Thursday, November 5, 2015
With the recent release of bar results in many states, I have been obsessed of late about the sorry state of bar passage across the country--as well as specific bar passage issues relating to our graduates. So, rather than (as I should and will do soon) responding to Steve Bradford's prompting post on the final JOBS Act Title III crowdfunding rules and the related proposals regarding Rules 147 and 504 under the Securities Act of 1933, as amended (as well as his follow-up post on the Rule 147 proposal), I have decided to focus on bar passage for my few minutes of air time this week. Specifically, I want to begin to explore the question of what we can do, if anything, as business law professors to help more of our students succeed in passing the bar on the first attempt.
At a base level, this means we should endeavor to understand something about the reasons why our individual students fail the bar the first time around. A lot has been written about the national trends (inconclusively, as a general rule). And I am sure every law school is now analyzing the data on its own bar passage shortcomings. But my experience teaching Barbri and my conversations with former students who have not passed the bar indicate a number of possible causes. They include (and these are my descriptions based on that experience and those conversations, in no particular order):
- Failing to state the applicable legal rule(s) and apply them to the facts;
- Difficulty in processing legal reasoning in the time allotted;
- Nerves, sleep deprivation, illness and the like; and
- Engaging insufficiently with study materials and practice examinations.
Assuming that these anecdotal observations are, in fact, causes contributing to bar exam failures for at least some students, how might we be able to help?
Sunday, November 1, 2015
I teach both Civil Procedure and Business Associations. As a former defense-side commercial and employment litigator, I teach civ pro as a strategy class. I tell my students that unfortunately (and cynically), the facts don’t really matter. As my civil procedure professor Arthur Miller drilled into my head 25 ago, if you have procedure on your side, you will win every time regardless of the facts. Last week I taught the seminal but somewhat inscrutable Iqbal and Twombly cases, which make it harder for plaintiffs to survive a motion to dismiss and to get their day in court. In some ways, it can deny access to justice if the plaintiff does not have the funds or the will to re-file properly. Next semester I will teach Transnational Business and Human Rights, which touches on access to justice for aggrieved stakeholders who seek redress from multinationals. The facts in those cases are literally a matter of life and death but after the Kiobel case, which started off as a business and human rights case but turned into a jurisdictional case at the Supreme Court, civil procedure once again "triumphed" and the doors to U.S. courthouses closed a bit tighter for litigants.
This weekend, the New York Times published an in depth article about how the corporate use of arbitration clauses affects everyone from small businesses to employees to those who try to sue their cell phone carriers and credit card companies. Of course, most people subject to arbitration clauses don’t know about them until it’s too late. On the one hand, one could argue that corporations would be irresponsible not to take advantage of every legal avenue to avoid the expense of protracted and in some cases frivolous litigation, particularly class actions. On the other hand, the article, which as one commenter noted could have been written by the plaintiffs bar, painted a heartbreaking David v. Goliath scenario.
I see both sides and plan to discuss the article and the subsequent pieces in the NYT series in both of my classes. I want my students to think about what they would do if they were in-house counsel, board members, or business owners posed with the choice of whether to include these clauses in contracts or employee handbooks. For some of them it will just be a business decision. For others it will be a question of whether it’s a just business decision.
Thursday, October 29, 2015
I recently received information about this social enterprise & nonprofit clinical teaching fellowship position at Georgetown University Law Center. My friend, Georgetown law professor Alicia Plerhoples, is the director of the clinic, and the fellowship sounds like an excellent opportunity.
Georgetown Law Graduate Clinical Teaching Fellowship
Description of the Clinic
The Social Enterprise & Nonprofit Law Clinic at Georgetown University Law Center offers pro bono corporate and transactional legal services to social enterprises, nonprofit organizations, and select small businesses headquartered in Washington, D.C. and working locally or internationally. Through the Clinic, law students learn to translate theory into practice by engaging in the supervised practice of law for educational credit. The Clinic’s goals are consistent with Georgetown University's long tradition of public service. The Clinic’s goals are to:
- Teach law students the materials, expectations, strategies, and methods of transactional lawyering, as well as an appreciation for how transactional law can be used in the public interest.
