Monday, November 12, 2018
Friend of the BLPB Josephine Nelson informs us of the following:
The second-annual ComplianceNet conference will take place on June 3-4, 2019. Villanova University Charles Widger School of Law and its Girard-diCarlo Center for Ethics, Integrity and Compliance will host the conference. Like the highly successful inaugural conference at UC Irvine in 2018, this conference will allow scholars from across disciplines and different legal and regulatory topics to exchange research and explore connections for collaboration.
The timing of this year’s conference is designed to follow on the heels of the Law & Society meeting in nearby Washington, D.C. If you are already headed to Law & Society, Villanova is a short train-ride away and easily accessible by public transportation. Regardless of whether you will be attending Law & Society, Villanova is in a beautiful location right outside Philadelphia, easily serviced by major international airports (Philadelphia (PHL), Newark (EWR), Baltimore (BWI), two more in NYC, and two more in DC); 90 minutes from NYC; and two hours from D.C.
The theme of this year's conference is Business Ethics, although we welcome additional papers discussing compliance across diverse settings. This year’s theme seeks to engage the question of how to run ethical companies, and how to encourage ethical behavior within organizations. The conference welcomes attempts to explore the strengths and limitations of various approaches, to identify how measurement strategies have shaped practices, and to understand how we can improve outcomes, for instance through new technology and combining methods. Submissions do not need to align with the meeting theme, but we encourage you to consider relating to it. The conference is also open to scholars and other experts who want to attend without presenting a paper.
The conference will host a business meeting of ComplianceNet, during which members may discuss future activities.
To register for the conference either as a presenter or attendee, please fill out the form by following this link. The URL is https://www.eventbrite.com/e/the-second-annual-compliancenet-conference-tickets-50784542935.
For individual papers, please submit the paper title and abstract (up to about 200 words). For panels (3 papers minimum with a maximum of 5 per panel), please submit an integrative statement explaining the panel (approximately 200 words), the titles of each paper and their authors, and an abstract for each paper (approximately 200 words). At our website, ComplianceNet.org, there is also a form to nominate papers for awards. Papers may be considered for awards whether they come through the nomination link or are presented at the conference.
The early registration discount deadline to submit papers and panels is January 25, 2019. The regular registration deadline for papers and panels is February 22, 2019. The registration deadline to attend without a paper or panel (as space available) is March 29, 2019. Registration for the conference includes the yearly membership in ComplianceNet. If you have questions regarding the call for proposals or about the conference, please contact Benjamin van Rooij (firstname.lastname@example.org).
. . .
---For conference updates, please refer to the ComplianceNet website at www.ComplianceNet.org---
Sounds like a great event. I note (and informed Josephine) that this conference overlaps with the Impact Investing Legal Working Group (IILWG)/Grunin Center for Law and Social Entrepreneurship’s 2019 Conference on “Legal Issues in Social Entrepreneurship and Impact Investing – in the US and Beyond,” scheduled for June 4-5 at the NYU Schools of Law in NYC. More on that conference later. In any event, it looks like there is a lot to do up North after the Law and Society Association conference! One could spend the whole week away presenting papers. . . .
Sunday, October 21, 2018
5th Conference of the French Academy of Legal Studies in Business (Association Française Droit et Management)
June 20 and 21, 2019 – emlyon - Paris Campus
CALL FOR PAPERS 2019 Social Issues in Firms
Social issues and fundamental rights occupy an increasingly important space in the governance of today’s companies. Private enterprises assume an increasingly active role not only in a given economy but also in society as a whole. Firms become themselves citizens. They recognize and support civic engagement by the men and women who work for them. Historically, the role of the modern firm that resulted from the Industrial Revolution has been torn between two opposing viewpoints.
[More information under the break.]
October 21, 2018 in Business Associations, Business School, Call for Papers, Conferences, Corporate Governance, Corporations, Ethics, Haskell Murray, International Business, International Law, Management, Research/Scholarhip | Permalink | Comments (0)
Monday, February 26, 2018
Professional Responsibility in an Age of Alternative Entities, Alternative Finance, and Alternative Facts
Like my fellow editors here at the BLPB, I enjoyed the first Business Law Prof Blog conference hosted by The University of Tennessee College of Law back in the fall. They have begun to post their recently published work presented at that event over the past few weeks. See, e.g., here and here (one of several newly posted Padfield pieces) and here. I am adding mine to the pile: Professional Responsibility in an Age of Alternative Entities, Alternative Finance, and Alternative Facts. The SSRN abstract reads as follows:
Business lawyers in the United States find little in the way of robust, tailored guidance in most applicable bodies of rules governing their professional conduct. The relative lack of professional responsibility and ethics guidance for these lawyers is particularly troubling in light of two formidable challenges in business law: legal change and complexity. Change and complexity arise from exciting developments in the industry that invite—even entice—the participation of business lawyers.
This essay offers current examples from three different areas of business law practice that involve change and complexity. They are labeled: “Alternative Entities,” “Alternative Finance,” and “Alternative Facts.” Each area is described, together with significant attendant professional responsibility and ethics challenges. The essay concludes by offering general prescriptions for addressing these and other professional responsibility and ethics challenges faced by business lawyers in an age of legal change and complexity.
I do not often write on professional responsibility issues. However, I do feel an obligation every once in a while to add to the literature in that area addressing issues arising in transactional business law. In essence, it's service through scholarship.
