Saturday, September 7, 2019

Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society

Have you ever wanted to learn the basics about blockchain? Do you think it's all hype and a passing fad? Whatever your view, take a look at my new article, Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society, co-authored with Rachel Epstein, counsel at Hedera Hashgraph.  I became interested in blockchain a year ago because I immediately saw potential use cases in supply chain, compliance, and corporate governance. I met Rachel at a Humanitarian Blockchain Summit and although I had already started the article, her practical experience in the field added balance, perspective, and nuance. 

The abstract is below:

Although many people equate blockchain with bitcoin, cryptocurrency, and smart contracts, the technology also has the potential to transform the way companies look at governance and enterprise risk management, and to assist governments and businesses in mitigating human rights impacts. This Article will discuss how state and non-state actors use the technology outside of the realm of cryptocurrency. Part I will provide an overview of blockchain technology. Part II will briefly describe how public and private actors use blockchain today to track food, address land grabs, protect refugee identity rights, combat bribery and corruption, eliminate voter fraud, and facilitate financial transactions for those without access to banks. Part III will discuss key corporate governance, compliance, and social responsibility initiatives that currently utilize blockchain or are exploring the possibilities for shareholder communications, internal audit, and cyber security. Part IV will delve into the business and human rights landscape and examine how blockchain can facilitate compliance. Specifically, we will focus on one of the more promising uses of distributed ledger technology -- eliminating barriers to transparency in the human rights arena thereby satisfying various mandatory disclosure regimes and shareholder requests. Part V will pose questions that board members should ask when considering adopting the technology and will recommend that governments, rating agencies, sustainable stock exchanges, and institutional investors provide incentives for companies to invest in the technology, when appropriate. Given the increasing widespread use of the technology by both state and non-state actors and the potential disruptive capabilities, we conclude that firms that do not explore blockchain’s impact risk obsolescence or increased regulation.

Things change so quickly in this space. Some of the information in the article is already outdated and some of the initiatives have expanded. To keep up, you may want to subscribe to newsletters such as Hunton, Andrews, Kurth's Blockchain Legal Resource. For more general information on blockchain, see my post from last year, where I list some of the videos that I watched to become literate on the topic. For additional resources, see here and here

If you are interested specifically in government use cases, consider joining the Government Blockchain Association. On September 14th and 15th,  the GBA is holding its Fall 2019 Symposium, “The Future of Money, Governance and the Law,” in Arlington, Virginia. Speakers will include a chief economist from the World Bank and banking, political, legal, regulatory, defense, intelligence, and law enforcement professionals from around the world.  This event is sponsored by the George Mason University Schar School of Policy and Government, Criminal Investigations and Network Analysis (CINA) Center, and the Government Blockchain Association (GBA). Organizers expect over 300 government, industry and academic leaders on the Arlington Campus of George Mason University, either in person or virtually. To find out more about the event go to: http://bit.ly/FoMGL-914.

Blockchain is complex and it's easy to get overwhelmed. It's not the answer to everything, but I will continue my focus on the compliance, governance, and human rights implications, particularly for Dodd-Frank and EU conflict minerals due diligence and disclosure. As lawyers, judges, and law students, we need to educate ourselves so that we can provide solid advice to legislators and business people who can easily make things worse by, for example, drafting laws that do not make sense and developing smart contracts with so many loopholes that they cause jurisdictional and enforcement nightmares.

Notwithstanding the controversy surrounding blockchain, I'm particularly proud of this article and would not have been able to do it without my co-author, Rachel, my fantastic research assistants Jordan Suarez, Natalia Jaramillo, and Lauren Miller from the University of Miami School of Law, and the student editors at the Tennessee Journal of Business Law. If you have questions or please post them below or reach out to me at mweldon@law.miami.edu. 

 

 

September 7, 2019 in Compliance, Conferences, Contracts, Corporate Governance, Corporations, CSR, Current Affairs, Financial Markets, Human Rights, Law Reviews, Lawyering, Legislation, Marcia Narine Weldon, Securities Regulation, Shareholders, Technology | Permalink | Comments (0)

Friday, August 23, 2019

UN Forum on Business and Human Rights- Nov. 25-27. Registration Open

I had planned to write about the Statement on the Purpose of a Corporation signed by 200 top CEOs. If you read this blog, you've likely read the coverage and the varying opinions. I'm still reading the various blog posts, statements by NGOs, and 10-Ks of some of the largest companies so that I can gather my thoughts. In the meantime, many of these same companies  will be at the UN Forum on Business and Human Rights touting their records. I've been to the Forum several times, and it's worth the trip. If you're interested in joining over 2,000 people, including representatives from many of the signatories of the Statement, see below. You can register here:

The UN annual Forum on Business and Human Rights is the global platform for stock-taking and lesson-sharing on efforts to move the UN Guiding Principles on Business and Human Rights from paper to practice. As the world’s foremost gathering in this area, it provides a unique space for dialogue between governments, business, civil society, affected groups and international organizations on trends, challenges and good practices in preventing and addressing business-related human rights impacts. The first Forum was held in 2012. It attracts more than 2,000 experts, practitioners and leaders for three days of an action- and solution-oriented dialogue.The Forum was established by the UN Human Rights Council in 2011  “to discuss trends and challenges in the implementation of the Guiding Principles and promote dialogue and cooperation on issues linked to business and human rights, including challenges faced in particular sectors, operational environments or in relation to specific rights or groups, as well as identifying good practices” (resolution 17/4, paragraph 12).

The Forum addresses all three pillars of the Guiding Principles:

    • The State duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation and adjudication;
    • The corporate responsibility to respect human rights, which means to avoid infringing on the rights of others and to address adverse impacts with which a business is involved; and
    • The need for access to effective remedy for rights-holders when abuse has occurred, through both judicial and non-judicial grievance mechanisms

The Forum is guided and chaired by the UN Working Group on Business and Human Rights and organized by its Secretariat at the Office of the UN High Commissioner for Human Rights (OHCHR).

If you have any questions about the value of attending the Forum, feel free to reach out to me at mweldon@law.miami.edu. 

August 23, 2019 in Conferences, Corporate Personality, Corporations, CSR, Current Affairs, Human Rights, International Business, International Law, Marcia Narine Weldon, Shareholders, Social Enterprise | Permalink | Comments (0)

Friday, August 16, 2019

Is Boycotting a Bust?

     Last week, I led a “legal hack” for some of the first year students during orientation. Each participating professor spoke for ten minutes on a topic of our choice and then answered questions for ten minutes. I picked business and human rights, my passion. I titled my brief lecture, “Are you using a product made by slaves, and if you are, can you do anything about it”?

     In my ten minutes, I introduced the problem of global slavery; touched on the false and deceptive trade practices  litigation levied against companies; described the role of shareholder activists and socially responsible investors in pressuring companies to clean up supply chains; raised doubts about the effectiveness of some of the disclosure regimes in the US, EU, and Australia; questioned the efficacy of conscious consumerism; and mentioned blockchain as a potential tool for provenance of goods. Yes. In ten minutes. 

