February 17, 2007
Best Wishes to Gordon Smith
Gordon Smith has announced he is joining the faculty at the J. Reuben Clark Law School at Brigham Young University. Best wishes from the LPB group to a good friend! We just want to know whether somebody in a place like the one Gordon showed over at Conglomerate can really keep his concentration on things like the business judgment rule and option backdating.
Exclusive: Childress & Lipshaw Caught Reveling at Mardi Gras!
Yes, it's true. Law professor paparazzi snapped this picture of Alan Childress (left) and Jeff Lipshaw in front of the Rayne Memorial Church on St. Charles Street in New Orleans Thursday evening during the Knights of Chaos parade. Said the photographer, apparently a New Orleans native (she was running the Port-a-Potty concession the church uses as an annual fundraiser - $1.00 a visit or a $10.00 all day pass [sic]), upon seeing the picture: "Y'all are SO white." Neither professor cared to comment.
Approved ABA Judicial Code Finally Retains 'Appearance of Impropriety' Ban As Enforceable Rule
Posted by Alan Childress
The dizzying redrafts and non-final "final" versions of the new ABA Model Code for judges (our prior posts here and here) finally led to media scrutiny and criticism and the resignation of one committee member in protest to what he perceived to be a weakening of the code. But the final, really final action taken--approval of a draft retaining the "appearance of impropriety" standard as an enforceable rule within the actual text of new Rule 1.2--became something of a fizzle to the controversy, as the vote sounded fairly unanimous and the meeting and debate did not drag on (possibly aided by the bad recent publicity and the need to get out of Miami ahead of the weather). This as helpfully reported by the ABA Journal's on-line story Friday, "Judging Judicial Ethics: ABA House Retains Ban on 'Appearance of Impropriety.' "
The mid-year ABA meeting and the House of Delegate's vote in Miami seems to have settled the debate in the ABA drafting process once and for all. The states will have a new, substantially revised Code to consider implementing for their judiciaries.
It is very likely now that the debate is ended at the ABA level. There will be a uniform public presentation of this move (though the debate and PR problems may start anew at the state level as the new code is actively considered). As quoted by the story, one Miami attorney said this approval was a good result not because the New York Times says so but because it is the right thing to do. That is going to be the public face of this version, and understandably so (though the ABA's PR people will do well to not draw attention to editorializing and controversy before the final vote). That's the inevitable and maybe even best result. Certainly it is the most publicly defensible non-nuanced result.
The only problem is that this version of the judicial code was always supposed to be about clearly laying out black-letter rules for judges and telling them what is and is not acceptable behavior. "Appearance of impropriety" can serve as a catch-all critique even without the showing of any violation of any rule, and runs counter to the mission of clear, literal benchmarks. It will generate more ethics complaints and disqualification motions not based on allegation of any actual impropriety. That effect may be tempered somewhat by the responsible enforcement of this code in the states, sensitive to the reality that it's easy to accuse a judge of "appearing" improprietous without having to identify any other rule violated or prove the underlying facts with clear and convincing evidence. I hope the states will keep that in mind and look for a real hook, an actual black-letter rule, when they take serious action against a judge.
I am reminded a little of the 1995 Aaron Sorkin/Rob Reiner film The American President, in which there's an exchange between the President (Michael Douglas) and, I think, his domestic policy adviser (Michael J. Fox). The adviser (well, maybe it was the press secretary) says that it is very important to not look like the White House is panicked. The President replies that, see, he thinks the important thing is to not actually be panicked.
To me, the language of "appearance of impropriety" is an important reminder that appearances do matter and should absolutely be the standard a judge imposes on himself or herself in every action taken and every interest pursued. I hope, though, that in imposing that standard as an external matter--as a punitive tool--the states are realistic and fair to the legitimate or even rule-approved actions of their judges.
