Friday, October 15, 2010
Wednesday, June 2, 2010
Posted by Alan Childress
One of my students doing a brief "independent study" on legal ethics wrote her paper on the 2009 Louisiana bar regulation of advertising, including internet and web advertising and blogging, and certain per-use fees and screening the bar requires. The rules were modeled on the restrictive Florida rules. The Louisiana act was challenged in federal district court late in '09 to a mixed result, as she details -- the judge nixing some procedures and fees while approving other parts of the act.
It's an interesting story and she helpfully explains what this means in nearly 25 other states. The student is Brittany Buckley--now a proud Tulane grad--and she said I could share it on LPB. It is called Intersecting the First Amendment, Ethics, and the Internet: Memo to Other States From the Louisiana Experience, and you can Download Buckley_ch 1 here.
This paper was turned into chapter one of the student book, called Hot Topics in the Legal Profession~2010, sold digitally on Amazon and Smashwords in nine formats including simple PDF (plus soon available for Nook and Apple--though iPad can read it now on its Kindle app). You do not need to own a Kindle to read Kindle books, but anyway there is always pdf or rtf from Smashwords. I blogged about the project here and included my Foreword as a download. This chapter should give you another taste of what the overall book includes, such as friending judges and judicial elections; ancillary businesses of law firms under labor law, actual friendships of judges, settlement ethics, and the Caperton case and final result. Get it while it is hot, and remember that sales benefit Tulane's nonprofit Public Interest Law Foundation.
The ethics book is featured on my publishing website at Quid Pro Books. We seek submission of books or monographs on law, legal history, and law and society -- and of course legal ethics -- plus other academic subjects. For information for you to submit your dissertation, here is my earlier post, but we also publish panel presentations, proceedings, and original manuscripts. Information for prospective authors is here.
Tuesday, May 25, 2010
Current events in U.S. legal ethics, 2009-2010, according to my students (and benefit Tulane's PILF)
Posted by Alan Childress
Several students writing Independent Studies papers this spring on legal ethics for me, joined by some from an advanced ethics seminar taught by a colleague, have their work collected into a new digital book on current events May 2009 to present. I edited the papers and wrote a Foreword to it, which explains its origins, topics covered, and other stories of the year, plus an ode to Mike Frisch here and John Steele at LEF as the leading bloggers for immediate ethics news and insights. Mike breaks a ton of stories, you already know, and posts multiple times each day, and John among his regular posts does a nice annual roundup of the year's big stories, each December. Some of those stories got covered, I explain, and some not, but in any event I think users will find the collection useful. As the Foreword details, it is for a good cause. Proceeds benefit the Tulane Public Interest Law Foundation, a nonprofit student org that sponsors
indigent client representations and placements in public interest work. Note: Download FOREWORD here.
More details on the book itself and topics to come (and some chapters to be posted), if you do not want to read the Foreword, but mainly I wanted to preview the opportunity to buy this work. Already it is available on Smashwords in multiple formats, such as ePub, PDF, HTML, rtf, and Palm, so anyone can read it without an app or Kindle. There the best format is PDF (footnotes do link) or the one for Sony readers, but we covered everything.
An even better format, with search function enabled and all links I added active, is on Kindle or its free apps for PC, iPad, Mac, iPhone, BlackBerry, and related devices or laptops. The Amazon webpage for this timely book is now active and accepts downloads now, to an app. But at least for now, Smashwords makes more money for PILF and also has the PDF, printable version, so that may be where you will go if you are not yet into Amazon ebooks. Oh, on the iPad, use the Amazon app and the format should work great. If not, let me know.
This is a followup to the post Publish Your Dissertation (but on topic for the blog!), and I can also help you publish other student seminar work and papers from academic conferences, preferably as part of the TPILF series. The website for all this will be qpbooks.com, active tomorrow. Submissions are on law and related subjects, not only legal ethics. Much more info on proposals and other books sold are on the website. For example, CLS scholar and Tikkun editor Peter Gabel did a digital version of The Bank Teller with me.
Friday, April 30, 2010
Posted by Alan Childress
[The Society of American Law Teachers has a list of past presidents and board members that reads like a who's who of the law prof world. A letter sent to Dean Griffin of Tulane today, by its presidents, Profs. Raquel Aldana and Steven Bender, reads in its body as follows --ed.]
Since 1974, the Society of American Law Teachers (SALT) has been an independent organization of law teachers, deans, law librarians, and legal education professionals working to make the profession more inclusive, to enhance the quality of legal education, and to extend the power of legal representation to under-represented individuals and communities. We write to you on behalf of SALT to express SALT’s opposition to SB 549, which undermines academic freedom and interferes with an essential public service provided by the clinical programs at the four Louisiana law schools. SB 549 threatens to prevent law school clinics from meeting their professional obligation to expand access to justice for their clients by seriously limiting the types of representation they can undertake.
SALT is particularly concerned with Section 2 of SB 549. Section 2 of the bill prohibits law clinics from filing any action against a government agency or filing a suit for monetary damages against any individual or business. It also prohibits law clinics from raising challenges to the Louisiana constitution.