     During the actual hack later in the afternoon, I had a bit more time to flesh out the problem. I developed a case study around the Rana Plaza disaster in which a building collapse in Bangladesh killed over 1,000 garment workers six years ago. Students brainstormed solutions to the problems I posed with the help of upperclassmen as student facilitators and community stakeholders with subject matter expertise. At the end of the two-hour brainstorming session, the students presented their solutions to me.  

     We delved deeper into my subject matter as I asked my student hackers to play one of four roles: a US CEO of a company with a well-publicized CSR policy deciding whether to stay in Bangladesh or source from a country with a better human rights record; a US Presidential candidate commenting on both a potential binding treaty on business and human rights and a proposed federal mandatory due diligence regime in supply chains; a trade union representative in Bangladesh prioritizing recommendations and demands to EU and US companies; and a social media influencer with over 100 million followers who intended to use his platform to help an NGO raise awareness.

     This exercise was identical to an exercise I did in March in Pakistan with 100 business leaders, students, lawyers, government officials, and members of civil society as part of an ABA Rule of Law Initiative. The only difference was that I asked Pakistanis to represent the Bangladesh government and I asked the US students to represent a political candidate. 

     In both Pakistan and Miami, the participants had to view the labor issues in the supply chain from a multistakeholder perspective. Interestingly, in both Pakistan and Miami, the participants playing the social media influencer rejected the idea of a boycott. Even though multiple groups played this role in both places, each group believed that seeking a boycott of companies that used unsafe Bangladeshi factories would cause more harm than good. 

     Of note, the Miami Law students did their hack during the call for a boycott of Soul Cycle due to Steve Ross’ decision to hold a fundraiser for President Trump. In my unscientific poll, three out of three students who patronized Soul Cycle refused to boycott. When it came to the fictionalized case study, all groups raised concerns that a boycott could hurt garment workers in Bangladesh and retail workers in the US and EU. Some considered a “buycott” to support brands with stronger human rights records. 

     I’ve written before about my skepticism about long term boycotts, especially those led by millennials. Some of these same students echoed my concerns about their own lack of sustained commitment on proposed boycotts in the past. The “winning” hack- #DoBetterBangladesh was a multipronged strategy to educate consumers, adopt best practices of successful campaigns such as the Imokalee

farm workers, and form acoalition with other influencers to encourage consumer donations to reputable NGOs in Bangladesh. After seeing what these student groups could do in just two hours, I can’t wait to see what they can accomplish after three years of law school. 

August 16, 2019 in Corporations, CSR, Current Affairs, Ethics, Human Rights, International Business, Law School, Marcia Narine Weldon, Shareholders, Teaching | Permalink | Comments (2)

Friday, July 26, 2019

Sex, Lies, and M&A

I'm at the tail end of teaching my summer transactional lawyering course. Throughout the semester, I've focused my students on the importance of representations, warranties, covenants, conditions, materiality, and knowledge qualifiers. Today I came across an article from Practical Law Company that discussed the use of #MeToo representations in mergers and acquisitions agreements, and I plan to use it as a teaching tool next semester. According to the article, which is behind a firewall so I can't link to it, thirty-nine public merger agreements this year have had such clauses. This doesn't surprise me. Last year I spoke on a webinar regarding #MeToo and touched on the the corporate governance implications and the rise of these so-called "Harvey Weinstein" clauses. 

Generally, according to Practical Law Company, target companies in these agreements represent that: 1) no allegations of sexual harassment or sexual misconduct have been made against a group or class of employees at certain seniority levels; 2) no allegations have been made against  independent contractors; and 3) the company has not entered into any settlement agreements related to these kinds of allegations. The target would list exceptions on a disclosure schedule, presumably redacting the name of the accuser to preserve privacy. These agreements often have a look back,  typically between two and five years with five years being the most common. Interestingly, some agreements include a material adverse effect clause, which favor the target. 

Here's an example of a  representation related to "Labor Matters" from the June 9, 2019 agreement between Salesforce.com, Inc. and Tableau Software, Inc.

b) The Company and each Company Subsidiary are and have been since January 1, 2016 in compliance with all applicable Law respecting labor, employment, immigration, fair employment practices, terms and conditions of employment, workers' compensation, occupational safety, plant closings, mass layoffs, worker classification, sexual harassment, discrimination, exempt and non-exempt status, compensation and benefits, wages and hours and the Worker Adjustment and Retraining Notification Act of 1988, as amended, except where such non-compliance has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

c) To the Company's Knowledge, in the last five (5) years, (i) no allegations of sexual harassment have been made against any employee at the level of Vice President or above, and (ii) neither the Company nor any of the Company Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or misconduct by any employee at the level of Vice President or above.

The agreement has the following relevant definitions:

"Knowledge" will be deemed to be, as the case may be, the actual knowledge of (a) the individuals set forth on Section 1.1(a) of the Parent Disclosure Letter with respect to Parent or Purchaser or (b) the individuals set forth on Section 1.1(a) of the Company Disclosure Letter with respect to the Company, in each case after reasonable inquiry of those employees of such Party and its Subsidiaries who would reasonably be expected to have actual knowledge of the matter in question.

Even though I like the idea of these reps. in theory, I have some concerns.  First, I hate to be nitpicky, but after two decades of practicing employment law on the defense side, I have some questions. What's the definition of "sexual misconduct"? What happens of the company handbook or policies do not define "sexual misconduct"? The Salesforce.com agreement did not define it. So how does the target know what to disclose? Next, how should an agreement define "sexual harassment"? What if the allegation would not pass muster under Title VII or even under  a more flexible, more generous definition in an employee handbook? When I was in house and drafting policies, a lot of crude behavior could be "harassment" even if it wouldn't survive the pleading requirements for a motion to dismiss. Does a company have to disclose an allegation of harassment that's not legally cognizable? And what about the definition of "allegation"? The Salesforce.com agreement did not define this either. Is it an allegation that has been reported through proper channels? Does the target have to go back to all of the executives' current and former managers and HR personnel as a part of due diligence to make sure there were no allegations that were not investigated or reported through proper channels? What if there were rumors? What if there was a conclusively false allegation (it's rare, but I've seen it)? What if the allegation could not be proved through a thorough, best in class investigation? How does the target disclose that without impugning the reputation of the accused? 

Second, I'm not sure why independent contractors would even be included in these representations because they're not the employees of the company. If an independent contractor harassed one of the target's employees, that independent contractor shouldn't even be an issue in a representation because s/he should not be on the premises. Moreover,  the contractor, and not the target company, should be paying any settlement. I acknowledge that a company is responsible for protecting its employees from harassment, including from contractors and vendors. But a company that pays the settlement should ensure that the harasser/contractor can't come near the worksite or employees ever again. If that's the case, why the need for a representation about the contractors? Third, companies often settle for nuisance value or to avoid the cost of litigation even when the investigation results are inconclusive or sometimes before an investigation has ended. How does the company explain that in due diligence? How much detail does the target disclose? Finally, what happens if the company legally destroyed documents as part of an established and enforced document retention and destruction process? Does that excuse disclosure even if someone might have a vague memory of some unfounded allegation five years ago?

But maybe I protest too much. Given the definition of "knowledge" above, in-house and outside counsel for target companies will have to ask a lot more and a lot tougher questions. On the other hand, given the lack of clarity around some of the key terms such as "allegations," "harassment," and "misconduct," I expect there to be some litigation around these #MeToo representations in the future. I'll see if my Fall students can do a better job of crafting definitions than the BigLaw counsel did. 

