Friday, November 25, 2022

Zhaoy Li Compares the U.S. and China on Judicial Review of Directors' Duty of Care

Zhaoyi Li, Visiting Assistant Profoessor of Law at the Univeristy of Pittsburgh School of Law, has published a new article, Judicial Review of DIrectors' Duty of Care: A Comparison Between U.S. & China. Here's the abstract:

Articles 147 and 148 of the Company Law of the People’s Republic of China (“Chinese Company Law”) establish that directors owe a duty of care to their companies. However, both of these provisions fail to explain the role of judicial review in enforcing directors’ duty of care. The duty of care is a well-trodden territory in the United States, where directors’ liability is predicated on specific standards. The current American standard, adopted by many states, requires directors to “discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.” However, both the business judgment rule and Delaware General Corporate Law (“DGCL”) Section 102(b)(7) shield directors from responsibility for their actions, which may weaken the impact of the duty of care requirement on directors’ behavior.

To better allocate the responsibility for directors’ violations of the duty of care and promote the corporations’ development, it is essential that Chinese company law establish a unified standard of review governing the duty of care owed by directors to companies. The majority of Chinese legal scholars agreed that a combination of subjective and objective standards would function best. Questions remain regarding how to combine such standards and implement them. In order to promote the development of China’s duty of care, these controversial issues need to be solved. This article argues that China’s Company Law should hold a first-time violator of the duty of care liable only in cases of gross negligence but hold directors liable in the cases of ordinary negligence if they have violated the duty of care in the past.

 

November 25, 2022 in Business Associations, Corporate Governance, Corporations, International Business, John Anderson | Permalink | Comments (0)

Friday, November 4, 2022

How Generation, Nationality, and Expertise Influence Stakeholder Prioritization of Tech Social Issues- Pt. 2

Last month, I posted about an experiment I conducted with students and international lawyers. I’ve asked my law student, Kaitlyn Jauregui to draft this post summarizing the groups’ reasoning and provide her insights. Next week, I’ll provide mine in light of what I’m hearing at various conferences, including this week’s International Bar Association meeting. This post is in her words.

After watching The Social Dilemma, participants completed a group exercise by deciding which social issues were a priority in the eyes of different tech industry stakeholders. The Social Dilemma is a 2020 docudrama that exposes how social media controls that influences the behavior, mental health, and political views of users by subjecting them to various algorithms. Director Jeff Orlowski interviewed founding and past tech employees of some of the biggest companies in Silicon Valley to bring awareness to viewers.  

Groups of primarily American college students, primarily American law students, one group of Latin American lawyers, and one group of international lawyers completed the exercise. Each of the groups deliberated from the perspective of a CEO, investor, consumer, or NGO.  Acting as that stakeholder, the team then ranked the following issues in order of importance: Incitements to violence, Labor Issues, Suppression of Speech, Mental Health, Surveillance, and Fake News. 

How The Groups Performed

The college students attend an American law school, but they are not necessarily all American. The groups’ logic behind their rankings could not be provided. I provided the rankings in the last post.

Law Students

The law students attend and American law school, but they are not necessarily all American. They considered six social issues.

Team CEO: Law Students

1.    Labor Issues in the Supply Chain

2.    Surveillance

3.    Mental Health

4.    Fake News

5.    Suppression of Speech

6.    Incitements to Violence

The law students assigned to view the issues as a CEO based their rankings on an internal to external approach. They believed the CEO is responsible for the operations of the company so would first try to solve internal issues such as labor issues because that would directly affect the bottom line. Surveillance and mental health ranked #2 because the team assumed that these issues directly related to customer satisfaction and retention. Because this group took on the role as a tech CEO and not a social media CEO, they did not view 4-6 as important. Fake news was only relevant if it was about the company. Suppression of speech was not problematic to them because it would not directly impact their business. Finally, they did not view incitement to violence as relevant to the business operations so ranked it last.

Team Investor: Law Students

1.    Labor Issues in the Supply Chain

2.    Incitements to Violence

3.    Surveillance

4.    Suppression of Speech

5.    Fake News

6.    Mental Health

The law students who prioritized social issues as if they were an Investor approached the task considering market forces. They chose labor issues first because it poses challenges to business operations. Whatever looks bad for revenue generation such as incitement to violence and surveillance means their investment would look bad as well. It is important to note they viewed this assignment as an institutional investor. The remaining factors were not imperative to the success of the tech company so were ranked lower.

Team NGO: Law Students

1.    Fake News

2.    Incitement to Violence

3.    Mental Health

4.    Labor Issues in Supply Chain

5.    Surveillance

6.    Suppression of Speech

The law students who took on a role as an NGO based their sense of urgency on the danger and risks the involved in each issue. At the top was fake news because they thought misinformation when taken as fact was unhealthy for making decisions and forming opinions. Incitement to violence closely followed because political polarization can lead to hateful actions outside of social media. They found mental health to be important because of statistics showing teens committing self-harm or worse as a result of social media use. Although labor Issues are abroad, the NGO team could not ignore it. Surveillance was not key to them because they believed platforms are already taking measures against it. And lastly, suppression of speech was not as important to them as deleting hate speech and fake news.

Team Consumer: Law Students

1.    Surveillance

2.    Mental Health

3.    Incitement to Violence

4.    Suppression of Speech

5.    Fake News

6.    Labor Issues in Supply Chain

The law students who took on their natural roles as consumers found social issues more important than financial forces. They referred to the many advertisements that tech companies like Apple and Google are posting against surveillance. The effects of social media on mental health and even physical health also stood out to them. As a group of law students, they are informed individuals who can spot fake news so did not see that as a priority. Lastly, labor issues are not in the consumers’ sight so are out of mind and therefore not a priority.

Latin American Lawyers

*The Latin American Lawyers did not consider Fake News or Incitements to Violence.

Team CEO: Latin American Lawyers

1.    Labor Issues in the Supply Chain

2.    Surveillance

3.    Suppression of Speech

4.    Mental Health

5.    -

6.    -

The Latin American lawyers ranked the social issues regarding business success and long-term goals. Labor issues were their top concern because it influences the legal challenges faced by the company and the costs of production. “Information is power” so surveillance restrictions would greatly decrease money earned from selling data gathered. They did not see suppression of speech as an issue because the company itself is not limited. Mental health was ultimately last because it does not impair business operations.

Team Investor: Latin American Lawyers

1.    Mental Health

2.    Surveillance

3.    Labor Issues in the Supply Chain

4.    Suppression of Speech

5.    -

6.    -

The Latin American lawyers listed their priorities as a socially responsible Investor. Mental health triggered the most urgency for them because the negative influence of social media on users is growing and is not slowing down. Heavy surveillance conflicts with the rights of persons like themselves so it is a great risk for them. Although labor issues were important, they did not think of it as a widespread issue affecting large populations of people. Lastly, suppression of speech was not a concern at all for them.

Team NGO: Latin American Lawyers

1.    Surveillance

2.    Suppression of Speech / Fake News

3.    Mental Health

4.    Labor Issues in Supply Chain

5.    -

6.    -

The Latin American lawyers who participated as an NGO focused their efforts on user experience and rights. They found surveillance to be a growing concern and a human right violation for users. Suppression of speech was also very important to them, especially in the scope of the team’s nationality because of political distress in their home countries. For countries with political instability, their citizens are more conscious of infringed rights through social media. Fake news and censorship on virtual platforms can ultimately destroy the democracy of countries in their point of view. The team preferred life over work so chose to rank mental health higher than labor issues.

Team Consumer: Latin American Lawyers

1.    Surveillance

2.    Suppression of Speech / Fake News

3.    Mental Health

4.    Labor Issues in Supply Chain

5.    -

6.    -

The Latin American lawyers used their personal perspective as consumers to rank in accordance with social concerns. Surveillance was seen as a major problem because it makes users uncomfortable knowing that their activity is tracked and sold as data. Suppression of speech was grouped with fake news as an important issue regarding the rights and freedom of the consumers. The gatekeeping of information from mainstream media in general was a concern for these consumers because they feel as if they are being controlled and concealed from the truth. Although the negative mental health results on teens from social media is important, the consumers thought this was the responsibility of parents and not of other consumers. Labor issues were of no concern because the consumers felt as if they have no control over the matter. 