- Represent social enterprises and nonprofit organizations in corporate and transactional legal matters.
- Facilitate the growth of social enterprise in the D.C. area.
The clinic’s local focus not only allows the Clinic to give back to the community it calls home, but also gives students an opportunity to explore and understand the challenges and strengths of the D.C. community beyond the Georgetown Law campus. As D.C. experiences increasing income inequality, it becomes increasingly important for the Clinic to provide legal assistance to organizations that serve and empower vulnerable D.C. communities. Students are taught how to become partners in enterprise for their clients with the understanding that innovative transactional lawyers understand both the legal and non-legal incentive structures that drive business organizations.
Description of Fellowship
The two-year fellowship is an ideal position for a transactional lawyer interested in developing teaching and supervisory abilities in a setting that emphasizes a dual commitment—clinical education of law students and transactional law employed in the public interest. The fellow will have several areas of responsibility, with an increasing role as the fellowship progresses. Over the course of the fellowship, the fellow will: (i) supervise students in representing nonprofit organizations and social enterprises on transactional, operational, and corporate governance matters, (ii) share responsibility for teaching seminar sessions, and (iii) share in the administrative and case handling responsibilities of the Clinic. Fellows also participate in a clinical pedagogy seminar and other activities designed to support an interest in clinical teaching and legal education. Successful completion of the fellowship results in the award of an L.L.M. in Advocacy from Georgetown University. The fellowship start date is August 1, 2016, and the fellowship is for two years, ending July 31, 2018.
Applicants must have at least 3 years of post J.D. legal experience. Preference will be given to applicants with experience in a transactional area of practice such as nonprofit law and tax, corporate law, intellectual property, real estate, or finance. Applicants with a strong commitment to economic justice are encouraged to apply. Applicants must be admitted or willing to be admitted to the District of Columbia Bar.
To apply, send a resume, an official or unofficial law school transcript, and a detailed letter of interest by December 15, 2015. The letter should be no longer than two pages and address a) why you are interested in this fellowship; b) what you can contribute to the Clinic; c) your experience with transactional matters and/or corporate law; and d) anything else that you consider pertinent. Please address your application to Professor Alicia Plerhoples, Georgetown Law, 600 New Jersey Ave., NW, Suite 434, Washington, D.C. 20001, and email it to email@example.com. Emailed applications are preferred. More information about the clinic can be found at www.socialenterprise-gulaw.org.
Teaching fellows receive an annual stipend of approximately $53,500 (taxable), health and dental benefits, and all tuition and fees in the LL.M. program. As full-time students, teaching fellows qualify for deferment of their student loans. In addition, teaching fellows may be eligible for loan repayment assistance from their law schools.
Wednesday, October 28, 2015
I had the honor of being invited to speak at the annual symposium for the Wayne Law Review two weeks ago. The event, which focused on Corporate Counsel as Gatekeepers, was well organized and attended--and also very stimulating. Speakers included Tony West as a keynote, a few of us academics, and a bunch of current and former practitioners--prosecutors, in-house counsel, and outside counsel.
My presentation focused on a story that bugs me--a story built on an experience I had in practice. In the story (which modifies the true facts), an executive flagrantly violates a securities trading compliance plan that I drafted in connection with a subsequent transaction that I worked on for the executive's firm. Specifically, the executive informs a friend about the transaction the day before it is announced, believing that the friend will never trade on the information. The friend trades. The incident results in a stock exchange and Securities and Exchange Commission (SEC) inquiries. No enforcement is undertaken against the firm. However, the executive signs a consent decree with--and pays a cash penalty to--the SEC and, together with the firm, suffers public humiliation via a front-page article in the local newspaper (since the SEC would not agree to forego a press release). This fact pattern gnaws at me because I wonder whether there is anything more legal counsel can do to prevent an executive from violating a compliance policy to the detriment of himself and the firm . . . .