I hope you read the essay and, if you do, I hope you enjoy it. I also can recommend the commentary on it published by my UT Law faculty colleague George Kuney and my student Claire Tuley. Both comments will be available electronically in the coming months. I will try to remember to post links . . . .
Saturday, February 3, 2018
Time's Up for Board Members: Sexual Misconduct Allegations Against CEOs of Wynn and the Humane Society Should Send a Message
Perhaps I'm a cynic, but I have to admit that I was stunned when the news of hotelier Steve Wynn's harassment allegations at the end of January caused a double-digit drop in stock price. What began as an unseemly story of a $7.5 million settlement to a manicurist at one his of his resorts later morphed into a story about his resignation as head of the finance chair of the Republican National Committee. Not only did he lose that job, he also lost at least $412 million (the company at one point lost over $3 billion in value). His actions have also led regulators in two states to scrutinize his business dealings and settlements to determine whether he has violated "suitability standards." Nonetheless, Wynn has asked his 25,000 employees to stand by him and think of him as their father. The question is, will the board stand by him as it faces potential liability for breach of fiduciary duty?
The Wynn board members should take a close look at what happened with the Humane Society yesterday. That board chose to retain the CEO after ending an investigation into harassment allegations. A swift backlash ensued. Major donors threatened to pull funding, causing the CEO to resign. A number of board members also reportedly resigned. However, not all of the board members resigned out of principle. One female director resigned after stating, " Which red-blooded male hasn’t sexually harassed somebody? ... [w]omen should be able to take care of themselves.” Unfortunately, the reaction of this board member did not surprise me. She's in her 80s and in my twenty years practicing employment law on the defense side, I've heard similar sentiments from many (but not all) men and women of that generation. Indeed, French actress Catherine Deneuve initially joined other women in denouncing the #MeToo movement before bowing to public pressure to apologize. We have five generations of people in the workplace now, and as I have explained here, companies need to reexamine the boundaries. What may seem harmless or "normal" for some may be traumatic or legally actionable to someone else.
As the Wynn and the Humane Society situations illustrate, the sexual harassment issue is now front and center for boards so general counsels need to put the issue on the next board agenda. As I wrote here, boards must scrutinize current executives as well as those they are reviewing as part of their succession planning roles to ensure that the executives have not committed inappropriate conduct. Because definitions differ, companies must clarify the gray areas and ensure everyone knows what's acceptable and what's terminable (even if it's not per se illegal).This means having the head of human resources report to the board that company policies and training don't just check a box. In fact, board members need to ask about the effectiveness of policies and training in the same way that they ask about training on bribery, money laundering, and other highly regulated compliance areas. Boards as part of their oversight obligation must also ensure that there are no uninvestigated allegations against senior executives. Prudent companies will review the adequacy of investigations into misconduct that were closed prematurely or without corroboration.Companies must spend the time and the money with qualified, credible legal counsel to investigate claims that they may not have taken seriously in the past. Because the #MeToo movement shows no signs of abating, boards need to engage in these uncomfortable, messy conversations. If they don't, regulators, plaintiffs' counsel, and shareholders will make sure that they do.
Wednesday, January 3, 2018
At a time when many boards may be thinking of tax planning and possible M & A deals, they may have to start focusing more on the unseemly topic of their executives' sex lives because the flood of terminations and resignations due to sexual misconduct shows no signs of slowing down. One of the most shocking but underreported terminations in 2017 related to VISA. The CEO, one year into the role, chose to terminate one of his most valuable executives after an anonymous tip about sexual misconduct. He wanted his employees to know that the corporate culture and values mattered. Board members should look closely at the VISA example.
We will continue to see the rise of the #MeToo movement spurred on in part by the messaging from a star-studded task force formed to address Hollywood issues and the establishment of a multimillion-dollar legal defense fund to help blue-collar workers. Even Supreme Court Chief Justice Roberts addressed sexual harassment in the court system in his Year-End Report on the Federal Judiciary. More people than ever may now choose to come forward with claims of harassment or assault. Whether companies choose to terminate wrongdoers or the accused choose to resign "to spend more time with their families," it's a new day. As I've written here, companies will need to re-evaluate policies and training to navigate these landmines.
Board members will need to step up too. Boards of any size institution (including nonprofits) need to take the job of CEO succession planning seriously because the chief executive could leave, retire, or die. Boards must not only consider the possibility of a harassment scandal in the C-Suite but they must also worry about their fellow board members. Unfortunately, a KPMG study revealed that only 14% of board members believe they have a detailed succession plan for themselves. Members of the C-suite will also need to think more clearly about succession planning in the lower ranks. HR may have to redouble efforts to ensure that high-potential employees have no skeletons in the closet that have been swept under the rug.
In the meantime, I and other former members of the Department of Labor Whistleblower Protection Advisory Committee have written an op-ed in the Boston Globe. Even if I had not co-authored the piece, as a former defense-side employment lawyer and compliance officer, I would recommend that company leaders take a look at it. Some of our recommendations for strengthening corporate culture are below:
1) have a trustworthy, independent system, with multiple reporting mechanisms, staffed with the proper skills to conduct swift, full, and fair investigations and to carry them to a just resolution, observing principles of confidentiality and discretion, and including ongoing protection of those who report;
2) make sure that there is a clear, credible anti-retaliation policy that protects accusers and witnesses who come forward in good faith;
3) require strong accountability for all levels of management for reporting and responding to complaints;
4) implement specific policies that direct bonuses, raises, and other incentives and opportunities to those who, in addition to meeting business targets, actively prevent and respond appropriately to harassment, retaliation, and other compliance problems. Consider clawbacks if unsupportive behavior later comes to light. Call out injurious behavior (without necessarily naming names) and credit exemplary behaviors;
5) periodically assess the culture and require an independent outside entity to confidentially administer anonymous surveys and interviews. The best of these use benchmarked and validated questions that can provide insight into the effectiveness of the compliance program and whether employees trust the system; and
6) make sure to involve unions and other formal and informal employee groups in developing new policies.
