Business Law Prof Blog

The Wit and Wisdom of Tom N.

It was so wonderful to be able to host an in-person version of our "Connecting the Threads" Business Law Prof Blog symposium on Friday.  Connecting the Threads VI was, for me, a major victory in the continuing battle against COVID-19--five healthy bloggers and a live audience!  Being in the same room with fellow bloggers John Anderson, Colleen Baker, Doug Moll (presenting with South Carolina Law friend-of-the-BLPB Ben Means), and Stefan Padfield was truly joyful.  And the topics on which they presented--shadow insider trading, exchange trading in the cloud, family business succession, and anti-ESG legislation--were all so salient.  (I offered the abstract for my own talk on fiduciary duties in unincorporated business associations in last week's post.)  For a number of us, the topic of our presentations arose from work we have done here on the BLPB.

This year, as I noted in my post last week, we had a special guest as our luncheon speaker.  That guest would be known to many of you who are regular readers as "Tom N."  Tom has commented on our blog posts here on the BLPB for at least eight years.  (I rooted around and found a comment from him as far back as 2014.)  And Tom lives right here in Tennessee--in middle Tennessee, to be exact (closer to Haskell Murray than to me).  You can check out his bio here.  I am delighted that we were able to coerce Tom to give up a day of law practice to come join us at the symposium.

The title/topic for Tom's talk was "A Country Boy Busines Lawyer's View from Down in the Weeds."  The talk was, by design, a series of reflections on Tom's wide-ranging business law practice here in the state of Tennessee.  He tries to stay out of the courtroom, but by his own recounting, he has been in court in every county in the state--and Tennessee has 95 counties!  

In the end, Tom ended up offering a bunch of tips for law students and lawyers (both of whom were in attendance at the symposium).  I took notes during Tom's talk.  I have assembled them into a list below.  The key points are almost in the order in which they were delivered.  The stories that led to a number of these snippets of practical advice were priceless.  You had to be there.  Anyway, here is my list, together with a few editorial comments of my own.  Tom can feel free to add, correct, or dispute my notes in the comments!

• Take tax courses; if you fear they may hurt your GPA, audit them.
• Use all available resources to get more knowledge.  (Tom indicated that he bought Westlaw/used Practical Law as a solo practitioner for many years but recently gave it up.  he also noted that he regularly reads a number of the law prof blogs.)
• Be a bar association member and access the resources bar associations provide.  (Tom noted the excellent written materials published by the American Bar Association and the superior continuing legal education programs produced by the Tennessee Bar Association.)
• “You are going to learn to write in law school.”  (Tom advised focusing on clear, efficient writing—something I just emphasized with my Business Associations students last week.)
• Publish in the law.  (Tom shared his view that writing in the law improves both knowledge and analysis.)
• Expect the unexpected, especially in court (e.g., confronting in court transactions in pot-bellied pigs involving a Tennessee nonprofit).  And as a Corollary: "You can't make this stuff up."  The truth often is stranger than anything you could make up . . . .)
• In business disputes, never assume that an attorney was there on the front end.  (And yes, there was mention of the use by many unknowledgeable consumers of online entity formation services.)
• As a lawyer, be careful not to insert your own business judgment.  The business decision is the client's to make.
• Relatedly, let the business people hand you the framework of the deal.
• Along the same lines: "I am not paying people to tell me I can’t do it; I am paying people to tell me how to do it.”  (As heard by Tom from his father, a business owner-manager.  I think many of us have heard this or learned this—sometimes the hard way . . . .  I do try to prevent my students from learning that lesson the hard way by telling them outright.)
• And further: “You want to screw up a deal, put the lawyers in the center of it.”
• As a courtroom lawyer, know the judges and—perhaps more importantly—court clerks!
• Introduce yourself to everyone; they may be in a position to help you now or later (referencing the time he introduced himself, unknowingly, to John Wilder, the former Lt. Governor of Tennessee, who proceeded to introduce him to the local judges).
• Preparation for the bar exam is a curriculum of its own.  (That's close to a quote.)
• “A lot of things go more smoothly of you can get people talking.”  (Tom is more of a fan of mediation than arbitration.)
• Local rules of court may not be even published; sometimes, you just need to pick up the phone and call the court clerk.  (Another reason to get to know local court clerks!)
• Developing rapport with a judge is incredibly important to successful courtroom lawyering.
• Saying "I don’t know" does not hurt anything; in fact, it may help judges/others develop confidence in you and your integrity.
• Your law school grades will not matter after your first or second job.  Employers will be looking at you and your professional record, not your grades.