July 26, 2019 in Compliance, Contracts, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Employment Law, Ethics, Law School, Lawyering, Litigation, M&A, Management, Marcia Narine Weldon, Teaching | Permalink | Comments (0)

Tuesday, July 9, 2019

Tennessee Court Subtly Affirms that LLCs Are Not Corporations

A recent Tennessee court decision subtly notes that limited liability companies (LLCs) are not, in fact corporations. In a recent Tennessee federal court opinion, Judge Richardson twice notes the incorrect listing of an LLC as a "limited liability corporation."  

First, the opinion states:

The [Second Amended Complaint] alleges that Defendant Evans is a resident of Tennessee, Defendant #AE20, LLC is a California limited liability company, and Defendant Gore Capital, LLC is a Delaware limited liability “corporation.”3

Gore Capital is in fact a limited liability company.

FERNANDO CAMPS, Pl., v. GORE CAPITAL, LLC, KARL JAMES, ANGELA EVANS, and #AE20, LLC, Defendants., 3:17-CV-1039, 2019 WL 2763902, at *1 and n.3 (M.D. Tenn. July 2, 2019) (emphasis in original). 

Judge Richardson later notes, in footnote 11:

Plaintiff states that he was sent documents that listed Gore’s (not #AE20’s) principal place of business as being in Chattanooga, Tennessee, although the SAC lists Gore as a “Delaware limited liability corporation (sic)[.]”
Id. 2019 WL 2763902, at *6 n.11 (M.D. Tenn. July 2, 2019). 
 
Given all the times I have complained about courts not correcting such mistakes, I figured I should give this opinion a well-deserved shout out for getting this right.  Thank you. 

July 9, 2019 in Business Associations, Corporations, Current Affairs, Joshua P. Fershee, Litigation, LLCs | Permalink | Comments (1)

Tuesday, May 14, 2019

An Oops In My New Paper: Survey of West Virginia Oil and Gas Law

So, this post is about shameless self-promotion and a cautionary tale.  A while back I was asked to write the West Virginia section of Texas A &M Journal of Property Law's Oil and Gas Survey.  It's a short overview of recent developments, and one of the many perils of the law review process is how long such things take to get to print.  

Even worse than a slow timeline, a miscommunication meant that my final round of edits did not make it into the piece, and there are a couple of errors. The editors were appropriately apologetic, and I know it all happened in good faith.  I take some ownership, too, in that I was not at all demanding about knowing the schedule for the next round of edits or the overall timeline.

Ultimately, despite the (nonsubstantive) errors, I hope the piece will be helpful to some folks. There are some interesting oil and gas cases happening in West Virginia (and around the country), and how they turn out could have a significant impact on the oil and gas business.  

Here's the abstract to my article, which you can find here

This Article summarizes and discusses important recent developments in West Virginia’s oil and gas law, including legislative action and case law. This Article is divided into three Sections. First, West Virginia’s evolution in its approach to fractional mineral owner disputes in the Marcellus Shale. After multiple efforts to pass a forced pooling bill, the state settled instead on a cotenancy solution. Second, West Virginia addressed flat-rate royalties, following two court cases, a legislative response, and a subsequent court challenge to the legislation. Finally, this Article discusses three developments in lease interpretation: (1) what will be deemed “reasonably necessary” for oil and gas development in West Virginia; (2) if implied pooling rights are included in West Virginia leases that are silent on the matter; and (3) whether non-executory and non-participating royalty owners have rights to approve pooling.

May 14, 2019 in Current Affairs, Family Business, Joshua P. Fershee, Law Reviews | Permalink | Comments (2)

Friday, May 10, 2019

Managing Compliance Across Borders Conference at the University of Miami- June 26-28

 

 

 

Join me in Miami, June 26-28.

 

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Managing Compliance Across Borders

June 26-28, 2019

Managing Compliance Across Borders is a program for world-wide compliance, risk and audit professionals to discuss current developments and hot topics (e.g. cybersecurity, data protection, privacy, data analytics, regulation, FCPA and more) affecting compliance practice in the U.S., Canada, Europe, and Latin America. Learn more

See a Snapshot: Who Will Be There?
You will have extensive networking opportunities with high-level compliance professionals and access to panel discussions with major firms, banks, government offices and corporations, including:

  • BRF Brazil
  • Carnival Corporation
  • Central Bank of Brazil
  • Endeavor
  • Equal Employment Opportunity Commission
  • Eversheds Sutherland
  • Fidelity Investments
  • Hilton Grand Vacations
  • Ingram Micro
  • Jones Day
  • Kaufman Rossin
  • LATAM Airlines
  • Laureate Education, Inc.

 

  • MasterCard Worldwide
  • MDO Partners
  • Olin Corporation
  • PwC
  • Royal Caribbean Cruises
  • Tech Data
  • The SEC
  • TracFone Wireless
  • U.S. Department of Justice
  • Univision
  • UPS
  • XO Logistics
  • Zenith Source

 

Location
Donna E. Shalala Student Center
1330 Miller Drive
Miami, FL 33146

 

CLE Credit
Upwards of 10 general CLE credits in ethics and technology applied for with The Florida Bar

 

Program Fee: $2,500 $1,750 until June 1 
Use promo code “MCAB2019” for discount 

Non-profit and Miami Law Alumni discounts are available, please contact:
Hakim A. Lakhdar, Director of Professional Legal Programs, for details

Learn More: Visit the website for updated speaker information, schedule and topic details.

This program is designed and presented in collaboration with our partner in Switzerland

University of St. Gallen

 

 

 

 

 

 

 

May 10, 2019 in Compliance, Conferences, Corporate Governance, Corporations, CSR, Current Affairs, Ethics, Financial Markets, International Business, Law Firms, Law School, Marcia Narine Weldon, White Collar Crime | Permalink | Comments (0)

Monday, May 6, 2019

Spring Reading 2019

This was a busy semester, but I still managed to read a few books. Always open to recommendations. 

Enough. John Bogle (Business) (2009). Vanguard’s founder reflects on business, money, satisfaction, and life. Easy read. Read this during a 2+ hour faculty meeting.   

Dandelion Wine - Ray Bradbury (Novel) (1957). A Walter Effross recommendation. A story of boyhood and summer and wonder and magic.

Half an Inch of Water - Percival Everett (Fictional Short Stories) (2015). A series of stories situated in the western U.S.--about loss, love, youth, aging, corruption, animals, and the wilderness. My favorite story is “A High Lake” because it reminds me of my grandmothers’ independence, intelligence, and care before they died.  

The Enduring Community - Brian Habig and Les Newsom (Religion) (2001). Co-authored my a minister to two of my siblings while they were at the University of Mississippi (Newsom). Attempts to clarify the roles of the Church in community.

Heavy - Kiese Laymon (Memoir) (2018). Raw memoir in which the author struggles with his weight, abuse, racism, addiction, and depression. Laymon was raised in Jackson, MS and is an English professor at University of Mississippi, after a number of years on the faculty at Vassar College.  