These prohibitions would eliminate law student representation of clients in most civil law actions. Should this bill become law, future Louisiana lawyers would suffer from the lack of litigation skills training necessary to the effective practice of law, and clients would suffer from not having access to lawyers to take their cases through the justice system using the most relevant legal theories available. Legal representation without the ability to pursue applicable claims does not constitute meaningful representation for either the students trying to learn or the clients which they serve.
Furthermore, our system of checks and balances, a necessary component of good government, values the ability of lawyers to challenge governmental action – this right is protected in the federal and Louisiana constitutions and statutes. Law clinic clients should be guaranteed the same constitutional and statutory rights as everyone else in Louisiana. . . .
The importance of the ethical principle at the heart of the legal profession, the duty to represent those who otherwise would not have access to justice, is a core value that students are taught in the classroom, but often experience and internalize only in their representation of clients in a clinic. ...
[The rest of the letter, a powerful one, follows in full by pdf: Download SALT Letter]
"A Serious Blow to Legal Education": La. to Effectively End Clinics? (Or Dialysis Patients Will Suffer?!)
Posted by Alan Childress
Law School clinics in several states, notably in Maryland and Louisiana now, are under fire. Real people may be hurt beyond imagination -- from indigent clients and neighborhood assocations to law students and ordinary medical patients (the latter because the pending La. bill would cut off funding for their treatments at Tulane). Here is the story by Nick Marinello at Tulane about a pending bill in La. which would effectively kill most clinics at our four law schools.
A pending bill in the Louisiana Legislature that would restrict the roles of university law clinics could "deal a serious blow to legal education in our state," according to a letter written by law school deans from Tulane and Loyola universities to members of the state senate. In that letter, Tulane Law School interim dean Stephen Griffin and Loyola University Law School dean Brian Bromberger describe the essential role of clinical legal education and decry the chilling effect that the bill would have on university law clinics.
The bill purports to regulate legal clinics but would in fact cripple them, write Griffin and Bromberger.
Senate Bill 549 by Sen. Robert Adley, R-Benton, would prohibit law clinics at any state or private university that receives state funding from suing government agencies. In addition, the bill would forbid clinics from suing individuals and businesses for financial damages and curtail the ability to raise constitutional challenges.
As stipulated in the bill, any violation of the law will "result in the forfeiture of all state funding to the university for that fiscal year."
In an interview, Griffin said that he believes the restrictive language of the bill is targeting a particular clinic. "Although the bill is aimed at the Environmental Law Clinic, the target it actually hits is far more broad and affects nearly all of our clinics negatively, which would severely hurt our curriculum and our ability to serve the community by providing access to justice."
Along with the Environmental Law Clinic, Tulane Law School operates clinics representing indigent clients in civil litigation, criminal law, domestic violence, juvenile law and legislative and administrative advocacy.
According to Griffin, SB 549's prohibition of suing the government and restriction on raising constitutional issues would have a profound and negative impact on the attorney-client relationship. "You can't say, 'yes I'll represent you but, by the way, I can't make an argument based on a state constitutional challenge'," said Griffin.
The legislation also calls for all university law clinics to be subject to oversight by the House Committee on Commerce and the Senate Committee on Commerce, Consumer Protection and International Affairs. Currently, the Louisiana Supreme Court supervises law clinics.
"Clinics have always been supervised by the courts," said Griffin. "They operate under the strictest limitations in the country. More regulation is simply unnecessary."
Currently the bill is under review before the Senate Commerce Committee. Griffin encourages anyone interested in the welfare of clinical legal education to contact members of the committee to voice their concern.
The law deans' letter appears here [Download Deansletter]. Contact info for the Committee, in case you can share your view. What a sad way to celebrate the second week of JazzFest: resisting a bill that may be targeted by petrochemical industries at our environmental clinic -- this, ironically, while the fishing industry tries to salvage its shrimp bed from oil -- but really will end one of the best things about legal education and about Loyola and Tulane. Have they no shame? And will this effort stop at La. and Md.?
Update: letter from SALT opposing bill, here.
Thursday, April 29, 2010
The web page of the Ohio Supreme Court announced yesterday changes in criminal discovery rules:
The Supreme Court of Ohio today filed with the Ohio General Assembly final amendments to the annual update of the Rules of Practice and Procedure, including changes to the criminal discovery process that were developed through a collaborative process led by the late Chief Justice Thomas J. Moyer and including the criminal defense bar and prosecutors.
The amendments concern changes to the rules of criminal procedure and the rules of appellate procedure. Specifically, the amendments to Criminal Rule 16 call for a more open discovery process, and the revision of several rules of appellate procedure implements a procedure for en banc consideration in courts of appeals when separate three-judge panels within the same court of appeals reach conflicting decisions on the same matter of law.
The new discovery process would allow defense counsel access to materials that, under the current rule, prosecutors did not have to divulge. Changes in Crim.R. 16 also call for establishing a defendant’s reciprocal duty of disclosure and seek to protect victims and witnesses from potential harassment.