I wish all of our readers a happy and healthy new year. I wish board members and company executives good luck.
Thursday, December 7, 2017
Two weeks ago, I asked whether companies were wasting time on harassment training given the flood of accusations, resignations, and terminations over the past few weeks. Having served as a defense lawyer on these kinds of claims and conducted hundreds of trainings, I know that most men generally know right from wrong before the training (and some still do wrong). I also know that in many cases, people look the other way when they see or hear about the complaints, particularly if the accused is a superstar or highly ranked employee. Although most men do not have the power and connections to develop an alleged Harvey Weinstein-type "complicity machine" to manage payoffs and silence accusers, some members of management play a similar role when they ignore complaints or rumors of inappropriate or illegal behavior.
The head in the sand attitude that executives and board members have displayed in the Weinstein matter has led to a lawsuit arguing that Disney knew or should have known of Weinstein's behavior. We may see more of these lawsuits now that women have less fear of speaking out and Time honored the "Silence Breakers" as the Person of the Year. As I read the Time article and watched some of the "silence breakers" on television, it reminded me of 2002, when Time honored "The Whistleblowers." Those whistleblowers caused Congress to enact sweeping new protection under Sarbanes-Oxley. Because of all of the publicity, companies around the country are now working with lawyers and human resources experts to review and revamp their antiharassment training and complaint mechanisms. As a result, we will likely see a spike in internal and external complaints. But do we need more than lawsuits? Would more women in the boardroom and the C-Suite make a difference in corporate culture in general and thereby lead to more gender equity?
Last week, Vĕra Jourová, the EU Commissioner for Justice and Gender Equality put forth some proposals to redress the gender pay gap in Member States’ businesses. She recommends an increase in the number of women on boards for companies whose non-executive Boards are more than 60% male. These companies would be required to “prioritize” women when candidates of “equal merit” are being considered for a position. Germany, Sweden, and the Netherlands have already previously rejected a similar proposal.
I'm generally not in favor of quotas because I think they produce a backlash. However, I know that many companies here and abroad will start to recruit more female directors and executives in an effort to appear on top of this issue. Will it work? We will soon see. After pressure from institutional investors such as BlackRock and State Street to increase diversity, women and minorities surpassed 50% of S & P open board seats in 2017. Stay tuned.
Wednesday, November 8, 2017
My friend and colleague at West Virginia University, Jena Martin, has posted her new paper, Hiding in the Light: The Misuse of Disclosure to Advance a Business and Human Rights Agenda. The paper is forthcoming in the Columbia Journal of Transnational Law and can be accessed at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3028826
It's worth a read. Here's the abstract:
In June 2017, Waitrose, a top UK supermarket, pulled its cans of corned beef off the shelves after an investigation revealed that the meat might have been produced with slave labor. At the time of the recall, Waitrose was in compliance with the UK Modern Slavery Act (MSA), a 2015 law enacted to prevent human trafficking and modern-day slavery. Under the MSA, corporations are required to file annual reports disclosing what action they had taken to eradicate slavery and human trafficking in their supply chains. The Modern Slavery Act, in turn, was a much-lauded law that is part of the growing trend of States to move the international business and human rights agenda forward. A key component of that agenda involves disseminating the UN’s Protect, Respect and Remedy Framework and implementing the UN Guiding Principles, which have been praised by States around the world as a framing mechanism for issues of corporate accountability for negative human rights impacts in a corporation’s operations and relationships with its suppliers.
The aim of this article is to analyze whether the business and human rights agenda (as embodied by the Three Pillar Framework and UN Guiding Principles) is well served with national laws that focus on disclosure. The article will focus primarily on rules being implemented in the United States at both the subnational and national level, however, it will also discuss approaches being used in European jurisdictions such as the United Kingdom and France and the overall trend towards a transparency model for human rights protection from business activities. The increased use of disclosure-based regulation (and the resulting compliance efforts by corporations) seems to come, at least in part, as a result of the efforts by States to address the duties laid out for them in the UN Guiding Principles. As such, it seems appropriate to undertake an analysis regarding whether these laws are in fact effective at implementing the Guiding Principles.
For decades now, disclosure has been held out as the ultimate curative for every corporate woe. The expansion of disclosure initiatives from mere investment-related issues to increasingly social policy issues would indicate that this trend will continue. Yet as this article demonstrates, disclosure to right now is at best a temporary stop gap measure that can lead to limited corporate change on the issue of business and human rights. At worst, disclosure is being used by corporations as a way to obtain a reputational advantage without actually making substantive changes – by simply hiding in the light.
Wednesday, October 25, 2017
Today I sat through a panel at the ABA International Law Section Meeting entitled, I, Robot - The Increasing Use and Misuse of Technology by In-House Legal Departments. I have already posted here about Ross and other programs. I thought I would share other vendors that in-house counsel are using according to one of the panelists:
- Deal point - virtual deal room.
