Friday, October 10, 2008
Posted by Alan Childress
The official AK Branchflower report is just out and linked here. Lost in all the legal verbiage and important findings will be this isolated event I note below. It is one of those Doh! moments we have all had in our lives, and I can only imagine seeing Sarah Palin's immediate reaction. Whatever your politics, and whether or not you agree with the report's finding that the motive to push the firing of Trooper Mike Wooten was not the sole factor in his boss's (Walt Monegan's) firing, consider this delicious moment of oops (page 71):
Finally, the record contains evidence that Governor Palin lost confidence in Commissioner Monegan when, on the eve of the 2008 annual Police Memorial Day ceremony, he sent her a photograph to sign and present at that event, but failed to realize it was actually a photograph of Trooper Michael Wooten.
OMG. Either Walt has a vicious and really funny sense of humor, wanted to incite First Dude Todd into a frenzy, wanted to get fired, or made a big mistake which he soon heard about. I suspect the latter but thought you would want to know about this non-reported scene.
I saw on Leno one time -- or was it Letterman? -- his asking Carrie Fisher didn't she think his next night's guest Liz Taylor was just great? Silence, then Carrie deadpanned: No, she broke up my mom and my dad. As Southwest Airlines would ask: Want to get away?
Thursday, October 2, 2008
Wednesday, September 24, 2008
[posted by Bill Henderson, cross-posted at ELS Blog]
Over at Moneylaw, rankings guru Tom Bell (Chapman) breaks an important story: The University of Michigan Law School has introduced the new Wolverine Scholars program, which is a special admissions program for UM undergraduates. It has two threshold requirements: (1) your UGPA must be at least 3.80, and (2) you cannot have taken the LSAT.
Studying the labor market for lawyers--including law school rankings, which is a important mechanism for mediating supply and demand--has made me sensitive to potential ulterior motives beyond the standard cant of "admitting the best students." While I would love to see a world where the LSAT is assigned its rightful limited place in law school admissions, I cannot overcome the perception that Michigan is really just upping the U.S. News gamesmanship. The lofty rhetoric of the Wolverine Scholar program cannot be squared with the unnecessarily rigid admissions criteria. In my opinion, the only rational explanation is that Michigan seeks a rankings payoff. Here, an elite law school sets a new low in our obsession of form over substances--once again, we legal educators are setting a poor example for our students.
Readers can judge for themselves. Here is how Michigan pitches the Wolverine Scholars program:
The Law School’s in-depth familiarity with Michigan undergrad curricula and faculty, coupled with significant historic data for assessing the potential performance of Michigan undergrads at the Law School, will allow us to perform an intensive review of the undergraduate curriculum of applicants, even beyond the typical close scrutiny we devote ... . For this select group of qualified applicants, therefore, we will omit our usual requirement that applicants submit an LSAT score.
With the exception of the intensified review of the undergraduate academic record and the omission of the LSAT, our admissions review and philosophy is the same for the Wolverine Scholars Program as it is generally. Thus, our evaluation criteria are holistic, and comprise the wide range of relevant considerations that can’t be reduced to any mechanical formula. We look for highly intelligent people who welcome challenging experiences, who have demonstrated leadership and community service, who have shown determination and discipline, who are eager to outdo themselves, and who are creative and resilient in dealing with adversity. We pay attention to evidence of academic progress. So, too, we pay attention to considerations – working many hours, coming from an educationally deprived background, having primary care responsibilities for family members, and so on – that may provide a context for the formal record of academic achievement. ... We look for individuals with intriguingly different backgrounds, experiences, goals, and perspectives. Academic majors, work experience, extracurricular activities, distinctive moral and political outlooks, socioeconomic background, time living or working abroad, and more inform our admissions decisions.
Wonderful stuff. But it is impossible to take the above excerpt seriously when we focus on the unreal application cutoff:
"Application Eligibility. UM undergraduates who have at least completed their junior year ... with at least six full-time semesters of attendance on the UM-Ann Arbor campus and a UM cumulative grade point average of ≥ 3.80 are eligible to apply." [Emphasis in the original -- yes the original!]