International Lawyers

The International Group comprised of participants from Bolivia, Brazil, Bulgaria, Canada, Colombia, Ecuador, Egypt, Ethiopia, India, Iran, Jamaica, Mexico, Nepal, Sweden, Switzerland, and Ukraine. The group was not assigned to rank Mental Health as a social issue. The groups’ logic behind their rankings could not be provided.

Team CEO: International Lawyers

1.    Fake News

2.    Labor Issues in the Supply Chain

3.    Surveillance

4.    Incitement to Violence

5.    Suppression of Speech

6.    -

Team Investor: International Lawyers (Socially Responsible)

1.    Incitement to Violence

2.    Fake News

3.    Labor Issues in the Supply Chain

4.    Surveillance

5.    Suppression of Speech

6.    -

Team Investor: International Lawyers (Institutional)

1.    Labor Issues in the Supply Chain

2.    Incitements to Violence

3.    Suppression of Speech

4.    Fake News

5.    Surveillance

6.    -

Team NGO: International Lawyers

1.    Fake News

2.    Labor Issues in Supply Chain

3.    Suppression of Speech

4.    Incitements to Violence

5.    Surveillance

6.    -

 

Team Consumer: International Lawyers

1.    Incitements to Violence

2.    Suppression of Speech

3.    Fake News

4.    Labor Issues in Supply Chain

5.    Surveillance

6.    -

 Insights

When given a business or financial oriented role, the teams ranked the social issues by focusing on whether it impacts company performance. Teams with community or advocate roles tended to rank the social issues according to impact on society. Team CEO prioritized labor issues and surveillance the most. Labor issues along with incitements to violence were of top concern for Team Investor. Fake news was the number one issue for Team NGO. Team Consumer, which reflects the average personal view of the participants, believed incitements to violence and surveillance were the most pressing social issues in the tech industry. Labor issues were the least important to the consumer participants, which is interesting in scope of consumer purchase decisions overall and not just in tech.

The Team Consumer data is reflective of each of the groups’ personal beliefs because all participants are also consumers. The College Students prioritized mental health. Both the law students and the Latin American lawyers found surveillance the most important tech issue. International lawyers instead thought incitement to violence more pressing. A possible explanation is that people in the U.S. and Latin America are trying to protect their privacy from intrusive technology. Because the international lawyers had participants from countries where incitement to violence are occurring, that may be why it was important to them.

Suppression of speech closely followed for Latin American Lawyers and International Lawyers whereas Mental Health was the second priority for the primarily American law Students. Many citizens of countries around the globe face oppressive governments that censor speech which may be influential in why Suppression of Speech was ranked highly. In the United States, citizens are guaranteed freedom of speech and press which is why this issue may not be as concerning for them. American teens also suffer from more mental illness as a result of social media use, possibly why it is second place.

Practices in corporate culture and opinions on social issues are influenced by the ethnic makeup of the employees. Although the stakeholder roles the groups took are the most determinative factor, their nationality is naturally a bias in their decision-making.

The Lewis Model is a triangular spectrum that identifies the prominent features of different cultures. Richard Lewis spoke 10 languages, visited 135 countries, and work in over 20 of them to find observable variability in social behavior. He recognized that stereotypes are unfair, but also emphasized that social norms are standards in each country. There are three defined points of culture: Linear Active, Multi-active, and Reactive.

  • Linear actives — those who plan, arrange, organize, do one thing at a time, follow action chains. They are truthful rather than diplomatic and do not fear confrontation. Their work and as well as personal life is based on logic rather than emotions. Linear actives like facts, fixed agenda and they are very job oriented. They are able to separate social-private and professional life.
  • Multi-actives — people belonging to this cultural category are able to do many things at once, planning their priorities not according to a time schedule, but according to the relative thrill or importance that each appointment brings with it. These cultures are very talkative and impulsive. These characteristics predict their orientation on people. They feel uncomfortable in silence. Multi-active people prefer face to face sessions.
  • Reactives — member of this group has in the priority list courtesy and respect on the top. This group is best listening culture. Listening quietly, reacting calmly and carefully to the other side's proposals are their traits as well. Reactive cultures are the world’s best listeners in as much as they concentrate on what the speaker is saying, do not interrupt a speaker while the discourse or presentation is on-going. Reactive people have large reserves of energy. Reactives tend to use names less frequently than other cultural categories.

How does the Lewis Model explain the results?

The primarily American college and law students fall under linear-active with their priorities aligned with individual rights and performance.

The Latin American lawyers are multi-active, think about the social issues in terms of impact on the community and on building relationships.

The International lawyers are comprised of participants all over the world, bringing in aspects from all over the spectrum.

The Lewis Model most likely plays a part in how each participant individually arrived at their own rankings and how they then communicated to agree on a reflective ranking together. The conversations guiding to the final result would have probably shown more insight as to how and why these social issues are important.

Age

The age of the participants is another influential factors because of the generational variation in trust in surveilling technologies. Generation Z, Millennials, and Generation X+ were asked in a survey how comfortable they felt with programs like Alexa or Siri on a scale from 1 to 10, 1 being very and 10 being not.

Generation Z: 7.73

Millennials: 8.28

Generation X+: 8.90

Older generations are more uneasy about virtual assistant technology.

With age comes more experience and better foresight. Researchers in Texas found that “older adults use the experience in decision-making accumulated over their lifetime to determine the long-term utility and not just the immediate benefit before making a choice. However, younger adults tend to focus their decision-making on instant gratification.”

How does age explain the results?

The majority of the college and law students were Generation Z or Millennials whereas the practicing attorneys were mostly Millennials or more senior.

As generations progress, younger people are more comfortable with surveillance technology than older people.

Expertise

Expertise of the participants surely impacted how they ranked social issues. The knowledge of experts in comparison to novices gives them a wider and practical approach to business and social issues. Here are some key aspects:

  1. Experts notice features and meaningful patterns of information that are not noticed by novices.
  2. Experts have acquired a great deal of content knowledge that is organized in ways that reflect a deep understanding of their subject matter.
  3. Experts’ knowledge cannot be reduced to sets of isolated facts or propositions but, instead, reflects contexts of applicability: that is, the knowledge is “conditionalized” on a set of circumstances.
  4. Experts are able to flexibly retrieve important aspects of their knowledge with little attentional effort.
  5. Though experts know their disciplines thoroughly, this does not guarantee that they are able to teach others.
  6. Experts have varying levels of flexibility in their approach to new situations.

Perhaps the practicing attorneys foresaw further down the line as to why one social issue was more pressing than another.

Thank you, Kaitlyn for providing your analysis of the results. Next week, I’ll provide mine.

November 4, 2022 in Business Associations, Comparative Law, Compliance, Corporate Personality, Corporations, CSR, Current Affairs, Human Rights, International Law, Law School, Lawyering, Marcia Narine Weldon, Social Enterprise, Teaching | Permalink | Comments (0)

Monday, August 15, 2022

Launching Business Associations 2022 - Course Objectives

I am back in the classroom teaching Business Associations (year 23 of teaching) on Wednesday.  As I was reviewing my course objective for the course this year, I wondered how different my learning objectives for my students are from those of others.  So, I decided I would share mine here and ask for comments.  Here it is:

*          *          *

Course objective:  The doctrinal content of this course is calibrated to prepare you for the business associations portion of the bar exam.  More specifically, the course is designed to enable you to:

  • compare and contrast core legal rules relating to the existence, structure, governance, liability, and financing of basic forms of for-profit business entity (and distinguish these forms of entity from sole proprietorships governed by common law principles, including those found in agency law, as well as contract, tort, and property law) through the review and analysis of state statutory and decisional law;
  • become familiar with basic concepts addressed in U.S. federal securities regulation, including the definition of a security, the registration of securities offerings, public company registration and reporting, proxy regulation, and securities fraud;
  • understand the framework of business entity regulation and key business law tools, concepts, and principles at the intersection of theory, policy, doctrine, and practice;
  • observe how economic, social, and political dynamics impact and are impacted by the law governing for-profit businesses; and
  • apply, both in writing and through oral expression, basic principles of state business entity law and U.S. federal securities law through legal analysis in advocacy, transactional, and other legal advisory settings.