The discovery reforms were developed through an extraordinary cooperative process that involved leaders of the Ohio Prosecuting Attorneys Association and Ohio Association of Criminal Defense Lawyers. Chief Justice Moyer had urged them to collectively develop proposed rules that would be considered for adoption by the Supreme Court.
“The patience and spirit of cooperation required to realize these important and necessary changes to the discovery process speak volumes about Chief Justice Moyer’s collaborative, collegial nature,” said Justice Paul E. Pfeifer. “His vision and persistence and, finally, his stubbornness in supporting a just cause, led to this remarkable achievement for our legal system. For well over a decade, he worked for this change, and we have been through numerous starts and stops. But today, we stand in a great place – the proposed Crim.R. 16 emerged from this court by a unanimous vote, has the support of prosecutors and defense attorneys, and, we think, bipartisan support in the General Assembly. All of that is the direct result of Tom’s stewardship.”
The en banc provisions of the appellate procedure rules result from the Supreme Court’s decision in McFadden v. Cleveland State Univ. The Court held that “if the judges of a court of appeals determine that two or more decisions of the court on which they sit are in conflict, they must convene en banc to resolve the conflict.” Language was also added to the proposed amendments to ensure that an order or entry in reconsideration that results in an intra-district conflict also could be subject to en banc consideration.
Other changes to the criminal procedure rules include amending Crim. R. 12(K) to accommodate the new interlocutory appeal to review a trial court’s ruling on a prosecutor’s non-disclosure of material granted under proposed Crim. R. 16(F)(2). Amendments to Crim. R. 41 permit applications and approvals of search warrants to be accomplished by electronic means, including facsimile transmission.
The amendments were adopted unanimously by the seven Justices of the Supreme Court, with the exception of Crim. R. 41, which was adopted 6-1 with Justice Terrence O’Donnell voting no.
According to the Ohio Constitution, amendments to rules of procedure must be filed with the General Assembly. After the initial filing, which must occur before Jan. 15, there was a period of public comment; the Court revised the amendments and filed final versions with the General Assembly before the constitutionally mandated deadline of May 1. The amendments take effect on July 1, unless before that date the General Assembly adopts a concurrent resolution of disapproval. The process also included another public comment period after the amendments were first published last October.
The text of the rule change is available through this link. (Mike Frisch)
Tuesday, April 27, 2010
Posted by Jeff Lipshaw
Thoughts in no particular order:
1. Ben Heineman, the former Senior V.P. and General Counsel of General Electric has some thoughtful comments on the difference between legal and right (at the Harvard Forum on Corporate Governance and Financial Regulation), and how Goldman Sachs ought to be approaching that issue from a public relations standpoint. I'm not even sure the Goldman Sachs market making was wrong, much less illegal, but I agree with Ben that there's no mileage at this point in Wall Street taking the "millions for defense but not a penny for regulation" posture.
2. As many readers know, I was a big firm, big case litigator for the first ten years of my career, and as I mentioned to someone in the last few days, when I see somebody walking down the street with a Redweld file or a big litigation briefcase, or a I see a deposition transcript, my stomach (21 years later) still turns over. That's what these hearings do to me as well. I'm from Michigan, and I've known Carl Levin and his extended family for years (his wife Barbara was an associate in my law firm the summer of 1978 when I was a summer clerk and he was still the president of the Detroit City Council and running for the Senate against Marvin Esch), and I think he's a smart good guy with tons of menschiness. But he is a politician through and through, and there's no winning and, indeed, very little reason, when politicians are doing the front of the house rather than the backroom stuff. The Congress has no basis for moral superiority if we are really going to start looking at how the sausages of the markets and legislation get made. I was an industry representative at a meeting the automotive suppliers held with the two Michigan senators back in about 1998, and I remember Senator Levin telling the group why he wouldn't support NAFTA: it was the usual "good is the enemy of the perfect" rationalization. Said he, when everybody is a free trader, I'll support being a free trader. I remember thinking, "wait a minute, Senator, would you take the same position on affirmative action? That is, preferences are vile, and so I'll simply wait until everybody is colorblind." No, you can't win by reasoned argument or facts with people who buy ink by the barrel, and you can't win with senators who want to create sound bites for their constituencies.
3. Why does the conversation between the Senate Committee and the Goldman men (see next comment) remind me of the bumper sticker "My Kid Beat Up Your Honor Student"?
4. Why are all of the Goldman witnesses young to middle-aged trim athletic looking white men?
Tuesday, April 20, 2010
Posted by Jeff Lipshaw
Regardless of one's stance (normatively speaking) on the the Goldman Sachs civil suit, it's tough to find reporting or commentary that gets the nuanced facts right. And because everything depends on the metaphor (see Erik Gerding's recent post - oh, and by the way, isn't cool to see how the way our minds categorize and analogize makes such a difference in the real world?), seeing that entire industry as a kind of casino makes a difference in things like duty and materiality. So kudos today to Andrew Ross Sorkin in the New York Times for getting it right. (Erik is also quoted extensively.)