So, a priori, the following student need not apply: a UM chemistry or engineering major with a 3.75 GPA who comes from a blue collar family in the rural Michigan who put himself through college by running a business and volunteers in an organization for the disabled. For this person, "holistic review" requires an LSAT score. He or she may not be one of the "highly intelligent people" UM is looking for. But the privileged frat boy who majored in political science and earned a 3.81 gets a free pass. It is hard to imagine a more misguided "mechanical formula." More after the jump. ...
Tuesday, August 26, 2008
Posted by Bill Henderson and Jeff Lipshaw
The Wall Street Journal article on gaming the USNWR this morning prompts us to a joint posting of something we've been discussing with each over the summer. We see this particular exercise - the use of part-time programs to affect a school's standing - as a real-world intersection of empirical data, the meaning one derives from that data, and the ethics of manipulating the data.
Put simply, in a world in which small moves in the USNWR rankings (much less big ones!) take on meaning within the context of the "rankings game," it is no wonder that the players play the game. Indeed, the players are co-opted into the "rules" of the game to the extent that observers from the outside question the moral sense of those playing the game (the point here). As Nancy Rapoport put it so eloquently in the Journal piece and on her blog, what is the difference between using the gray areas of the USNWR formulas to move up the rankings, or manipulating the gray areas of GAAP to report higher earnings? And what is the implication of this gaming in terms of the ethical leadership of those teaching new lawyers?
Let's review the data. Regarding the proposed inclusion of part-time students in the USNWR rankings formula, there is no need to speculate on which schools will be affected: the ABA-LSAC Official Guide to Law Schools publishes LSAT and UGPA medians for full-time, part-time, and combined entering classes. For example, below is an LSAT/UGPA grid from the recently released 2009 edition. An inspection of the LSAT and UGPA medians suggests that this school is going to get absolutely hammered by the proposed change: -4.0 for LSAT points and -.26 for UGPA.
The school above, however, appears to be one of the biggest gamers of the part-time loophole. Before reviewing the data, however, let us offer some context.
Here is the problem. We aren't at all suggesting that schools with part-time programs are gaming. But as the Journal article and our data shows, under the current system, the part-time loophole opens the door to gaming because schools are able to keep students whose statistics are a drag on the numbers out of the calculation. For example, if FT and PT numbers were combined, there is at least the possibility that a large number of older students with excellent work experience will be less likely to gain admission. During his guest blogging stint at Prawfsblawg back in June, Bill Araiza, who formerly served as Associate Dean of Loyola LA (which has a part-time program), summarized the tradeoffs if we see the worst case:
[The inclusion of part-timer in the rankings formula] is potentially quite pernicious, as it will put pressure on law schools to curtail part-time (especially evening) programs' focus on older students whose life and work experience may offset any deficits on the more standard admissions credentials (i.e., LSAT scores and GPA). This is especially true with regard to LSAT scores. ... If those students are going to start counting for U.S. News ranking purposes admissions committees are going to start giving those students less of a break on that criterion, even if their post-college accomplishments give all kinds of reasons to expect the applicant to succeed in law school.
Note what is really be said here: "If US News combines full with part-timers, the part-time programs will be subject to the same foolish, myopic tradeoffs as the full-time." People with excellent work and life experience also apply to full-time law programs. Prof Araiza implicitly acknowledges that we don’t give these characteristics the proper weight when it could affect our school’s US News ranking. Last month, Bob Morse of US News weighed in on this pattern of tradeoffs, observing that the combined rankings really do reflect the entire school more accurately, suggesting that the problem of schools gaming the statistics or changing substance to adapt to the form is really one for the law school accreditor: the ABA. In short, “we just report the numbers; we can’t be responsible for the foolish or myopic tradeoffs.”
To illustrate the effect of US News on law school admissions decisions, let’s assume for the sake of argument that part-time programs are a sanctuary for whole person review rather than vehicle for manipulating US News. Therefore, to get a glimpse of how law school admissions would operate in world without rankings pressures, we compare full and part-time admissions among schools with both programs. Below is a summary of average median LSAT and UGPA scores for the 96 fully or provisionally accredited ABA law schools with part-time programs (from the 2008 ABA-LSAC Official Guide):
Note the difference: Within the universe of schools that offer both full and part-time programs, the typical part-time student has a lower UGPA (-.10) and a lower LSAT (-3.4) than his or her full-time counterpart. Of course, we are not implying that the part-timers are weaker students; with part-time largely exempt from US News, admissions officers are free to make the type of sensible tradeoffs prescribed by Bill Araiza. As compared to a 22 year-old, running a business or non-profit for five years or a tour of duty in the military ought to be worth a couple of LSAT points or .3 UPGA.