What does a guy have to do to be disbarred around here? The Kansas Supreme Court indefinitely suspensed a lawyer who it had previously disciplined three times. The attorney also was admitted in Missouri, which had disciplined him eight times and ultimately also had imposed an indefinite suspension. The Kansas court found multiple ethical violations including misapppropriation, dishonesty, commingling and incompetence. The lawyer's trust account records were incomplete (he told Kansas that Missouri had some of them, which turned out not to be the case) and there were overdrafts. He paid his secretary out of the escrow account. The court considered the ABA standards for imposing lawyer discipline and found several aggravating factors.
This result does not greatly concern me if indefinite suspension is tantamount to disbarment. I understand that there is a stigma attached to the disbarment label that courts may wish to avoid. I am concerned if a record of ethical violations such as these would allow for reinstatement in the foreseeable future. (Mike Frisch)
The Rest of the Story
Here's a story that any small firm lawyer who litigates can relate to. Lawyers A and B are opposing counsel in a domestic relations matter. B asks for and gets a continuance. A then seeks a continuance of the rescheduled date, citing either an oncoming illness or a conflicting obligation. B objects because of the expense in securing the testimony of an expert witness who was to testify on the fast-approaching new hearing date. The court denies the continuance and orders A to produce a doctor's note to support the claim of flu. There is confusion that suggests the possibility that A misled B as to whether the requested continuance was a fait accompli. In any event, A and the client do not appear and the judge places B under oath to recount the interaction with A. The judge orders A to personally pay B's fees.
The rest of the story is the nightmare part. A is the subject to a disciplinary action that ultimately results in a six month suspension by the Oregon Supreme Court. These cases happen when lawyers in A's situation are not straightforward with opposing counsel and the court. I did not see in the opinion whether the court ever got a doctor's note. (Mike Frisch)
February 16, 2007
The Maryland Court of Appeals recently disbarred an attorney who had been admitted in 2001 for neglect and failure to respond to the ethics complaint. The court viewed disbarment as the only appropriate sanction for an attorney who appears to have abandoned the practice of law and failed to participate in the disciplinary process.
The decision calls to mind a question asked by an Associate Judge of the District of Columbia Court of Appeals at an oral argument I attended last month. The question: would a lawyer be better off being prosecuted for an ethics violation in D.C. rather than Maryland? My answer: yes, indeedy. Maryland's relative toughness on ethics violations committed by lawyers stands in stark contrast to the D.C. Board's reflexively forgiving and lawyer-coddling attitude. If this attorney is also admitted in the District of Columbia, I'm taking bets that the D. C. Board will recommend lesser discipline as a reciprocal sanction. Any takers? (Mike Frisch)
February 14, 2007
Board Silly or Silly Proposal? A Response to Professor Subramanian
Posted by Jeff Lipshaw
On the way to something else, I saw Ethan Leib's post over PrawfsBlawg drawing a parallel between the objections to staggered corporate boards, and possible objections to our system of staggered Senate elections. What inspired Ethan's observation was an op-ed in today's New York Times from Harvard Professor Guhan Subramanian (right) on the issue of corporate staggered boards. Professor Subramanian's clever and well-written piece is entitled "Board Silly," but to most corporate lawyers who have spent time in the real world, I'd wager its proposal seemed just plain silly. (I also commented on the analogy to the Senate over at PrawfsBlawg.)
Here's the issue. No matter which side of the issue on which you sit, it's undeniable that the combination of a so-called "poison pill" and staggered board make it very difficult to mount a successful hostile takeover. The poison pill makes it almost impossible to initiate, much less complete a tender offer (for reasons too complex to describe here) that does not have the approval of the target board. If the acquiror has the patience to wait until the next annual election of directors, it can mount a proxy contest. A proxy contest does not trigger a poison pill. But if the board is staggered, the acquiror would not be able to take control in a single election. Indeed, most M&A lawyers would tell you the staggered board is more important than the poison pill.