Educated - Tara Westover (Memoir) (2018). Pitched as the remarkable story of the author’s journey from a survivalist family that did not believe in formal schooling to a Cambridge PHD.  But I think the book is more interesting as a look at how memories are formed, abuse, family, and mental illness.

May 6, 2019 in Books, Current Affairs, Haskell Murray | Permalink | Comments (0)

Friday, May 3, 2019

Can Lawyers and Law Students Be (More) Effective Working and Learning Virtually?

I blogged two weeks ago about whether we were teaching law students the wrong things, the wrong way, or both. I’ve been thinking about that as I design my asynchronous summer course on transactional lawyering while grading asset and stock purchase agreements drafted by the students in my spring advanced transactional course. I taught the spring students face to face, had them work in groups, required them to do a a negotiation either in person or online, and am grading them on both individual and group work as well as class participation. When I looked at drafts of their APAs and SPAs last week, I often reminded the students to go back to old PowerPoints or the reading because it seemed as though they missed certain concepts or maybe I went through them too quickly— I’m sure they did all of the reading (ha!).  Now, while designing my online course, I’m trying to marry the best of the in person processes with some of the flipped classroom techniques that worked (and tweaking what didn’t).

Unlike many naysayers, I have no doubt that students and lawyers can learn and work remotely. For the past nine years, I have participated as a mentor in LawWithoutWalls, a mostly virtual experiential learning program started by University of Miami professor Michele DeStefano. Also known as LWOW, the program matches students from around the world with business people and practicing lawyers to develop a project of worth over sixteen weeks. Team members meet in January in person and never see each other in person again until April during a competition that is judged by venture capitalists, lawyers, entrepreneurs, and academics. I mentored a team of students from Bucerius in Germany, Wharton in Pennsylvania, and the University of Miami. Banking behemoth HSBC sponsored our project and staffed it with lawyers from Singapore, Canada, and the UK. Other mentors on the team hailed from Spain and the UK. On any given week, 7-10 people joined Skype calls, chatted in WhatsApp, drafted on Google Docs, and accessed Slack. They attended mandatory webinars weekly via Adobe Connect on developing business plans, pitching to VCs, and working with clients. Seventy percent of the people on the seventeen teams spoke languages other than English as the first language. 

How did this virtual experience work? Extremely well, in my view. After some growing pains, students adjusted quickly as did the business partners, who are used to setting up conference calls and working across borders. Some of the winning teams developed projects that provided virtual reality training on implicit bias for police officers; informed consumers about food freshness to combat food waste; and organized health information for foster care children on a blockchain-powered platform. Humble brag- my team won best overall project by developing a solution to use blockchain and smart contracts in syndicated lending that has the potential to save the bank almost 2 million per year. I also mentored last year’s winner, Team Spotify, with students from Miami, Colombia, and Chile and lawyers housed in Sweden, California, and New York. Each year, teams do almost all of this hard work remotely, across time zones, and with language differences. Students collectively interview hundreds of subject matter experts over 16 weeks, and the vast majority of those interviews take place via phone or video and with people in different countries. Other sponsors for LWOW included Accenture, White and Case, Pinsent Mason, Microsoft,  Cozen O'Connor, LegalZoom, Eversheds Sutherland, LatAm Airlines, and Legal Mosaic-- all companies and law firms that see the benefit of these skill sets.  Significantly, every year, a cohort of teams does all of the work virtually, never meeting in person for a kickoff. That virtual team winner competes in person with the traditional teams each April, and often wins the whole competition. Clearly, these students develop special skills by necessity. I plan to learn from those experiences as I design my course.

My experience with LawWithoutWalls and as a former compliance officer (where we often did training online and via video) makes me optimistic about online learning and working. In my summer course, I will have students work in groups, where they will use the latest virtual teaming tools. I will have live office hours via Skype, Zoom, or FaceTime, and I will require that some of the groups do their meetings via video as well to have a connection outside of email. Students will draft and edit on community bulletin boards. They will post their own video presentations and "webinars" geared toward fictitious business clients. Working collaboratively and creatively are key skills in the real world, and they will be key in my class. 

But there is a lot of resistance in both the legal community and academia regarding the online world. Last week, I attended a seminar at a law firm and met a member of the Florida Board of Bar Examiners. I asked his opinion on the state of students and young lawyers. I was particularly interested in his thoughts because he’s also a partner at a large law firm in our state. Like some quoted in my prior post, he believes that online coursework is a poor substitute for face to face learning. He further opined that when people don’t work in offices, they miss the camaraderie of being around peers and their work suffers. These are valid concerns. Many lawyers are unhappy in general, and the way people hide behind digital devices (even when in the same room/office) can lead to isolation, depression, and poor networking and social skills. 

But these drawbacks should not doom online learning and remote working. Most of my graduating 3Ls will take their bar prep courses online. They claim that it makes no sense to drive to campus “just to watch a video of a professor speaking.” They also like the idea of being able to rewind videos to take notes. The indicated that they will meet up with friends when they want to study together and may even come on campus to watch their online coursework for a sense of community. But significantly, they don’t see the need to learn in the traditional ways. Personally, I love good online courses but I also love the ability to have face to face interaction with teammates- even if that’s via video. Being in the same physical space also allows for chance interactions that can lead to enriching conversations. On the other hand, sometimes there's no choice. Many readers may remember that years ago, in harder economic times, companies cancelled non essential business travel and people got used to video meetings. Many employers now interview candidates by Skype first before bringing them in. Learning and working virtually is no longer a novelty. Some of our students  will work in co-working spaces for firms or companies where everyone works from home. 

Change is coming and in many places, already here. Law professors must prepare students to practice in this new world while not sacrificing pedagogical gains. This requires training on project management and effective communication with team members— all non-substantive topics and that will give many people pause. We also need to make sure that students know how to communicate with clients and employers face to face in business and social settings. Some professors will say- correctly- that they have enough to contend with making sure students understand the law and can pass the bar. But, for those of us interested in online learning, we need to do more. We have to make sure that we prepare students for both the "hard" and "soft" skills.  Most important, we need to make sure that these online courses have the rigor of traditional classes-- US News is watching.

I’m open to suggestions of what has worked for you and what hasn’t so please feel free to comment below or email me at mweldon@law.miami.edu.

May 3, 2019 in Current Affairs, Jobs, Law Firms, Law School, Lawyering, Marcia Narine Weldon, Negotiation, Teaching, Technology, Web/Tech | Permalink | Comments (2)

Thursday, May 2, 2019

The Department of Health and Human Services Is Trying to Make Me Sick

Okay, not really. But my daily Westlaw search for "limited liability corporation" recently started delivering contract award announcements from the Department of Health and Human Services (DHHS) related to contract awards. DHHS reconds many "business types" for their records, such as "Minority Owned Business" and "For Profit Organization. And now, apparently, "limited liability coroporation" is one of them.  ARRRRRGHH! LLCs are "limited liability companies" and are not corporations.  An internet search shows that there are at least 78 of these DHHS designations out there (and I'll wager there are more).  

Following is an excerpt of one such announcement.  You'll note that, according to the announcement, Seba Professional Services LLC is both a "Partnership or Limited Liability Partnership" and a "Limited Liability Corporation."  Sigh.  Really, they're making my stomach hurt: 

Department of Health and Human Services awarded contract of IGF::CT::IGF PATIENT MESSENGER AND TRANSPORT SERVICES to SEBA PROFESSIONAL SERVICES LLC

Washington: This contract was awarded to seba professional services llc with a potential award amount of $6,117,056. Of this amount, 100% ($6,117,056) has been obligated.
 
