outside the United States. That’s typical. Franklin Gevurtz has written a wonderful supplement on comparative corporate law, Global Issues in Corporate Law, but business associations casebooks generally ignore comparative issues.
The book I use for Securities Regulation covers the application of U.S. registration requirements and antifraud rules to transactions outside the United States, but it doesn’t discuss foreign securities law. (A prior edition did, but that material was eliminated from the most recent edition.) This book’s approach is also typical. Other securities regulation casebooks cover the extraterritorial application of U.S. law, but offer little or no comparative analysis of the law of other jurisdictions.
The casebook authors ought to do more, but that’s an inadequate excuse. I include a lot of supplemental material that isn’t in the textbook, especially in Business Associations. It wouldn’t be too hard for me to create supplemental material to add a comparative perspective to my courses.
Perhaps this is just one of those areas where I have fallen into the rut of teaching what my professors taught me. My memory may be faulty, but I don’t recall any international coverage when I took those courses 30+ years ago—which is interesting, because my Corporations professor, Detlev Vagts, was a noted international law scholar.
But it’s mostly an issue of time. At most law schools, corporate and securities law is crammed into a few credit hours, unlike constitutional law other, more favored subjects I won’t name. I, like most corporate law teachers, don’t have the luxury of adding topics. It’s hard enough to cram agency, partnership, limited partnership, limited liability companies, corporations, and some securities law into a single four-hour Business Associations course.
Nevertheless, I’m going to review my coverage carefully and see if I can sneak in more comparative materials. In today’s global environment, even students in Nebraska ought to be exposed to at least some foreign corporate and securities law.
Thursday, July 30, 2015
Last week I attended a panel discussion with angel investors and venture capitalists hosted by Refresh Miami. Almost two hundred entrepreneurs and tech professionals attended the summer startup series to learn the inside scoop on fundraising from panelists Ed Boland, Principal Scout Ventures; Stony Baptiste, Co-Founder & Principal, Urban.Us, Venture Fund; Brad Liff, Founder & CEO, Fitting Room Social, Private Equity Expert; and (the smartest person under 30 I have ever met) Herwig Konings, Co-Founder & CEO of Accredify, Crowd Funding Expert. Because I was typing so fast on my iPhone, I didn’t have time to attribute my notes to the speakers. Therefore, in no particular order, here are the nuggets I managed to glean from the panel.
1) In the seed stage, it’s more than an idea but less than a business. If it’s before true market validation you are in the seed round. At the early stage, there has been some form of validation, but the business is not yet sustainable. Everything else beyond that is the growth stage.
2) The friend and family round is typically the first $50-75,000. Angels come in the early stage and typically invest up to $500,000.
3) The seed rounds often overlap with angels and businesses can raise from $500,000 to $1,000,000. If you have a validated part of a business model but are not self funding then you are at Series A investment stage. You still need outside capital despite validation. The Series A round often nets between $3-5 million and then there are subsequent rounds for growth until the liquidity event which is either the IPO or acquisition.
4) Venture capitalists are investing their LPs' money and often the LP will co-invest with the VC. Their ultimate goal is for the company to get acquired or go public.
5) At the early stages some VCs will show a deal to other investors if it looks good. Later stage VCs will become more competitive and will keep the information and good deals to themselves.
6) It’s important to find a lead investor or lead angel to champion your idea.
7) Not all funding is helpful. Some panelists discussed the concepts of “fallen angels” or “devils,” which were once helpful but now are not providing value but still take up time and energy that could be better spent focusing on building the business. “False angels” are those who could never have been helpful in the first place.
8) You don’t want to be the first or the last check the angel is writing. You want to get references on the angel investor and see where they have invested and what their plan is for you.
9) There is smart money and dumb money. Smart money gives money and additional resources or value. Dumb money just gives money and nothing else. It’s passive and doesn’t jump into the business (note the panelists disagreed as to whether this was a good or bad thing). Another panelist noted the distinction between helpful and harmful money. Harmful people think they are helpful and give advice when they don’t have a lot to add but take up a lot of time. Sometimes helpful money just gives a check and then gets out of the way. It’s the people in between that can cause the problems.