The standard defense of the companies, when shareholders submit their non-binding resolutions requesting that the board undertake the process of eliminating the staggered board, is that the staggering of the terms promotes stability and continuity within corporate management. (I made that argument myself, but I'm happy to say as I re-read it five years later, it was hardly the centerpiece of the defense.) As Professor Subramanian correctly observes, responsible shareholders don't oppose stability and continuity; what they oppose is the loss of the threat to incumbent management that they can be thrown out quickly if they fail to produce adequate returns to the shareholders. And there's the ironic rub. It's a crock that the form of the staggered board, as opposed to the substance of the customary practice of board nomination and renomination of its own members, is fundamentally responsible for the stability and continuity of the board (and I couldn't bring myself to say that even when I was defending it!) Boards will be stable and continuous as long as their elections, whether unitary or staggered, do not turn into political free-for-alls, which appears to be the goal of at least some portion of the shareholder activist community (primarily the union pension funds).
More below the fold.
Professor Subramanian's "compromise" is to move the staggered board from the corporate charter, where it cannot be changed (at least in Delaware) without the board's prior consent, to the bylaws, where it could be amended by the shareholders at least as easily as they could mount a successful proxy fight for control of the board. Somehow he sees this as a favor to the directors "because companies are increasingly requiring that board candidates win a majority of votes cast, [and therefore] directors would value the right to face election only every three years rather than every year."
I'm not sure what the basis is for this last empirical proposition. The question is whether competent directors are going to want to serve at all in the environment where majority vote versus consensus is the standard. By and large, as a matter of form, boards "vote" on the matters before them, but the substance of decision-making is not majority rule. (To my sociologist friends: the form is gesellschaft, but the actual operation of the board and management group is gemeinschaft.)
The flip side of the irony is this from Professor Subramanian: "If directors surrender on the question of staggered boards, we risk further short-termism in boardrooms and no internal counterweight to managers focused on quarterly earnings." That's precisely the argument the directors make in support of the retention of the poison pill and staggered board! To wit: "If our stock price sinks to a bargain price as a result of a short-term event, and a raider wants to acquire us on the cheap, and not in the best long-term interest of the shareholders, we need to be able to fend it off." Note also the additional empirical assertions: (1) that short-termism in boardrooms is a rampant problem in corporate America (is it? I'm agnostic on that until shown some better data); and (2) that it takes the mere window-dressing of a three-year term in the bylaws to provide a counterweight to managers focused exclusively on the short-term.
Professor Subramanian's bylaw proposal is an offer of the sleeves off his vest. Either the staggered board has a anti-takeover effect which overall benefits the shareholders, in which case it is defensible as a matter of corporate law, or it does not, in which case perhaps it should go. (By the way, I think the burden is on those advocating its elimination, but that's another subject.) But if I were a director, and the professor offered this to me as a compromise, I'd say "To what? Don't do me any favors - I can have continuity and stability as long as your constituencies refrain from making our elections into referenda about class inequalities and wealth redistribution. And don't insult me by suggesting that the only thing that keeps me from being a short-termer is the three-year election cycle. Last I checked, I still minded my fiduciary duties."
Negligence or Incompetence?
The Oregon Supreme Court suspended a lawyer for 30 days, overruling a trial panel decision that had found no ethical violation. The attorney had obtained a waiver of the right to a jury trial from his client without conducting any investigation of the client's situation or even reviewing the charges. The client later retained new counsel and entered a plea of guilty. He then filed an ethics complaint, alleging that his first lawyer had failed to adequately communicate with him. Noting that there is a distinction between errors of judgment that could lead to an actionable claim of negligence, on one hand, and incompetence on the other, the court found that the lawyer had failed to provide competent representation. (Mike Frisch)
Wall Street Journal's Law Blog on "thinking like a lawyer" teaching debate
Posted by Nancy Rapoport.
Over at MoneyLaw, I'm calling people's attention to today's WSJ Law Blog about whether we should be teaching students to think like lawyers (and what that might mean). Please weigh in!