Moreover, Sorkin frames what I think is the real issue: is there a social value to this kind of derivative trading? That's a question whose answer I don't know. I know there is social value, for example, in currency derivatives. It allows companies that want to be conservative lock in their profits against currency devaluation, while foregoing the possibility of speculative currency gains. It does mean, however, that the conservative company either needs to have a counter-bettor that is either another company with a similar but reversed conservative position, or a pure speculator. So that's the question: what, if any, is the conservative strategy to lock in non-casino gains that products like synthetic CDOs serve?
Monday, April 19, 2010
Posted by Jeff Lipshaw
Well, gosh, I haven't had this much fun reading the Wall Street Journal and the New York Times on a Monday morning in a long time. First of all, I want to note that while I use the first rate Choi & Pritchard, Securities Regulation 2d (great teacher's manual!), as the casebook for my class, I disagree with the idea of teaching Rule 10b-5 litigation before teaching the 1933 Act stuff on public offerings. So I teach the book out of order. The benefit is that we are moving into the elements of Rule 10b-5 in the next two weeks, and I'm thinking about scrapping my prepared materials in favor of this case. (A more devious me would use it as a question on the final exam.) I just want it to be noted that my syllabus is evidence I predicted this crisis, and now am in a position to benefit from it.
Second, I can't help being amused by some of the public commentary. The Wall Street Journal carries a headline referring to a statement by Gordon Brown (the British Prime Minister) that Goldman was "morally bankrupt." Oh, come on. That puts Goldman in the class of all other occupations that make money on the churn, like real estate brokers, executive recruiters, Las Vegas casinos, every state that conducts a lottery or allows parimutuel betting on horses, car dealers, and advertising agencies.
Third, in the past I advocated a standard of conduct in which one ought not to engage in conduct that one would be embarrassed to see highlighted on the front page of the Journal or the Times. I think I need to amend that to include that one ought not to be in a business in which one cannot explain the products being sold if they were to appear on the front page of the Journal or the Times. Let me give a breaking news example. My friend Erik Gerding has run a series of very helpful commentaries over at Conglomerate. I am pretty sure I disagree with a number of his conclusions (perhaps because having done deals in the real world for a long time I am more jaundiced about the number of times anybody actually gets led down the primrose path, and particularly in the never-never land of financial products). But that's what makes betting on horse races or synthetic CDOs. I've commented on one of his more interesting insights, but I decided to bring it out of the hinterlands of the way comments work over there. (I am grateful to Erik for having found the article and opened the debate on this aspect!)
Erik highlights this morning a paper by Arora et al., entitled "Computational Complexity and Information Asymmetry in Financial Products" to the effect that it really was material to the synthetic CDO investors that Mr. Paulson selected the Reference Portfolio. The gist of the paper is that it's very easy to create a computationally complex system from simple factors, but almost impossible to work the other way and select the factors that gave rise to the resulting system. Hence, conclude the authors, if an arranger of CDOs wants to hide "lemon" assets among the good ones, it's an intractable computational problem to find the lemons. See this blog post to which Erik links for another good explanation.) Thus, if Paulson had a hand in selecting the Reference Portfolio he really did have an advantage over those poor victims at IDK Deutsche Industriebank and ABN Amro.
Granted that blogging often is to research what journalism is to literature; nevertheless we don't always believe what we read in the newspaper and we need to be careful in assessing real-time commentary. The gist of my comment over at Conglomerate is that I think there's a flaw in Erik's move from applying the "Intractability Theory" in cash CDOs to a justification for a conclusion that who selected the Reference Portfolio in a synthetic CDO is material. In a cash CDO, there is only a long position - that is, the arranger has no interest other than in having investors believe that the underlying assets and the collateral are all good. The lemons in that case are the underlying mortgage assets. (Indeed, much of the math in the Arora paper is beyond me, but I believe that the authors argue the computational complexity increases the farther you get from the actual lemons, say by creating CDOs out of the CDOs.) Part of the problem may be terminology: the cash CDOs themselves are "derivatives" because their value derives from the value of the underlying assets. The point is that if the arranger-seller did slip in some lemons, the buyer would never be able to discover it.
How does that carry over to somebody who isn't actually compiling a portfolio of mortgages to package in a CDO to sell to investors, but instead is selecting the securities on which to bet in a synthetic CDO? Let's assume Paulson did select the synthetic portfolio. He doesn't want to slip a lemon asset in among the good assets. He wants ALL the assets to be lemons, not because he's trying to hide a pig in a poke (as if he were the actual arranger of a CDO), but because he wants to bet against the whole portfolio. He doesn't accomplish his goal at all if he gets IKB and ABN Amro to bet on really good assets with a lemon hidden among them. He ought to be worried that there are GOOD assets baked in there that he can't find!