- Casetext - legal research.
- Disco AI; Relativity; Ringtail - apply machine learning to e-discovery.
- Ebrevia; Kira Systems; RAVN - contract organization and analysis.
- Julie Desk - AI "virtual assistant" for scheduling meetings.
- Law Geex - contract review software that catches clauses that are unusual, missing, or problematic.
- Legal Robot - start-up uses AI to translate legalese into plain English; flags anomalies; IDs potentially vague word choices.
- LexMachina - litigation analytics.
- NeotaLogic - client intake and early case assessment.
- Robot Review - compares patent claims with past applications to predict patent eligibility.
- Ross Intelligence - AI virtual attorney from IBM (Watson).
These and their future competitors lead to new challenges for lawyers, law professors, and bar associations. Will robots engage in the unauthorized practice of law? What are the ethical ramifications of using artificial intelligence in legal engagements? How much do you tell clients about how or what is doing their legal research? What about data security issues for this information? How do we deal with discovery disputes? Can robot lawyers mediate? Why should lawyers who bill by the hour want the efficiency of artificial intelligence and machine learning? Finally, how do we help students develop skills in “judgment” and how to advise and counsel clients in a world where more of the traditional legal tasks will be automated (and 23% of legal task already are)? These are frightening and exciting times, but I look forward to the challenge of preparing the next generation of lawyers.
Friday, October 13, 2017
Earlier this week, my two-year old daughter was in the pediatric ICU with a virus that attacked her lungs. We spent two nights at The Monroe Carell Jr. Children's Hospital at Vanderbilt (“Vanderbilt Children’s). Thankfully, she was released Wednesday afternoon and is doing well. Unfortunately, many of the children on her floor had been in the hospital for weeks or months and were not afforded such a quick recovery. There cannot be many places more sad than the pediatric ICU.
Since returning home, I confirmed that Vanderbilt Children’s is a nonprofit organization, as I suspected. I do wonder whether the hospital would be operated the same if it were a benefit corporation or as a traditional corporation.
Some of the decisions made at the hospital seems like they would have been indefensible from a shareholder perspective, if the hospital had been for-profit. Vanderbilt Children’s has a captive market, with no serious competitors that I know of in the immediate area. Yet, the hospital doesn’t charge for parking. If they did, I don’t think it would impact anyone’s decision to choose them because, again, there aren’t really other options, and the care is the important part anyway. The food court was pretty reasonably priced, and they probably could have charged double without seriously impacting demand; the people at the hospital valued time with their children more than a few dollars. The hospital was beautifully decorated with art aimed at children – for example, with a big duck on the elevator ceiling, which my daughter absolutely loved. There were stars on the ceiling of the hospital rooms, cartoons on TVs in every room, etc. All of this presumably cost more than a drab room, and perhaps it was all donated, but assuming it actually cost more, I am not sure those things would result in any financial return on investment.
As we have discussed many times on this blog, even in the traditional for-profit setting, the business judgment rule likely protects the decisions of the board of directors, even if the promised ROI seems poor. But at what point – especially when the board knows there will be no return on the investment at all - is it waste? (Note: Question sparked by a discussion that Stefan Padfied, Josh Fershee, and I had in Knoxville after a session at the UTK business law conference this year). And, in any event, the Dodge and eBay cases may lead to some doubt in the way a case may play out. And even if the law is highly unlikely to enforce shareholder wealth maximization, the norm in traditional for-profit corporations may lead to directorial decisions that we find problematic as a society, especially in a hospital setting.
Now, maybe the Hippocratic Oath, community expectations, and various regulations make it so nonprofit and forprofit hospitals operate similarly. As a father of a patient, however, even as a free market inclined professor, I would prefer hospitals to be nonprofit and clearly focused on care first. Also, some forprofit hospitals are supposedly considering going the benefit corporation route, which may be a step in the right direction – at least they have an obligation to consider various stakeholders (even if, currently, the statutory enforcement mechanisms are extremely weak) and at least there are some reporting requirements (even if , currently, reporting compliance is miserable low in the states I have examined and the statutory language is painfully vague).
I am not sure I have ever been in a situation where I would have paid everything I had, and had no other good options for the immediate need, and yet I still did not feel taken advantage of by the organization. There is much more that could be said on these issues, but I do wonder whether organizational form was important here. And, if so, what is the solution? Require hospitals to be nonprofits (or at least benefit corporations, if those statutes were amended to add more teeth)?
Thursday, August 31, 2017
Uber has a new CEO. Perhaps his first task should be to require one of his legal or compliance staff to attend the FCPA conference at Texas A & M in October given the new reports of an alleged DOJ investigation.. I might have some advice, but Uber needs to hear the lessons learned from Walmart, who will be sending its Chief Compliance Officer. Thanks to FCPA expert, Mike Koehler, aka the FCPA Professor, for inviting me. Mike has done some great blogging about the Walmart case (FYI- the company has reported spending $865 million on fees related to the FCPA and compliance-related costs). Details are below:
THE FCPA TURNS 40:
AN ASSESSMENT OF FCPA ENFORCEMENT POLICIES AND PROCEDURES
Thursday, October 12, 2017
Texas A&M University School of Law
Fort Worth, Texas
This conference brings together Foreign Corrupt Practices Act enforcement officials, experienced FCPA practitioners, and leading FCPA academics and scholars to discuss the many legal and policy issues relevant to the current FCPA enforcement and compliance landscape.Register here
Registration, 8:30 a.m.