Earlier this month BLPB editor Ann Lipton wrote about the Delaware Supreme Court opinion in Sanchez regarding director independence (Delaware Supreme Court Discovers the Powers of Friendship). On the same day as the Del. Sup. Ct. decided Sanchez, it affirmed the dismissal of KKR Financial Holdings shareholders' challenge to directors' approval of a buyout. The transaction was a stock-for-stock merger between KKR & Co. L.P. (“KKR”) and KKR Financial Holdings LLC (“Financial Holdings”). Plaintiffs alleged that the entire fairness standard should apply because KKR was a controlling parent in Financial Holdings. The controlling parent argument hinged on the facts that:
Financial Holdings's primary business was financing KKR's leveraged buyout activities, and instead of having employees manage the company's day-to-day operations, Financial Holdings was managed by KKR Financial Advisors, an affiliate of KKR, under a contractual management agreement that could only be terminated by Financial Holdings if it paid a termination fee.
Chief Justice Strine, writing an en banc opinion for the Court, upheld Chancellor Bouchard's finding that KKR could not be considered a controlling parent where "KKR owned less than 1% of Financial Holdings's stock, had no right to appoint any directors, and had no contractual right to veto any board action."
The Delaware Supreme Court upheld the familiar standard of effective control, absent a majority, which focuses on "a combination of potent voting power and management control such that the stockholder could be deemed to have effective control of the board without actually owning a majority of stock."
Chancellor Bouchard had noted that plaintiff's complaint stemmed from dissatisfaction at the contractual relationship between KKR and Financial Holdings which limited the growth of Financial holdings. Chancellor Bouchard wrote:
At bottom, plaintiffs ask the Court to impose fiduciary obligations on a relatively nominal stockholder, not because of any coercive power that stockholder could wield over the board's ability to independently decide whether or not to approve the merger, but because of pre-existing contractual obligations with that stockholder that constrain the business or strategic options available to the corporation.
Sometimes a "nothing new" case provides a good reminder of an established standard and provides clear language for recapping the concept to students. This will become a note case on "effective" control in my ChartaCourse corporations casebook and also a good illustration of the role of private agreements in shaping how legal standards are applied.
You can read the opinion at: Corwin et al. v. KKR Fin. Holdings et al., No. 629, 2014, 2015 WL 5772262 (Del. Oct. 2, 2015).
Wednesday, October 14, 2015
Last week was the oral midterm examination week for students in my in Business Associations class. I admit to exhaustion and jubilation at the end of that week every year. I think the students feel about the same way . . . .
This year's examination related to an expulsion of members in a member-managed limited liability company (LLC). The facts were based on an interesting Tennessee case with which many LLC aficionados are no doubt familiar: Anderson v. Wilder. The exam questions related to the validity and effects of the expulsion under the Revised Uniform Limited Liability Company Act and the LLC's operating agreement, the potential breaches of fiduciary duty and failure to comply with the contractual obligation of good faith and fair dealing, and the possible resulting causes of action and remedies--including any effects of the members' dissociation.
In a blog post last weekend from Lou Sirico and our other friends at the Legal Skills Prof Blog, I divined support for all of us who engage in practice-focused legal education: these teaching/learning methods can help students to thrive, not merely survive. It has been my (admittedly anecdotal) observation that students who engage in simulations (as well as those who participate in clinics and internships/externships) in law school are happier and more well-adjusted about their education and their post-graduation employment. Last week's oral midterms--conducted in groups of three--gave me some windows on that world. I will share a few here.
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 firstname.lastname@example.org. 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 email@example.com. Alternatively, résumés can be mailed to Professor Mulvaney at Texas A&M University School of Law, 1515 Commerce Street, Fort Worth, Texas 76102-6509.