Awarding Agency:
Department of Health and Human Services
 
. . . .
 
Recipient:
SEBA PROFESSIONAL SERVICES LLC
. . . .
 
Business Types
Woman Owned Business
Women Owned Small Business
Economically Disadvantaged Women Owned Small Business
Minority Owned Business
Black American Owned Business
Partnership or Limited Liability Partnership
Limited Liability Corporation
For Profit Organization
DoT Certified Disadvantaged Business Enterprise
Self-Certified Small Disadvantaged Business
8a Program Participant
 
 

May 2, 2019 in Corporations, Current Affairs, Joshua P. Fershee, LLCs | Permalink | Comments (0)

Monday, April 29, 2019

Trump's Deregulatory Promises and Accomplishments

My essay, "Mr Toad's Wild Ride: Business Deregulation in the Trump Era," was recently published by the Mercer Law Review as part of a volume featuring works from a recent symposium on "Corporate Law in the Trump Era."  The symposium was held back in October and resulted from ideas shared at a discussion group on "Corporate and Financial Reform in the Trump Administration" convened for the 2017 Southeastern Association of Law Schools conference.  A portion of the introduction explaining the overall nature of the essay follows (footnote reference omitted).

This Essay identifies and takes stock of the Trump Administration’s deregulatory efforts as they impact business interests, with the thought that even incomplete or biased information may be useful to transactional business lawyering. What of significance has been done to date? With what articulated policy goals, if any? How may—or how should—the success of the administration’s business deregulatory plans and programs be judged? What observations can be made about those successes? For example, who may win and lose in the revised regulatory framework that may emerge? The Essay approaches these questions from a transactional business law perspective and offers related observations. Spoiler Alert: to date, the deregulatory journey is characterized by haphazardness not unlike the motorcar experience that is the subject of the beloved Disneyland attraction, Mr. Toad’s Wild Ride—a joyride that includes surprises and may sometimes feel like it is taking us “merrily, merrily, merrily, merrily, merrily on our way to nowhere in particular!”

This is the second essay in a pair that I wrote over the past year on deregulation and the presidency.  I posted on the first essay here, with a bit of information about the project as a whole (which had its genesis in BLPB posts by Anne Tucker and me).*  I also posted on this project back in September, here.  Thanks to those of you who responded with ideas in the comments and in private messages in response to these earlier posts.  

Although not all of those comments made it into my work implicitly or explicitly, they were nevertheless helpful as I researched and thought through my theses on these two short reflective pieces.  I do have many more ideas relating to this topic.  No doubt those ideas--and some of yours--will find their way into other work as time moves on.

_____

* In reviewing my prior posts for this post, I noted that the text of  this post has the year of the Southeastern Association of Law Schools discussion group wrong.  It did, in fact, occur in 2017, and it therefore preceded the Association of American Law Schools conference discussion group referenced in the post.  I left a postscript on that page, but I wanted to clarify the matter here also.

April 29, 2019 in Anne Tucker, Current Affairs, Joan Heminway, Lawyering | Permalink | Comments (0)

Friday, April 19, 2019

Are We Teaching Law Students The Wrong Things, The Wrong Way, or Both?

It's that time of year again. Many states have released February 2019  bar passage rates. Thankfully, the rates have risen in some places, but they are still at suboptimal levels. Indeed, the July 2018 MBE results sunk to a 34- year low. A recent article on law.com lists some well-known statistics and theories, explaining, in part:

Kellye Testy, president of the Law School Admission Council . . .  suspects the falling pass rates are the results of a combination of factors, the most obvious being the lower credentials of incoming students. The declining quality of public education—meaning an erosion of the reading and writing foundations children develop in elementary and high schools—may also be a contributor, she said. Moreover, the evolving way that law is taught may explain why today’s law graduates are struggling more on the bar exam, said Testy, whose organization develops the LSAT. Professors now put less emphasis on memorizing rules, and have backed off on some of the high-pressure tactics—like the Socratic method—that historically dominated the classroom. “The way we used to teach wasn’t as good for caring for the student, but it made sure you could take a closed-book exam,” she said. “You knew the doctrine. It was much more like a bar exam, in some ways. Today, when you go into a classroom, it’s all PowerPoint. The teachers give them an outline, the students are on computers. There’s a different student approach and a different faculty approach.” The fact that so many law graduates now take bar preparation courses online rather than in person is another avenue worth examining for a potential correlation to falling pass rates, said Judith Gundersen, president of the National Conference of Bar Examiners. “You used to have to go to a lecture and show up every day,” she said. “Now so much of it is online. People are wondering whether that’s changing how people prepare, because there just isn’t that communal aspect where, ‘I have to prepare in case I get called on.’”

I'm not sure how I feel about these assertions. I agree that many students lack some of the key critical thinking and writing skills needed to analyze legal problems. I also see far fewer professors using the strict Socratic method and more allowing computers in class. I allow computers for specific activities but not throughout the class. I also employ more of a modified Socratic method, use powerpoint, and often post it in advance with questions for students to answer prior to class so that we can spend time in class applying what the students have learned. Am I doing a disservice to my students with a flipped classroom? Do we need to go back to rote memorization and cold calling students for the bar passage rates to rise? And if so, will that make our students better lawyers?

I remember how difficult it was to take the Florida bar after three years of law practice in New York. The rote memorization helped me pass the bar exam while working a full time job and caring for an infant as a single mother. But it didn't make me a better lawyer. Having worked for three years, I remember slogging through bar study thinking that what I was learning in bar prep had little to do with what I actually did in practice. When I prepared for the New York and New Jersey bars, I went to classes live but some were in a classroom via video. I'm not even sure that purely online courses were an option back in 1992. When I moved to Florida and studied for that bar, I used tapes in my car (yes, it was 1996). I had tried the live courses for a few days and realized that my time was better spent reciting the rules of evidence to my son in lieu of nursery rhymes. I passed three bars using two different methods but I wonder how well I would have done with an online version, the way most students study for the bar now. 

I no longer teach courses tested on the bar, but when I did, I had the perpetual conflict-- how do I make sure that the students pass the bar while instilling them with the knowledge and skills they will actually need in the real world? I see now how some of my transactional lawyering students dread going to the bar prep classes offered during the semester. But they also consider these classes a necessity to pass the bar even through they will engage in full time bar prep upon graduation. Does the proliferation of these law school bar prep classes mean that the doctrinal professors aren't teaching the students the way we learned? Or does it mean that that the students are no longer learning the way we did? I don't have the answers. 

But these articles do have an effect on how and what I teach. Under ABA Standard 306,  law schools can offer up to one-third of their credits online, including up to ten credits for first-year coursework. As I prepare to teach my contract drafting and negotiation class asynchronously online for the first time this summer, I'm learning about presenting information in short, digestible chunks for the students- no more than 15-20 minutes per video, and preferably even shorter, I'm told. I'm also reviewing the conflicting evidence about whether online courses are a help or a hindrance.