Morning Session, 9:00 a.m. to Noon
FCPA Legal and Policy Issues
- Daniel Chow, Professor, Ohio State School of Law
China’s Crackdown on Government Corruption and the FCPA
- Mike Koehler, Professor, Southern Illinois School of Law
Has the FCPA Been Successful In Achieving Its Objectives?
- Peter Reilly, Associate Professor, Texas A&M School of Law
The Fokker Circuit Court Opinion and Deferred Prosecution of FCPA Matters
- Juliet Sorensen, Professor, Northwestern School of Law
The Phenomenon of an Outsize Number of Male Defendants Charged with Federal Crimes of Corruption
- Marcia Narine Weldon, Professor, Univ. of Miami School of Law
What the U.S. Can Learn from Enforcement in Other Jurisdictions and What Other Jurisdictions Can Learn from Us
Luncheon, Noon to 1:00 p.m.
Afternoon Session, 1:00 to 3:00 p.m.
(1:00 to 2:00 p.m.)
- Jay Jorgensen
Executive Vice President, Global Chief Ethics and Compliance Officer, Walmart
Follow-up panel (2:00 to 3:00 p.m.):
FCPA Enforcement and Compliance Landscape: Past, Present, and Future
- Kit Addleman, Attorney, Haynes and Boone LLP, Dallas and Fort Worth Offices
- Jason Lewis, Attorney, Greenberg Traurig LLP, Dallas Office
Friday, August 18, 2017
On July 15 of this year, The New York Times ran an article entitled, “The Lawyer, The Addict.” The article looks at the life of Peter, a partner of a prestigious Silicon Valley law firm, before he died of a drug overdose.
You should read the entire article, but I will provide a few quotes.
- “He had been working more than 60 hours a week for 20 years, ever since he started law school and worked his way into a partnership in the intellectual property practice of Wilson Sonsini.”
- “Peter worked so much that he rarely cooked anymore, sustaining himself largely on fast food, snacks, coffee, ibuprofen and antacids.”
- “Peter, one of the most successful people I have ever known, died a drug addict, felled by a systemic bacterial infection common to intravenous users.”
- “The history on his cellphone shows the last call he ever made was for work. Peter, vomiting, unable to sit up, slipping in and out of consciousness, had managed, somehow, to dial into a conference call.”
- “The further I probed, the more apparent it became that drug abuse among America’s lawyers is on the rise and deeply hidden.”
- “One of the most comprehensive studies of lawyers and substance abuse was released just seven months after Peter died. That 2016 report, from the Hazelden Betty Ford Foundation and the American Bar Association, analyzed the responses of 12,825 licensed, practicing attorneys across 19 states. Over all, the results showed that about 21 percent of lawyers qualify as problem drinkers, while 28 percent struggle with mild or more serious depression and 19 percent struggle with anxiety. Only 3,419 lawyers answered questions about drug use, and that itself is telling, said Patrick Krill, the study’s lead author and also a lawyer. “It’s left to speculation what motivated 75 percent of attorneys to skip over the section on drug use as if it wasn’t there.” In Mr. Krill’s opinion, they were afraid to answer. Of the lawyers that did answer those questions, 5.6 percent used cocaine, crack and stimulants; 5.6 percent used opioids; 10.2 percent used marijuana and hash; and nearly 16 percent used sedatives.”
There is much more in the article, including claims that the problems with mindset and addiction, for many, start in law school.
After reading this article, and many like it (and living through the suicide of a partner at one of my former firms), I decided to do a series of posts on Law & Wellness. These posts will not focus on mental health or addiction problems. Rather, these posts will focus on the positive side. For example, I plan a handful of interviews with lawyers and educators who manage to do well both inside and outside of the office, finding ways to work efficiently and prioritize properly. My co-editors may chime in from time to time with related posts of their own.
Wednesday, August 16, 2017
Business leaders probably didn’t think the honeymoon would be over so fast. A CEO as President, a deregulation czar, billionaires in the cabinet- what could possibly go wrong?
When Ken Frazier, CEO of Merck, resigned from one of the President’s business advisory councils because he didn’t believe that President Trump had responded appropriately to the tragic events in Charlottesville, I really didn’t think it would have much of an impact. I had originally planned to blog about How (Not) To Teach a Class on Startups, and I will next week (unless there is other breaking news). But yesterday, I decided to blog about Frazier, and to connect his actions to a talk I gave to UM law students at orientation last week about how CEOs talk about corporate responsibility but it doesn’t always make a difference. I started drafting this post questioning how many people would actually run to their doctors asking to switch their medications to or from Merck products because of Frazier’s stance on Charlottesville. Then I thought perhaps, Frazier’s stance would have a bigger impact on the millennial employees who will make up almost 50% of the employee base in the next few years. Maybe he would get a standing ovation at the next shareholder meeting. Maybe he would get some recognition other than an angry tweet from the President and lots of news coverage.
By yesterday afternoon, Under Armour’s CEO had also stepped down from the President’s business advisory council. That made my draft post a little more interesting. Would those customers care more or less about the CEO's position? By this morning, still more CEOs chose to leave the council after President Trump’s lengthy and surprising press conference yesterday. By that time, the media and politicians of all stripes had excoriated the President. This afternoon, the President disbanded his two advisory councils after a call organized by the CEO of Blackstone with his peers to discuss whether to proceed. Although Trump “disbanded” the councils, they had already decided to dissolve earlier in the day.