Even assuming that Arona et al. have a point, I suspect Paulson doesn't qualify as the arranger who had the information advantage. The Reference Portfolio consisted of fewer than 100 already assembled CDO securities, each with a notional value of $22,222,222, and each being made up of many, many underlying mortgages (indeed, the flip book refers to the CDO security as "midprime" if the average weighted FICO score was above 625, and as "subprime" if the equivalent number was below 625). To put it more simply, if you are the bettor looking from the outside at a synthetic CDO portfolio, looking either to be long like IKB or ABN Amro or short like Paulson, and not the actual arranger of the cherries, peaches, plums, and lemons that went into the portfolio, you are no better off, informationally speaking, in trying to gauge whether you want to bet for it or against it.
Sunday, April 18, 2010
Posted by Jeff Lipshaw
It's certainly not my goal to defend Goldman Sachs any more than it is to defend bookies. And I acknowledge that as to materiality, it's entirely possible that you get to the trier of fact on the question whether the actual selector of the Reference Portfolio was something for which there is a substantial likelihood that a reasonable investor would find that the information significantly altered the total mix. (That's the legal standard.) But, as we teach our students, the mere materiality of undisclosed information doesn't create liability for its omission; as opposed to a misrepresentation, the culpability of an omission depends first on a duty to disclose.
So here's a quote from the Goldman Sachs flip book under "Risk Factors." And remember this thing wasn't going to Mom and Pop up in Lowell; it was going to IKB Deutsche IndustrieBank and ABN Amro:
- Goldman Sachs may, by virtue of its status as an underwriter, advisor or otherwise, possess or have access to non-publicly available information relating to the Reference Obligations, the Reference Entities and/or other obligations of the Reference Entities and has not undertaken, and does not intend, to disclose, such status or non-public information in connection with the Transaction. Accordingly, this presentation may not contain all information that would be material to the evaluation of the merits and risks of purchasing the Notes.
- Goldman Sachs does not make any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained herein or in any further information, notice or other document which may at any time be supplied in connection with the Transaction and accepts no responsibility or liability therefore. Goldman Sachs is currently and may be from time to time in the future an active participant on both sides of the market and have long or short positions in, or buy and sell, securities, commodities, futures, options or other derivatives identical or related to those mentioned herein. Goldman Sachs may have potential conflicts of interest due to present or future relationships between Goldman Sachs and any Collateral, the issuer thereof, any Reference Entity or any obligation of any Reference Entity.
Isn't there a real question whether Goldman owed a legal duty that would make the omission actionable? Didn't Goldman tell the Investors in the flip book that it might well have non-public information relating to the Reference Portfolio? Didn't it say that it might have "short positions in . . . other derivatives identical or related to those mentioned here"? This is the "bespeaks caution" doctrine: optimistic forecasts or projections in a prospectus aren't actionable if they are accompanied by meaningful disclaimers or warnings of the risk involved.
I'd like to be a fly on the wall when the sophisticated investor representatives get deposed on this issue.
Q: "Did you read the flip book?"
A: "Well, parts of it."
Q: "Which parts?"
A: "The parts that talked about the Reference Portfolio."
Q: "Did you read the disclaimer about 'non-public information' that Goldman might have?"
A: "I don't recall at this time."
Q: "You don't disagree that the disclaimer is there, do you?"
Q: "Did you ask Goldman to reveal to you the undisclosed information?"
A: "I don't recall at this time."
Q: "Did you read the risk factor that said Goldman might be shorting the identical reference portfolio?"
A: "I don't recall at this time."
Q: "Did you actually ask Goldman if it was shorting the identical reference portfolio?"
A: "I don't recall at this time."
Q: "Remind me again how long you've been in this business."
I find myself in a funny position, intellectually speaking. The lawyer in me, applying a legal model to what I've seen so far, is saying this case is a real stretch. The business ethicist in me is saying, "ugh, what a squirrelly business to be in. You must have to take a scalding shower when you get home every night to play it that close to the vest." The sociologist-psychologist-philosopher-Tina Turner in me is saying: "Well, of course, Jeff, what's law got to do with it?" The cognitive scientist in me is saying, "It all depends on the metaphor. If you think of Goldman as the bookie, and ABN Amro as a high roller, you reach one result. If you think of Goldman as your doctor or lawyer, you reach another one."
Saturday, April 17, 2010
Posted by Jeff Lipshaw
I really think this should have been the epigram on the SEC's complaint against Goldman Sachs: "I'm shocked, shocked to find gambling is going on in here!" I've spent a little time in the last couple days digging past the allegations to the structure of the deal, and conclude that blaming Goldman Sachs for this is about as sensible as blaming the Race & Sports Book at Caesars Palace for taking bets on both sides of the game.
