Legal Profession Blog

Bepress Announces New Online Journal: "Law & Ethics of Human Rights"

The web announcement of this new journal is here, including a table of contents of its first issue.  Links to PDFs of these first papers, and a list of editors, are found here.  [Alan Childress]

New Issue Out: bepress's 'Studies in Ethics, Law, and Technology'

Posted by Alan Childress

The bepress journal Studies in Ethics, Law, and Technology announces at this link its newest issue, Vol. 2, Issue 1.  The journal "is a peer-reviewed and policy-focused journal that examines the ethical and legal issues that arise from emerging technologies."  All papers are easily accessed in PDF via links at either site above.  Its table of contents for lead articles (plus discussions and book reviews not listed here) is as follows:

Death in Traffic: Why Are the Ethical Issues Ignored?
Leonard Evans                                    

The Ethics of Autonomous Military Robots
Jason Borenstein

Privacy, Data Protection, and the Unprecedented Challenges of Ambient Intelligence
Antoinette Rouvroy

The Legal and Ethical Changes in the NHS Landscape Accompanying the Policy Shift from Paper-Based Health Records to Electronic Health Records
Alan C. Gillies

Engineering Greater Resilience or Radical Transhuman Enhancement?
Andy Miah

The Historical Idea of a Better Race
Matti Häyry

BE Press Offers New Online Journal on Law, Ethics and Technology

The BE Press series of e-journals has started a new one, linked here, called Studies in Ethics, Law, and Technology.  Although the description of its subject clearly includes broader ethical issues of bioethics and medical advancements, like moral issues raised by cloning, the subject does seem to include legal ethics as related to technology.  [Alan Childress]

McKenzie & Vaughn on How Computers Change the Way Lawyers Think

Posted by Alan Childress

In addition to our previous post on Richard Danner's article, consider that Elizabeth McKenzie and Susan Vaughn, both law librarians at Suffolk (and Betsy McKenzie is a law prof and the library's director), have posted to SSRN their article, "PCs and CALR: Changing the Way Lawyers Think."  It is also linked in PDF here from bepress.  Here is their abstract:

Computers are changing the way lawyers and judges think. The authors measured differences in analogical reasoning in briefs and decisions written before computers were used in law, and now. They argue that the changes found mandate changes in legal education, that students need more emphasis on careful reading and analysis.

Kohm on Judge Judy vs. People's Court and Their Different Models of Justice

Posted by Alan Childress

The recent effect or mirroring of pop culture and Judge Judy within the legal profession has been a recurring theme of LPB.  It was initially raised by Nancy Rapoport in her previous scholarship (e.g., on lawyer images in popular culture causing effects on lawyering) and continued by her on this blog, and then picked up by me with a post or two on the behavior of judges who seem to be emulating Judge Judy.

There is actually more scholarship related to the specific subject of Judge Judy:  Steven Kohm (Univ. of Winnipeg--Criminal Justice) has published in the Law & Society Review an essay on her show and also People's Court, and their competing visions of law and justice.  It is called "The People's Law versus Judge Judy Justice: Two Models of Law in American Reality-Based Courtroom TV," and was published in 40 Law & Soc. Rev. 693–728 (2006).  It is not downloadable gratis, as far as I know, but can be ordered here.  Unfortunately [my characterization], as he demonstrates, Judge Judy "wins."  Here is Kohm's abstract:

This essay examines the popular American daytime courtroom programs Judge Judy and People's Court and comparatively analyzes two distinct models of law and justice developed in these shows. Using the techniques of qualitative media analysis, I argue that Judge Judy represents a shift in the way popular culture imagines the role of law in the lives of ordinary people. This shift accords with neoliberal notions of governance and individual self-responsibility for protection against risk. Conversely, People's Court represents an older, liberal-legal model of law that emphasizes individual rights, public participation in the court process, and due process. By demonstrating the supersession of Judge Judy justice over that of People's Court, I argue that this shift in the way law is imagined in American popular culture signals wider shifts in American and indeed international attitudes toward the law in our everyday lives.

A few years before, Kohm had written his doctoral dissertation on TV judges after studying 200 hours' worth.  (Ouch.  Sort of like the Michael Caine-Gene Hackman thesis in the movie PCU.)    The dissertation is available as a PDF file from this link (though the file is so big it froze my tiny laptop--man I hate PDF--so better luck to you).  It is cleverly called "I'm Not A Judge But I Play One on TV:  American Reality-Based Courtroom Television."  Its 2004 abstract and alternative download info are linked here.