I’m not teaching Business Associations this semester, but this is a teachable moment, and not just for Con Law professors. What are the corporate governance implications? Should the CEOs have stayed on these advisory councils so that they could advise this CEO President on much needed tax, health care, immigration, infrastructure, trade, investment, and other reform or do Trump’s personal and political views make that impossible? Many of the CEOs who originally stayed on the councils believed that they could do more for the country and their shareholders by working with the President. Did the CEOs who originally resigned do the right thing for their conscience but the wrong thing by their shareholders? Did those who stayed send the wrong message to their employees in light of the Google diversity controversy? Did they think about the temperament of their board members or of the shareholder proposals that they had received in the past or that they were expecting when thinking about whether to stay or go?
Many professors avoid politics in business classes, and that’s understandable because there are enough issues with coverage and these are sensitive issues. But if you do plan to address them, please comment below or send an email to email@example.com.
August 16, 2017 in Business Associations, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Ethics, Law School, Marcia Narine Weldon, Shareholders, Teaching | Permalink | Comments (1)
Friday, July 28, 2017
These days it is easy to get discouraged on how divided our nation seems to be on a number of issues. John Inazu, Distinguished Professor of Law, Religion, and Political Science at Washington University, maps a way forward in his book Confident Pluralism (2016).
The book is divided into two parts: (1) Constitutional Commitments, and (2) Civic Practices.
The first part “contend[s] that recent constitutional doctrine has departed from our longstanding embrace of pluralism and the political arrangements that make pluralism possible.” (8) Further, the first part offers guideposts for future decisions and political solutions. The first part argues for both inclusion and dissent, for the free formation of voluntary groups, for meaningful access to public forums, and for access to publicly available funding for diverse organizations. Provocatively, Inazu claims that Bob Jones case – which stripped tax-exempt status from Bob Jones University due to its prohibition of interracial dating/marriage – is “normatively attractive to almost everyone, [but] is conceptually wrong.” (75) Inazu claims that “[t]he IRS should not limit tax-exempt status based on viewpoint of ideology.” (79) He extends the argument to “generally available resources.” While the Trinity Lutheran case was decided by the Supreme Court after publication of Confident Pluralism the decision seems in line with Inazu’s argument about the provision of ”generally available resources” to all types of organizations. Inazu does concede “Neither [the inclusion of dissent] premise is absolute. Inclusion will stop short of giving toddlers the right to vote or legally insane people the right to bear arms. Dissent will not extend to child molester or cannibals.” (16) I fully never figured out how he draws these lines, as he discusses other controversial topics that the majority of people strongly object to, but perhaps he only seeks to exclude when virtually everyone in society agrees.
The second part “canvass[es] the civic practices of confident pluralism that for the most part lie beyond the reach of the law.” (10) The second part centers around civic aspirations of tolerance, humility, and patience. As defined by Inazu, “Tolerance is the recognition that people are for the most part free to pursue their own beliefs and practices, even those beliefs and practices we find morally objectionable. Humility takes the further step of recognizing that others will sometimes find our beliefs and practices morally objectionable, and that we can’t always “prove” that we are right and they are wrong. Patience points toward restraint, persistence, and endurance in our interactions across difference.” (11). In this part, he describes the “hurtful insult” and the “conversation stopper” as speech we should aspire to avoid. (97-100). The hurtful insult includes terms like “fat, ugly, stupid, friendless.” (97). The aim of the conversation stopper is not primarily used to wound (as the hurtful insult is) but rather to shut down the conversation. Terms like “close-minded, extremist, heretical, and militant” fall in the conversation stopper category. While Inazu admits that those terms can be hurtful, he claims that they are mainly used to shut down reasoned debate.
In conclusion, this is a timely book and is well worth reading. At under 170 pages (including the notes), it is an extremely quick read, but the book is also worth pondering for extended time. Inazu encourages relationships across differences, such as Dan Cathy (Chick-fil-A) and Shane Windmeyer (Campus Pride) and former President Barack Obama and former Republican senator Tom Coburn. (124) I’d add the friendships of the late, conservative justice Antonin Scalia with his liberal colleagues on the Supreme Court Ruth Bader Ginsburg and Elena Kagan. With Inazu, I suggest face-to face conversations with friends with different, strongly-held beliefs. While social media and electronic communication can sometimes suffice between in-person meetings, tough topics are best handled around a table and after trust has been earned. Personally, I count my friendships with those who see the world very differently than I do as some of my most valuable relationships, and those friendships make it difficult to construct the straw men we see so frequently in TV news “debates.”
For more, Paul Horwitz (Alabama) shares some thorough and thoughtful notes on the book here.
Monday, July 24, 2017
Hot Off the Press: Russell and Heminway on Representing the Organizational Client on Environmental Matters
My good friend and long-time mentor Irma Russell and I wrote a chapter for the recently released ABA book, Ethics and the Environment: A Lawyer's Guide. Irma also is a co-editor of the book (with Vicki Wright). In our joint contribution, the chapter entitled "Representing the Organizational Client on Environmental Matters," Irma and I cover issues involving professional responsibility, corporate governance, and environmental compliance. Guess which part was my primary responsibility . . . ?!) Covering some 37 pages of the 242-page book, the rules we cover and the observations we make are fairly wide-ranging. We hope, as we noted in our conclusion to the chapter, that we supply legal counsel representing corporations and other organizations with "foundational tools to assist them in providing advisory and advocacy-oriented services to organizational clients in the environmental law context." Irma and I received our copies last week. The book soon will be available through the ABA and other outlets.