10) VCs and angels invest in teams as well as ideas. They look for the right fit and a mix of veteran entrepreneurs, a team/product fit, a mix of technical and nontechnical people, professionals whose reputations and resumes can be verified. They want to know whether the people they are investing in have been in a competitive environment and have learned from success or failure.
11) Crowdfunding can be complicated because investors don’t meet the entrepreneurs. They see everything on the web so the reputation and the need for a good team is even more important.
12) Convertible notes are the “gold standard” according to one speaker and it’s the workhorse for funding. There was some discussion of safe notes, but most panelists didn't have a lot of experience with them and that was echoed this week by attorney David Salmon, who advises small businesses and holds his own monthly meetups. One panelist said that the sole purpose of safe notes was to avoid landmines that can blow up the company. Another panelist indicated that from an investor standpoint it’s like a blackhole because it’s so new and people don’t know what happens if something goes wrong.
13) The panelists indicated that businesses need to watch out for: the maturity date for their debt (how long is the runway); when can the investors call the note and possibly bankrupt the company; how will quirky covenants affect the next round of financing and where later investors will fall in line; and covenants that are easy to violate.
14) There was very little discussion of Regulation A+ but it did raise some interest and the possibility to raise even more funds from non-accredited investors. Only 3% of the eight million who can invest through crowdfunding actually do, so Reg A+ may help with that.
16) All of the panelists agreed that entities may start out as LLCs but they will have to convert to a C Corp to get any VC funding.
There was a lot more discussion but this post is already too long. Because I've never been an angel nor sought such funding, I don’t plan to provide any analysis on what I’ve typed above. My goal in attending this and the other monthly events like this was to learn from the questions that entrepreneurs ask and how the investors answer. Admittedly, most of my students won’t be dealing with these kind of issues, but I still introduce them to these concepts so they are at least familiar with the parlance if not all of the nuances.
July 30, 2015 in Business Associations, Corporate Finance, Corporate Governance, Corporations, Current Affairs, Entrepreneurship, Financial Markets, International Business, Law School, Legislation, LLCs, Securities Regulation, Teaching | Permalink | Comments (0)
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.
Friday, July 24, 2015
For a university discussion group this summer, I read William Deresiewicz's book Excellent Sheep: The Miseducation of the American Elite and the Way to a Meaningful Life (2014).
Deresiewicz, a former Yale English professor, caused quite a stir in higher education circles with his Don't Send Your Kid to the Ivy League article in the New Republic (and other articles in various outlets), which promoted Excellent Sheep pre-publication.
Deresiewicz's attack on the ivy league can be summarized as follows:
- Encourages a system that leads to resume-padding instead of authentic learning and service
- Too much focus on future financial success and not enough focus on life's big questions
- Not enough socioeconomic diversity
- Faculty preoccupied with research and do not spend enough time on teaching/service
- Risk-taking is not encouraged; error for margin for students is too small
- Coursework not rigorous enough
- Students are kept doing busy-work rather than allowed to explore
- Encourages a system that can lead to depression, isolation, etc.
Deresiewicz taught at Yale for 10 years and was supposedly denied tenure in 2008. When I found out that Deresiewicz's was denied tenure, I was tempted to write off his book as sour grapes, but I think it best to evaluate his claims on their own merit.
In my view, Deresiewicz doesn't bring much new to the conversation, and a number of his challenges to the ivy league could be brought against many colleges and universities. His proposed solution is for students to consider attending a small liberal arts college (where teaching is still a priority) or a state school (where there is much more true diversity). Deresiewicz, however, seems to underestimate the value of connections, brand, resources, and opportunities at ivy league schools.
Deresiewicz also laments the dwindling interest in the liberal arts and the increasing focus on majors that are more directly profession-focused (like economics and finance). While Deresiewicz seems to realize the risk in turning down an ivy league education and also choosing a major like History or English, he does not seem to fully realize how some students simply cannot afford those risks. While return on investment should certainly not be the only focus in choosing a school and a major, it is rightfully important to many.