The "combined" column tell us the price to be paid for this wholistic review: If these admissions policies are kept in place and US News adopts the proposed methodology, the typical law school with a part-time program can expect a drop of .03 units in UPGA and 1.2 LSAT points.
Now let’s relax the part-time-as-sanctuary assumption and be open to the possibility that, at some schools, the part-time program has become a cynical way-station to collect tuition from lower credentialed students that it would have admitted to the full-time program in the pre-US News era. For example, consider the following facts that apply (in reality, this is not a hypothetical) to the same law school summarized in the above LSAT/UPGA grid—i.e., the one that will get hammered by the proposed US News formula change:
- In 1992, the first year that US News ranked all fully accredited ABA law schools, this law school enrolled 177 full-time and 74 part-time students. In the early to mid-1990s, it fluctuated between Tiers (or "quartiles) 3 and 4.
- In 2004, the school had 89 full-time and 84 part-time students--quite a change--and broke into the second tier.
- According to data in the 2009 ABA Official Guide, the pattern is now fully reversed: 76 full-time and 121 part-time. Further, the part-time yield is remarkable: 149 offers and 121 matriculated (81.2%)--that is better than Yale's full-time yield of 78.4%. In recent years, the school has fluctuated between Tiers 2 and 3.
- In addition to full-time day, the school has part-time that runs during the day and at night. That seems odd.
Last year, the dean who presided over this transformation was hired by another lower ranked law school. The news coverage made it very clear that he was hired for his track record of taking a school from Tier 4 and Tier 2. Indeed, the dean publicly proclaimed that very goal to the local media.
Can you guess one of his strategies for moving up in the rankings at his new school? Shrinking the full-time program while expanding the part-time program? Here is a comparison of figures from the 2008 and 2009 ABA-LSAC Official Guides.
- 2008: 287 full-time, 95 part-time
- 2009: 211 full-time, 170 part-time
The large increase in PT enrollment was achieved by doubling the number of part-time offers, from 171 to 352. On the school's website, the profile of the 2007 entering class has full-time day and part-time evening numbers. Below is screen-shot of the actual page:
Note the qualifying text under the grid: "An additional 70 students were admitted as Part-Time Day." Gee, during the most recent admissions cycle, the school added 75 part-timers while dropping 76 full-timers. Further, the school's website says: "Applicants to the full time day division who do not meet the admissions criteria may be offered admission into a part time day division."
Another section of the website explains how this new program works: "[A] new Part-Time Limited Day Program … allow[s] incoming students to complete their first year in three continuous semesters—fall, spring and summer. Instead of taking five classes in the fall, students take three classes and make up the remaining two classes—Torts and Criminal Law—the following summer. … By the beginning of the second year, students in the [PT Day] program are attending law school full time with their 2L peers. …"
And the US News payoff from this rescheduling of student courses?
- 2008 medians: LSAT, 153 FT / 153 PT; GPA, 3.24 FT / 2.98 PT
- 2009 medians: LSAT, 155 FT / 151 PT; GPA, 3.34 FT / 3.13 PT
A 2 point gain in LSAT and a .10 gain in UPGA. The school also moved from the Tier 4 to Tier 3. The proposed changes to the US News rankings will shut down these shenanigans, which, we suspect, have nothing to do with admitting experienced older students who will enrich the classroom. Note that this dean has been lauded for his mastery of US News--indeed, it appears to be the reason why he was hired.
What Does the Data Mean?