I am sure I missed something along the way.  Maybe my fellow bloggers in attendance will have something to add.  But this list alone is, imv, pure gold for students and starting lawyers.

Heading to Knoxville and Paying for Energy Peaks

As co-blogger Joan Heminway mentioned in Monday's post, I'm soon heading to Connecting the Threads VI.  I could not be more excited! I'm so grateful to the University of Tennessee Law School for hosting the Symposium, and especially Professors Joan Heminway and George Kuney, in addition to all of the hard-working, excellent law student editorial staff of Transactions: The Tennessee Journal of Business Law, who help with the Symposium and later edit and publish our symposium-related articles.  Paying for Energy Peaks: Learning from Texas' February 2021 Power Crisis, coauthored with Professor James Coleman, is my latest article in Transactions and my first in the energy space!  Here's its first paragraph (with footnotes removed):

"From February 14–19, 2021, winter storm Uri blanketed Texas with extreme cold. Tragically, the severe temperatures overwhelmed the state’s power system. Texas’ power grid ended up more than 20 Gigawatts short of the electricity Texans needed – more power than all of California produces on an average day. Over two-hundred lives were lost and an estimated $295 billion in damage resulted. Yet many had long regarded Texas’ electric power system, and its regulation, as a model for others. What happened? That question is the focus of this article."

 

UT Law Again Welcomes the Business Law Prof Blog to Knoxville!

After two years of the "Zoom version" of the annual Business Law Prof Blog symposium, Connecting the Threads VI, the live, in-person symposium is back.  Scheduled for this coming Friday, September 30, the symposium features presentations by me and fellow BLPB bloggers John Anderson, Colleen Baker, Doug Moll (with co-presenter and special guest Ben Means), and Stefan Padfield.  The agenda and more can be found here.  UT Law looks forward to hosting this event for a sixth year!

I will be speaking on The Fiduciary-ness of Business Associations.  A brief summary follows.

Fiduciary duty has historically been a core value of statutory business associations.  However, with Delaware leading the charge, limited liability company and limited partnership statutes in some jurisdictions allow equity holders to contractually eliminate fiduciary duties.  In addition, state legislatures in jurisdictions like Wyoming and Tennessee have adopted legislation that allows decentralized autonomous organizations—blockchain-based associations of business venturers—to organize as limited liability companies and avoid statutory fiduciary duties without engaging in private ordering. 

The public policy ramifications of some of these legislative moves have not been fully vetted in traditional ways or have not been completely explored in certain contexts.  Moreover, business lawyers now have more options in advising businesses and their constituents, adding to already complex matrices applicable to choice-of-entity decision making.  This presentation offers a window on recent fiduciary-related legislative developments in business entity law and identifies and reflects on related professional responsibility questions impacting lawyers advising business entities and their owners.

I look forward to seeing my co-bloggers in person, sharing some ideas, and hearing from the commentators--my UT Law colleagues and students.  BLPB commenter Tom N. is making a special appearance as the symposium lunch speaker, too.  It should be a great day all around!

Open Legal Studies Faculty Position - University of Georgia Terry College of Business

Dear BLPB Readers:

"University of Georgia, Terry College of Business Lecturer of Legal Studies

Department of ILSRE

The Department of Insurance, Legal Studies and Real Estate in the Terry College of Business at The University of Georgia invites applications for a full-time non-tenure-track faculty position in Legal Studies at the lecturer level, beginning Fall 2023.

Candidates must hold a juris doctorate or equivalent degree. Strong communication skills and demonstrated potential for excellent teaching are required. The position is renewable based on performance and promotion to Senior Lecturer is possible after six years of service. For information regarding the requirements for each faculty rank, please see the University of Georgia Guidelines for Appointment and Promotion of Lecturers (https://provost.uga.edu/policies/appointment-promotion-and- tenure/guidelines-for-appointment-and-promotion-of-lecturers/).