Personally, I don't think the entire 242-page book was worth the read. There simply was not much new, aside from a few glimpses behind the curtain at Yale. If I had it to do over again, I probably would have just stuck with Deresiewicz's article and the responses (e.g., here and here).
Thursday, July 23, 2015
TEXAS A&M UNIVERSITY SCHOOL OF LAW seeks to expand its academic program and its strong commitment to scholarship by hiring multiple exceptional faculty candidates for tenure-track or tenured positions, with rank dependent on qualifications and experience. Candidates must have a J.D. degree or its equivalent. Preference will be given to those with demonstrated outstanding scholarly achievement and strong classroom teaching skills. Successful candidates will be expected to teach and engage in research and service. While the law school welcomes applications in all subject areas, it particularly invites applications from:
1) Candidates who are interested in building synergies with Texas A&M University’s Mays Business School, with an emphasis on scholars engaged in international business law who focus on cross-border transactions, trade, and economic law (finance, investments, dispute resolution, etc.);
2) Candidates who are interested in building synergies with the broad mission of Texas A&M University’s College of Agricultural and Life Sciences, which include but are not limited to scholars engaged in agricultural law (including regulatory issues surrounding agriculture), rural law, community development law, food law, ecosystem sciences, and forensic evidence; and
3) Visionary leaders in experiential education interested in guiding our existing Intellectual Property and Technology Law Clinic (with concentrations in both trademarks and patents), Entrepreneurship Law Clinic, Family Law and Benefits Clinic, Employment Mediation Clinic, Wills & Estates Clinic, Innocence Clinic, Externship Program, Equal Justice/Pro Bono Program, and Advocacy Program, with a particular emphasis on candidates who may have an interest in participating in our Intellectual Property and Technology Law Clinic or developing an Immigration Law Clinic.
Texas A&M University is a tier one research institution and American Association of Universities member. The university consists of 16 colleges and schools that collectively rank among the top 20 higher education institutions nationwide in terms of research and development expenditures. As part of its commitment to continue building on its tradition of excellence in scholarship, teaching, and public service, Texas A&M acquired the law school from Texas Wesleyan University in August of 2013. Since that time, the law school has embarked on a program of investment that increased its entering class credentials and financial aid budgets, while shrinking the class size; hired eleven new faculty members, including nine prominent lateral hires; improved its physical facility; and substantially increased its career services, admissions, and student services staff.
Texas A&M School of Law is located in the heart of downtown Fort Worth, one of the largest and fastest growing cities in the country. The Fort Worth/Dallas area, with a total population in excess of six million people, offers a low cost of living, a strong economy, and access to world-class museums, restaurants, entertainment, and outdoor activities.
As an Equal Opportunity Employer, Texas A&M welcomes applications from a broad spectrum of qualified individuals who will enhance the rich diversity of the university’s academic community. Applicants should email a résumé and cover letter indicating research and teaching interests to Professor Timothy Mulvaney, Chair of the Faculty Appointments Committee, at firstname.lastname@example.org. Alternatively, résumés can be mailed to Professor Mulvaney at Texas A&M University School of Law, 1515 Commerce Street, Fort Worth, Texas 76102-6509.
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.
Friday, July 10, 2015
I’ve always been eager to do pro bono work. I went to law school with the intent of helping the indigent upon graduation, but then with a six-figure debt load, I went to BigLaw in New York and Miami, and then corporate America so that I could pay that debt off. But even as an associate and as in house counsel, I dutifully accepted pro bono cases. As a relatively new academic, I paid my way out of pro bono for the first couple of years as Florida allows and assuaged my guilt with the knowledge that my payments were going to fund the local legal aid office.