The Need For Proportional Sanctions
The North Dakota Supreme Court rejected its Disciplinary Board's proposed 18 month suspension in a case involving misappropriation of entrusted funds. The Court's majority imposed disbarment. A dissent/concurrence by Chief Justice VandeWalle favored the recommended 18 month suspension, noting a concern about proportionality in disciplinary sanctions in light of a two-year suspension imposed in a case involving two instances of false testimony under oath, which had a serious and profound effect on a litigated case.
I agree with the Chief Justice in principle but not result. The sanction for the theft of client funds is entirely appropriate. The court (and other courts including my own "home Court"-- the D.C. Court of Appeals) should be treating serious acts of dishonesty the same way it deals with misappropriation. The ultimate sanction should be imposed for both forms of attorney misconduct. (Mike Frisch)
HALT Internships in DC: Application Process + Promises No Photocopy Work
Well, actually, the work promises to be very substantive but not entirely Xerox-free: "Minimal grunt work! ...You won't make copies for anyone but yourself." The attorney-watchdog and law-reform group HALT has a revolving internship program, for college and grad students. It's in its Washington, D.C. headquarters on K Street. This link explains the advantages (including "Food!" and nearby Metro) and application process.
We have posted here and here on some of HALT's important work, including their letter grades for states' lawyer disciplinary processes. Michigan gets a C, unsurprisingly--though even then that mark is based on Incomplete "promptness" information due to the state's failure to report such stats to the ABA, and it appears the score would be lower if its actual MPH were considered. Anyway, I like the fact that the group's name does not appear to be an acronym for anything.
New Orleans Tornados
Posted by Jeff Lipshaw
Just when you thought it was safe to go back in the water, more weather-related problems in New Orleans (my wife and son are digging out in Indianapolis).
The night before last, at about 3:00 a.m., a tornado touched down in Westwego, which is across the Mississippi River from New Orleans, then proceeded across the river to what is known as the Carrollton area of Uptown New Orleans. This is a mixed student-permanent neighborhood between the Tulane campus and the bend of the Mississippi River as it proceeds north and west. (On the map at right, the Tulane campus is the dark spot in the middle; the tornado touched down just to the left where it says "East Carrollton.") There is also a commercial strip along Maple Street with bars, restaurants, and my regular Starbucks, which has the singular advantage of opening at 6:00 a.m.
Although there was a death and injuries in another affected neighborhood, as I understand it, there were no serious injuries in the Carrollton area. Two Tulane professors live right there, and had some fairly significant damage to their homes. When the power went out in the law
school for a while yesterday morning, I went to Oliver Houck's house to see if I could help, and saw at least one house down the street that had its entire second story taken off, and another with the entire front of the house gone. In true tornado fashion, however, two blocks to the east, there was no indication of a storm. (I have previously noted how Professor Houck has become one of my heroes.)
I never did find Oliver; apparently he and Lisa were clearing debris in the back of the house, where most of the damage was sustained. True, however, to his almost mythical persona, Ollie showed up later in the afternoon for the faculty meeting. Also typical of Ollie, as nobody in the neighborhood, amazingly, was hurt, he called it one of the most exhilarating, fun days of his life, the kind of thing we experience when communities and neighborhoods truly act as communities and neighborhoods, apropos of this post-Katrina thought.
Better Late Than Never
The Indiana Supreme Court reprimanded a judge who failed to take action to implement an order from a higher court that reversed his order revoking the defendant's probation. As a result, the defendant was incarcerated for over a year and subject to parole supervision for an additional year thereafter. The Supreme Court expressed concern about the judge's initial lack of remorse and attempts to blame his staff for failing to act in the wake of the reversal. Eventually, the judge acknowledged misconduct and apologized. (Mike Frisch)
February 13, 2007
University of Miami CLE 4/13 on Criminal Justice Ethics
"Criminal Justice Ethics: Round IV"
April 13, 2007 -- Bank United Center @ University of Miami Campus, Coral Gables
St. Mary's Symposium on Legal Malpractice & Ethics 2/23
Albiston and Nielsen on Federal Fee-Shifting and the Private AG Policy
Posted by Alan Childress
Catherine Albiston (Cal. Berkeley--Law, and its JSP doctoral program), left, and Laura Beth Nielsen (ABF and Northwestern U.--Sociology), right, have posted to SSRN's Law & Soc'y: Legal Profession their empirical study of attorneys' fees and fee-shifting in light of recent Supreme Court cutbacks on incentivizing civil rights representations under a "private attorney general" rationale. It is called "The Procedural Attack on Civil Rights: The Empirical Reality of Buckhannon for the Private Attorney General." It will appear this year in the UCLA Law Review. [Bill Henderson at ELS blog also blogged on the importance of this research here.] Here is their abstract:
In 2001, in Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health and Human Resources, the Supreme Court rejected the catalyst theory for recovery of attorneys' fees in civil rights enforcement actions. In doing so, the Court dismissed concerns that plaintiffs with meritorious but expensive claims would be discouraged from bringing suit, finding these concerns “entirely speculative and unsupported by any empirical evidence.”