In this course, you are required to act as legal decision-makers, advocates, and advisors—both individually and as part of a group—and your performance will be assessed both individually and in a group context (with all members of the group being collectively responsible for the group’s performance, as lawyers are in law practice).  As a result, oral and written skills of various kinds (reading and listening closely and critically, analyzing methodically, persuading effectively and efficiently, self-assessing and peer assessing constructively, etc.) will be at a premium in all that we do.  Group dynamics also will play a role.  As the course permits, we will engage in contextual discussions about these kinds of skills and other aspects of lawyering (including legal ethics and professional responsibility, which pervade the course material).

*           *          *

I suspect that those of us who teach the course all have a core set of substantially similar objectives,  However, I also suspect that there is a lot of variance beyond that as to the scope of doctrine (how far beyond bar exam basics one goes) and the nature of other expectations.  Let me know in the comments or by private message if you have any comments or other reactions.  I remain curious . . . .

August 15, 2022 in Business Associations, Joan Heminway, Teaching | Permalink | Comments (0)

Monday, August 1, 2022

Belmont University (Nashville, TN) - Assistant Professor of Business Systems and Analytics

BelmontU

We are hiring for an open Assistant Professor of Business Systems and Analytics position.

We will consider lawyers/law professors with data governance/privacy law experience/research.

I am on the hiring committee; feel free to reach out to me with any questions.

Position posting here.

August 1, 2022 in Business Associations, Business School, Haskell Murray, Intellectual Property, Jobs, Technology | Permalink | Comments (0)

Friday, July 29, 2022

Practical Tips for Teaching or Training Adult Learners

Millions of law school graduates around the US just took the bar exam. Others are preparing to enter colleges and graduates schools in a few weeks. How will these respective groups do? While a lot depends on how much and how well they study, a large part of their success or failure may depend on how they've been taught. I recently posted about how adults learn and what the research says we should do differently. In this post, I'll show how I used some of the best practices in the last ten days when I taught forty foreign lawyers from around the world  and thirty college students in separate summer courses offered by the University of Miami as well as nine Latin American lawyers who were taking courses in business law from a Panamanian school. I taught these disparate groups about ESG, disclosures, and human rights. With each of the cohorts, I conducted a simulation where I divided them into groups to prioritize issues based on whether they were a CEO, an investor, a consumer, the head of an NGO, and for the US college students, I added the roles of a member of Congress or influencer. In a future post, I will discuss how the groups prioritized the issues based on their demographics. Fascinating stuff. 

Depending on what you read, there are six key principles related to adult learning:

1. It seems obvious, but adults need to know why they should learn something. Children learn because they are primed to listen to authority figures. Too often in law school or corporate training, there's no correlation to what they learn and what they actually do. When I taught the two groups of foreign lawyers, I talked about the reality and the hype about ESG and how the topic could arise in their practices with specific examples. When I spoke to the college students who were considering law school, I focused on their roles and responsibilities as current consumers and as the future investors, legislators, and heads of NGOs. Same powerpoint but different emphasis.

2. Adults are self-directed. Under one definition, "self-directed learning describes a process by which individuals take the initiative, with or without the assistance of others, in diagnosing their learning needs, formulating learning goals, identifying human and material resources for learning, choosing and implementing appropriate learning strategies, and evaluating learning outcomes." This may seem radical because many of my colleagues complain that today's students need a lot of hand holding and spoon feeding, and I agree to some extent. But I also think that we don't give students enough credit and we underestimate them. I developed my curriculum for the practicing lawyers but I also asked what they wanted to learn and what would be most useful for them. I only had a few hours with them, so I wasn't able to explore this much as I would have. But in some of my traditional courses at the law school and when I train adults in other contexts, I often give a choice of the exam type and topic. This ensures that they will submit a work product that they are passionate about. At the end of my traditional classes at the law school, I also ask them to evaluate themselves and me based on the learning outcomes I established at the beginning of the semester. They tend to be brutally honest about whether they've taken responsibility for their own learning.

3. Adults filter what we tell them through their life experiences. In my traditional classes, I send out a survey to every student before the semester starts so that I understand their backgrounds, perspectives, and what's important to them. I often pick hypotheticals in class that directly address what I've learned about them through the surveys so it resonates much more clearly for them. With my three groups this week, I didn't have the chance to survey them but I knew where they were all from and used examples from their countries of origin, when I could. When the college students entered the Zoom room, I asked them to tell me why they picked this class. This helped me understand their perspectives. I also picked up on some of their comments during discussion and used those data points to pivot quickly when needed. It would have been easy to focus on my prepared lecture. But what does ESG mean to a lawyer in Bolivia, when that's not a priority? College students quickly grasped the context of socially responsible investing, so I spent more time there than on the Equator Principles, for example. The cultural and generational differences were particularly relevant when talking about the responsibility of tech companies from a human rights perspective. The lawyers and students from authoritarian regimes looked at social media and the power to influence the masses in one way, while the college students saw the issues differently, and focused more on the mental health issues affecting their peers. Stay tuned for a future post on this, including interesting discussion on whether Congress should repeal Section 230.

4. Adults become ready to learn only when they see how what they are learning applies to what they need to do at work and at home. With the foreign lawyers, I focused on how their clients could have to participate in due diligence or disclosure as part of a request from a company higher up in the supply chain. I focused on reputational issues with the lawyers who worked at larger companies. College students don't deal with supply chains on a regular basis so I spent more time focusing on their role as consumers and their participation in boycotts at their universities and their activism on campus and how that does or does not affect what companies do. 

5. Adults need a task-centered or problem-focused approach to learning. I had to lecture to impart the information, but with each group, they learned by doing. I had 12 hours with the Latin American lawyers so to test them on their understanding of US business entities, instead of having them complete a multiple choice quiz, I asked them to interview me as a prospective client and develop a memo to me related providing the advice, which is what they would do  in practice. They, with the other groups, also prioritized the issues discussed above from their assigned roles as CEO, NGO head, institutional investor, or consumer. When I teach my compliance course to law students, they draft policies, hold simulated board meetings, and present (fake) CLEs or trainings. My business and human rights students  have the option to draft national action plans, write case studies on companies that they love or hate, or write develop recommendations for governments for their home country. Students are much more likely to engage with the material and remember it when they feel like they are solving a real problem rather than a hypothetical.

6. Adults need extrinsic and intrinsic rewards. Everyone I taught this week will get some sort of certificate of completion. But they all chose to take these courses and those who weren't part of the UM program either self paid or were reimbursed by their employers. None of them were required to attend the classes, unlike those in elementary and high school. When students choose a course of study and learn something relevant, that's even more important than the certificate or diploma. 

I hope this helps some of you getting ready for the upcoming semester. Enjoy what's left of the summer, and if you try any of these suggestions or have some of your own, please leave a comment.

 

July 29, 2022 in Business Associations, Corporate Governance, Corporations, CSR, Current Affairs, Financial Markets, Human Rights, International Business, Law School, Lawyering, LLCs, M&A, Marcia Narine Weldon, Teaching | Permalink | Comments (0)

Wednesday, July 6, 2022

Neighborliness, Ideals, and Business

IMG_4568

(Some neighborhood children playing duck-duck-goose in our common space on July 4th.)

Recently, I finished philosopher David McPherson’s book The Virtues of Limits published by Oxford University Press this year. While I disagree with McPherson in certain areas, I highly recommend his book. I was reacting to the book with friends and the author before I even completed it. Perhaps it would have been best to refrain from commenting until I had finished, but it was a sign that the book was quite thought-provoking. The book was well-written and accessible, even to a non-philosopher like me. 

Given that this post only has a loose connection to business law, I will place the remainder of my thoughts below the page break. 