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Open Faculty Position in Real Estate at U. of Michigan Business School

Dear BLPB Readers:

"The Stephen M. Ross School of Business at the University of Michigan has a tenure-track position available in Real Estate starting in September 2023. Depending on interest and qualifications, the successful candidate will join the Finance, Business Economics, or Business Law area.  Teaching at the graduate and/or undergraduate level. Research and publishing, supervising doctoral research, and service contribution is required.  This position is open-rank."

The complete job posting is here.

Open Faculty Position in Business Law at Penn State Smeal College of Business

Dear BLPB Readers:

"The Risk Management Department in the Smeal College of Business is seeking to fill a tenure-track (open rank) appointment in Business Law effective Fall 2023. Qualified applicants with an expertise in any area of law will be considered, but the department has a particular interest in candidates with a background in UCC and commercial transactions law, securities law and financial regulation, or legal aspects of risk management. This position will have teaching responsibilities at the undergraduate level.

Please review the full posting and application link at: https://psu.wd1.myworkdayjobs.com/PSU_Academic/job/University-Park-Campus/Tenure-Track-Business-Law-Professor--Open-Rank-_REQ_0000035410-2

Consideration of applications will begin immediately and continue until the position has been filled. If you have questions about the position or process, please email RM@smeal.psu.edu"

Open Faculty Positions - Bentley University's Law and Taxation Department

Dear BLPB Readers:

"Bentley University’s Law and Taxation Department is accepting applications for two full-time faculty positions: a tenure-track Assistant Professor of Law and a Law Lecturer, both to begin July, 2023. Application review will begin in mid-October, with preliminary interviews targeted for late October and early November. Here are the relevant links to Bentley’s hiring webpage: Bentley University tenure-track Assistant Professor of Law and Bentley University Law Lecturer The links describe the positions and required qualifications, give more information about Bentley University and the Law and Taxation Department, and contain all information necessary for submitting an application. Nonetheless, any questions about the positions or application process may be sent to Marianne Kulow, Chair of the Hiring Committee, at mdelpokulow@bentley.edu"

Professor Skinner on The Monetary Executive

Today, I enjoyed reading Professor Christina Parajon Skinner's timely and important new article, The Monetary Executive, forthcoming in the George Washington Law Review.  It's definitely a worthwhile read!  Here's the abstract:

"As inflation in 2022 surges to a forty-year high, economists, lawmakers, and the public continue to question why. As part of that inquiry, experts and onlookers seek explanations grounded in errors recently made by the central bank, the U.S. Federal Reserve. This Article argues that, while there is no doubt a host of contributing factors to the current bout of inflation, the President’s role remains comparatively understudied. In particular, the Article adds a new dimension to the growing literature on the fiscal foundations of inflation by studying its longstanding statutory roots, which can be traced back to the New Deal Era. Although the Framers of the Constitution were deliberate in vesting power over money and spending with Congress, and separating it from the President, in time, Congress eroded this separation with successive ad hoc delegations directly to the Executive. As a consequence, today, the President has far more influence over money in the economy—and levers for “fiscal dominance”—than the Constitution arguably allows, casting a long shadow over the Federal Reserve’s ability to properly rein in inflation. The Article traces the development of a “Monetary Executive” through the lens of statutory delegations, and suggests the need for new constraints on Fed policy tools to help buffer against pressure from the President to increase the money supply."

Professor Skinner on The Monetary Executive

Today, I enjoyed reading Professor Christina Parajon Skinner's timely and important new article, The Monetary Executive, forthcoming in the George Washington Law Review.  It's definitely a worthwhile read!  Here's the abstract:

"As inflation in 2022 surges to a forty-year high, economists, lawmakers, and the public continue to question why. As part of that inquiry, experts and onlookers seek explanations grounded in errors recently made by the central bank, the U.S. Federal Reserve. This Article argues that, while there is no doubt a host of contributing factors to the current bout of inflation, the President’s role remains comparatively understudied. In particular, the Article adds a new dimension to the growing literature on the fiscal foundations of inflation by studying its longstanding statutory roots, which can be traced back to the New Deal Era. Although the Framers of the Constitution were deliberate in vesting power over money and spending with Congress, and separating it from the President, in time, Congress eroded this separation with successive ad hoc delegations directly to the Executive. As a consequence, today, the President has far more influence over money in the economy—and levers for “fiscal dominance”—than the Constitution arguably allows, casting a long shadow over the Federal Reserve’s ability to properly rein in inflation. The Article traces the development of a “Monetary Executive” through the lens of statutory delegations, and suggests the need for new constraints on Fed policy tools to help buffer against pressure from the President to increase the money supply."