Friday, July 14, 2017
I highly recommend Jayber Crow by Wendell Berry.
Set in rural Kentucky, Jayber Crow is a story about small town life, community, love/hate, sustainability, and industrialization. The main character, Jonah "Jayber" Crow loses both his parents and his Aunt and Uncle by the age of ten. He spends the next few years in an orphanage before obtaining a scholarship to a local college as a "pre-ministerial" student. Doubting his calling to the ministry, Jayber drops out and returns to his hometown. He serves as the town's only barber, and he also picks up jobs as the local grave digger and church janitor. Jayber narrates, in vivid detail, the exodus from the small town by the younger generation and the invasion of large-scale, profit-focused, corporate farming.
The author, Wendell Berry, warns that "persons attempting to explain, interpret, explicate, analyze, deconstruct, or otherwise 'understand' [this book] will be exiled to a desert island in the company only of other explainers" so I will simply end with a few of my favorite quotes below. I think one of the reasons I so liked this book is because it reminded me of my family's property and of my maternal grandfather, who lived at a pace unknown to most of us and who worked the land with his hands and simple tools.
"You have been given questions to which you cannot be given answers. You will have to live them out--perhaps a little at a time." (54)
"The university thought of itself as a place of freedom for thought and study and experimentation, and maybe it was, in a way. But it was an island too, a floating or a flying island. It was preparing people from the world of the past for the world of the future, and what was missing was the world of the present, where every body was living its small, short, surprising, miserable, wonderful, blessed, damaged, only life." (71)
"Instead of sitting out and talking from porch to porch on the summer evenings, the people sat inside rooms filled with the flickering blue light of the greater world." (258)
"We were, as we said again, making war in order to make peace We were destroying little towns in order to save them. We were killing children in order that children might sleep peacefully in their beds without fear." (294)
"On those weekends, the river is disquieted from morning to night by people resting from their work. This resting involves traveling at great speed, first on the roads and then on the river. The people are in an emergency to relax." (331)
"The Economy does not take people's freedom by force, which would be against its principles, for it is very humane. It buys their freedom, pays for it, and then persuades its money back again with shoddy goods and the promise of freedom." (332)
Update: Here is a trailer for a new film on Wendell Berry, Look & See. Powerful, especially if you grew up in a rural place that is now being "developed," or if have seen beautiful landscapes that you love ruined. "Those who had wanted to go home could never get there now...."
Friday, May 26, 2017
The Nike Oregon Project is coached by running legend Alberto Salazar, who, by all accounts, is both incredibly competitive and dedicated to his work.
Among the athletes who are or have been associated with the Nike Oregon Project (and coached by Salazar )are gold medalist (in the 5000 & 10,000m in 2012 and 2016) Sir Mo Farah, gold medalist (in the 2016 1500m) Matt Centrowitz Jr., and silver medalist (in the 10,000m in 2012 and in the marathon in 2016) Galen Rupp. These three athletes have been the most dominant male distance runners for the U.S. over the last two Olympic cycles.
Allegations of doping is nothing new for the Nike Oregon project coach and athletes. For example, Kara Goucher, U.S. Olympian and former member of the Nike Oregon Project herself, has been extremely vocal with allegations against the group for years. The Times of London published some of the same allegations against the Nike Oregon Project a few months before The New York Times. FloTrack has released what it thinks is the full report from USADA (US Anti-Doping Agency). The allegations are not only of doping, but of drug use that may have engaged the athletes' long-term health.
I haven't seen any of the contracts for the Nike Oregon Project, but I would be willing to wager they contain morals clauses, allowing Nike to terminate the contracts, for cause, if the coach or athletes' actions tarnish Nike's brand. Often these morals clauses do not even require a finding of liability or guilt - often the mere allegations are enough.
In this case, however, given the success of these athletes and coach, I expect Nike to wait to see if the allegations are confirmed. If, however, these athletes or coach were less popular and/or underperforming, the morals clause might have come into play earlier. These allegations do already appear to be hurting Nike's reputation among my friends who follow track & field. Sadly, however, I imagine that most of Nike's customers are more aware of the medals won by the athletes than the current allegations made against the athletes and coach.
This summer, I am working on a paper on morals clauses, including a discussion on when these clauses may be unenforceable, so I will continue to follow this story and may update with new information.
Wednesday, May 3, 2017
Every year my students have the opportunity to earn extra credit writing about business issues that they see in movies or television. This year the movies Wall Street, and The Social Network tied for the most popular subjects. One student wrote an interesting paper about the business and CSR issues in Monsters, Inc., a movie I plan to watch for the first time this weekend. Disney’s describes the movie this way:
Lovable Sulley and his wisecracking sidekick Mike Wazowski are the top scare team at Monsters, Inc., the scream-processing factory in Monstropolis. When a little girl named Boo wanders into their world, it's the monsters who are scared silly, and it's up to Sulley and Mike to keep her out of sight and get her back home.
The student who wrote the paper spent her time instead focusing on Mr. Waternoose, the villainous CEO, seen here.