Some of my students have taken many courses online as undergraduates. As a compliance officer, I required employees to take courses online and did live training. Personally, I like taking online courses. But I don't know enough about how well students retain the information and how well they learn to use key skills to serve clients. I'm fortunate, though, to have excellent instructional designers working with me who understand adult learning much better than I do. I'm convinced that more students will seek online courses and more schools will adopt them as a way of earning more revenue through developing programs for working professionals and JD students who need more flexible schedules. This means many more of us may need to prepare for this new way of teaching and learning.

April 19, 2019 in Current Affairs, Law School, Lawyering, Licensing, Marcia Narine Weldon, Teaching | Permalink | Comments (1)

Tuesday, April 16, 2019

Petition to Create AALS Section Community Economic Development

My friend and colleague, Priya Baskaran, asked me to post the following, which I am happy to do: 

Over the past year, a critical mass of law school faculty and staff have expressed interest in establishing an AALS Section on Community Economic Development (CED). The proposed section will provide a dynamic, collaborative environment to enhance the scholarship, activism, and direct legal work of CED-focused faculty and professional staff. Notably, the section will help bridge existing gaps between various actors in the CED universe by increasing opportunities for networking and enabling greater synergy and collaboration between scholars and experts in various substantive subjects and disciplines related to CED. Interested faculty and professional staff are invited to read the full petition.

I think this is a great idea, and I will be signing the petition (here).  I have been working with an interdisciplinary group on my campus, WVU Center for Innovation in Gas Research and Utilization (CIGRU). We are a multidisciplinary group of researchers who are experts in science, engineering, environmental, policy, law, and finance. The CIGRU conducts research and services relevant to gas, oil, and chemicals. Our experimental research includes broad areas covering catalysis, reaction engineering, material science, power generation, and gas turbine. The CIGRU undertakes U.S. government- and industry-funded research projects developing clean and renewable energy technologies. Our services include air emission control, regulatory and policy, law and finance relevant to shale gas.

I have been leading CIGRU's Economic and Community Development Group for the past few years.  About 18 months ago, CIGRU earned a five-year seed grant awarded by the West Virginia Higher Education Policy Commission, under its Research Challenge Grant program. The WVU gas utilization team includes eight CIGRU researchers, working in partnership with Marshall University, the WVU Energy Institute, the WVU Bureau for Business and Economic Research, the West Virginia Chemical Alliance Zone, Morgantown’s National Energy Technology Laboratory and the Mid-Atlantic Technology, Research and Innovation Center. So, this idea resonates with me. I think this is a great idea, and it has my support. If you agree, I hope you'll sign on, too.  

For anyone interested, CIRGUs grant announcement and a description of the program are available after the jump. 

Continue reading

April 16, 2019 in Conferences, Current Affairs, Entrepreneurship, Joshua P. Fershee, Law School, Service | Permalink | Comments (0)

Friday, April 12, 2019

Why Businesses Should Not Ignore the Operation Varsity Blues Scandal

As a former compliance officer who is now an academic, I've been obsessed with the $25 million Varsity Blues college admissions scandal. Compliance officers are always looking for titillating stories for training and illustration purposes, and this one has it all-- bribery, Hollywood stars, a BigLaw partner, Instagram influencers, and big name schools. Over fifty people face charges or have already pled guilty, and the fallout will continue for some time. We've seen bribery in the university setting before but those cases concerned recruitment of actual athletes. 

Although Operation Varsity Blues concerns elite colleges, it provides a wake up call for all universities and an even better cautionary tale for businesses of all types that think of  bribery as something that happens overseas. As former Justice Department compliance counsel, Hui Chen, wrote, "bribery. . .  is not an act confined by geographies. Like most frauds, it is a product of motive, opportunity, and rationalization. Where there are power and benefits to be traded, there would be bribes." 

My former colleague and a rising star in the compliance world, AP Capaldo, has some great insights on the scandal in this podcast. I recommend that you listen to it, but if you don't have time, here are some questions that she would ask if doing a post mortem at the named universities. With some tweaks, compliance officers, legal counsel, and auditors for all businesses should consider: 

1) What kind of training does our staff receive? How often?

2) Does it address the issues that are likely to occur in our industry?

3) When was the last time we spot checked these areas for compliance ? In the context of the universities, were these scholarships or set asides within the scope of routine audits or any other internal controls or reviews?

4) What factors or aspects of the culture could contribute to a scandal like this? What are our red flags and blind spots? Do we have a cultural permissiveness that could lead to this? In the context of the implicated universities, who knew or had reason to know?

5) How can we do a values-based analysis? Do we need to rethink our values or put some teeth behind them?

6) How are our resources deployed?

7) Do we have fundamental gaps in our compliance program implementation? Are we too focused on one area or another?

8) Are integrity and hallmarks of compliant behavior part of our selection/hiring process?

Capaldo recommends that universities tap into their internal resources of law and ethics professors who can staff  multidisciplinary task forces to craft programs and curate cultures to ensure measurable improvements in compliance and a decrease in misconduct. I agree. I would add that as members of the law and business community and as alums of universities, we should ask our alma maters or employers whether they have considered these and other hard questions. Finally, as law and business professors, we should use this scandal in both the classroom and the faculty lounge to reinforce the importance of ethics, internal controls, compliance with law, and shared values.

 

April 12, 2019 in Business School, Compliance, Corporate Governance, Corporations, CSR, Current Affairs, Ethics, Law Firms, Law School, Lawyering, Management, Marcia Narine Weldon, Sports, Teaching | Permalink | Comments (0)

Thursday, March 28, 2019

Nike, Avenatti, and the Business Judgment Rule

 
This Michael Avenatti extortion case is fascinating to me. I am not really sure why, other than it seems so absurd.  You may recall Avenatti as the lawyer who represented Stormy Daniels in her lawsuits against President Trump. He is a big personality and known for being outlandish at times.  
 
According to federal prosecutors, Avenatti tried to extort Nike for millions of dollars because he claimed to have evidence that Nike employees were illegally paying people to help recruit college basketball players.  Apparently, Avenatti believed he would be able to get Nike to pay him millions of dollars in exchange for the evidence. Instead, he ended up with the FBI. 
 
The New York Time reports:
According to people with knowledge of the cases, once Nike heard Mr. Avenatti’s claims, it acted to inform federal officials of the allegation that the company’s employees were paying players. The nature of the discussion with Mr. Avenatti raised the possibility that extortion was taking place.
That is, as soon as Nike was on notice of a potential problem right to the authorities.  How very Allis-Chalmers of them.  I am a fan of that old business judgment rule case, which state “it appears that directors are entitled to rely on the honesty and integrity of their subordinates until something occurs to put them on suspicion that something is wrong. If such occurs and goes unheeded, [only] then liability of the directors might well follow . . . “ Graham v. Allis-Chalmers Mfg. Co., 41 Del. Ch. 78, 85, 188 A.2d 125, 130 (1963).  So, as soon as Nike was on notice of wrongdoing, they disclosed it to officials.  
 