 

Continue reading

July 6, 2022 in Books, Business Associations, Ethics, Haskell Murray, Religion, Social Enterprise | Permalink | Comments (4)

Monday, July 4, 2022

Celebrating Independence without the Trappings: A Business Law Prof "Take"

Stefan's Independence Day post is far more erudite than mine.  Kudos and thanks to him for the substantive legal content.  This post covers more of a teaching point--one that I often think about in the background but want to being to the fore here.

I am focused in writing this on things like family reunions, local holiday festivities, grilling out, and fireworks.  It has been a rocky road to the Fourth in these and other aspects this year.  Overlapping causes can easily be identified.  As if the continuing COVID-19 nightmare were not enough . . . .

I will start with COVID-19, however.  I have heard of many who are missing family and other events this weekend because of positive COVID-19 diagnoses, test results, or exposures.  I was sad to learn, for example, that Martina Navratilova had to miss the historic Wimbledon centennial celebration, including the Parade of Champions, yesterday.  But there is more.

The air travel debacles have been well publicized.  Weather, labor shortages, and other issues contribute to the flight changes and cancellations airlines need to make on this very popular travel weekend--expected to set records.  And gas prices have stymied the trips of some by land (again, at a time during which travel was expected to be booming), although news of some price drops in advance of the weekend was certainly welcomed.  Even for those who are well and able to travel to spend holiday time with family, it has been a challenge.

The cost of your cookout this year also may be higher, should you choose to have one.  Supply chain turmoils and the effects of inflation and the war in Ukraine all are listed as contributing factors.  (The linked article does note that strawberries are a good buy, nevertheless, which is welcome news to me.)

And yes, fireworks displays also have been disrupted.  The causes include both concerns about weather (dry conditions and flammables do not mix well!) as well as the impact of labor shortages, inflation, and other factors influencing the supply of goods.  Of course, there also is a high demand for fireworks in the re-opened socio-economic environment.  All have been widely reported.  See here, here, here, and here.

These holiday weekend disappointments create personal strife.  But why should a business law prof care about all of this? 

I find that stepping back and looking at the state of business at given times can be instructive in reflecting on the ways in which business law policy, theory, and doctrine do and should operate in practice.  In an inflationary period with labor shortages, what profit-seeking business would not be looking at customers, clients, and employees as an important constituencies?  In an era of supply chain dislocations, what business managers would not be focused on strong, positive relationships with those who sell them goods and services significant to their business?  And, of course, with investment returns of direct and indirect import to the continued supply of funding to business ventures, firms need to pay heed to investor concerns.  Note how these observations allow for commentary on principles of/underlying contract law, contract drafting, securities regulation, fiduciary duty in (and other elements of) business associations law, insurance law, and more.

Looking at legal theory, policy, and doctrine in practical contexts can useful to a business law prof for teaching, scholarship, and service--depending on the nature of a person's appointment and the institution at which the prof teaches.  The current Fourth of July woes are but one example of how those connections can be made.  But I want to invite folks to make them, especially in their teaching--in current courses (if you are teaching over the summer) and in fall and spring course planning, which I know many folks are now doing.

In closing, I send sympathetic vibes to all who had plans foiled by (or who decided to have a "staycation" and avoid) some or all of the holiday weekend dislocations I highlight in this post.  I hope you found joy in your Independence Day weekend nonetheless.

July 4, 2022 in Business Associations, Contracts, Corporate Finance, Current Affairs, Financial Markets, Insurance, Joan Heminway, Law School, Lawyering, Research/Scholarhip, Service, Teaching | Permalink | Comments (0)

Monday, May 16, 2022

AALS Section on Business Associations - Call for Papers for 2023 Annual Meeting

Dear Section Members --

On behalf of the Executive Committee for the AALS section on Business Associations, I'm writing with details of our two sessions at the 2023 AALS Annual Meeting, which will be held in San Diego, CA from January 4-7, 2023.

First, our main program is entitled, "Corporate Governance in a Time of Global Uncertainty.” We anticipate selecting up to two papers from this call for papers. To submit, please submit an abstract or a draft of an unpublished paper to Professor Mira Ganor, mganor@law.utexas.edu, on or before Friday, August 19, 2022. Authors should include their name and contact information in their submission email but remove all identifying information from their submission. Please include the words “AALS - BA- Paper Submission” in the subject line of your submission email.

Second, we are excited to announce that we will again hold a "New Voices in Business Law" program, which will bring together junior and senior scholars in the field of business law for the purpose of providing junior scholars with feedback and guidance on their draft articles. Junior scholars who are interested in participating in the program should send a draft or summary of at least five pages to Professor Summer Kim at skim@law.uci.edu on or before Friday, August 19, 2022. The cover email should state the junior scholar’s institution, tenure status, number of years in his or her current position, whether the paper has been accepted for publication, and, if not, when the scholar anticipates submitting the article to law reviews. The subject line of the email should read: “Submission—Business Associations WIP Program.”

For further details on both sessions, please see the attached calls for papers. [Ed. Note: the calls for papers are included below.]

Thank you,

James Park
Chair, AALS Business Associations Section

+++++

Call for Papers for the
Section on Business Associations Program on
Corporate Governance in a Time of Global Uncertainty
January 4-7, 2023, AALS Annual Meeting

The AALS Section on Business Associations is pleased to announce a Call for Papers for its program at the 2023 AALS Annual Meeting in San Diego, CA. The topic is Corporate Governance in a Time of Global Uncertainty. Up to two presenters will be selected for the section’s program.

Businesses are operating at an exceptional level of global uncertainty.  Mounting pressures from myriad fronts leave boards of directors to navigate new frontiers while maneuvering lingering challenges.  In addition to adjusting to uncertain economic and financial implications of geopolitical events and the global pandemic, businesses are asked to assume a distinct social role.  Proliferation of calls for corporate disengagement from certain states comes amidst continued disruption in supply chains and mounting diversity, inequality, climate, and cybersecurity challenges, as well as increased disclosure requirements.  This panel will explore the implications of global uncertainty on corporate governance and the role of corporations and their boards in these changing times.

Submission Information:

Please submit an abstract or a draft of an unpublished paper to Mira Ganor, mganor@law.utexas.edu, on or before Friday, August 19, 2022.  Authors should include their name and contact information in their submission email but remove all identifying information from their submission.  Please include the words “AALS - BA- Paper Submission” in the subject line of your submission email.  Papers will be selected after review by members of the Executive Committee of the Section.  Presenters will be responsible for paying their registration fee, hotel, and travel expenses.

We recognize that the past couple of years have been incredibly challenging and that these challenges have not fallen equally across the academy.  We encourage scholars to err on the side of submission, including by submitting early stage or incomplete drafts.  Scholars whose papers are selected will have until December to finalize their papers.   

Please direct any questions to Mira Ganor, the University of Texas School of Law, at mganor@law.utexas.edu.

+++++

Call for Papers
AALS Section on Business Association
New Voices in Business Law
January 4-7, 2023, AALS Annual Meeting

The AALS Section on Business Associations is pleased to announce a “New Voices in Business Law” program during the 2023 AALS Annual Meeting in San Diego, CA. This works-in-progress program will bring together junior and senior scholars in the field of business law for the purpose of providing junior scholars with feedback and guidance on their draft articles.  To complement its other session at the Meeting, this Section is especially interested in papers relating to corporate governance in a time of global uncertainty, but it welcomes submissions on all business-related topics.

PROGRAM FORMAT:  Scholars whose papers are selected will provide a brief overview of their paper, and participants will then break into simultaneous roundtables dedicated to the individual papers.  Two senior scholars will provide commentary and lead the discussion about each paper.

SUBMISSION PROCEDURE:  Junior scholars who are interested in participating in the program should send a draft or summary of at least five pages to Professor Summer Kim at skim@law.uci.edu on or before Friday, August 19, 2022.  The cover email should state the junior scholar’s institution, tenure status, number of years in his or her current position, whether the paper has been accepted for publication, and, if not, when the scholar anticipates submitting the article to law reviews.  The subject line of the email should read: “Submission—Business Associations WIP Program.”

