Monday, October 4, 2021
With my bum shoulder and a lot of work on our dean search cramping my style over the past few weeks, I have been remiss in posting about the 2021 Business Law Prof Blog Symposium, Connecting the Threads V. The idea behind the name (and Doug Moll likes to riff on it--so have at it, Doug!) is that our bloggers here at the BLPB connect the many threads of business law in what we do--here on the blog and elsewhere.
Anyhoo (as Ann would say), as always, my BLPB co-bloggers did not disappoint in their presentations. I know our students look forward to publishing many of the articles and the related commentaries in the spring book of our business law journal, Transactions: The Tennessee Journal of Business Law. I also am always so proud of, and interested to hear, the commentary of my colleagues and students. This year was no exception.
In the future, I will post more about the article that I presented. But I will offer a teaser here, accompanied by the above screen shot from the symposium. (It was "Big Orange Friday" on our campus. The orange had to be worn. Go Vols!)
The title of my presentation and article is Choice of Entity: The Fiscal Sponsorship Alternative to Nonprofit Incorporation. A brief excerpt from the continuing legal education handout for the symposium presentation is set forth below (footnotes omitted).
[T]his presentation urges that competent, complete legal counsel on choice-of-entity for nonprofit business undertakings should extend beyond advising clients on which form of business entity best fits their needs and wants, if any. For many small business ventures that qualify for federal income tax treatment under Section 501(a) of the U.S. Internal Revenue Code of 1986, as amended (“IRC”), as religious, charitable, scientific, literary, educational, or other eligible organizations under Section 501(c)(3) of the IRC . . . , the time and expense of organizing, qualifying, managing, and maintaining a tax-exempt nonprofit corporation under state law may be daunting (or even prohibitive). Moreover, the structures imposed by business entity law may not be needed or wanted by the founders or promoters of the venture. Yet, there may be distinct advantages to entity formation and federal tax qualification that are not available (or not as easily available) to unincorporated not-for-profit business projects. These may include, for example, exculpation for breaches of performative fiduciary duties and limitations on personal liability for business obligations available to participants in nonprofit corporations under state statutory law and easier clearance of or compliance with initial and ongoing requirements for tax-exempt status under federal income tax law.
The described conundrum—the prospect that founders or promoters of a nonprofit project or business may not have the time or financial capital to fully form and maintain a business entity that may offer substantial identifiable advantages—is real. Awareness of this challenge can be disheartening to lawyer and client alike. Fortunately, at least for some of these nonprofit ventures, there is a third option—fiscal sponsorship—that may have contextual benefits. This presentation offers food for thought on the benefits of fiscal sponsorship, especially for arts and humanities endeavors.
Again, I will have more to say about this later, once the article is fully crafted. But your thoughts on fiscal sponsorship--and examples, stories, and the like--are welcomed in the interim as I continue to work through the article.
Friday, September 24, 2021
I'm so excited to present later this morning at the University of Tennessee College of Law Connecting the Threads Conference today at 10:45 EST. Here's the abstract from my presentation. In future posts, I will dive more deeply into some of these issues. These aren't the only ethical traps, of course, but there's only so many things you can talk about in a 45-minute slot.
All lawyers strive to be ethical, but they don’t always know what they don’t know, and this ignorance can lead to ethical lapses or violations. This presentation will discuss ethical pitfalls related to conflicts of interest with individual and organizational clients; investing with clients; dealing with unsophisticated clients and opposing counsel; competence and new technologies; the ever-changing social media landscape; confidentiality; privilege issues for in-house counsel; and cross-border issues. Although any of the topics listed above could constitute an entire CLE session, this program will provide a high-level overview and review of the ethical issues that business lawyers face.
Specifically, this interactive session will discuss issues related to ABA Model Rules 1.5 (fees), 1.6 (confidentiality), 1.7 (conflicts of interest), 1.8 (prohibited transactions with a client), 1.10 (imputed conflicts of interest), 1.13 (organizational clients), 4.3 (dealing with an unrepresented person), 7.1 (communications about a lawyer’s services), 8.3 (reporting professional misconduct); and 8.4 (dishonesty, fraud, deceit).
Discussion topics will include:
- Do lawyers have an ethical duty to take care of their wellbeing? Can a person with a substance use disorder or major mental health issue ethically represent their client? When can and should an impaired lawyer withdraw? When should a lawyer report a colleague?