Coquillette on the Profession, Jury Trials, and Legal Education Circa 1763

Posted by Alan Childress
Daniel Coquillette (B.C.--Law) has posted this article to bepress's NELLCO collection: "The Legal Education of a Patriot: Josiah Quincy Jr.'s Law Commonplace (1763)."  It will appear in Arizona State Law Journal, sum. 2007.  The paper can be downloaded (free and without subscription) from this site.  Here is the abstract:

This article is based on the exciting discovery of a never before printed Law Commonplace, written by the 18th-century lawyer and patriot, Josiah Quincy, Junior. Quincy was co-counsel with Adams in the famous Boston Massacre Trial, a leader of Committee on Correspondence and the Sons of Liberty, and author of the first American law reports. His Law Commonplace provides an exceptional window into the political, racial and gender controversies of the evolving American legal system, and profoundly challenges our conventional views on the origin of American legal education. In certain areas, particularly jury trial, it also has present constitutional significance, as compelling evidence of the state of the law referenced by the Seventh Amendment.

Professor Coquillette discusses the advocacy of Quincy and Adams, and relates it to Cully Stimson's controversial comments, in this Boston Globe op-ed.

Dinovitzer & Garth on Job Satisfaction in the Legal Profession: Sorting the Social Class Factor

Posted by Alan Childress

Ronit Dinovitzer (Univ. of Toronto, Soc'y) and Bryant Garth (Dean of Southwestern Law School & ABF [left]) have posted on SSRN's Law & Society: Legal Prof. journal a provocative empirical article, "Lawyer Satisfaction in the Process of Structuring Legal Careers."  It uses data as part of the ongoing After the JD Project following longitudinally the bar class of 2000 [part of their earlier work from the project, with others, here].  This one will be published in 2007 in Law & Society Review.  Its abstract:

This paper proposes a new approach to the study of job satisfaction in the legal profession. Drawing on a Bourdieusian understanding of the relationship between social class and dispositions, we argue that job satisfaction depends in part on social origins and the credentials related to these origins, with social hierarchies helping to define the expectations and possibilities that produce professional careers. Through this lens, job satisfaction is understood as a mechanism through which social and professional hierarchies are produced and reproduced. Relying on the first national data set on lawyer careers (including both survey data and in-depth interviews), we find that lawyers' social background, as reflected in the ranking of their law school, decreases career satisfaction and increases the odds of a job search for the most successful new lawyers. When combined with the interview data, we find that social class is an important component of a stratification system that tends to lead individuals into hierarchically arranged positions.

In this After the JD Project team photo [all names here], Prof. Dinovitzer is shown sitting toward right, next to Dean Garth.

Spindler on Corporations' Release of Information After Dura Pharmaceuticals' Securities Damages Rule

Posted by Alan Childress

James Spindler (Southern Cal., Law) has posted on bepress Legal Repository the article, "Why Shareholders Want Their CEOs to Lie More after Dura Pharmaceuticals." It will be published next year in the Georgetown Law Journal.  Despite the provocative title, it seems primarily about the timing and "bundling" of release of corporate information and, in any event, raises some implications for proper counseling of corporations after the Supreme Court, per Justice Breyer, decided Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005).  The abstract:

The Supreme Court's recent Dura Pharmaceuticals decision requires a plaintiff to show a market decline (ex post losses), as opposed to price inflation at the time of purchase (ex ante losses), in order to maintain an action for securities fraud. Since fraud is actionable only where a market decline attributable to the fraud occurs under the ex post loss rule, firms that can bundle together disclosures or business projects are under-deterred by the antifraud regime: the success of one project may compensate for the failure of another, the firm can time the release of good and bad news to mask fraud's effect on price, and "other factors" that would have caused a loss of investment value even without the fraud can disallow a claim for damages. Strategically, firms may bundle to minimize exposure to liability. On the other hand, firms that value transparency may wish to unbundle. In this sense, the credibility of disclosure under an ex post loss rule depends on the extent to which firms can and do unbundle, whereas an ex ante regime is theoretically perfect in any case. This analysis also reveals two additional problems with an ex post rule: market tests for ex post damages awards (a chief purported benefit) are generally not available for bundled firms, and awarding ex post damages may over-punish small frauds but reward big ones.