Seriously. Bookies don't gamble. They facilitate gambling. They set odds to equalize the betting on both sides. When the game or the race is over, they gather up what the losing side lost, pay what the winning side won, and skim a little bit for themselves. You know when you place a bet with a bookie that it's the nature of the system that the bookie HAS to have a counter-bet to offset your own. Now imagine that you'd like to bet against the Pakistani badminton team in its upcoming match against Indonesia because you think there are a lot of crazed Pakistani badminton fans who will bet the farm on their team. There aren't any bookies who take badminton action. So here is what you do. You find a reputable bookie and ask him to set odds on the match for no other reason than you see those Pakistanis as suckers just waiting to be taken. You'll even pay the overhead to set up the line. Caesars posts a line on the match; you bet Indonesia; the Pakistanis bet Pakistan; Indonesia creams Pakistan; Caesars collects the Pakistani bets, pays you off, and makes a little money in the process.
Then, horror of horrors! The bettors on the Pakistani team sue Caesars because it didn't disclose that it set the badminton line and took the action because somebody wanted to bet on Indonesia! Ludicrous, you'd say.
But as far as I can tell that's exactly what Goldman did here. What made the deal work for Goldman was that it was the purchaser from ABACUS of credit default swap bets on the reference portfolio and the seller of matching credit swap bets to Paulson on the same portfolio. I'm afraid that what's going on is that the deal is indeed so complex in its structure and terminology that even the sophisticated public is flummoxed. SYNTHETIC CDOS WERE NOTHING BUT GAMBLES ON THE DIRECTION OF THE HOUSING AND SUBPRIME MARKET. Like all derivatives, they might well have served as a conservative strategy if one had an underlying business that was exposed, and wanted to hedge away losses at the cost of additional speculative gains, either going long or short on the market. If ABN Amro and IDK Deutsche Bank wanted to bet on the subprime market, they had to have a bookie with counter action to create an opportunity for the bet!
At first I thought this case was odd for its secondary actor liability issues. Now I think it's just as interesting on issues of materiality, reliance, and causation.
Monday, April 5, 2010
The District of Columbia Bar Legal Ethics Committee has recently opined on the practice by immigration attorneys of executing affidavits of support for their clients. The conclusion:
Lawyers in immigration matters may not execute an Affidavit of Support (U.S. Citizenship and Immigration Services Form I-864) on the immigrant’s behalf as a joint–sponsor while continuing to represent the immigrant in the matter. Typically, a person who signs an Affidavit of Support agrees to support the immigrant at an annual income that is not less than 125% of the federal poverty level so that the immigrant will not become a public charge. The ensuing contractual obligations continue for years after the immigrant is admitted on the basis of the Affidavit of Support. The Affidavit of Support is a guarantee of financial assistance to a client. Such guarantees are generally prohibited by Rule 1.8(d). Because the obligations continue long after the completion of the immigration proceeding, the undertaking does not fit within the narrow safe harbor of Rule 1.8(d)(2), which allows, but does not require, financial support strictly necessary to sustain the client during a proceeding. An Affidavit of Support undertaking by a lawyer to a client is also fraught with peril under Rule 1.7(b)(4) (conflicts of interest). Thus, a lawyer who wishes to serve as a joint sponsor for an immigration client by executing an Affidavit of Support on the immigrant’s behalf must withdraw from the representation of that client before doing so.
Wednesday, March 31, 2010
The Florida Judicial Ethics Advisory Committee has now weighed in on a series of questions concerning "friending. " Judicial assistants may friend so long as they do so in conformance with this opinion:
Several opinions clearly hold that judicial assistants are not subject to the Code of JudicialaConduct. See JEAC Op. 95-12 (where a majority of the Committee believed that the Code of Judicial Conduct did not apply to judicial assistants for seeking donations and fund-raising activities outside the courthouse and outside their administrative duties); Op. 93-45 (law clerks not bound by Code of Judicial Conduct when engaged in partisan political activity during their personal time).
While the Code may not apply directly to judicial assistants, it may indirectly impact them and their duties. In JEAC Op. 00-08, the Committee recommended that the judge direct its court employees, including judicial assistants, to not accept gifts. The Committee explained that “the acceptance of such gifts places the fidelity and the integrity of the court into serious question.” JEAC Op. 00-08; see also Canon 3C(2), Fla. Code of Jud. Conduct. Furthermore, in Op. 06-32, the Committee opined that a judicial assistant should not accept employment cleaning offices of attorneys who have appeared or were likely to appear before the judge. That conduct, coupled with the monetary implications, “gives an appearance of impropriety and has an adverse impact on the public perception of the integrity of the court system.” JEAC Op. 06-32; see also Canon 2B, Fla. Code of Jud. Conduct.
In JEAC Op. 09-20, the Committee recommended that a judge not add lawyers who may appear before the judge as “friends” on a social networking site, nor allow lawyers to add the judge as their “friend.” The Committee believed “that listing lawyers who may appear before the judge as ‘friends’ on a judge’s social networking page reasonably conveys to others the impression that these lawyer ‘friends’ are in a special position to influence the judge.” Canon 2B.
The concern presented in this inquiry is whether a judicial assistant adding a lawyer as a “friend” on a social networking site indirectly conveys the message that the attorney, who may appear before the judge, has a special position to influence the judge. The mere fact that personal information is being disseminated between the judicial assistant and a lawyer on the social networking site does not adversely impact the public perception nor compromise the integrity of the court system. Prohibiting the judicial assistant from expressing himself/herself outside the courthouse infringes upon his/her First Amendment freedoms. This form of expression by judicial assistants is not contemplated in our Canons and therefore not a violation of Canon 2B.