- What ethical obligations arise when serving on a nonprofit board of directors? Can a board member draft organizational documents or advise the organization? What potential conflicts of interest can occur?
- What level of technology competence does an attorney need? What level of competence do attorneys need to advise on technology or emerging legal issues such as SPACs and cryptocurrencies? Is attending a CLE or law school course enough?
- What duties do lawyers have to educate themselves and advise clients on controversial issues such as business and human rights or ESG? Is every business lawyer now an ESG lawyer?
- What ethical rules apply when an in-house lawyer plays both a legal role and a business role in the same matter or organization? When can a lawyer representing a company provide legal advice to an employee?
- With remote investigations, due diligence, hearings, and mediations here to stay, how have professional duties changed in the virtual world? What guidance can we get from ABA Formal Opinion 498 issued in March 2021? How do you protect confidential information and also supervise others remotely?
- What social media practices run afoul of ethical rules and why? How have things changed with the explosion of lawyers on Instagram and TikTok?
- What can and should a lawyer do when dealing with a businessperson on the other side of the deal who is not represented by counsel or who is represented by unsophisticated counsel?
- When should lawyers barter with or take an equity stake in a client? How does a lawyer properly disclose potential conflicts?
- What are potential gaps in attorney-client privilege protection when dealing with cross-border issues?
If you need some ethics CLE, please join in me and my co-bloggers, who will be discussing their scholarship. In case Joan Heminway's post from yesterday wasn't enough to entice you...
Professor Anderson’s topic is “Insider Trading in Response to Expressive Trading”, based upon his upcoming article for Transactions. He will also address the need for business lawyers to understand the rise in social-media-driven trading (SMD trading) and options available to issuers and their insiders when their stock is targeted by expressive traders.
Professor Baker’s topic is “Paying for Energy Peaks: Learning from Texas' February 2021 Power Crisis.” Professor Baker will provide an overview of the regulation of Texas’ electric power system and the severe outages in February 2021, explaining why Texas is on the forefront of challenges that will grow more prominent as the world transitions to cleaner energy. Next, it explains competing electric power business models and their regulation, including why many had long viewed Texas’ approach as commendable, and why the revealed problems will only grow more pressing. It concludes by suggesting benefits and challenges of these competing approaches and their accompanying regulation.
Professor Heminway’s topic is “Choice of Entity: The Fiscal Sponsorship Alternative to Nonprofit Incorporation.” Professor Heminway will discuss how for many small business projects that qualify for federal income tax treatment under Section 501(a) of the U.S. Internal Revenue Code of 1986, as amended, the time and expense of organizing, qualifying, and maintaining a tax-exempt nonprofit corporation may be daunting (or even prohibitive). Yet there would be advantages to entity formation and federal tax qualification that are not available (or not easily available) to unincorporated business projects. Professor Heminway addresses this conundrum by positing a third option—fiscal sponsorship—and articulating its contextual advantages.
Professor Moll’s topic is “An Empirical Analysis of Shareholder Oppression Disputes.” This panel will discuss how the doctrine of shareholder oppression protects minority shareholders in closely held corporations from the improper exercise of majority control, what factors motivate a court to find oppression liability, and what factors motivate a court to reject an oppression claim. Professor Moll will also examine how “oppression” has evolved from a statutory ground for involuntary dissolution to a statutory ground for a wide variety of relief.
Professor Murray’s topic is “Enforcing Benefit Corporation Reporting.” Professor Murray will begin his discussion by focusing on the increasing number of states that have included express punishments in their benefit corporation statutes for reporting failures. Part I summarizes and compares the statutory provisions adopted by various states regarding benefit reporting enforcement. Part II shares original compliance data for states with enforcement provisions and compares their rates to the states in the previous benefit reporting studies. Finally, Part III discusses the substance of the benefit reports and provides law and governance suggestions for improving social benefit.
All of this and more from the comfort of your own home. Hope to see you on Zoom today and next year in person at the beautiful UT campus.