This year, as a condition of attending a family law CLE for free, I volunteered to take a case. I’ve devoted over 70 hours to it thus far, and we still aren’t finished even after today’s marathon 6.5 hour hearing dealing with a motion for contempt and enforcement, modification of alimony and child support, a QDRO (qualified domestic relations order), and a house in foreclosure. The case was complicated even according to my seasoned family law practitioner friends.
As a former litigator and current BA professor, I found that my skills helped to make up for my lack of family law expertise. The techniques for cross examining witnesses, preparing for hearing, and introducing exhibits came flooding back. From a BA perspective, knowing to ask questions about the structure of the petitioner’s LLC, inquiring about charging orders, and dissecting the financial statements and corporate tax returns put me in a much better position to protect my client’s interests. I always tell my students on the first day of BA that they never know where they will end up as practitioners, and that in today’s market many of them will be in small firms taking on a number of kind of clients. I try to make them understand how BA can help them in practice areas that don’t seem directly related to business. Now, thanks to this pro bono case I can back that up with proof from my own experience.
Thursday, June 25, 2015
In my final post on the subject of “respectability” of lawyers (the first four can be found here, here, here and here), I’d like to tie my thoughts together, discussing what the various parties can do to make Bird and Orozco’s thesis of assimilation of lawyers into corporate business teams the “new normal”. This should give lawyers more career opportunities in the future, slow the loss of influence of the legal profession in businesses, and make legal education a more attractive choice. Much of the discussion in academia has ignored the in-house counsel approach as being a viable option for the woes of the legal industry. Below the fold, this post will discuss the roles that academia, in-house counsel, and business firms each may play in increasing the potential for success of a new model for business lawyers.
Tuesday, June 9, 2015
Exam time has come and gone and grades are filed. I have never had any trouble, as far as a I know, with cheating in my exams. My expectation is that most problems arise from plagiarism in writing assignments. There may be people trying to cheat on my exams, I suppose, but I am not sure it would prove helpful. I change my exams and take steps to try to make the exam as fair possible, so that cheaters, should there be any, can't get much of an advantage.
I was interested to see the report that China took proctoring to new heights this week, according to a news report in The Guardian, China deploys drones to stamp out cheating in college entrance exams:
Authorities in China are employing surveillance drones in an effort to stamp out cheating in college entrance exams.
But this year officials have unleashed a six-propeller drone, flown over two testing centres in Luoyang in Henan province on Sunday – the first day of the exam – to scan for signals being sent to devices which may have been smuggled in. No such signals were detected, local reports said.
I suppose it makes sense to add enforcement mechanisms, especially with the stake so high for the exams. Drones sure make my walking of the aisles seems a little outdated.
Apparently some employers are taking steps to combat cheating, too. Potknox, a cloud-based online assessment tool, is used by some employers to screen applicants. According to the Potknox Blog, here, there are ways to combat cheaters. Among other things, the program can take random pictures of the test-taker (which can catch them on the phone) and random screenshots (checking Wikipedia).
Law schools that use exam software can lock out the internet, which can help limit such things, though I wonder just how much smartphones have changed the game. I have never caught anyone looking at a phone during an exam, but these days, one could get a basic definition of the business judgment rule or the Howey Test pretty quickly, I suppose. I'd be shocked if anyone could cheat their way to a high grade on my exams, but one who is struggling might find it useful to get by.
I'll have to give some thought about other ways to catch cheating. I have almost no interest in catching cheaters, because that's awful for everyone. However, I have zero interest in sending people out into the legal profession who would do such a thing, so I'll keep looking.
Tuesday, June 2, 2015
NPR recently posted a story titled, Nonacademic Skills Are Key To Success. But What Should We Call Them? The story, by Anya Kamenetz, is about labeling non-cognitive skills (or skill areas) that are important -- I would argue essential -- to success. The listed areas are as follows: (1) character, (2) non-cognitive traits and habits, (3) social and emotional skills, (4) growth mindset, (5) 21st Century skills, (6) soft skills, and (7) grit.
Ms. Kamenetz explains:
More and more people in education agree on the importance of learning stuff other than academics.
But no one agrees on what to call that "stuff".