Junior scholars whose papers are selected for the program will need to submit a draft to the senior scholar commentators by Friday, December 9, 2022.

ELIGIBILITY:  Junior scholars at AALS member law schools are eligible to submit papers.  “Junior scholars” includes untenured faculty who have been teaching full-time at a law school for ten or fewer years.  The Committee will give priority to papers that have not yet been accepted for publication or submitted to law reviews. 

Pursuant to AALS rules, faculty at fee-paid non-member law schools, foreign faculty, adjunct and visiting faculty (without a full-time position at an AALS member law school), graduate students, fellows, and non-law school faculty are not eligible to submit.  Please note that all presenters at the program are responsible for paying their own annual meeting registration fees and travel expenses.

May 16, 2022 in Business Associations, Call for Papers, Conferences, Corporate Governance, Family Business, Research/Scholarhip | Permalink | Comments (0)

Monday, April 4, 2022

Business Associations & Relationships on the Future Bar Exam: A Virtual Symposium (Part V)

It's been one week since I announced and started posting in this virtual symposium on the NextGen Bar Exam. Thanks to Josh, Ben, and John for joining me in commenting on the proposed content scope outline relating to Business Associations and Relationships.  You can find their posts here, here, and here, respectively. 

We have raised issues about terminology.  And there are a few areas that are lacking in clarity or specificity.  In addition, two important overarching points have emerged to date in our posts.  One is that it is important to indicate the source of the law being tested, since the default rules operative in various areas of LLC and corporate law are not the same in the dominant national statutory frameworks.  (I offer another example of how this may matter in the discussion of corporate director and officer fiduciary duties, below.)  The other is that the default rules in business associations law tell only part of the story.   Constitutional issues, authorized private ordering, and decisional law that both supplements and interprets state legislative enactments can all play roles.

In this post, I offer a few more points that illustrate or add to these observations.

Partnership Nomenclature

The outline notes that distinctions between or among partnerships (denominated "general partnerships" in the outline), limited liability partnerships, and limited partnerships will be tested.  That seems appropriate.  But the next few prompt all refer to "general partners."  Neither partnerships nor limited liability partnerships have general partners.  They just have partners.  Only limited partnerships distinguish general partners from limited partners.

Partnership Governance

Only the duty of loyalty between and among partners and the partnership is proposed to be tested as a matter of partnership fiduciary duties.  Why not care?  And what about the obligation of good faith and fair dealing?  These governance rules are all equally important.  And duties of care and loyalty exist in agency law, unincorporated business associations law, and corporate law.

Moreover, the outline notes under "Duty of loyalty": "This topic includes the consequences of a partner acting outside the scope of the partner’s authority to bind the partnership."  This annotation is perplexing to me.  I have two principal substantive comments about it.

First, a partner's authority to bind the partnership is a matter of agency authority--the authority to transact with third parties.  A partner's fiduciary duties are a matter of internal governance (as the relevant outline topic, "Rights of . . . partners among themselves" indicates).  Two separate parts of the Revised Uniform Partnership Act (the "RUPA") address relations with third parties and internal governance--Articles 3 and 4, respectively.  So, the annotation introduces an apples-and-oranges problem--the illumination of an internal governance rule by reference to a third-party relations rule.

Second, the duty of loyalty of partners in a RUPA partnership is relatively specific.  It consists of three exclusive components: 

(1) to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in the conduct and winding up of the partnership business or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity;

(2) to refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership; and

(3) to refrain from competing with the partnership in the conduct of the partnership business before the dissolution of the partnership.

It is hard for me to see how a partner acting outside of their agency authority would implicate any of the three components of the duty of loyalty.  That conduct does not, of itself, result in the partner: deriving or taking any property, profit, or benefit of or belonging to the partnership; having conflicting interests, or competing with the partnership.

Corporations and LLCs, Generally

I agree with John that LLCs and corporations should each have their own category.  The doctrinal rules (structure, governance, and finance) are simply too different.  The general categories under each (and under partnerships, for that matter)--formation, management and control, fiduciary duties, agency, third-party liability, etc.--can be almost exactly the same.   Topics like veil piercing, pre-organizational contracting, and shareholder/member litigation that apply to both corporations and LLCs in similar ways can be noted in the outline for each with a cross-reference to the other or can be called out separately in the outline (with any unique corporate or LLC nuances addressed in that broader context).

Corporate Director (and Officer) Fiduciary Duties

While Josh and Ben have focused some pointed and valuable comments on jurisdictional differences in limited liability company fiduciary duties (comments that I endorse), I am at least as troubled by jurisdictional differences in corporate fiduciary duties.  I have written in the past in this space (here, here, and here) about the challenges in teaching corporate fiduciary duty law.  Delaware's classification of Caremark oversight duties as good faith questions actionable as breaches of the duty of loyalty runs counter to decisional law in other jurisdictions that characterizes oversight failures as breaches of the duty of care.  In sum, the relative narrowness of the fiduciary duty of care in Delaware, the capaciousness of Delaware's duty of loyalty, and the Delaware judiciary's reinterpretation of a director's obligation of good faith as a component of the duty of loyalty distinguish the law of director fiduciary duties in Delaware from the law of fiduciary duties elsewhere. 

Generally

Like others, I have doubts about the fairness and efficacy of bar exams as meaningful gatekeepers for the profession.  But I assume good faith in constructing the NextGen Bar Exam.  With that in mind, any bar exam should assess the law that licensed practitioners should know.  And it should use normative terms in signaling the law to be tested and recognize the use of normative terms in evaluating performance.  In this regard, it is important to note that there are parallel types of legal rules in agency, unincorporated business associations law, and corporate law.  There are recognized, well-worn labels for describing these component legal rules in agency and business associations law.  Why reinvent the wheel?  If parallel legal doctrine from business associations and relationships laws is to be tested, the content scope outline should use the acknowledged customary descriptors for those rules.

These comments round out my thoughts on the "Business Associations and Relationships" portion of the proposed Content Scope Outlines for the NextGen Bar Exam of the Future.  I welcome additional posts and any responses here on the BLPB, and as I noted in my initial post, comments can be filed with the National Conference of Bar Examiners hereThe comment period closes on April 18, 2022. 

April 4, 2022 in Business Associations, Corporations, Joan Heminway, LLCs, Partnership | Permalink | Comments (0)

Business Associations & Relationships on the Future Bar Exam: A Virtual Symposium (Part IV) - Guest Post from John Rice

The following symposium post comes to us from John Rice at Duquesne Law.

*     *     *

I’m pleased to add my voice among those commenting as part of this virtual symposium on the recently-released Content Scope Outline for the “Business Associations & Relationships” for the NextGen Bar Exam. Despite my general skepticism of the efficacy of any bar examination, I tend to view the draft outlines as an improvement above the current exam outline. I join with my colleagues Joan, Joshua, and Benjamin in stressing how imperative it is that the NCBE specify the specific sources of law from which these topics are drawn.

In terms of substance, I favor separating LLCs into their own category rather than merely being a sub-set of corporation law. Additionally, the business litigator in me feels compelled to note that the draft outline’s description of “Shareholder and member litigation: direct and derivative litigation” is underdeveloped. I want my students to recognize litigation as a form of shareholder control over the corporation and to evaluate the standing prerequisites and demand requirement. Likewise, I would prefer more attention be paid to the specific remedies available in business disputes, including declaratory judgment, injunctive relief, and the appointment of receivers and custodians.

In this post, however, I wish to briefly move our conversation of the “Business Associations & Relationships” coverage to consider the “Foundational Skill and Associated Lawyering Task” of legal research. The NCBE has identified two “skills” under the umbrella of legal research: First, the ability to engage in statutory interpretation, and second, legal issue spotting in a “client file.” In doing so, the NCBE under-comprehends the skills associated with legal research and overlooks what I consider to be one of the most fundamental legal research skills, and that skill is one particularly well-situated to be tested in the context of business law; that is, synthesis of separate legal authorities into one analysis.