September 24, 2021 in Colleen Baker, Compliance, Conferences, Contracts, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Delaware, Ethics, Financial Markets, Haskell Murray, Human Rights, International Business, Joan Heminway, John Anderson, Law Reviews, Law School, Lawyering, Legislation, Litigation, M&A, Management, Marcia Narine Weldon, Nonprofits, Research/Scholarhip, Securities Regulation, Shareholders, Social Enterprise, Teaching, Unincorporated Entities, White Collar Crime | Permalink | Comments (0)
Monday, July 19, 2021
. . . I figure it is still OK to publish a link to the SSRN posting of my co-authored article from the 2020 Business Law Prof Blog symposium, Connecting the Threads. Published earlier in the spring, this piece, entitled Business Law and Lawyering in the Wake of COVID-19, was written with two of my students: Anne Crisp (who will start her 3L year in about a month) and Gray Martin (who graduated in May and will take the bar exam next week). My March 30, 2021 post on business interruption insurance came from this article. The SSRN abstract is included below.
The public arrival of COVID-19 (the novel coronavirus 2019) in the United States in early 2020 brought with it many social, political, and economic dislocations and pressures. These changes and stresses included and fostered adjustments in business law and the work of business lawyers. This article draws attention to these COVID-19 transformations as a socio-legal reflection on business lawyering, the provision of legal services in business settings, and professional responsibility in business law practice. While business law practitioners, like other lawyers, may have been ill-prepared for pandemic lawyering, we have seen them rise to the occasion to provide valuable services, gain and refresh knowledge and skills, and evolve their business operations. These changes have brought with them various professional responsibility and ethical challenges, all of which are ongoing at the time this is being written.
No doubt both the changes to business lawyering and the lessons learned from the many substantive, practical, and ethical challenges that have arisen in the wake of COVID-19 will survive the pandemic in some form. This offers some comfort. While the thought of another systemic global crisis is unappealing at best, what we have experienced and learned will no doubt be useful in maneuvering and surviving through whatever the future may bring.
This article came to be because I agreed to take on additional research assistants after summer jobs were scuttled for many students in the spring of 2020. I shared the germ of an idea with Anne and Gray. They took that idea and ran with it, adding important new concepts and support. The writing collaboration naturally followed. They co-presented the article with me at the symposium back in October. Working with them throughout was so joyful and fun--a true pandemic silver lining.
Tuesday, June 8, 2021
Recently, I finished two similar books on problems with extreme meritocracy in the United States: The Tyranny of Merit by Harvard philosophy professor Michael Sandel and The Meritocracy Trap by Yale law professor Daniel Markovits. Law schools and entry level legal jobs tend to be intensely meritocratic. The more competitive entry level legal jobs rely very heavily on school rank and student class rank. Once in a private firm, billable hours seem to be the main metric for bonuses and making partner.
Sandel describes at least three problems with meritocracy: (1) people are not competing on an even playing field in the US "meritocracy" (e.g., children of top 1% in income are 77x more likely to attend an Ivy League school than children of bottom 20%); (2) even if there were an even playing field, natural talents that fit community preferences would lead to wild inequality in a pure meritocracy and those natural advantages are not “earned,” (3) a strict meritocracy leads to excessive hubris among the “winners” and shame among the “losers” who believe they deserve their place in society.
Markovits hits a lot of the same notes, but pays more attention to how the elite “exploit themselves” trying to keep themselves and their children in the shrinking upper class. While the $50,000/year competitive preschools Markovits describes are mostly limited to NYC and Silicon Valley now, the expenditures on the education and extracurriculars of children of the wealthy seems to be increasing exponentially everywhere. He also notes the lengthening work hours for the “elite” and the increasing percentage of wealth tied to labor. For example, Markovits points out that the ABA assumed that lawyers would bill 1300 hours a year in 1962 (and 1400 in 1977). As legal readers know, many firms now require 2000+ billable hours a year (which means working 2500+ hours in most cases).
Both Sandel and Markovits do a thorough job explaining the problems of meritocracy, but are fairly brief on proposed solutions. Sandel thinks meritocracy could be made more fair through elite schools eliminating SAT/ACT requirements (that tend to track family income), engaging in more aggressive class-based affirmative action, and using a lottery to admit baseline qualified students. He thinks the last suggestion would reduce the hubris of those admitted to elite schools, and acknowledge an element of luck in their selection. Sandel also suggests more government expenditures on training and retraining programs, as most economically advanced countries spend a much higher percentage of GDP on these programs (0.1% vs. 0.5% to 1.0%). He also suggests using the tax system to reward “productive labor” by, for example, “lower[ing] or even eliminat[ing] payroll taxes and rais[ing] revenue instead by taxing consumption, wealth, and financial transactions.” (218).