If you look at the data compiled by the Journal today, one of the striking things is how small many of the moves would be. That's not surprising. In April 2007, Lipshaw (who is no statistician!) observed that if you charted schools by the number at each peer assessment ranking, you ended up with a chart like the one at the left (based on the then current rankings): excepting the top seventeen schools, right-skewed bell curve. For large groups of schools, there is no perceived difference in reputation, and getting all worked up about a move up or down by a couple of digits seems misplaced. Just like there probably isn't a whole lot of difference between the performance of the students who get between 3.0 and a 2.7 GPA equivalent on exams with a mandated mean of 2.85, there really isn't a whole lot of difference in small moves within the group bunched between a 2.8 peer assessment score (the schools at that level are BYU, Florida State, Alabama, Miami, Oregon, Pittsburgh, and San Diego) and a 1.7 peer assessment score (schools at that level are California Western, Capital, New England, Northern Illinois, Roger Williams, South Texas, St. Mary's, Texas Wesleyan, and Touro). Perhaps a jump from a 1.7 to a 2.8 would signify a real change, but we could question the significance of most of the small moves inside that range.
But people, including academics, give data meaning--not the other way around. So if meaning arises here (for whatever reasons, including behavioral or cognitive biases, including our round number and base ten biases) because of ordinal ranking, and the way USNWR splits the tiers, and each spot between 1 and 188 means exactly the same thing, it's not surprising that players (deans, faculty, students) ignore the bell-shaped curve, and care, for example, whether the school is ranked 96 or 102.
Lessons in Ethics and Leadership
What does this matter? At least three reasons: (1) most of the time, the "gaming" gains don't actually accomplish very much in terms of movement up or down, weakening the rationalization that it's being done for the "greater good" of the school (not the kind of good cost-benefit judgment we'd like to see our students exercise!) (2) gaming compromises the role-modeling credibility of the legal educators who do it; and (3) all legal educators now have to deal with the "well, everybody does it" rationalization for pushing the edge of the legal and ethical envelope, making their jobs harder, just like ethical corporate lawyers pushing back against CEOs and CFOs have to contend with the "everybody does it" rationalization for accounting manipulation, backdating options, or other arguably benign exploitations of the rules.
We've observed that this kind of sub-optimization to “make the numbers” happens out in the real world all the time. If a company rewards its executives for short-term numerical targets, like inventory turns, or working capital turns, or quarterly earnings, or sales, that differ either from the fundamental number (say, annual earnings) or, worse, damage the company in the long run (e.g. to make this year’s number we cut all R&D spending) you can expect that the executives will respond to the incentives.
To bring it closer to home, it’s exactly the ethical problem we worry about when a law firm sets billable hour goals for its partners or associates. What then drives the determination whether work actually needs to be done? The client’s need or the lawyer’s statistics? One has to wonder about schools teaching “padding your hours” ethics at the same time they are doing this gaming. The point of ethical leadership is to demonstrate a separation of your self-interest from the choice to do the right thing.
Below the fold you can find the chart of the 90+ fully accredited ABA schools that have part-time programs based on the size of the gap between part-time and full-time/part-time combined statistics. It is sorted first by LSAT gap, then by UGPA. Slightly more than half gain 1 or more LSAT point by having a part-time program. As we noted above, these are all the part-time programs, and we aren't suggesting any gaming other than the publicly acknowledged instances we've discussed.
Posted by Jeff Lipshaw
Fresh off the front page Wall Street Journal article this morning, friends Larry Ribstein and Nancy Rapoport nail the analogy between law deans gaming the USNWR rankings and accountants massaging the numbers to meet the quarterly estimates, so permit me a moment of "I told you so" when I see this quote:
As for the charge of “gaming” the system, Phillip Closius, former Toledo dean, who successfully used the part-time strategy to improve the school’s ranking, says:
U.S. News is not a moral code, it's a set of seriously flawed rules of a magazine, and I follow the rules...without hiding anything.
My discussion of the resemblance between models like USNWR rankings, and games like football or chess is posted on SSRN and will be coming out in this volume of the Cleveland State Law Review. The piece is Models and Games: The Difference Between Explanation and Understanding for Lawyers and Ethicists. Here is the abstract. Enjoy.
There is value for lawyers in thinking about constructs of rules as games, on one hand, or models, on the other. Games are real in a way models are not. Games have thingness - an independent reality - and they can be played. Models have aboutness - they map onto something else that is real for the sake of simplification and explanation. But models and games are not as dichotomous as the preceding claim makes them out to be. Sometimes models look just like games, and sometimes games can serve as models. Because models look like games, we may come to believe they are real - that the models have thingness rather than aboutness. People are prone to think some of the models they deal in all the time are real, like games, and perhaps even more real than the reality the models are supposed to represent. When that happens unreflectively in business, ethical and legal problems can ensue.