Personally, I was hoping someone would write about Season 3 of HBO’s Silicon Valley, which has provided some great scenes about fiduciary duties, corporate governance, succession planning, funding, and other issues related to startups. No one did, but I was pleased to see so many students apply what they learned in class to what they have watched on screen. Some even indicated that they finally understood The Wolf of Wall Street now that they have taken the class. Let’s see if that understanding is reflected in their exams. Happy grading, everyone!
Friday, April 21, 2017
In this semester's student mentorship group, we have been discussing personal priorities and principles. The consensus from the students seems to be that this topic is not only useful, but also more difficult than originally envisioned. A number of the students expressed a lack of clarity regarding their own priorities and life principles, but they recognized the need for deep thinking about those things.
Outlining priorities and principles could be a useful exercise for politicians and professors as well. Without a clear understanding of our priorities and principles, we often drift toward our political parties and the visible rewards dangled in front of us.
Regarding both politicians and professors, I am most inspired by those who take stands that do not benefit their party or themselves, but rather make the stand because it is the “right thing” to do. Professors, obviously, have more freedom to seek and speak the truth, but I think that professors' impact will be greater if they stick to their principles regardless of the party in power.
Of course sticking to priorities and principles does not guarantee a good or admirable outcome. One must have “good” priorities and principles. What qualifies as “good” is beyond the scope of this short blog post, but I do think priorities and principles that are selfless (or as selfless as we are capable of being) tend to be good ones.
Wednesday, April 19, 2017
Ratings behemoth Bill O'Reilly is out of a job at Fox News “after thorough and careful review of the [sexual harassment] allegations” against him by several women. Fox had settled with almost half a dozen women before these allegations came to light, causing advertisers to leave in droves once the media reported on it. According to one article, social media activists played a major role in the loss of dozens of sponsors. Despite the revelations, or perhaps in a show of support, O’Reilly’s ratings actually went up even as advertisers pulled out. Fox terminated O’Reilly-- who had just signed a new contract worth $20 million per year-- the day before its parent company’s board was scheduled to meet to discuss the matter. The employment lawyer in me also wonders if the company was trying to preempt any negligent retention liability, but I digress.
An angry public also took to social media to expose United Airlines' after its ill-fated decision to have a passenger forcibly removed from his seat to make room for crew members. However, despite the estimated 3.5 million impressions on Twitter of #BoycottUnited, the airline will not likely suffer financially in the long term because of its near monopoly on some key routes. United’s stock price nosedived by $800 million right after the disturbing video surfaced, but has rebounded somewhat with EPS beating estimates. Check out Haskell Murray's recent post here for more perspective on United.
Pepsi and supermodel Kendall Jenner also suffered more embarrassment than financial loss after people around the world erupted on social media over an ad that many believed trivialized the Black Lives Matter movement. Pepsi pulled the controversial ad within 24 hours. Some believe that Pepsi may suffer in sales, but I’m not so sure. Ironically, Pepsi’s stock price went up during the scandal and went down after the company apologized.
Pepsi and United both suffered public relations nightmares, but the skeptic in me believes that consumers will ultimately focus on what’s most important to them- convenience, quality, price, and in Pepsi’s case, taste. I recently attended my 25th law school reunion, and all of my colleagues who used a ride sharing app used Uber nowithstanding its well-publicized leadership scandals and the #deleteuber campaign. Indeed, many social media campaigns actually backfire. The #grabyourwallet boycott of Ivanka Trump’s brand raised public awareness but may have actually led to its recent record sales.
Reasonable people can disagree about whether social media campaigns and threats of consumer boycotts actually cause long-standing and permanent changes in corporate culture or policy. There is no doubt, however, that CEOs and PR departments will be working more closely than ever in the age of viral videos and 24-hour worldwide Twitter feeds.
Monday, January 30, 2017
Conference information from an e-mail I recently received.
The second annual Susilo Symposium of the Susilo Institute for Ethics in the Global Economy will be held on June 15-17, 2017 at Boston University Questrom School of Business.
The event will feature distinguished and varied speakers, including Professor Francesca Gino of Harvard Business School, and site visits at Aeronaut Brewing, Bright Horizons, and Fenway Park, among other exciting area companies.
The Susilo Symposium will be part of a new Global Business Ethics week, which begins at Bentley University from June 12-15 for the Global Business Ethics Symposium and teaching workshop, and then will move to BU for June 15-17.
The event promises an audience of both scholars and practitioners from around the world. All seek to explore and exchange ideas in a unique and interactive forum about the role of ethics in the global economy.
This year’s Susilo Symposium follows the inaugural symposium, which was held in May 2016 in Surabaya, Indonesia. Featuring foremost business, academic, and political leaders, it reflected on “Global Business Ethics – East Meets West.”
What to Expect
The program is directed specifically toward both academics and practitioners. Our hope is that attendees will learn from each other and take away ideas and practices that they can implement immediately.
It will feature onsite visits to global corporations and the latest start-ups, from which you will learn about today’s cutting-edge responses to challenging dilemmas.
Symposium sessions will range from traditional academic paper presentations on the most recent research on global ethics, to interactive panels of faculty and practitioners discussing their shared perspectives, to active problem-solving and learning, to programs showcasing effective practices by leading corporate decision-makers.
The conference design intentionally builds in plenty of opportunities for networking among your colleagues and between academics and practitioners, including a Thursday evening social event, a Friday luncheon and Friday evening reception.
Registration & Questions