Markovits proposes that private schools should lose their tax-exempt status if at least half of their students do not come from the bottom two-thirds of the income distribution. Markovits also suggests promoting more mid-skill production; by, for example, reducing regulation to allow more work to be done by nurse practitioners (rather than doctors) and legal technicians (rather than lawyers.) He suggests uncapping payroll tax (so that the wealthy pay more of their share), introducing wage subsidies for middle class jobs, and raising the minimum wage.
As Ivy League professors, I think they overestimate the role of their schools in shaping the rest of the country, though they may be right about their influence among certain segments of the wealthy. And while their solutions are rather thin, I think they raise issues with meritocracy worth addressing. As Henri Nouwen acknowledged more than 50 years ago in his book Reaching Out, “people are in growing degree exposed to the contagious disease of loneliness in a world in which a competitive individualism [ a/k/a "meritocracy"] tries to reconcile itself with a culture that speaks about togetherness, unity, and community as the ideals to strive for.”
Tuesday, June 1, 2021
I recently received the final version of my short article, "The Benefits and Burdens of Limited Liability," in Transactions: The Tennessee Journal of Business Law. The article is based on some of my prior blog posts, as well as my presentation as part of the fourth annual Business Law Prof Blog symposium, Connecting the Threads. It was great event, as always, thanks to Joan and the whole crew at Tennessee Law, and it was my pleasure to be part of it.
Here's the abstract:
Law students in business associations and people starting businesses often think the only choice for forming a business entity is a limited liability entity like a corporation or a limited liability company (LLC). Although seeking a limited liability entity is usually justifiable, and usually wise, this Article addresses some of the burdens that come from making that decision. We often focus only on the benefits. This Article ponders limited liability as a default rule for contracts with a named business and considers circumstances when choosing a limited liability entity might not communicate what a business owner intends. The Article notes also that when choosing an entity, you get benefits, like limited liability, but burdens (such as need for counsel or tax consequences) also attach. It's not a one-way street. The Article closes by urging courts to consider both the benefits and burdens of an entity choice, especially in considering whether to uphold or disregard an entity, to help parties achieve some measure of certainty and equity.
Sunday, May 30, 2021
Grading done? Join in for an engaged, energizing day with fellow business law profs to start the summer.
Grading not done? This is sure to be a fun and enlightening distraction--better than house cleaning or laundry!
Not grading at all (you lucky ducky)? Clear the decks of other impediments and come join us for what always is a super day filled with teaching tips and catalysts for scholarship and service.
REGISTER NOW! CONFERENCE IS JUNE 4th!
Emory Law's 7th biennial conference on the teaching of transactional law and skills is just a few days away! Register here and join us on Friday, June 4th. (Note: The Registration Fee for this one-day, online conference is $50.) A copy of the Conference schedule is posted here.
Connect with transactional law and skills educators across the country to ponder our theme - "Emerging from the Crisis: The Future of Law and Skills Education." You'll hear illuminating keynote addresses from three leaders in our field - Joan MacLeod Heminway, Marcia Narine Weldon, and Robert J. Rhee. And you'll participate in exciting presentations and try-this exercises designed to help us all become better teachers.
At day's end, we'll hold a Vision Workshop to synthesize our vision for the future. We'll also announce the winner of the Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills, chosen from a group of illustrious nominees.
Special Note: The State Bar of Georgia has approved our conference for four CLE credits. We will provide attendance certificates for other states.
Monday, April 12, 2021
A few weeks ago, I posted on COVID-19 and business interruption insurance, quoting from part of a forthcoming coauthored article presented at the Business Law Prof Blog symposium last fall. This week, I am posting a few more teaser paragraphs from that same article, which focuses overall on business law issues, practice changes, and professional responsibility challenges emanating from the pandemic. Today's excerpts focus on lawyers working from home. Second-year UT Law student Anne Crisp is the primary author of the part of the paper that includes these paragraphs (from which footnotes have been omitted).