There is also a relationship between games and models as a way of thinking, and the position of the thinker as modeler, game creator, or game player. To engage in any of those acts is to use the legally trained mind to make sense of what is going on, and to act on it. But there are different ways of making sense, either by explaining or understanding, and it is not common in legal education to undertake the exercise of thinking about thinking, or theorizing about theory. I explore the consequence of confusing games and models in two contexts, financial accounting and contract interpretation, and consider the possibility of co-optation from models into games and vice versa. I conclude that practicing lawyers (or law professors) need to think about thinking itself or face the possibility of being misled by precisely the same context facing their clients. In short, lawyers need to be pragmatic ontologists.
Wednesday, July 30, 2008
A criminal defendant ("petitioner") who was represented jointly along with her spouse in connection with drug charges established that counsel labored under a conflict of interest. Thus, the South Carolina Supreme Court concluded that the trial court improperly denied post-conviction relief:
At the PCR hearing, both plea counsel and Petitioner testified that counsel spent more time preparing Husband’s case despite the fact that Petitioner was pleading guilty to a majority of the charged offenses and faced a more severe sentence.
In terms of the conflict of interest, plea counsel acknowledged that she discussed this issue with Husband, but could not recall specifically talking to Petitioner about such a conflict. Plea counsel also admitted that she argued for leniency in Husband’s case and requested the plea judge reconsider his sentence. In contrast, plea counsel did not make these arguments on behalf of Petitioner. Moreover, Petitioner’s and Husband’s interests were adverse to one another given Petitioner pleaded guilty to the majority of the drug charges whereas Husband pleaded guilty to a single charge of PWID marijuana within proximity of a school. Significantly, plea counsel stated at the plea proceeding that Husband was originally “charged with everything,” but she “was able to get the solicitor who had the case at the time to dismiss all of his cases.” A review of the plea proceeding also reveals that plea counsel argued for leniency on behalf of Husband by comparing his more limited involvement in the crimes to that of Petitioner. We believe plea counsel’s approach essentially pitted Husband against Petitioner, which was clearly detrimental to Petitioner’s interests.
Under the circumstances, the court held that the petitioner need not demonstrate prejudice in order to establish entitlement to relief. (Mike Frisch)
Saturday, July 19, 2008
Posted by Jeff Lipshaw
Some random observations this morning from up here in God's country. . . . (well, if David Broder could do it from Beaver Island thirty miles northwest in the middle of the lake, why can't I?)
- The front page of the Detroit Free Press has a story on the latest gaffe in the mayoral debacle, this time, the decision by Gov. Jennifer Granholm (D-Harvard Law School) apparently to try to broker a deal with the federal prosecutors to resolve the mayor's difficulties at the same time she may be called upon to remove him from office. Quoted in the article on the legal ethics angle is none other than our own Nancy Rapoport.
- They have begun to tear down vacant Tiger Stadium. See the New York Times.
- Reading the list of Starbucks closings to which Alan linked felt a little like going down a list of disaster victims. I knew the ones at 38th and Meridian and in The Precedent in Indianapolis. I used to stop at the first one on my way down to teach my entrepreneurship and the law seminar at IU-Indy, and the second one was the stop between the gym and my office at Great Lakes. Interesting that not a single store in Boston or Cambridge was closed. Here's a theory. Because of the significant competition in Boston from Dunkin' Donuts (I still don't get Dunkin' Donuts, particularly the abomination of having the servers put the cream in your coffee before they pour it, but Boston runs on Dunkin'), Starbucks never overbuilt.
- For those of you just dying to know the fate of yesterday's cherries, first they are pitted and sugared (see above left), and then they are consigned to a cherry crisp (right). We who merely climb the ladder to pick the cherries defer this latter highly technical activity to the experts.
- Humean dogs. My two dogs, Max and Annie, are constrained by an Invisible Fence. When somebody comes by walking a dog on the street in front of us, they run up and down barking furiously until the passersby are a couple feet beyond the lot line, and then they immediately stop. I have concluded they believe they are causing the passersby to go away.