U. of Michigan School of Business Tenure/Tenure-Track Faculty Positions

Dear BLPB Readers:

"Stephen M. Ross School of Business at the University of Michigan invites applications for two tenure-track professors (open rank) beginning September 1, 2023. This is an open-area search for faculty with outstanding research records and scholarly expertise related to diversity, racial and social equality and economic mobility and opportunity. The successful candidate will be appointed in one of the Ross School’s disciplinary areas: Accounting, Business Economics and Public Policy, Business Law, Finance, Management and Organizations, Marketing, Strategy, and Technology and Operations."

The complete job posting is here: Download Ross Job posting for Diversity Position 

Call for Papers - Business Ethics and the Future of Work

Dear BLPB Readers:

"CALL FOR PAPERS
BUSINESS ETHICS AND THE FUTURE OF WORK

The Center for Ethics, Diversity, and Workplace Culture in the Fox School of Business at Temple University, the Center for Legal Studies & Business Ethics in the Spears School of Business at Oklahoma State University, and the American Business Law Journal to Cohost 2023 Symposium:

Business Ethics and the Future of Work

The Center for Ethics, Diversity, and Workplace Culture, the Center for Legal Studies and Business Ethics, and the American Business Law Journal (ABLJ) welcome submissions on business ethics and the future of work. The ABLJ is rated an A journal on the Australian Business Deans Council (ABDC) journal quality list and is the premier peer-reviewed research journal in business law. The symposium theme is consistent with 2020 AACSB Standard 9. The ABLJ anticipates publishing a special issue devoted to the symposium theme.

The societal, economic, cultural, and public health challenges and opportunities of the last decade have dramatically altered the ways that workers around the globe conceive of their work and the workplace. The #MeToo and Black Lives Matter Movements, the global pandemic, innovations in technology and artificial intelligence, and a resurgence of labor organizing, among other forces, necessitate a reconsideration of ethical business practices particularly as they impact employees and the modern workplace. Organizations across industry sectors must contemplate “hybrid” work spaces, demands for corporate social responsibility, and serious calls for an equitable and inclusive workplace culture. While industry professionals are beginning to contemplate these large-scale changes, there is a need for legal and ethics research to help guide this conversation. This symposium hopes to generate a broad range of scholarship that develops thought leadership around business ethics and the future of work in this new reality."

The complete call for papers is Download RESEARCH SYMPOSIUM_2023.

Creighton Law Is Seeking Entry-Level and Lateral Candidates

Dear BLPB Readers:

"Creighton University School of Law seeks to hire multiple tenure-track faculty members, and invites both entry-level and lateral candidates to apply, one of which will be focused on Academic Success & Bar Exam Preparation. The Law School is particularly interested in candidates with teaching and research interests in the field of Contracts, including Business Associations and Commercial Law and in the field of Evidence, including Criminal Law and Procedure. The Law School’s current curriculum requires these courses, which are also offered during the summer due to our robust Accelerated J.D. (AJD) program. The Law School has secondary needs in Human Rights, Constitutional Law, and in multiple areas of Private International Law, Sports & Entertainment Law, ADR, and Environmental & Natural Resources Law.

Continue reading

A CDS Market Auction-Related Development to Follow

For those BLPB readers watching the derivatives markets, specifically CDS (credit default swaps), an interesting development to be following right now is the potential auction related to the EMEA (Europe) Determinations Committee’s decision that a failure to pay credit event had occurred with respect to the Russian Federation.

Really really briefly – if you want a deeper dive into CDS and the Determinations Committees, see here – CDS are insurance-like contracts in which a protection buyer makes periodic payments akin to an insurance premium to a protection seller to financially “protect” them should a credit event (failure to pay, bankruptcy, etc.) occur on an underlying reference entity, for example, the Russian Federation.  The protection buyer may or may not have actual economic exposure to the underlying entity.   