. . . While the work-from-home movement was already taking off in many sectors prior to COVID-19, the legal sector had been slow to adopt this working model. Leaving aside multijurisdictional practice challenges, lawyer resistance to remote work has been attributed in large part to the perceived relationship-based nature of lawyering and the perception that at least some clients expect to meet with their legal counsel in well-appointed offices. But along came COVID-19, and lawyers could no longer avoid the pull of the work-from-home movement. If lawyers wanted to bill hours, they were going to have to work from home.
As lawyers began working from home, law offices were forced to enhance their technological resources and capabilities to meet the needs of the firm and to confront the technological challenges associated with such developments. Issues around laptop-versus-desktop use, home Wi-Fi capacity and security, and virtual private networks emerged as pressing problems to address. Lawyers, like everyone else in the world, began using videoconferencing and telecommunication platforms such as Zoom to meet with clients, colleagues, and the courts on a regular basis, rather than in specific circumstances. Lawyers adapted to the work-from-home model not by choice, but out of necessity.
Law firms also had to address security concerns that arise as a result of remote working. Malware infections, hacking, and other challenges are more difficult to prevent once workers are no longer regularly connected to a law office’s computer network. Firms with appropriate cybersecurity systems in place had to ramp up their availability to cover more workers; those without appropriate security technologies needed to acquire and implements them on an urgent basis.
Moreover, communication complications became manifest, and the need to address them holistically became important. “In a remote working world, everyone’s delegation/supervision/feedback skills must be even better—more frequent, more clear and more realistic—than usual.” For example, in a private firm, a practice group leader may need to intentionally ask how an individual is doing because the leader can no longer gauge this based on their interaction with the individual in the office. Junior lawyers in office settings must be more transparent and realistic about their own constraints as their home environments change. It has also become more important for junior lawyers to take clear ownership of the work they are doing so that senior lawyers, whose focus is on more directly helping clients navigate the issues arising, can more easily monitor who is working on what and keep track of the status of projects. Before the pandemic, communication challenges of the kinds mentioned here may have been barriers to lawyers working from home. Now, lawyers have no choice but to overcome them.
While the work-from-home movement has presented new challenges surrounding security and communication, it has also produced some positive effects. Working from home often creates a more relaxed work environment that has been shown to lead to more creativity. Additionally, lawyers are enjoying the benefits of having no commute. Many lawyers have liked working from home so much that they hope to continue to do so once the pandemic is over. It remains to be seen whether law firms will allow them to continue to do so in a post-pandemic world.
There is so much I could say about all this. But I will confine myself here to two points, both stemming from the text of that last quoted paragraph. The positive aspects of lawyers' adaptive work-from-home lives generate their own set of challenges.
First, law firms are making decisions about the extent to which they will allow work-from-home after the pandemic. (So are law schools.) The managing shareholder of a regional law firm's Knoxville office participated in my Advanced Business Associations class last week, and he indicated his concern that new and junior associates be physically present in the office in order to ensure that they are exposed and acclimate to the firm's culture.
Second, return-to-the-workplace mandates will result in some bumpy transitions back to full in-person operations. Child, elder, and general family care routines devised for use during the pandemic may be as (or more) difficult to unwind than they were to create. For many, it is not an option to merely go back to the way things were before COVID-19.
I suspect that, as we come out of the pandemic, different firms will handle 2021 work location transitions in different ways based on their size, market, reputation, culture, and more. The type of work being performed by the lawyers and client preference are likely to play specific guiding roles in the analysis. This certainly will be an area to watch.
Friday, March 12, 2021
It's been one year since the US declared a pandemic. It's been a stressful time for everyone, but this post will focus on lawyers.
I haven't posted any substantive legal content on LinkedIn in weeks because so many of my woo woo, motivational posts have been resonating with my contacts. They've shared the posts, and lawyers from around the world have reached out to me thanking me for sharing positive, inspirational messages. I hope that this care and compassion in the (my) legal community will continue once people return back to the office.
Earlier this week, I took a chance and posted about a particularly dark period in my life. I've now received several requests to connect and to speak to legal groups and law firms about mindset, wellness, resilience, and stress management. I've heard from executives that I used to work with 15 years ago asking to reconnect. Others have publicly or privately shared their own struggles with mental health or depression. I'm attaching a link to the video here. Warning- it addresses suicide prevention, but it may help someone.