Of all the subjects identified to be tested on the NextGen Bar Exam, Business Associations is the only subject that would require a test candidate to consider the interplay of separate legal authorities: the constitutional delegations of authority, the default rules created by the applicable statutory scheme, the private ordering agreed to by contract between the parties, the case law from the jurisdiction interpreting the statute and contract, and the underlying principles of equity and fairness. For example, a question about fiduciary duty in the context of a Delaware corporation would require a candidate to draw from multiple sources of law: the line of case law recognizing the existence of fiduciary duty; the statutory limits that may be impose on fiduciary duty by the chartering documents and bylaws; and the contractual limits actually agreed to by the parties.

Joshua implicitly recognized this opportunity in his post when he discussed the significance of looking to corporate documents to understand the applicable rules for quorum. But this sort of analysis should be the goal of the bar examination’s testing of the law of business associations—not merely an incidental consequence. A minimally competent attorney—whatever that may mean—should be able to articulate the legal research and factual investigation they would need to undertake to answer a question.

In my view, the NCBE would be wise to revise the content outlines to account for how candidates may evaluate different sources of applicable law in light of one another, and to express what information—legal and factual—they would to engage in a complete analysis of the questions presented.

April 4, 2022 in Business Associations, Corporations, Joan Heminway, LLCs | Permalink | Comments (0)

Friday, April 1, 2022

Call for Submissions: William & Mary Business Law Review, Volume 14 (2022-2023)

Volume 14 of the William & Mary Business Law Review is currently accepting submissions for publication in 2022 and 2023. The Journal aims to publish cutting-edge legal scholarship and contribute to significant and exciting debates within the business community. Submissions for consideration can be sent via Scholastica, or if need be, via email to wm.blr.articlesubmission@gmail.com.

April 1, 2022 in Business Associations, Corporations, John Anderson | Permalink | Comments (0)

Wednesday, March 30, 2022

Business Associations & Relationships on the Future Bar Exam: A Virtual Symposium (Part II)

Thanks to Joan Heminway for kicking off our virtual symposium, here, where some of us will take a look at the recently released National Conference of Bar Examiners (NCBE) content summaries of the material planned for future bar exams in the Content Scope Outlines .  These comments relate to the "Business Associations & Relationships” portion. 

As a general matter, I have been growing increasingly skeptical of the bar exam and its role and purpose for the profession.  I very much believe we need to facilitate a process to help ensure clients are served by competent lawyers who have the skills necessary to serve clients.  However, I am more and more convinced that bar exam does an incomplete job of testing readiness for practice, potentially ingrains some bad practices, and continues to inappropriately limit access to the profession for women and minorities. Those issues, though, are for another time.   

Following are my initial thoughts on the Business Associations and Relationships portion of the Outlines:

In the area of “Partnerships,” under “Nature of general partnerships” and “Formation, the outline states: “This topic includes the de facto treatment of improperly created incorporated entities as general partnerships.”  Here, in place of “incorporated entities” I would recommend replacing it with “corporations” or “limited liability entities.”  If they intend to limit the review to corporations, which would not be surprising given the way the “de facto corporation doctrine” is often taught, then say that. If it means improperly formed limited liability entities (intending to include LLCs, LPs or LLPs) then say that.  An “incorporated entity” is necessarily a corporation.

For the section on “Corporations and Limited Liability Companies,” I agree with Joan that the corporation concept of “articles of incorporation” is too narrow, unless they intend to pick a state or model law that uses that phrase (and if so, please tell us!).  Adding “formation document” or “creation document” could work, though most casebooks include something “charter or articles or certificate of incorporation.” 

For LLCs, I think it should say “Operating or member agreements” (not members, though maybe “members’ agreements”). 

Items “IX. Piercing the Corporate Veil” should say, “Piercing the Entity Veil” given that this section does not say whether it’s just corporations (the general section is corporations and LLCs).  A literal reading of this would suggest they only intend to test it as to corporations, but given the way courts and other commentators treat this concept, such an assumption would be (unfortunately) flawed. There is an “asterisk” by this area, which means exam takers will be expected” to know the details of the relevant doctrine without consulting legal resources.”  Here, too, it would be important to know the jurisdiction because veil piercing law is not uniform state to state, and this is even more true of LLCs than it is of corporations. The basics are similar, but states vary.  Texas, for example, requires “actual fraud” for contract-type veil piecing claims.  And veil piercing is different for LLCs, too. Compare, for example, Minnesota law and the ULLCA. 

Under “management and control” of corporations, I don’t love that they test quorum, because it’s my understanding that, in years past, they have tested on some default rules of quorum (though I have not been able to verify that). Quorum should always be checked by looking at the articles/certificate/charter and bylaws AND buy checking the state statute to make sure that the chosen path is permissible under the statute.  There is no “asterisk” by this area, which means exam takers should “have generality familiarity with the topics.” So, it’s possible the bar examiners are approaching this by testing quorum where they would provide the relevant statute and or corporate documents (or specifics would not matter for the call of the question).  If so, great, but I think it’s worth raising to ensure that’s the case.

Finally, fiduciary duties may be tested for corporations and LLC.  These, too, are general, so hopefully exam takers will be able to respond with general knowledge and supplemental information in the exam. Given the divergent nature of Delaware LLC law in this area, it would seem worthwhile to give some guidance as to the source of law, exam takers should be using in their responses.  I will, again, second Joan’s point: “I favor letting examinees know which sets of rules and norms apply to their exam responses.”

 

March 30, 2022 in Business Associations, Corporations, Joshua P. Fershee, LLCs | Permalink | Comments (2)

Monday, March 28, 2022

Business Associations & Relationships on the Future Bar Exam: A Virtual Symposium (Part I)

The National Conference of Bar Examiners (NCBE) recently released content summaries of the material proposed to be tested on the future bar exam.  Labeled Content Scope Outlines (the "Outlines"), they are available here.  Among them, are content descriptions under the heading "Business Associations & Relationships," pp. 7-9 of the Outlines.  This post introduces a series of posts over the next week or two on those specific parts of the Outlines.  I will start the ball rolling by making four opening comments below, each focused on a general issue.

  • Testing Guidance - The Outlines designate topics that will be "tested in a way that assumes examinees know the details of the relevant doctrine without consulting legal resources" and distinguishes them from ones that will be "tested in a way that assumes examinees have general familiarity with the topics for purposes of issue-spotting or working efficiently with legal resources provided during the exam."  I find this designation and separation helpful.
  • High-Level Content Guidance - Given that Delaware corporate and limited liability company law  (a) are national standards and (b) include provisions that are different from those in the Model Business Corporation Act and the Uniform Limited Liability Company Act, respectively, I favor letting examinees know which sets of rules and norms apply to their exam responses.  The Outlines do not offer this information.
  • Topic Annotations - At various points, the Outlines offer a short comment about the specific contents of a particular topic.  For example, they note that the topic "Vicarious liability of principal for acts of agent . . . includes distinctions between employees and independent contractors. This topic also includes delegable/nondelegable duties."  These statements are useful, although some of the annotations may still leave too much to the imagination.
  • Terminology - The Outlines use "articles of incorporation" to describe a chartering document for a corporation.  Yet, Tennessee uses the term "charter" (arguably the generalist term) and Delaware uses the term "certificate of Incorporation."  I wonder if it would be better to merely use a generic or general descriptive term like "chartering document."  Similar issues exist with respect to limited liability company "articles of organization," "certificates of formation," and "operating or members agreements."  Along similar lines, I would like to see veil piercing referred to in just that way and not as "piercing the corporate veil" when it is used to describe the veil of limited liability in limited partnerships or limited liability companies.

These comments should be enough to get us started.  I will plan to say more in a subsequent post, if time permits.

Please note that comments on the scope and depth of the subjects to be tested are being solicited and are welcomed by the NCBE.  The comment period closes on April 18, 2022.  Comments can be submitted here.

More information about the NCBE's project on the next generation of the bar exam can be found here.