This article presents original data from a national survey of more than 200 public interest organizations that call into question the Court's empirical assumptions. These data indicate that organizations that take on paradigmatic public interest cases, such as class actions seeking injunctive relief against government actors, are the most likely to be negatively affected by Buckhannon. In addition, our respondents report that Buckhannon encourages “strategic capitulation,” makes settlement more difficult, and discourages attorneys from representing civil rights plaintiffs. We argue that these far reaching effects herald a shift away from private rights enforcement and toward more government power, both to resist rights claims and to control the meaning of civil rights.
February 13, 2007 in Abstracts Highlights - Academic Articles on the Legal Profession | Permalink | Comments (0) | TrackBack
Younger Generation of Women Lawyers Not Staying in Big Law Firms? "In Droves"?
Posted by Alan Childress
That is the premise (and generational-divide explanation) noted and discussed by Nicole Black at Sui Generis here, based in part on an article from California Lawyer. Whether the premises are true (and true nationally)--that women are way-disproportionately leaving biglaw practice, and this is especially true with Gen X and Gen Y subjects--is something on which Bill Henderson at ELS blog is more equipped to comment, with all his law-firm data and empirical-crunching talents. But it does seem true to almost any casual observer like me with interest in the demographics of the legal profession that the generational divide Nicole spots is really there, and that women have higher turnover rates at biglaw. Now I just wonder if it is empirically true.
Legal Oxymorons: Hey, You Live In a Glass House Too
Posted by Alan Childress
I get inevitable and immediate titters from civilians when they hear that I teach "legal ethics." Not sure I can blame them after that last story Jeff posted, forwarded from Peter Henning, or of course the one on the guy who only got a brief suspension for microwaving Max. But usually the person tittering about my course's name is himself or herself in a profession for which my oxymoronic or ironic comeback is easy, like journalistic research, waiting room patients, postal worker, stock broker, contract binder, professional musician, managing partner, radio talent, Help Desk, business school, sushi chef, I.T., golf announcer, social scientist, family planning, abnormal psychologist, or Academic Dean.
Along the same lines, I once read an ad in the Berkeley school newspaper: "Procrastination Workshop: Pre-registration Required." And I noticed last year, while in the GW "emergency waiting room" (itself ironic), fortunately for me not because of acute angina, that the doctors now uniformly pronounce it AN-gin-uh. After I figured out they meant angina, I realized the world's doctors got together one day and voted to relocate the accent mark--absolutely to end once and for all their own titter factor. The tactic likely works 99% of the time. In my case, and I do promise to grow up someday, it just put me on a five-second delay before my mind moved the accent back and they caught me tittering anyway.
Law also provides one of the language's few single-word oxymorons: Brief.
Obviously such jokes sort of write themselves. I was thinking that this morning when I read the Yahoo! teaser headline, Madame Tussauds Unveils Kate Moss Wax Figure.
Where's the Disciplinary Watchdog?
Peter Henning (Wayne State) passed along a link to this ugly story from Flint, Michigan on the disciplinary process (or the slowness thereof).