I'm also sharing an article that my colleague Jarrod Reich wrote last year. He and I have just finished sitting on a panel on Corporate Counsel and Professional Responsibility Post COVID-19, and it's clear that the issue of lawyers and mental health could have been its own symposium. Here is the abstract for his article, Capitalizing on Healthy Lawyers: The Business Case for Law Firms to Promote and Prioritize Lawyer Well-Being.
This Article is the first to make the business case for firms to promote and prioritize lawyer well-being. For more than three decades, quantitative research has demonstrated that lawyers suffer from depression, anxiety, and addiction far in excess of the general population. Since that time, there have been many calls within and outside the profession for changes to be made to promote, prioritize, and improve lawyer well-being, particularly because many aspects of the current law school and law firm models exacerbate mental health and addiction issues, as well as overall law student and lawyer distress. These calls for change, made on moral and humanitarian grounds, largely have been ignored; in fact, over the years the pervasiveness of mental health and addiction issues within the profession have persisted, if not increased. This Article argues that these moral- and humanitarian-based calls for change have gone unheeded because law firms have not had financial incentives to respond to them.
In making the business case for change, this Article argues that systemic changes designed to support and resources to lawyers will avoid costs associated with lawyer mental health and addiction issues and, more importantly, create efficiencies that will increase firms’ long-term financial stability and growth. It demonstrates that this business case is especially strong now in light of not only societal and generational factors, but also changes within the profession itself well. As firms have begun to take incremental steps to promote lawyer well-being, lasting and meaningful change will further benefit firms’ collective bottom lines as it will improve: (1) performance, as clients are demanding efficiency in the way their matters are staffed and billed; (2) retention, as that creates efficiencies and the continuous relationships demanded by clients; and (3) recruitment, particularly as younger millennial and Generation Z lawyers—who prioritize mental health and well-being—enter the profession.
If you have any feedback on Jarrod's article or tips on how you are coping, surviving, or thriving in these times, please feel free to drop them in the comments.
Take care and stay safe.
Friday, January 1, 2021
Happy New Year!
I first posted this on Thrive Global a few weeks ago. In the spirit of the New Year, I'm sharing it with you all.
It’s time to work on your happiness like it’s a full-time job. 2020 has challenged everyone and 2021 may not be much better. You’ve made it this far so now it’s time to reclaim your power at work with these five tips.
- Worklife balance is a myth. Whether you’re working from home or actually going to a work site, there’s no such thing as work life balance and there never has been. It’s impossible to devote your full attention to work and family at the same time — something will suffer. As time management guru David Allen explained, you can do anything you want, you just can’t do everything you want. Learn how to say no to anything that isn’t absolutely necessary. For me, if it’s not a hell yes, then it’s a hell no. Unless you can’t say “no,” use your non-work time to do something that brings you joy and sustains you. Find a passion project. When you focus on life balance, your work life will improve.
- Change your thoughts and change your life. Do you focus on everything that’s happened to you? Why not reframe that to believe that everything happens for you? What are the lessons that you can learn from the curveballs that life has thrown at you? A job loss could be your impetus to start your own business or go back to school. An abusive boss may be what you need to get out of your comfort zone and look for another job. Changing your mindset will help you at home and at work because you’ll get much less frustrated over things you can’t control. You’ll soon be the go-to person because you’ve shown that you can be flexible and you’re able to pivot. Resilience and grit are key currencies in the workplace, particularly in the age of COVID.
- Forgive no matter what. Before you stop reading, I didn’t say that you have to forget. Anger and resentment impacts everyone in your life and it can affect your health. You’re either complaining to your colleagues about your family or complaining to your family about your colleagues. Don’t demand an apology and don’t dwell on the fact that you’re “right.” Forgive without conditions and treat everyone as though they only have 24 hours to live. Forgiveness is a gift, not to the other person but to yourself. Once you forgive someone, they no longer have power over you because they no longer take up space in your head or your heart. You don’t even have to tell the person you’ve forgiven them, but it helps. Acknowledge any role you’ve played in the issue, apologize, and then forgive. Even if you don’t want to be magnanimous, just think of how much you’ll upset the power dynamic with the person who hurt you if you make it clear that you’re no longer angry with them. Remember, the opposite of hate isn’t love, it’s indifference. No matter what they’ve done, let it go and set yourself free. You’ll be much lighter and a much more pleasant person to be around.
