Thursday, March 25, 2021

Vanishing Investor Clinics and the Hope on the Horizon

Earlier today, a number of law school securities clinics met online with the SEC thanks to its Office of the Investor Advocate to talk about what they have been seeing in their cases.  By the most recent count, we're down to only about 12 securities clinics nationwide.  Jill Gross has written about these disappearing clinics.  In my role, I teach business organizations, securities regulation, professional responsibility, and also offer a clinic from time to time.  At UNLV, clinics are not always offered every semester because our faculty also teach other courses.  With the need to turn a clinic on and off, I can't run the kind of investor protection clinic I ran when I was at Michigan State because the cases just don't wrap up in a semester.  Although we've done it in the past at UNLV with good results for clients and students, it's not something that works well without attorney support to carry the cases and provide broader assistance when we're not in session.  With that in mind, we've offered a "Public Policy"clinic here this semester with a focus on helping non-profits in preparing comment letters and advocating for their own goals.  This new offering focuses mostly on the advocacy work that other investor clinics do in their comment letters, only with a broader portfolio.  We'll tackle a few things outside the securities realm as well.  It's also been challenging because the federal rulemaking environment has been in flux with the Presidential transition.

Still, we've also been able to get students some real speaking experience.  A few weeks ago, we had a student team represent a non-party customer in an expungement hearing within the FINRA forum.  They were able to do openings, closings, and cross examinations--even cross examining the CEO of a brokerage firm.  These matters are intense because they happen on an expedited basis.  But they also don't require the kind of long-term commitment that an ordinary customer arbitration does.  Today, that same student team was able to turn around and present to the SEC about the experience and interact with sitting SEC Commissioners.  Although outside the securities realm, we also had another student team prepare a white paper and present at the Consumer Product Safety Commission, sharing views on how the CPSC might regulate consumer products with AI and machine learning technology embedded in the devices.  This work gets us into some fascinating areas and gets the students writing, presenting, and having client experiences. 

But there are still too few of these clinics and we need more of them.  They play a vital role because the economics don't make sense for most ordinary securities attorneys to take cases with relatively smaller damages or take on matters where there isn't any money to recover.  If you get swindled out of a million dollars, attorneys will fight for you.  If you get taken for forty grand, many lawyers will pass because they have to put food on their own tables.  Of course, this leaves bad actors free to continue to take people for significant amounts without much fear that they'll be held accountable for swindling investors.

A short time ago, the SEC's Investor Advisory Committee recommended financial support for law school clinics.  I know that if we had funding, I could hire counsel, help more people, help a broader class of people, and provide more opportunities for our students.  We might eventually get something similar for securities law to what already exists for tax clinics, but it's still uncertain whether we'll get there.  Absent that, it seems likely that these kinds of clinics are going to continue to vanish.

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