Nike took action to deal with the problem quickly, rather than acting like Caremark did years ago, when "there was an unconsidered failure of the board to act in circumstances in which due attention would, arguably, have prevented the loss [from fines resulting from bad employee behavior]." By taking action, Nike likely insulates the company (or at least mitigates the harm) it could face from alleged wrongdoing. Rather than engaging in a cover up (and potentially paying to hide the problem), the company acted proactively by disclosing the actions.  
 
Was this Avenatti's first attempt at such a thing?  It seems unlikely one would start with a company like Nike, but maybe the potential payoff seemed worth it. On the other hand, maybe such tactics have worked in other circumstances with smaller companies, so it seemed like a good idea. 
 
Regardless, it seems like Nike handled this wisely. The company recognized the issue before it, and fairly quickly realized that any of the alleged bad behavior was already done.  When such things happen, it is disappointing, to be sure, but it can't be undone.  The only question then is, "how are you going to respond."  For my money, going to the authorities was the right call, even though Nike had to know some bad press was going to follow.  
 
Now, I recognize it is possible that Nike knew about the behavior and reported nothing until Avenatti showed up. It would be interesting to find out, and if so, the analysis of whether they should have reported earlier would be an interesting one.  For example, would the company have faced more or less scrutiny had they reported on their own?  Or did they inoculate themselves to some degree by waiting and having the alleged Nike behavior overshadowed by Avenatti's alleged acts? Tough questions that require the exercise of business judgment. Thank goodness there is a rule about that.  

March 28, 2019 in Corporations, Current Affairs, Joshua P. Fershee, White Collar Crime | Permalink | Comments (2)

Monday, March 18, 2019

And Now for Something Completely Different . . . .

OK.  So, the title of this post is clickbait of sorts.  I am not writing about Monty Python, sorry to say.  But I am writing about something completely different for me--very outside my norm.  In fact, this past year, I have been researching and writing a bit outside my norm . . . .  

It all started with two blog posts here on the BLPB--here and here.  My posts, focusing on Trump's deregulatory promises and early pronouncements, followed an earlier one written by Anne Tucker.  Anne and I then organized an discussion group at the 2018 Association of American Law Schools Annual Meeting focusing on regulation in the Trump Era: "A New Era for Business Regulation?"  I then presented some of my research on business deregulation at the National Business Law Scholars ("NBLS") conference in June 2018.  A related Southeastern Association of Law Schools ("SEALS") discussion group followed later in the summer of 2018.

As I began to accumulate observations and information from these academic encounters, I came to vision a series of two papers that would enable me to engage in related research and make some observations.  (I first shared my conception for the two-paper series in my NBLS presentation.)  Thanks to an invitation from the UMKC Law Review to publish an administrative law reflection of my choice and an invitation from the Mercer Law Review to turn our SEALS discussion group into a published symposium volume, I was able to channel my curiosity about presidential deregulation and my research and writing energy into developing law review essays based on the two papers I had conceptualized.  

From the start, my interest in presidential deregulation was driven by my interest in business and business law, and the essays reflect that interest and bias.  In the first essay, I set out to explore the ways in which a U.S. president may fulfill deregulatory campaign promises and objectives.  As someone who [ahem] underachieved her potential (shall we say) in Constitutional Law in law school, I was challenged in this task from the get-go.  But I persevered and learned a lot from the Constitution itself and the work of administrative law scholars.  In the second essay, I aimed to make observations about what successful presidential efforts at deregulation look like by reviewing the perceived successes of the Trump administration's deregulatory initiatives to date.  This inquiry resulted in some interesting--even if somewhat predictable--findings.  

The first essay, Designing Deregulation: The POTUS's Place in the Process, was just released.  You can find it here.  The last two paragraphs of the abstract follows.

This essay interrogates the role of the president in deregulation at the federal level. The interrogation is designed to serve two principle goals. First, the essay sets out to identify and explain the president’s role in the deregulatory process from a legal and practical perspective. Second, with the knowledge gained in better understanding the nature of the president’s optimal role in deregulating, the essay offers a perspective and practical advice for use by a president in constructing and implementing a deregulatory agenda.

Ultimately, the essay suggests that the president assume the roles of change leader and fiduciary in meeting deregulatory promises and expectations. The role of change leader focuses the president on processes geared to foster lasting change; the role of fiduciary focuses the president on trustworthy conduct in a relationship with the public that allows for discretion yet demands accountability. The two roles are not mutually exclusive. They have the capacity to work together as complements.

Both this essay and the forthcoming one are limited-scope works.  My hope is that by having invested time in attempting to understand the current deregulatory environment, my ongoing work in securities regulation and other federal regulatory environments will be enriched.  Regardless, I have become a more educated consumer of presidential power and authority in the process of my research and writing.  Perhaps my work in this area also will offer some of you a bit of new information or a novel idea that helps you in your work--or at least in social conversation--as deregulatory efforts progress.

[Postscript, April 29, 2019: In reviewing this post for a subsequent post, I noted that this post has the year of the Southeastern Association of Law Schools discussion group (entitled "Corporate and Financial Reform in the Trump Administration") wrong.  It did, in fact, occur in 2017, and it therefore preceded the Association of American Law Schools conference discussion group also referenced in this post.  My apologies for the error.]

March 18, 2019 in Anne Tucker, Current Affairs, Joan Heminway | Permalink | Comments (1)

Friday, March 15, 2019

What Happens When the CEO or the Face of the Business Is a Risk? #MeToo and Corporate Governance

Hundreds of men have resigned or been terminated after allegations of sexual misconduct or assault.  Just last week, celebrity chef/former TV star Mario Batali and the  founder of British retailer Ted Baker were forced to sell their interests or step down from their own companies. Plaintiffs lawyers have now found a new cause of action. Although there a hurdles to success, shareholders file derivative suits when these kinds of allegations become public claiming breach of fiduciary duty, unjust enrichment, or corporate waste among other things. Examples of alleged corporate governance missteps in the filings include: failure to establish and implement appropriate controls to prevent the misconduct; failure to appropriately monitor the business; allowing known or suspected wrongdoing to persist; settling lawsuits but not changing the corporate culture or terminating wrongdoers; and paying large severance packages to the accused. Google, for example, announced earlier this year that it had terminated 48 people with no severance for sexual misconduct, but until it became public, the company did not disclose a $90 million payment to a former executive, who had allegedly coerced sex from an employee. Earlier this week, Google acknowledged another $35 million payment to a search executive who had been accused of sexual assault. This second payment was revealed after lawyers filed a shareholder derivative suit in January. CBS, on the other hand, denied a $120 million severance package to its former head, Les Moonvies, who has demanded arbitration.

So what happens when a company knows that a prominent executive has engaged in misconduct? How does a company prevent the conduct and then react to it? Board members and rank and file employees are undergoing more training even as people talk of a #MeToo backlash. But is that enough? Should companies now discuss potential or alleged sexual harassment by executives as a material risk factor in SEC filings? One panelist speaking at the 37th Annual Federal Securities Institute last month suggested that board counsel needed to consider this as an option.

#MeToo has also affected M&A deals with over a dozen companies now inserting a "Weinstein clause" representing, for example that “To the knowledge of the company, no allegations of sexual harassment have been made against any current or former executive officer of the company or any of its subsidiaries” Other "#MeToo reps" require a target company to confirm that it “has not entered into any settlement agreements” with perpetrators of sexual misconduct. Clawbacks are also increasingly common both in M & A deals and executive compensation agreements. Some companies have even asked newly-hired executives to represent that they have not been accused of or engaged in sexual misconduct.