The importance of a credit event determination is that it triggers the CDS protection seller’s payout obligation.  In general, the amount of this payout obligation is determined by an auction.  The Credit Derivatives Determinations Committees is the dispute resolution mechanism which decides whether or not a credit event has occurred and, if so, whether a settlement auction will be held.  The decision of a Committee applies market-wide.  There are five regional Committees: Americas, Australia-New Zealand, Asia (non-Japan), Japan, and EMEA (Europe).  In general, each Committee is responsible for decisions surrounding reference entities related to their region.  An independently managed subsidiary of ISDA, DC Administration Services, is secretary to each Committee.  The voting members of a full Committee consist of 10 dealer members and 5 non-dealer members.  The most recent list of Determinations Committees members is here.

On June 1, 2022, the EMEA (Europe) Determinations Committee decided “Yes” in answer to the question: “Has a Failure to Pay Credit Event occurred with respect to the Russian Federation under the 2014 Definitions and the Updated 2003 Definitions?”  Generally, a Committee votes to hold a settlement auction following its determination that a credit event has occurred.  However, the EMEA Determinations Committee decided to defer making a decision about whether to hold an auction.  As noted in its Meeting Statement of July 25, 2022: “On 9 June 2022, the EMEA DC announced that it was deferring making a decision on holding an Auction and the date of any Auction. Such deferral was as a result of the publication by OFAC [Office of Foreign Assets Control] of updated FAQs on 6 June 2022 in respect of new investment prohibitions relating to entities in the Russian Federation (further to Executive Order (E.O.) 14066, E.O. 14068, and E.O. 14071).”  On June 24, 2022, a Bloomberg news article noted “Swaps Panel Asks US Treasury for Russia Sanctions Workaround.”  On July 22, 2022, OFAC released General Licenses No. 45 “Authorizing Transactions Related to the Wind Down of Certain Financial Contracts Prohibited by Executive Order 14071” and No. 46 “Authorizing Transactions in Support of an Auction Process to Settle Certain Credit Derivative Transactions Prohibited by Executive Order 14071.”

An August 5, 2022, Determinations Committee website update (the latest as of this post) shares that the EMEA Committee has now published a “Preliminary List of Deliverable Obligations for the purposes of a potential auction” and also that “The EMEA DC continues to consider the potential impact of restrictions on settlement of the debt obligations of the Reference Entity within clearing systems, including the restrictions on transfer of debt obligations within Clearstream referenced in the DC Meeting Statement of 25 July 2022.” 

With CDS and clearing involved, this is definitely a developing story I’ll continue to follow, think about, and write on!                  

Call for Papers - Fifth Conference on Law and Macroeconomics

Dear BLPB readers:

"Fifth Conference on Law and Macroeconomics
October 20-21, 2022 (virtual)

The macroeconomic instability of the 2020s continues to fuel economic, social, and political
turmoil worldwide and to recast our understanding of law and macroeconomics. The ongoing crisis
has opened up new and vitally important research opportunities. As we press on towards pandemic
recovery and confront new challenges, the Fifth Conference on Law and Macroeconomics will
focus on the law’s role in shaping a sustainable and resilient macroeconomy and on the role of
macroeconomic policy in national, regional, and global governance."

September 15, 2022 is the deadline for submitting papers for consideration.  The conference website and complete call for papers is here.

Tomorrow!! Are SPACs Illegal Investment Funds?

Tomorrow, the Wharton Initiative on Financial Policy and Regulation is hosting a webinar entitled, Are SPACs Illegal Investment Funds?  I encourage you to register (here) and decide what you think about this issue!

 

UPenn Law Inaugural Junior Faculty Business and Financial Law Workshop

Dear BLPB Readers:

"The Institute for Law & Economics (ILE) at The University of Pennsylvania Carey Law School is pleased to announce its inaugural Junior Faculty Business and Financial Law Workshop. The Workshop will be held in person on December 8, 2022 at Penn Law School, unless pandemic protocols require otherwise.

The Workshop supports and recognizes the work of untenured legal scholars in accounting, banking, bankruptcy, corporations, economics, finance and securities regulation and litigation , while promoting interaction among them and selected tenured faculty and practitioners. By providing a forum for the exchange of creative ideas in these areas, ILE also aims to encourage new and innovative scholarship in the business and financial arena."