Wednesday, July 16, 2008
The Legal Ethics Committee of the District of Columbia Bar has recently issued an opinion that discusses the ethical implications of lawyers who engage in lobbying activities. The committee concludes as follows:
Most of the conflict rules apply to lawyer-lobbyists engaged in lobbying. Lawyer-lobbyists in the District of Columbia who hold themselves out as lawyers may not advance opposing positions in the same lobbying matter even with consents from all of their lobbying clients. Moreover, the lawyer-lobbyist must also ensure that she is not placing herself in a position where she might have to pull her punches on behalf of one client so as to protect the interests of another. Such conflicts can be waived with informed consent from the affected clients, provided that the lawyer reasonably believes that he or she can provide competent and diligent representation. Absent special circumstances, all of these restrictions also apply to other lobbyists in the same law firm, even if those other lobbyists are not themselves lawyers.
Lawyer-lobbyists are not, however, generally subject to Rule 1.7(b)(1) in the conduct of lobbying activities. This rule is confined to “matter[s] involv[ing] a specific party or parties,” a phrase that excludes lobbying, rulemaking and other matters of general government policy. As a result, Rule 1.7(b)(1) does not prohibit a lawyer-lobbyist from advancing a position in a lobbying matter that may be opposed in that same lobbying matter by another client of the lawyer-lobbyist (or of the lawyer-lobbyist’s law firm) where the other client is unrepresented in the lobbying matter or is represented by a different lobbyist who is not associated with the lawyer-lobbyist’s firm.
Finally, Rule 5.7 provides guidance for lawyers and law firms who wish to establish a law-related lobbying practice that is not governed by the conflicts provisions of the Rules of Professional Conduct. To do so, however, the lobbying client must receive clear notice that the services are not legal services and that the usual protections accompanying a client-lawyer relationship do not apply.
Of course, opinions of the ethics committee do not constitute binding precedent in the District of Columbia. However, an attorney who in good faith follows the articulated advice could assert reliance to show an intent to comply with ethical obligations. (Mike Frisch)
The Definition of Chutzpah or I've-Seen-It-All-Now: Being On Both Sides of Appeal. Cal Court Calls It A Disregard of Duties "Without Precedent."
Posted by Alan Childress
If it were a Hollywood script, I would laugh at its utter incredibility: only Hollywood would unblinkingly make an attorney have a litigation interest in both sides of the appeal (and treat it as clever lawyering). But it happened, yes in California, and the court there called it a disregard of a client's fiduciary duties that is "without precedent." It certainly is, to my knowledge, and it as twistedly brilliant and stunningly nervy as it is stupid and in the "what were they thinking?" box. [Thanks to appellate attorney Greg May for letting us know and pointing us to his (detailed and excellent) post on The California Blog of Appeal.] My simplified but accurate version is this, re attorney Anthony Pagkas:
Civil defendant-client loses suit due to default judgment from Lawyer's alleged lack of diligence. Client then sues Lawyer for malpractice and also appeals the default. Lawyer then buys out the plaintiff's interest on appeal (gets an assignment of the interest from the prior plaintiff, for some "undisclosed consideration"). That's right: buys into the other side of the appeal and, now represented as a litigant by another attorney in his firm, owns the default judgment if it is upheld. On the other side from his barely-former client, in the appeal!
Brilliant: if Lawyer loses "his" appeal, then there are no malpractice damages and no causation. If he wins, he collects a $730,000 default judgment from the former client.
Stupid: this requires Lawyer to move the appeals court to substitute him as "respondent" in his former client's appeal.
Sort of predictable: ”Finding that the proposed substitution violates multiple rules of Professional Conduct as well as the Business and Professions Code, we will deny the motion.” Well, yeah. The court's stated astonishment to follow in explaining the denial and imposing sanctions is quoted by May, and its full opinion here as well, issued yesterday. Suffice it to say that "if the substitution were allowed, it is conceivable that Pagkas could prevail in both the malpractice action and in this appeal, leaving him with huge windfall at the expense of his former client. Pagkas’s disregard for his ongoing fiduciary duties to his former client in favor of his own personal gain is without precedent." (Footnote omitted.)