March 28, 2022 in Agency, Business Associations, Joan Heminway | Permalink | Comments (0)

Monday, March 14, 2022

Business Divorce in Tennessee: Oppression, Fair Value, Attorneys' Fees, Pre-Judgment Interest, and More!

A recent opinion of the Court of Appeals of Tennessee at Nashville, Buckley v. Carlock, is chock full of great issues from the standard Business Associations course.  Specifically, the case involves allegations of controlling shareholder oppression under Tenn. Code Ann. § 48-24-301.  The plaintiff requested, and was grated, a buy-out of his shares in lieu of dissolution.

As noted in the opinion, the plaintiff raises a variety of issues on appeal, arguing:

that the trial court's valuation of his interest in TLC was "erroneous as a matter of law, or at least contrary to the weight of the evidence." He also claims that the court abused its discretion in denying him prejudgment interest. And he contends that he was entitled to attorney's fees as the prevailing party for the whole case. Lastly, he argues that the trial court erred in dismissing his claim for unjust enrichment as moot.

The Court of Appeals affirms the trial court opinion after oral argument (a note on that below).  In the process, the court validates a dissenters' rights ("fair value") approach to calculating the value of the plaintiff's shares.  It also confirms aspects of the valuation calculation.

All of these "real life" business divorce issues are illustrative of the way the statutes we teach get used in practice.  The related issues (e.g. as to attorneys' fees, the admission of witness testimony, pre-judgment interest, and unjust enrichment) all add color to the standard Business Associations fare.  This case may make for interesting teaching material.

To that point, in writing up this post, I found some buried treasure relevant to teaching.  The oral arguments for the case were recorded on Zoom and are publicly available!  The two legal counsel arguing the case are professional and knowledgeable.  All of this may help to illustrate for students the relevance of the activities they engage in during law school.

March 14, 2022 in Business Associations, Corporations, Joan Heminway, Teaching | Permalink | Comments (2)

Friday, November 26, 2021

Presenting at the 16th Annual Meeting of the American College of Business Court Judges

I was recently honored to be invited to join a panel at the 16th Annual Meeting of the American College of Business Court Judges (ABCBJ), which was held in Jackson, Mississippi, on October 27-29. The meeting was hosted by Chancellor Denise Owens (the current president of the ACBCJ) in association with the Law & Economics Center (LEC) at George Mason University Antonin Scalia School of Law.

Chancellor Owens kicked off the event and introduced the keynote speaker, Haley Barbour (former Governor of Mississippi). Governor Barbour gave an excellent talk about the ways in which Mississippi's musical traditions have helped to improve race relations over the past century.

The meeting panels covered a broad array of topics, including:

  • Ownership, Transfer and Trading of Intellecual Property Rights.
  • The Cost of Truth, Can You Afford It?
  • Artificial Intelligence, Machine Learning, and Algorithms: Studies in Law, Economics, and Racial Bias
  • Thriving Post Pandemic - Private Practice and Expanding Regulatory Authority After COVID-19.

I joined Professors Todd Zywicki and Donald Kochan on a panel moderated by Judge Elihu Berle (Los Angeles Superior Court). The panel was entitled, Shareholder Wealth Maximization versus ESG and the Business Roundtable: The Growing Debate Over Corporate Purpose. I presented on the Securities and Exchange Commission's plans for a new mandatory climate-change-related disclosure regime. The prsentation drew from portions of a recent essay I coauthored with Professor George Mocsary, An Economic Climate Change?

The conference concluded with the tour of our new Civil Rights Museum in Jackson. It was a wonderful meeting, and I look forward to participating in future ABCBJ events!

November 26, 2021 in Business Associations, Conferences, John Anderson, Law and Economics, Securities Regulation | Permalink | Comments (0)

Tuesday, November 23, 2021

Penn State Law Minority Business Development: Special Open Session (November 30, 2021, 4:00 PM - 6:45 PM EST)

This just in from friend-of-the-BLPB Sam Thompson at Penn State Law.  Sam hopes we will bring this program to the attention of those "who might be interested in learning more about this very important topic," including law school administrators, faculty, and students.  I know I plan to make others aware.

+++++

Dear Colleagues: This semester I am teaching a course dealing with issues in Minority Business Development, a subject I took as a student literally 50 years ago in my third year at the University of Pennsylvania Law School.  Because of the importance of this topic, Penn State Law has permitted me to make the course open to anyone who is interested in this very important topic, and recordings of all of the sessions of the course are available on the Penn State Law website here.

The course is divided into the following three segments:

Part I, Introduction and in-Depth Analysis of the Minority-White Gap in Business Ownership,

Part II, The Lawyer’s Essential Tools in Representing a Minority-Owned Small Business, and

Part III, The Big Ideas for Addressing the Minority-White Gap in Business Ownership

Part I was covered over five sessions and ended with a discussion with Professor Berdejo of the Loyola Law School in LA about his recently published article in the University of Wisconsin Law Review entitled: Financing Minority Entrepreneurship.  Part II of the course focused on the Essential Tools that any lawyer needs in advising owners of a business.  Each of these sessions was led by an outstanding practitioner, including a lawyer from the following firms: McGuire Woods; Richards, Layton & Finger; Nelson Mullins; Schiff Hardin; Wachtell Lipton; and Starfield & Smith.  For this part, we principally used the Maynard et. al. Business Planning casebook. 

This brings me to Part III, The Big Ideas for Addressing the Gap, which will be held in one session on Tuesday, November 30, 2021.  This special session will be live over the Internet from 4 PM to 6:45 PM Eastern Time.  A recording of this session will also be available on the website for the course.  This Special Session is entitled Perspectives on Minority Business Development, and in this session, experts from across the country will engage in a live discussion of Minority Business Development issues. The event, which is divided into three sessions, includes perspectives of lawyers, an economist, a business school dean, tax policy experts, entrepreneurs, and Penn State Law students who are enrolled in the course.  Reactions to the presentations in the three sessions will be provided by Dana Peterson, Chief Economist at The Conference Board.  While Ms. Peterson was a banker at Citigroup, she was the co-author of a 2020 report by Citigroup entitled: Closing the Racial Inequality Gaps.  A flyer for the program is attached, and the event page for the program can be reached here.  

. . .

Regards, Sam

November 23, 2021 in Business Associations, Entrepreneurship, Joan Heminway, Lawyering, Teaching | Permalink | Comments (0)

Tuesday, September 14, 2021

Campbell University - Norman A. Wiggins School of Law - Hiring

Campbell University's Norman A. Wiggins School of Law in Raleigh, NC is hiring for two positions. They are especially interested in candidates in the following areas: (1) business organizations, (2) commercial law (including sales law), and/or contracts. Details here or after the break. 

Continue reading

September 14, 2021 in Business Associations, Commercial Law, Contracts, Haskell Murray, Jobs | Permalink | Comments (0)

Friday, September 3, 2021

Testing Our Intuitions About Insider Trading - Part III

I suggested in my last two posts (here and here) that as Congress and the SEC contemplate reforms to our current insider trading regime, it is important for us all to explore our intuitions about what we think insider trading is, why it is wrong, who is harmed by it, and the nature and extent of the harm. If we are going to rethink how we impose criminal and civil penalties for insider trading, we should have some confidence that the proscribed conduct is wrongful and why. One way to do this is to place ourselves in the shoes of traders and ask, “What would I do?” or “What do I think about that?” With this in mind, I developed some scenarios designed to test our attitudes regarding trading scenarios that distinguish the four historical insider trading regimes (laissez faire, fiduciary-fraud, equal access, and parity of information).

In the previous post, I offered a scenario that would result in liability under equal-access and parity-of-information regimes, but not under the fiduciary-fraud and laissez-faire models. Those of you who were not convinced that the trading in that scenario was wrongful may favor one of the less restrictive models.