Spindler had previously posted on analysts' conflicts of interest in "Conflict or Credibility: Analyst Conflicts of Interest and the Market for Underwriting Business."  It was published in volume 35 of the Journal of Legal Studies (June 2006).

Zealous Advocacy Meets Fantasia: A Response to Professor Donohue

Posted by Jeff Lipshaw

John J. Donohue III (Yale) has a column in The Economist's Voice (Berkeley Electronic Press) entitled The Discretion of Judges and Corporate Executives:  An Insider's View of the Disney Case.  To be accurate, Professor Donohue's "insider" status derives from the fact that he was an expert witness for the plaintiff shareholders in the shareholder derivative litigation claiming that Disney officers and directors breached their fiduciary duties and wasted corporate assets.  So it turns out Professor Donohue wasn't a fly on the wall when Michael Eisner and his general counsel, Sanford Litvack, were trying to decide what to do about the very highly paid executive Disney had recently hired, and who was turning out to be one of the great hiring errors in recent corporate history.  Like the rest of us, Professor Donohue was an after-the-fact commentator on the cold record of documents and depositions, taking (hey, that's what we're paid to do) a pot shot, albeit learned, at their decision.

It's pretty clear Professor Donohue does not hold himself out as an expert on Delaware corporate law; he has a distinguished background as a legal academic and economist, and according to his biography on the Yale Law School website "has used large-scale statistical studies to estimate the impact of law and public policy in a wide range of areas from civil rights and employment discrimination law to school funding and crime control. Before joining Yale Law School, he was a chaired professor at both Northwestern Law School and Stanford Law School. He recently published Employment Discrimination: Law and Theory." 

A real insider might have been somebody like Senator George Mitchell (right) who was on the board of Disney at the time, and who took over as the interim chairman of Disney when the board relieved Michael Eisner of that title.

Extended reaction below the fold.

First, Professor Donohue's column has the implicit disclaimer, at least in the description of the author, that he had some emotional stake in the outcome of the case, and that certainly would account for the vituperative attack on the Disney executives as well as the Delaware judiciary.  I also want to issue a disclaimer.  I was a general counsel, often making ex ante decisions like Litvack's, and my sympathy to a general counsel in that position is a matter of public record.

One further disclaimer:  hell hath no fury like a litigant scorned, particularly when the litigant has an academic outlet for the fury.  In my prior life as a general counsel, I was a two-time loser - well, I guess I shouldn't personalize it - in the Delaware courts in the same case:  Great Lakes Chemical Corp. v. Monsanto.  (Kind of like Brandon Inge committing two errors on the same play in the World Series, but we digress.)  The first loss was in the federal court on the issue whether the LLC interest the company bought from Monsanto (before my tenure, by the way) was a "security" for purposes of Rule 10b-5.  In retrospect, I think we deserved to lose that issue, and I hold no animus with regard to Judge McKelvey's well-reasoned opinion.  (The only "animus" - :) - I hold is to Professor Bainbridge, who took the case out of the new edition of his business associations case book, depriving me of the priceless credibility of teaching my own bad decision to litigate an issue out of somebody's else book.)  The second loss, which I take more personally, was the state court decision (where we refiled after being dismissed in federal court) holding that as a matter of law we had failed to state a claim for common law fraud in view of an anti-reliance provision of the kind I am now addressing in a work in progress.  I confess that my view is in part shaped by my own experience, and I wouldn't mind seeing a change in Delaware contract law on the subject.  But I still think the Chancery Court is at the top of the list as a place to have business issues decided if you really have to litigate.

But now to the (red) meat of Professor Donohue's beef.  He excoriates Disney's management and board, and the entire Delaware judiciary (but in particular Chancellor William Chandler who was the fact-finder) for what he sees as an egregious waste of corporate assets - the roughly $140 million (in 1996 dollars) that Disney paid to Michael Ovitz in severance upon his termination just fourteen months into his five year contract.  This, says Professor Donohue, was waste.  The board made an uninformed decision, without "an evaluation of the legal rights of the company and the costs and benefits of" choosing NOT to pay under the non-fault termination provision, and instead litigating the issue whether, under the contract, Ovitz had committed "gross negligence or malfeasance."