How did Lawyer ever think he would get away with this? The sanctions are merely $5260, but I am sure there is more to come. The case is Styles v. Mumbert, civil H029767 (6th Dist. July 15, 2008).
UPDATE: Not entirely without precedent, it has since occurred to me.
Tuesday, July 15, 2008
[Posted by Bill Henderson]
Looking for a primer on the Fannie Mae / Freddie Mac mortgage mess? Over at Econbrower, UCSD economist James Hamilton has an excellent detailed post that lays out the problem. In a nutshell, it comes down to market believing that Freddie and Fannie mortgage-backed securities were riskless because the government would never let them fail. All that extra cash, available at artificially low rate for consumers, subsequently ran up the price of housing to unsustainable levels. Here is Hamilton's bottomline:
The overriding concern in dealing with the current mess is that the process of rapid and radical deleveraging would so impede the flow of new credit that the housing price declines, foreclosures, and bankruptcies significantly overshoot the values that we'd expect in a properly functioning credit market. In addition, I would worry about possible serious repercussions of a flight of foreign capital if there is a sudden perception that agency debt entails heavy risks.
The principle of "make those who caused the problem pay" has a lot of visceral appeal. But the principle of "don't impose severe and gratuitous extra costs on those who had no role in causing the problem"-- in other words, don't make the housing depression much more severe just to teach somebody a lesson-- has to be the basis for our policy decisions.
(HT: Tom Smith at the Right Coast.) The poor organizational incentives at Fannie Mae and Freddie Mac remind me a lot of Enron's go-go culture. Unfortunately, this debacle has potentially staggering macroeconomic consequences.
To my mind, the legal analogue to the economist's "moral hazard" problem is conflict of interest; lawyers should be able to spot these issues. The peculiar aspect of the mortgage meltdown is that many Wall Street lawyers had clients that, at least in the short run, were benefiting from the conflict of interest. From this unchecked growth, Fannie and Freddie executives got power, income, and patronage $$ to spend around to their politico friends, and investors got seemingly riskless securities. But there was no vigilant regulator at the table assessing the risk implicitly being assumed by the government and taxpayers. We operate in an adversarial system. If the government lawyer never shows up, that is not the problem of the private sector lawyer.
I would be interested to know, however, how many Wall Street lawyers perceived the mortgage-backed securities market as an eventual Ponzi scheme. Is it a pipe dream to teach lawyers to spot these types of issues? And if they do spot the issue, what should they do with the information?
Wednesday, June 25, 2008
The District of Columbia Rules of Professional Conduct prohibit discrimination in employment with the following language:
A lawyer shall not discriminate against any individual in conditions of employment because of the individual’s race, color, religion, national origin, sex, age, marital status, sexual orientation, family responsibility, or physical handicap.
The prohibition, so far as I am aware, has never resulted in public discipline against a member of the D.C. Bar. The rule came to mind as I reflect on the report of D.O.J. Inspector General Glenn A. Fine finding employment discrimination in the Department of Justice honors and intern programs. By its language, discrimination based on inferred political leanings or affiliations would not appear to violate the letter of the rule. However, to the extent such discrimination constitutes criminal or otherwise improper conduct (such as violation of Department regulations), it might well violate D.C. Rule 8.4(b) (criminal conduct that reflects adversely on honesty, trustworthiness or fitness to practice in other respects) or (d)(conduct that seriously interferes with the administration of justice).
A web search (apparently a favorite tool for detecting political persuasion not apparent from a resume) for information about the two attorneys who were found to have discriminated reveals that both have left the Department of Justice and one is a practicing member of the D.C. Bar. I would expect the District of Columbia Bar Counsel to open a confidential investigation of this attorney in light of the Inspector General's findings. The Bar Counsel has the authority (and, in my view, the obligation) to proceed even without a formal complaint under the following Board on Professional Responsibility Rule:
An investigation may be initiated on the basis of a complaint or on the basis of any alleged ground for discipline coming to the attention of Bar Counsel or the Board from any source whatsoever.