There are least seven major overlapping terms in play. New ones are being coined all the time. This bagginess bugs me, as a member of the education media. It bugs researchers and policymakers too.
"Basically we're trying to explain student success educationally or in the labor market with skills not directly measured by standardized tests," says Martin West, at the Harvard Graduate School of Education. "The problem is, you go to meetings and everyone spends the first two hours complaining and arguing about semantics."
Whatever you call it, it matters.
Beyond the semantics, it would be easy to debate the relative importance of these areas, and I am not sure I'd organize (or label) my own list in this way, but the concept behind the story is critically important to legal education. As we in law schools strive to prepare practice-ready lawyers (at least, that's a primary focus of those with whom I have taught), I have often noticed that the skills students lack are often not information based. Many times, it's that students have a hard time with deadlines, responsiveness, accountability, and thoroughness.
Though it's less true today that it may have been ten, twenty, and thirty years ago, it's easy to get caught up in the idea that students might not have been taught how to draft a complaint, or file a motion, or create an LLC. These are all things a lawyer should be able to do, of course, but I am finding that just showing students how to file a motion or form an LLC does not mean they are ready to actually do it. That is, I am confident that some students I have taught how to form an LLC (and did well in my class) would not be ready to do that on their own. And I know some students who weren't in my class and have never seen an LLC statute who would be ready to figure it out. Why? Life skills.
Anyone who worked in a BigLaw job saw people who were clearly not cut out to do the job, even though the folks there come with a very serious pedigree. I sure saw people who couldn't (or wouldn't) do the work. I worked with some truly brilliant and wonderful people, and I worked with some folks who had no idea (or at least no interest) in doing the work required. For that matter, I also worked with some brilliant and wonderful partners, and just a couple smart partners who did good work but seemed committed to making people cry. (That's for a different post).
How, in addition to cognitive skills, do we teach deadlines, responsiveness, accountability, and thoroughness? I think it's through clinics and externship, as part of it, but it's also through committed efforts in courses throughout the curriculum. We often teach first-year students about hard deadlines in their writing course, and we do it to some degree with rigid exam schedules, but that lacks the constant nature of deadlines (and moving parts) we see in practice. We can do it in other classes, with additional assignments, and I think it's worth trying.
For my seminar courses, I have added small assignments and I don't remind people. They do it, or they don't. When students ask for an extension or change in their assignment date, I allow it if it fits my schedule and the class schedule. I'll decline or add a penalty if it causes others a problem. (They know this up front.) It allows me to have conversations throughout the course about the importance of deadlines, and to talk more realistically about how things work in the real world. I know I'm not solving everything, but I do think talking about these things candidly forces students to engage with these life skills in a way that might not otherwise.
It's easy to think a lot of the life skills are things you have or you don't, but that's not true. They just come to some people more easily. Others can be taught, if they want to be. For those who want to learn, I think it's our job to teach them. And for those who don't want or care to learn these skills, if we offer the education, it's one less thing they can blame when they're shown the door or otherwise don't get what they want.
[Author's note: My colleague Steve Bradford's post "Practice-Ready" Law Graduates? is a worthwhile companion to this post.]
Wednesday, May 13, 2015
Emory’s Center for Transactional Law and Practice cordially invites you to attend its fifth biennial conference on the teaching of transactional law and skills. The conference, entitled “Method in the Madness: The Art and Science of Teaching Transactional Law and Skills,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 10, 2016, and ending at 3:45 p.m. on Saturday, June 11, 2016.
The registration fee for the conference is $189 and includes:
Pre-conference lunch and snacks
A pre-dinner reception on June 10
Breakfast, lunch and snacks on June 11
We are planning an optional dinner for attendees on Friday evening, June 10, at an additional cost. Attendees are responsible for their own hotel accommodations and travel arrangements. Additional information on the optional dinner and accommodations to come.
A request for proposals will be distributed in the fall.
We look forward to seeing you in June of 2016!
Executive Director and Professor in the Practice of Law
Center for Transactional Law and Practice
Emory University School of Law