We need to peel this artichoke a little to understand just what constitutes the gravamen of Professor Donohue's view of the sin here.  It is not the original decision to give Ovitz a contract that upon termination was worth that much money.  (Indeed, I have just finished teaching the Disney case to my Business Enterprises class.  Granted that I am a superb (?) advocate, and there was no opposing view, after my fifteen-minute history of the hiring, my subsequent request for a show of hands whether the Disney board was wrong in executing the contract produced no takers, and this from a class that had gasped at the amount before we started.)  The sin was also not in the decision to fire Ovitz.  One presumes that it was legitimate for the board and management to have said "what is done is done, and we cannot unring the bell, but we must fire Ovitz."  No, the sin, according to Professor Donohue goes to the professional lawyering issue that I previously pegged as the one not really discussed so far in the academic world:  Sanford Litvack's determination that trying to fit Ovitz's conduct within the "gross negligence or malfeasance" standard of the contract was a "no-brainer" (i.e., it didn't fly), and the Board's acceptance of that conclusion.

And we need to peel even further.  Professor Donohue does not address the fact that the board was entitled under Delaware law (Section 141(e)) to rely on the opinions, reports, or statements presented to the corporation by any of its employees, or by any other person as to matters the board reasonably believed were within that person's professional or expert competence and who had been selected with reasonable care by the corporation.   Whatever else one thinks, Sandy Litvack was a lawyer on whose opinion a board member could reasonably rely.  (NB: the opinion points that Eisner himself checked with all the lawyers he knew and got the same answer - conduct that is completely consistent with my experience in dealing with CEOs who do not like the answer given to them by their general counsel, as much as the CEO may love and respect the general counsel.)  He was certainly reasonably hired. 

So Professor Donohue's argument really boils down to the following propositions:  (a) Litvack was wrong (even if wrong in good faith) in applying the contract standard for a termination for cause to Ovitz's conduct; (b) even if there were a colorable basis for such a position, Litvack did not zealously represent his client by recommending that Disney pursuing the "for cause" claim; (c) as general counsel, Litvack was not entitled to make that decision - the board, and not the lawyer, had the duty to practice law - that is, to draw the appropriate legal conclusion from a set of factual circumstances (a board member without a law license doing this out of her home office for a client would no doubt have some issues with the local bar association); and (d) the board should be liable, without the benefit of the presumptions of the business judgment rule, for what, in effect, was either its or Litvack's alleged malpractice of law.

Wow.  In fact Professor Donohue is no more an insider to this particular decision than I.  But I have been inside on decisions that may well have involved as much money as the $140 million, and I am bothered terribly by the advocacy of what appears to be the "zealous advocacy" model of a general counsel's duties. As I asked in the earlier post, if Litvack concluded that Disney could pass Rule 11 muster (or the straight face test), did he have an obligation, moral or otherwise, to all the uninformed stakeholders (i.e. the shareholders) to pursue the claim, even if as nothing more than bludgeon to knock ten or twenty or thirty million dollars off the pay-out?  Is it like zealous advocacy when defending a client for a capital crime?  Are we general counsels obliged to employ EVERY means at our disposal to win?

To paraphrase the earlier comment, that was always the toughest kind of call for me as a general counsel.  Like Litvack, I would conclude that contesting a particular issue was a "no brainer" because in my judgment we had no case.  But I always wondered in those instances:  was I too nice?  or too ethical?  Somebody could cobble together enough of a position to cause some grief for the other side (because it seemed like people were always taking marginally ethical positions against us, and finding lawyers who would sign the pleadings!) If I reached a legal conclusion and expressed it to the board, it was the rare case that anybody would question it.   In essence, my sense of ethics or my moral judgment, as the GC, became the moral judgment of the corporation.  And I always told the board when my legal judgment overlapped either my moral judgment or my business judgment (which often overlapped each other - as my business judgment was pretty utilitarian).  I have a hard time believing (and here I confess I do not know the record as well as Professor Donohue) that Litvack never had that same conversation with the Disney board.

This is the real danger of big numbers, like those in the Ovitz situation.  Ask your next class, completely out of context, if $140 million severance is too much after fourteen months work, and I guarantee you that the overwhelming majority will answer "yes" spontaneously with no knowledge whatsoever of the facts.  I probably would.  What we have here, it seems to me, is a populist attack on an issue of wealth distribution, in the guise of what purports to be an analysis of law.  And it is not a careful analysis of law or morality, as much as one expert's continued political advocacy of a position wholly rejected by the court.  It would be fair, at least, were it made explicitly on the latter basis.