As long as a judicial assistant utilizes the social networking site outside of the judicial assistant’s administrative responsibilities and independent of the judge, thereby making no reference to the judge or the judge’s office, this Committee believes that there is no prohibition for a judicial assistant to add lawyers who may appear before the judge as “friends” on a social networking site.
However, a judge would continue to have the responsibility under Canon 3C(2) to “require staff, court officials, and others subject to the judge’s direction and control to observe the standards of fidelity and diligence that apply to the judge. . . .” Therefore, in the unlikely event that a lawyer attempts an ex-parte communication through the social networking site, the judge should direct the judicial assistant to immediately “de-friend” the lawyer and to immediately report it to the judge.
The committee also opines that a candidate for an elected judgeship and lawyers who may appear before the judge if elected may "friend' each other.
Finally, there is this opinion:
(1) Whether the Code of Judicial Conduct requires a judge who is a member of a voluntary bar association to “de-friend” lawyers who are also members on that organization’s Facebook page and who use Facebook to communicate among themselves about that organization and other non-legal matters.
(2) Whether a judge may allow an attorney access to the judge’s personal social networking page as a “friend” if the judge sends a communication to all attorney “friends” or posts a permanent, prominent disclaimer on the judge’s Facebook profile page that the term “friend” should be interpreted to simply mean that the person is an acquaintance of the judge, not a “friend” in the traditional sense.
(3) If a judge accepts as “friends” all attorneys who request to be included or all persons whose names the judge recognizes, and others whose names the judge does not recognize but who share a number of common friends, whether attorneys who may appear before the judge may be accepted by the judge as “friends” on the judge’s Facebook page.
Wednesday, March 24, 2010
Posted by Jeff Lipshaw
In the gym today, I was reading an article in Outside that reminds me of a Law & Order plot's back story. I don't know anything about family law, but I do write about judgment, and while I'm generally loathe to second-guess reasonable ones, and have a fairly strong libertarian streak, this one seems to call out for - well, if not the Department of Social Services, then maybe some friends' intervention? If that's possible.
The story is about 13 year old Jordan Romero, who with his somewhat wacko sounding father, and his father's more grounded sounding partner, has climbed five of the Seven Summits - the highest peaks on each continent - and is planning an Everest expedition this May from the Tibet side, and without professional guides. (Some of the exchanges with the kid and his parents reminded me of that L&O episode with the totally dominating father who controls everybody in the family.) As far as I could tell, not a single mountaineering professional thought this was a good idea - but it sounds like "hockey parents" gone mad. (I may be influenced by the fact that I am not a climber but I am a climbing story aficionado, likely brought on by the fact that one of my former law partners, Lou Kasischke, was a participant and minor character in the tragic 1996 Everest climb that Jon Krakauer wrote about in Into Thin Air.)
I don't know diddly about family law, or how the state goes about protecting children from really dumb parents, so I don't know how much leeway is given, or whether this is even controversial from a legal standpoint. I invite comments. But I'm willing to take a stand and say, even if the young man returns safely, this is really stupid! If he wants to climb Everest when he's 21, more power to him! But there is no reason that a child needs to be doing this, and you can't persuade me that he's made the decision to do it as a knowing and consenting adult.
Tuesday, March 16, 2010
[Posted by Bill Henderson]
The American Bar Foundation invites scholars to join the intellectual community of the ABF for the 2010-2011 academic year (8/31/10 to 6/30/11).
For visitors, the ABF offers an office, phone, and computer but no stipend. The ABF encourages national and international scholars on leave or sabbatical to take advantage of the ABF's diverse intellectual community and excellent facilities.
Preference will be given to visitors whose scholarship coincides with the research agenda of the ABF and who will be in residence fulltime. Visitors will participate in the intellectual life of the ABF, including participation in seminars.
If you have an interest in this opportunity, please send an email to Robert Nelson at email@example.com, subject line: Visiting Scholars Program, which states (1) the topic on which you are working, (2) the preferred dates for residence, and (3) the days each week you would expect to be at the ABF, (4) attach a CV. Applications should be received by April 1, 2010 though later applications will be considered as space allows. The ABF Appointments Committee will review applications and prospective visitors will be notified in late Spring 2010.
Saturday, March 13, 2010
Posted by Jeff Lipshaw
My article on financial bubbles and earthquakes, The Epistemology of the Financial Crisis, is due out any moment in the Southern California Interdisciplinary Law Journal. In it, I suggest there are parallels between the science of earthquakes and the science of financial booms and busts and the epistemological crises that I claim ensued when the workings of the world managed to burst the bubble of faith in predictive sciences with respect to each of them. What interested me as a lawyer in particular, as discussed in the piece, is the lawyerly equation of causation with blame. I had a friendly debate a few weeks ago with one of my faculty colleagues who said she did assess this last bubble correctly before it burst. I have no doubt she's right, but proving it's anything more than luck is far more difficult because of the counter-factuality problem - otherwise known as 20-20 hindsight - in historical causation.