Top Ten - Legal Ethics & Professional Responsibility, Feb. 13, 2007
There's been a lot of turnover, particularly in the second five since the last time I posted. I've just downloaded Differentiating Gatekeepers by Arthur Laby (Rutgers-Camden, right), because it looks like it may be relevant both to my inquiry into the differences between lawyer-like methods of rule-following versus the orientation to rule-following we might find in an entrepreneur, as well as to my previous work on lawyers as rationalizers. Professor Laby's abstract follows the break.
And here are the top ten papers in the SSRN Legal Ethics & Professional Responsibility Journal as measured by downloads in the last sixty days.
1. How an Instrumental View of Law Corrodes the Rule of Law, Brian Z. Tamanaha, St. John's University - School of Law
2 Young Associates in Trouble, David T. Zaring, William D. Henderson, Washington & Lee University - School of Law, Indiana University School of Law - Indianapolis.
3 An RSVP to Professor Wexler's Warm TJ Invitation: Unable to Join You, Already (Somewhat Similarly) Engaged, Mae C. Quinn, University of Tennessee - College of Law
4 The View from the Trenches: A Report on the Breakout Sessions at the 2005 National Conference on Appellate Justice, Arthur D. Hellman, University of Pittsburgh School of Law.
5 The Hypocrisy of the Milberg Indictment: The Need for a Coherent Framework on Paying for Cooperation in Litigation Bruce H. Kobayashi, Larry E. Ribstein, George Mason University School of Law, University of Illinois College of Law
6 Take Back the Night: Why an Association of Regional Law Schools Will Return Core Values to Legal Education and Provide an Alternative to Tiered Rankings Jon Garon, Hamline University School of Law
7 Differentiating Gatekeepers Arthur B. Laby, Rutgers University School of Law - Camden
8 Critical Legal Ethics Paul R. Tremblay, Boston College - Law School
9 The Scarlet Gene: Behavioral Genetics, Criminal Law, and Racial and Ethnic Stigma Karen H. Rothenberg, Alice Wang, University of Maryland School of Law, Public Defender Service for the District of Columbia - Appellate Division
10 The Changing Social Role of Urban Law Schools Joyce Sterling, Ronit Dinovitzer, Bryant G. Garth, Bryant G. Garth, University of Denver - Sturm College of Law, University of Toronto, American Bar Foundation, Southwestern Law School
Here is Professor Laby's abstract:
The emphasis on gatekeepers to control corporate misconduct has depended on a rational actor model. A gatekeeper prevents wrongdoing because expected liability or reputational harm from failing to prevent misconduct exceeds the gain in fees. This model, however, fails to distinguish among gatekeepers or account for how gatekeepers with different incentives respond to legal controls. This Article distinguishes between gatekeepers that are supposed to be independent, such as auditors and analysts, from those that are supposed to be dependent, such as lawyers and underwriters. The Article then addresses why gatekeepers have not been more effective monitors and points out failures of conventional analysis. Advances in behavioral and social psychology suggest that dependent gatekeepers perform their responsibilities under the yoke of unconscious bias. Independent agents, therefore, are better gatekeepers than dependent ones. Concern about bias is exacerbated by indeterminacy in corporate and securities law, which facilitates self-serving interpretations of the law and gives wide berth to insist the principal's conduct is appropriate. Differences among gatekeepers, viewed through a social psychology prism, help explain recent reforms and suggest the potential need for additional reforms. One such proposal is to marry the suggestion for lawyer certifications of financial statements with the "reporting up" requirement of Sarbanes-Oxley and require, instead, that a lawyer certify annually that the lawyer is not aware of evidence of a material violation, or has made the required report under the SEC's lawyer rules. The prospect of making a false filing would likely have deterrent effects that are absent under current rules. The hope is that the Article raises for further consideration whether insights from behavioral psychology, married with a deeper understanding of the structure of gatekeeper relationships, can help tailor reform.
February 13, 2007 in Weekly Top Ten: SSRN Legal Ethics & Professional Responsibility | Permalink | Comments (0) | TrackBack