The Value of Transactional Lawyering

Posted by Jeff Lipshaw

I suppose one reaches a point in one's academic career when one no longer jumps around the house shouting "yes, yes, yes, yes, yes" when one places a law review article, or, as we say, "kvells" quietly upon being cited by anybody, much less a fine scholar in a really interesting and insightful article, and even when you're not sure the citation is for precisely the point you thought you were making.  But I'm still a neophyte, that explains my happy reaction, apart from the real value of the article, to Explaining the Value of Transactional Lawyering, posted by Steven Schwarcz (Duke Law School) in the ExpressO pre-print series. 

The really interesting approach Professor Schwarcz has taken is to collect data from lawyers and clients on their perceptions of the value lawyers create in transactions, and uses it to challenge the "transaction cost engineering" approach proposed over twenty years ago by Ronald Gilson.  With all the appropriate disclaimers for the flaws in the data, Professor Schwarcz hypothesizes that the primary value transactional lawyers bring to the party is not transaction cost engineering (in the sense of reducing the likelihood of future litigation), or acting as reputational intermediaries, but in reducing "client regulatory" and "transaction regulatory" costs.

More below the fold.

I think there's gold in some of this data, and it helps direct the next aspect of empirical research.  (Not the smallest bit of gold from my standpoint is support for my merely casually empirical assertion at the outset of The Bewitchment of Intelligence (78 Temp. L. Rev. 99) that there is little relationship between what lawyers focus on in the negotiation and what is actually litigated - something that Judge Posner had asserted was actually tied together in a way expressable by a mathematical function.  According to the survey data, 66% of the clients surveyed reported their experience being that fewer than twenty percent of contract litigations were over issues anticipated during the negotiation.)

Professor Schwarcz cites my Contingency & Contracts:  A Philosophy of Complex Business Transactions (54 DePaul L. Rev. 1077) generally for the point that lawyers prepare contracts to minimize future contingencies.  I think the citation belongs in the article, but as support for his broader conclusion: that good or effective transactional lawyering is not reducible to economic formulae, something I suspect is intuitive to both of us as long time transactional practitioners as well as, at least in his case, academic thinkers.  I've read and wrestled with the Gilson thesis, feeling intuitively that it is over-reductive.  What I wish Professor Schwarcz's data had done, and propose for additional research and thinking on the subject, is to provide a basis for a regression on what clients and lawyers believe to be the value. 

My hypothesis (consistent with the themes of Contingency and Bewitchment that the contingencies of the world are too complex ever to be captured fully by the language of contracts) is that the value of lawyering reflects many, many concerns, some of which can be reflected in cost reduction, and some of which cannot.  For example, one transaction cost is the risk of not making a deal at all.  Lawyers who have a skill in crafting meaningful (or, in my case, often slick but meaningless) compromise language ARE transaction cost engineers in a sense, but I'm not sure (and certainly not without going back and re-reading Gilson) in the sense the economic approach has considered.  Those factors and concerns ought to be the subject of a regression analysis, and good survey data of the kind Professor Schwarcz has begun might address that issue.  My intuition is that we will see a number of "value perceptions" but none that we could really call "primary."

The other data I find interesting (along the lines of something I've noodled about) is that close to half the lawyers and clients surveyed say that clients should "seriously consider hiring a highly reputed law firm in all transactions where opposing parties hire highly reputed law firms."  Think about this for a second.  It's a Prisoner's Dilemma.   There are two sides to the deal.  Neither knows whether the other side will hire a lawyer (we could put probability into the matrix).  Recall that in a single play, the prisoners will always confess and get a middling sentence, because the payoffs of holding out are worse whether or not the other prisoner holds out.  The best payoff only occurs if there is cooperation to hold out, something that most likely occurs only with trust and repeated plays of the game.  If, as client, I think that the other side will hire a lawyer, I have to hire one as well.  I could go to the other client and say "there are no regulatory or other costs here; let's both save on costs and do this on a sheet of paper."  My hypothesis (I didn't come up with this today; I've been thinking about it for a while) is that there are a certain segment of transactions in which the lawyers provide NO value, but are present in the deal because their clients are facing a Prisoner's Dilemma.

Well, that was stimulating for a Saturday afternoon....