I expect these #MeToo reps, clawbacks, and other disclosures to become more mainstream for a few reasons. First, there's a steady stream of news keeping these issues in the headlines, and many states have banned or are considering banning nondisclosure agreements in sexual harassment cases. Second, women leaders may now play a larger role in changing corporate culture. California requires that publicly held corporations whose “principal executive office” is located in California include at least one female board member by 2019 and even more depending on the size of the board. See here for some perspective on whether more female board members would lead to fewer sexual harassment scandals.  Third, proxy advisory firms sounded the alarm on #MeToo in early 2018 and both ISS and Glass Lewis have issued statements about what they plan to recommend when there are no women on boards. Finally, BlackRock, the world's largest asset manager has made it clear that it expects to see women on boards.  Some people do not agree that these guidelines/laws will work or are even necessary. Indeed, it will take a few years for empirical evidence to reveal whether having more women on boards and in the C suite will make a meaningful difference.

Personally, I believe it will take a combination of new leadership, successful shareholder derivative suits, and a continuation of the social due diligence in the hiring and M & A context. Sexual misconduct is wrong but it's also expensive. Companies are spending hundreds of thousands of dollars and sometimes more to investigate claims and prepare reports that they know will likely be made public at some time. Conduct won't change unless there are real financial and social penalties for wrongdoers.  

March 15, 2019 in Compliance, Corporate Governance, Current Affairs, Ethics, M&A, Marcia Narine Weldon | Permalink | Comments (1)

Saturday, March 9, 2019

Does U.S. Soccer Have A Flawed Business Model?

Yesterday was International Women's Day and I was supposed to post but couldn't think of what to write. I simply had too many choices based on this week's news. It's no coincidence that three months before the World Cup and on International Women's Day, the U.S. Women's Soccer Team sued U.S. Soccer for gender discrimination based on pay and working conditions, including medical treatment, travel arrangements, and coaching. On the one hand, some argue that the women should not receive the same amount as their male counterparts because they do not draw the same crowds or generate the same revenue. The plaintiffs argue that they cannot draw the same crowds in part because they do not get the same marketing and other financial support. In their defense, the U.S. women have won the World Cup three times and have won gold four times at the Olympics. The men's team has never won either tournament and didn't even qualify for the 2018 World Cup. I was in Brazil for the 2014 World Cup and when the men advanced, people were genuinely shocked. No one expected it and I was able to get a ticket to that match 15 minutes before start time for pennies on the dollar. Yet the men earn more.

If U.S. Soccer followed a pay for performance model, the women would and should clearly earn more. But, it's more complicated than that. As the NY Times explained, "each team has its own collective bargaining agreement with U.S. Soccer, and among the major differences are pay structure: the men receive higher bonuses when they play for the United States, but are paid only when they make the team, while the women receive guaranteed salaries supplemented by smaller match bonuses." Even so, the union for the U.S. Men's team supports the lawsuit, stating "we are committed to the concept of a revenue-sharing model to address the US Soccer Federation's "market realities" and find a way towards fair compensation. An equal division of revenue attributable to the MNT and WNT programs is our primary pursuit as we engage with the US Soccer Federation in collective bargaining. Our collective bargaining agreement expired at the end of 2018 and we have already raised an equal division of attributable revenue. We wait on US Soccer to respond to both players associations with a way to move forward with fair and equal compensation for all US soccer players." I will follow the lawsuit filed by Winston & Strawn and report back. 

The other stories I considered writing about concerned the ouster Chef Mario Batali and resignation of the founder of UK retailer Ted Baker over sexual harassment allegations. I will save that for next week when I will discuss whether companies should consider listing sexual harassment/misconduct as a material risk factor in SEC filings.

 

  

March 9, 2019 in Current Affairs, Marcia Narine Weldon, Sports | Permalink | Comments (0)

Monday, February 25, 2019

The Bear Awakens . . . .

A bunch of us sensed that it was coming.  I raised the question in an October 8, 2018 post here.  Now, it has actually happened.

Tesla Chief Executive Officer Elon Musk has finally caught the negative attention of the U.S. Securities and Exchange Commission (SEC) with yet another of his reckless tweets.  The WaPo reported earlier tonight that "[t]he Securities and Exchange Commission . . . asked a federal judge to hold Tesla CEO Elon Musk in contempt for violating the terms of a recent settlement agreement . . . ."  That settlement agreement, as readers will recall, relates to SEC allegations that Musk lied to investors when he posted on Twitter that he had secured the funding needed to take Tesla private.  The settlement agreement provides for the review and pre-approval of Musk's market-moving public statements.

Ann Lipton and I, as BLPB's resident fraud mongers, have been following the Musk affaire de Twitter for a number of months now.  (See, e.g., here, here, and here.)  Based on our prior posts, it seems clear the world was destined for this moment--a moment in which the SEC not only catches Musk in a tweeted misstatement but also can prove that the tweet was not pre-approved, as required under the terms of the settlement agreement.  The WaPo article notes evidence that breaches of the agreement may be the rule rather than the exception.  (Why does that not surprise me?)

Let's see where this goes next . . . .

February 25, 2019 in Ann Lipton, Compliance, Current Affairs, Joan Heminway, Securities Regulation | Permalink | Comments (0)

Wednesday, February 13, 2019

CALL FOR SUBMISSIONS- Blockchain Technology, Cryptoassets, and the Law

I have been told there may be some flexibility on the March 1 deadline.

The UMKC Law Review is pleased to announce a call for submissions relating to the law surrounding distributed ledger ("blockchain") technology. Selected papers will be published in the Special Topics Symposium, Summer 2019 edition of the UMKC Law Review. This symposium invites proposals for papers that explore the legal and regulatory issues involved in blockchain technology. Today, blockchain technology is used to build tools and infrastructure that help lawyers draft contracts, record commercial transactions, and verify legal documents. In general, investments in blockchain technology has surged over the past year, inviting both legitimate businesses and modern-day scammers. To date, regulatory agencies have yet to determine a consistent approach to the technology that protects the public while not stifling innovation. Issue 1 of UMKC Law Review’s 88th Volume will explore these and related topics with the goal of advancing awareness of blockchain technology and cryptoassets. Articles and essays of all lengths and papers by single authors or multiple authors are invited. Preference will be given to works between 5,000 and 25,000 words. To be accepted for publication in UMKC Law Review, articles must not have been previously published. Papers are due March 1, 2019.

Authors will have the opportunity to immediately publish submitted drafts to UMKC Law Review’s Special Topics Symposium webpage during the editing process. Proposals for papers should be submitted to the attention of

Ashley Crisafulli (ashleycrisafulli@mail.umkc.edu); and

Prof. Del Wright (wrightdc@umkc.edu).

Proposals should include the following information:

Name

Contact information

CV

Proposed title of paper

Anticipated length as either an article or essay

Abstract or brief description of the topic

Questions may be addressed to Ashley Crisafulli (ashleycrisafulli@mail.umkc.edu)

February 13, 2019 in Call for Papers, Current Affairs, Law Reviews, Writing | Permalink | Comments (0)