It turns out I'm not the only person who has a dual interest in bubbles and earthquakes. The Wall Street Journal has an article this morning about Professor Didier Sornette, the director of the Financial Crisis Observatory at the Swiss Federal Institute of Technology in Zurich. As a geophysics professor at UCLA, he has studied earthquakes, which he concludes are more difficult to predict than anything else. As a professor of finance, he tries to predict market bubbles, having now made several predictions and locked them away in encrypted files.
Once again, the counter-factuality problem raises its ugly head. Even if it turns out he's right, it won't prove much. Sporadic evidence confirming a theory doesn't carry much weight, even if we accord a lot of weight to theories (like quantum mechanics) that haven't been falsified, but have been confirmed in thousands of experiments and applications. Nor will being wrong, I suspect, damage his career, the case in point being Ed Yardeni, who made his name for several years predicting the collapse of the world because of the Y2K problem.
Friday, March 5, 2010
The Maine Supreme Court has again denied Husson University's request for permission to allow its future Juris Doctor graduates to sit for the bar examination. The court found that the renewed request detailed "a program largely identical to that proposed in its [denied] 2007 submisions." The court had conducted a hearing and received statements from a variety of groups including its Board of Bar Examiners.
The renewed request had sought the court's "preliminary approval of a blueprint of its proposed law school program" rather than blanket approval for its graduates. The court expressed concern that the University has apparently decided not to apply for ABA accreditation and has not yet begun operations:
Like any other nascent law school, and in the absence of any other existing accrediting body, Husson may apply to the ABA for provisional accreditation after it has been in operation for one year...It could then demonstrate its compliance with all the other ABA standards while the ABA is reviewing its position on the issue of tenure. If, at the conclusion of the evaluative processes, Husson has met all of the other criteria, and the ABA decides not to change its standards on tenure, Husson must then decide whether to revisit its own policy on tenure.
Husson's faculty had voted to eradicate the faculty tenure system more than 15 years ago. (Mike Frisch)
Thursday, February 18, 2010
The New Jersey Appellate Division has held that an agreement between an attorney and three defendants (two individuals and a corporation) that the attorney would not represent parties in litigation adverse to the defendants was void.
The agreement was entered into while the attorney was negotiating with defendants on behalf of clients and also was tied to a provision by which the defendants waived conflict of interest claims against the attorney. The attorney had previously provided legal services to an entity in which some of the defendants were principals.
The attorney then sought a court determination that the agreement violated New Jersey RPC 5.6(b)(restriction on right to practice) in order to bring suit against a corporation owned by the individual defendants.
The court here held the agreement void as a violation of public policy and refused to enforce it on grounds of equitable estoppel. The ethical provision exists for the benefit of the public and "that purpose would be thwarted if equitable estoppel principles allowed the [agreement] to stand." (Mike Frisch)
Saturday, February 6, 2010
This is your political ad on drugs. Any questions?
It gets even more bizarre at the end.
By the way, Jeff, that breed of sheep on the pedestal at about 22 seconds into it is a Suffolk.
Sunday, January 31, 2010
Posted by Alan Childress
And send cease and desist letters to Mom & Pop tshirt shops who for years have been selling clothing asking that two-word question? Why, the NFL of course. And the timing seems to be now because the Saints are in the Superbowl -- no one in the Front Office (wherever the NFL is) seemed to care when the team was just losers.
Never mind that the Who Dat phrase was actually invented for other local teams like St. Augustine High School and later borrowed for the Saints by fans. And used in 1983 as associated with the Saints in a copyrighted recording, by players and Aaron Neville, who apparently are not getting any tshirt royalties out of all this (nor the Marx Brothers, who used the two words in a movie, borrowing from vaudeville). And that the "Saints" name as a football team was used by lots of local high schools, including my son's St. Martin's Episcopal School, long before the NFL ever thought to place an awful franchise in the city. Who stole from whom?
The NFL is targeting designs without the Saints or NFL logo or name on them -- just
anything associated with the Saints and that two-word phrase. (Espn image right, from an AP photo.) And in this specific case that other emblem is simply the fleur de lis.
The fleur de lis? THE FLEUR DE LIS? The NFL makes claim to the FLEUR DE LIS? That has been around as a symbol for New Orleans since, oh, like 1713??? Or for that matter the flags of Quebec, Nova Scotia, Louisville, Detroit, St. Louis, Baton Rouge, and Lafayette! And Bosnia. And a city in Finland called Liljendal (ironically named since our Governor Bobby Jindal is now being asked to sue the NFL over this lily, the official state symbol). And the Boy Scouts.
I hope that relatives of Jean-Baptiste Le Moyne, Sieur de Bienville send a cease and desist letter to the NFL. I just hate it when my neighbor borrows the antique family-heirloom lawnmower and then files an injunction to claim it was his all along.