Whether or not such an investigation goes anywhere remains to be seen. I have always favored open access to matters that result in dismissal so that the public could understand the basis of a Bar Counsel decision not to institute charges. I doubt the present rule (D.C. App. R. XI, section 17) that accords confidentiality to dismissal letters will change in the foreseeable future. (Mike Frisch)
Monday, June 23, 2008
Tuesday, June 17, 2008
Tx Ct Crim App denies appeal of death row inmate who alleges that judge & prosecutor slept together during case
OK, here's a first for me. Charles Hood is set to be executed tonight because the Texas Court of Criminal Appeals has denied his appeal, which alleged that the judge and prosecutor on his case were sleeping together at the time that he was being tried. The appeal was denied on procedural grounds. More...
Monday, June 16, 2008
Posted by Alan Childress
Comes now the Appellant, by counsel, and moves the Court to reschedule the Oral Argument currently scheduled for August 1, 2007. The grounds for this motion are that undersigned counsel will be out of town in Oregon, on a 350-mile bicycle trip from July 30 through August 4, 2007, for no other reason than to please his wife. Counsel assures this panel that Oral Argument would be more enjoyable than the aforementioned bike trip.
Saturday, June 14, 2008
Tuesday, May 20, 2008
"The Third International Legal Ethics Conference will be held on Australia's beautiful Gold Coast on 13-16 July 2008. ... The primary aim of the conference is to provide a forum for informed and lively debate within the various conference themes." Detailed Information, speakers, and a call for papers are linked here. Our prior link here to the colorful and printable conference schedule.
Notably for LPB readers:
The conference will be designed to cater for both scholars and legal practitioners, with a designated "practitioners’ day" which will include papers, presentations and discussions of particular relevance to practising lawyers.
The conference themes embrace international perspectives, and will provide delegates from Australia and abroad with opportunities to hear and share ideas and arguments that have implications for "lawyering" across jurisdictions.
Saturday, April 12, 2008
Friday, March 21, 2008
Posted by Jeff Lipshaw
As I continue to get rejections from law review articles editors based on the expedite request I sent out with a deadline date two weeks ago, and having since accepted a publication offer, I have been going through a little thought experiment (read: fantasy) about how to deal with a tardy offer coming from, say, a "top fifteen" law review.
Would you abide by your commitment to the first one?
I can imagine this conversation:
Professor: "Hello, EAE from East of the Rockies Land Grant University Law Review."
Professor: "A funny thing happened on the way to class today."
Professor: "You know that piece of mine you accepted three weeks ago?"
Professor: "I just got an offer from the Founded in the Eighteenth Century East Coast University Law Review."
Now here we have a divergence:
(A): Professor Shavell and Kaplow Disciple: "The utility I will gain from disavowing my acceptance far exceeds the cost to you. This is an efficient breach. See ya."
(B) Professor Fried Discipline: "I am morally bound to my promise to you. I just wanted to let you know while I weep quietly."
(C) Professors Fuller and Perdue Disciple: "Have you started cite-checking yet?"
(D) Professor Lipshaw: "I am legally and morally bound to you. Would you, however, release me from the obligation? What can I offer you for the release?"
Tune in later for my views on another (from my perspective) fantasy: the curse of the "top five" law review "short decision window" strategy. To paraphrase Tevye: "May the Lord smite me with it, and may I never recover."
Monday, March 17, 2008
Ethical Duties of Prosecutors in White Collar Cases: The Enron/Skilling Example of the Value of Full Disclosure (or, Here's the Story of a Rule Named Brady)
Posted by Alan Childress
On White Collar Crime Prof Blog, Ellen Podgor has recently posted on the social value (here) and on the ethics rule requirement (here) of full discovery disclosure by prosecutors -- the Brady rule as legal ethics and as applied to white collar prosecutions beyond typical drug cases. The issue arises from allegations in Jeff Skilling's brief that the government did not turn over all of the Fastow notes (initial FBI interviews of Andy Fastow which painted a much more innocent picture than his trial testimony). See also the WSJ article here, unfortunately just a preview. And the Letter of Apology Blog finds the non-disclosure to be "striking" and "troubling," here, with further links to blogging on the issue.
Update : The Skilling Supplemental Brief is also linked in this commentary by Houston blogger-lawyer Tom Kirkendall.