The complete call for papers is here.

Baker on Derivatives and ESG

I’m excited to share that my most recent article, Derivatives and ESG, is forthcoming in the American Business Law Journal (Vol. 59, no.4)!  I recently posted a draft of this article to SSRN.  As the abstract below suggests, it examines the role of the derivatives ecosystem - the instruments themselves, trading exchanges, and clearinghouses - in promoting ESG objectives. 

I've written a lot about credit default swaps (for example, here and here).  So, in researching this topic, I was especially struck by the potential for well-known past and existing challenges in credit default swap markets – specifically, decentralized decision-making and conflicts of interest – to eventually become issues in the currently nascent sustainability-linked derivatives (SLDs) market, a type of over-the-counter ESG derivative.  Undoubtedly, the SLDs market is set to grow, so I’ll likely be posting on this topic again in the future!   

Here’s the abstract:

“Financial markets are increasingly developing innovative, ESG-related derivatives and relying upon these instruments to hedge ESG-related risks. The global derivatives markets are among the largest, most consequential financial markets in the world. Derivatives are financial contracts that derive their value from an underlying reference entity which can be almost anything, including interest rates, credit, equities, foreign exchange, the weather, or the price of carbon. They provide for hedging, investment (speculation), and arbitrage, and trade on regulated exchanges and in the over-the-counter markets. Derivatives can also facilitate access to the tremendous amounts of capital necessary for the transition to a cleaner energy future and to the objective of net zero emissions by 2050 of governments around the world.

Through an exploration of recent innovations and developments in the exchange-traded and over-the-counter derivatives markets, this Article explores the role of the derivatives ecosystem - the instruments themselves, trading exchanges, and clearinghouses - in promoting ESG objectives. It also highlights the potential for the nascent sustainability-linked derivatives market to face certain challenges experienced by and present in the market for credit default swaps.”

Open Faculty Position in Legal Studies and Business Ethics Department at the Wharton School

Dear BLPB Readers:

"The Legal Studies and Business Ethics Department of the Wharton School, University of Pennsylvania, is seeking applicants for a full-time, tenure-track faculty position at any level: Assistant, Associate, or Full Professor. The appointment is expected to begin July 1, 2023. Information about the Legal Studies and Business Ethics Department and the research expertise of its current faculty may be found at: https://lgst.wharton.upenn.edu

JOB QUALIFICATIONS: Applicants must have either a JD (or equivalent) or a PhD from an accredited institution or both (expected completion by June 30, 2024 is acceptable). We seek outstanding researchers and teachers with a commitment to business-relevant scholarship. The Department’s faculty hold graduate degrees in a variety of areas, including law, philosophy, sociology, history, psychology, and political science. They teach courses in business ethics and law to undergraduates, MBAs, Executive MBAs, and PhD students."

The complete job posting is here.

House Majority Staff Report on the GameStop Market Event

Last year, several BLPB posts focused on the GameStop market event (for example, here, here, here, here, and here). For BLPB readers with continuing interest in this topic, I wanted to flag that yesterday, a report prepared by the Majority Staff of the Committee on Financial Services of the U.S. House of Representatives was released: Game Stopped: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadequate Risk Management, and the Need for Legislative and Regulatory Reform.  I look forward to reviewing the report in more detail!

[revised]

 

Custodia Bank Sues the Fed

In December 2018, in one of my earliest posts on the BLPB, I shared “although esoteric, such issues as who has access to an account at the Fed are critical social policy choices with real world implications that merit broad-based public debate.”  And I’ve continued to highlight this issue with posts such as “Master Accounts at the Fed: An Arcane But Highly Important Issue” and “Professor Hill on Bank Access to Federal Reserve Accounts and Payment Systems.”  And I’m going to continue to do so today and in the future.  It's just that important. 

So today, I want to highlight that Custodia Bank, Inc. recently filed a lawsuit against the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City.  Custodia alleges that the defendants have unlawfully delayed – for more than 19 months now – processing its application for a Fed master account.  A few related news stories are: here, here, and here.  Recall that TNB USA Inc. sued the Federal Reserve Bank of New York for related reasons (here), but this lawsuit was dismissed.  I’ll be sure to keep BLPB readers posted regarding what happens in Custodia’s case.