In today’s post, I offer two scenarios to test our attitudes regarding trading under the fiduciary-fraud model. This model recognizes a duty to disclose material nonpublic information or abstain from trading on it, but only for those who share a recognized fiduciary or similar duty of trust and confidence to either the counterparty to the trade (under the “classical” theory) or the source of the information (under the “misappropriation” theory). The trading in the following scenario would incur liability under the classical theory of the fiduciary-fraud model (as well as under the more restrictive parity-of-information and equal-access models), but not under the misappropriation theory:

A senior VP at BIG Corp., a publicly traded company, took the lead in closing a big deal to merge BIG Corp. with XYZ Corp. The shares of BIG Corp will skyrocket when the deal is announced in seven days. The senior VP asks the CEO and board of Big Corp if he can purchase shares of BIG Corp for his personal account in advance of the announcement. The CEO and board approve the senior VPs trading. The senior VP buys Big Corp. shares in advance of the announcement and he makes huge profits when the deal is announced.

Note the difference between this scenario and the scenario in last week’s post. Here the counterparties to the trade are existing Big Corp shareholders who (if they had the same information as the senior VP) presumably would not have proceeded with the trade at the pre-announcement price. The theory assumes that such trading on the firm’s information (even with board approval) breaches a fiduciary duty of loyalty to the firm’s shareholders (fair assumption?). In last week’s post, the counterparties to the trade were XYZ Corp.’s shareholders, so the board-approved trade did not breach any fiduciary duty. Do you agree that the senior VP’s trading in the scenario above is deceptive, disloyal, or harmful to shareholders? If so, do you think such trading should be subject to civil or criminal sanction (or both)?

The trading in the next scenario would incur liability under the misappropriation theory of the fiduciary-fraud model (as well as under the more restrictive parity-of-information and equal access models), but not under the classical theory:

A senior VP at BIG Corp., a publicly traded company, took the lead in closing a big deal to merge BIG Corp and XYZ Corp. The shares of BIG Corp and XYZ Corp will both skyrocket when the deal is announced in seven days. At the closing party, the CEO and Board of BIG Corp explain to everyone on the deal team that they would like to keep the deal confidential until it is announced to the public the following week. Immediately after the party, the senior VP goes back to his office and buys shares of XYZ Corp for his personal online brokerage account. The senior VP makes huge profits from his purchase of XYZ Corp shares when the deal is announced a week later.

Here the senior VP at BIG Corp. trades in XYZ Corp. shares, so he does not breach any fiduciary duty to his shareholders. Assuming a reasonable person would conclude that a request of confidentiality includes a request not to trade (fair assumption?), the VP’s trading does, however, breach a duty of loyalty to BIG Corp. Is this trading wrongful? If so, is it more/less/equally wrongful by comparison to the trading in the classical scenario above? Finally, if you do think this trading is wrongful, should it be subject to civil or criminal sanction?

Again, the hope is that walking through these scenarios will help bring some clarity to our shared understanding of when trading on material nonpublic information is wrong and harmful—and (given our answers to these questions) the nature and extent to which it should be regulated.

September 3, 2021 in Business Associations, Corporations, Ethics, John Anderson, Law and Economics, Philosophy, Securities Regulation, White Collar Crime | Permalink | Comments (0)

Friday, August 20, 2021

Testing Our Intuitions About Insider Trading - Part II

As Congress and the SEC continue to contemplate reforms to the U.S. insider-trading enforcement regime, I suggested in my last post that it is important for us all to explore our intuitions about what we think insider trading is, why it is wrong, who is harmed by it, and the nature and extent of the harm. If we are going to rethink how we impose criminal and civil penalties for insider trading, we should have some confidence that the proscribed conduct is wrongful and why. One way to do this is to place ourselves in the shoes of traders and ask, “What would I do?” or “What do I think about that?” To this end, I have developed some scenarios designed to test our attitudes regarding trading scenarios that distinguish the four historical insider trading regimes (laissez faire, fiduciary-fraud, equal access, and parity of information).

In the last post, I offered a scenario that would result in liability under a parity-of-information regime, but not under the other three. Those of you who were not convinced that the trading in that scenario was wrongful may favor one of the less restrictive models.

In this post, I offer the following scenario to test our attitudes regarding trading under an equal-access model. An equal-access regime precludes trading by those who have acquired information advantages by virtue of their privileged access to sources that are structurally closed to other market participants (regardless of whether such trading violates a duty of trust and confidence). An equal access model is narrower in scope than the parity-of-information model, but broader than the laissez-faire and fiduciary-fraud models. Consider these facts:

A senior VP at BIG Corp (a publicly traded company) took the lead in closing a big deal to merge BIG Corp with XYZ Corp (another publicly traded company). The shares of both BIG Corp and XYZ Corp will skyrocket when the deal is announced to the public in seven days. The senior VP asks the CEO and board of Big Corp if, instead of receiving the usual cash bonus that would be his due for leading such a deal, he can purchase shares of XYZ Corp for his personal account in advance of the announcement. The CEO and board approve the VP’s trading—deciding that the BIG Corp shareholders will save money from this arrangement. The VP buys XYZ Corp shares in advance of the announcement and he makes huge profits when the deal is announced.

Was the senior VP’s trading wrong or harmful? If you do not think the senior VP or Big Corp has done anything wrong or harmful in this scenario, then you will probably not favor the equal-access model for insider trading regulation—which would render this conduct illegal. You will likely favor some version of the less restrictive laissez-faire or fiduciary-fraud model instead. My next post will offer a scenario to test our intuitions about the fiduciary-fraud model (the third most restrictive regime).

Again, the hope is that walking through these scenarios will help bring some clarity to our shared understanding of when trading on material nonpublic information is wrong and harmful—and (given our answers to these questions) the nature and extent to which it should be regulated. Please share your thoughts in the comments below!

August 20, 2021 in Business Associations, Ethics, John Anderson, Law and Economics, Philosophy, Securities Regulation, White Collar Crime | Permalink | Comments (0)

Friday, August 6, 2021

Kelley School of Business at Indiana University (Bloomington) Hiring

Indiana University has a top-notch Business Law and Ethics department in their business school. I know a number of their professors and they would be fabulous colleagues.

----

The Kelley School of Business at Indiana University in Bloomington seeks applications for a tenured/tenure-track position or positions in the Department of Business Law and Ethics, effective fall 2022. The candidate(s) selected will join a well-established department of 28 full- time faculty members who teach a variety of courses on legal topics, business ethics, and critical thinking at the undergraduate and graduate levels. It is anticipated that the position(s) will be at the assistant professor rank, though appointment at a higher rank could occur if a selected candidate’s record so warrants.

To be qualified, a candidate must have a J.D. degree with an excellent academic record and must demonstrate the potential for outstanding teaching and excellent scholarship in law and/or ethics, as well as the ability to contribute positively to a multicultural campus. Qualified applicants with expertise in any area of law and/or ethics will be considered, and we welcome candidates with teaching interests across a broad range of legal and ethical issues in business, as well as research methods or perspectives, that would contribute to the diversity of our department and help usadvance the Kelley School’s equity and inclusion initiatives and programs.

Candidates with appropriate subject-matter expertise and interest would have the opportunity to be involved on the leading edge of a developing interdisciplinary collaboration between the Kelley School of Business and the Kinsey Institute, the premier research institute on human sexuality and relationships and a trusted source for evidence-based information on critical issues in sexuality, gender, and reproduction. Such expertise, however, is not required to be qualified and considered for the position or positions.

Interested candidates should review the application requirements and submit their application materials at https://indiana.peopleadmin.com/postings/11252. Candidates may direct questions to: Professor Josh Perry, Department Chair (joshperr@indiana.edu), or Professor Tim Fort, Search Committee Chair (timfort@indiana.edu), both at Department of Business Law and Ethics, Kelley School of Business, Indiana University, 1309 E. 10th Street, Bloomington, IN 47405.

Application materials received by September 15, 2021 will be assured of consideration. However, the search will continue until the position(s) is/are filled.

Indiana University is an equal employment and affirmative action employer and a provider of ADA services. All qualified applicants will receive consideration for employment without regard to age, ethnicity, color, race, religion, sex, sexual orientation, gender identity or expression, genetic information, marital status, national origin, disability status or protected veteran status.

August 6, 2021 in Business Associations, Business School, Ethics, Haskell Murray, Jobs | Permalink | Comments (0)