- Words have power. We’ve all heard about the power of affirmations and gratitude. I wake up in the morning and journal about what I’m grateful for, even if what I want hasn’t happened yet. I’m specific and I write in the present tense. I see, feel, smell, taste and hear what I would experience if what I wanted was true. Sooner or later, some variation of what I journaled or something better comes to pass. When you dream big, you achieve big. Think of that job or promotion as though it were already yours. But words are equally powerful when you speak negatively. Do you say, “I always get sick,” “the boss will never promote me,” or “I hate my job”? Think about what you say to yourself and how that corresponds to where you are in your life. I’ve literally gone to the hospital within days of telling someone they were going to cause me to have a heart attack or stroke. Twice.
- Have your FU fund and make sure people know about it. This is my most important tip. Never let your employer think you need the job. Know your value and then add tax to it. When you have a “forget you” fund, you’re not tied to either a job or a relationship for financial reasons. This affects how people treat you because they know that you can leave without a second thought if you see something unethical, get passed over for a promotion, or don’t get the respect you deserve. When I was in corporate America, I had saved enough to live for two years without working. My boss knew it and so did the board of directors. But let’s be honest, some of us are struggling just to pay the bills. In that case, start thinking of your side hustle. What skills are in demand? What kinds of certifications can you take online? How many other languages do you know? Are you using LinkedIn or Clubhouse to make meaningful contacts? If you have time for Facebook, TikTok, Instagram, and Netflix, you have time to learn something new so that you can level up your skills and be ready for any opportunities that open up either in your current workplace or someplace else.
Old habits are hard to break. If you’re a people pleaser, think self-care is selfish, have limiting beliefs, or have resentments that you can’t let go of, some of these tips may seem out of reach. If so, find an accountability partner and just pick one or two to work on. It will change your life. Don’t just survive 2021. Thrive.
If this woo woo stuff appeals to you, feel free to follow me on Instagram at @illuminatingwisdom or check me out on my website.
Finally, I hope to "see" some of you at AALS on January 8 at 1:15 EST at the Section on Socio-Economics, Co-Sponsored by Business Associations, Minority Groups and Securities Regulation: For Whose Benefit Public Corporations? Perspectives on Shareholder and Stakeholder Primacy. Join me and co-bloggers Joshua Fershee and Stefan Padfield, along with:
- Robert Ashford, Professor of Law, Syracuse University College of Law
- Lucian Arye Bebchuk, James Barr Ames Professor of Law, Economics, and Finance and Director, Program on Corporate Governance Harvard Law School
- Margaret M. Blair, Milton R. Underwood Chair in Free Enterprise; Professor of Law,Vanderbilt University Law School
- June Rose Carbone, Robina Chair in Law, Science and Tech, University of Minnesota Law School
- Sergio Alberto Gramitto Ricci,Cornell Law School
- Michael P. Malloy, Distinguished Professor of LawUniversity of the Pacific, McGeorge School of Law
- Edward L. Rubin, University Professor of Law and Political ScienceVanderbilt University Law School
- George B. Shepherd, Emory University School of Law
Stefan is giving us 8 minutes each, so there's no way you can get bored. See you there!
Tuesday, December 1, 2020
A job posting that may be of interest to some of our readers.
BOSTON UNIVERSITY SCHOOL OF LAW, a top-tier law school with an international reputation, is a community of leading legal scholars, teachers, students, and alumni, dedicated to providing one of the finest legal educations in the world. The breadth and depth of our curriculum, especially our clinical program, as well as our innovative spirit are distinctive in American legal education.
Boston University School of Law is seeking to hire a full-time attorney in its Startup Law Clinic (the “Clinic”). The Clinic is part of BU Law’s Entrepreneurship, Intellectual Property, and Cyberlaw Program, which is a unique collaboration between BU Law and the Massachusetts Institute of Technology. The School of Law believes that the cultural and social diversity of our faculty, staff, and students is vitally important to the distinction and excellence of our academic programs. To that end, we are especially eager to hear from applicants who support our institutional commitment to BU as an inclusive, equitable, and diverse community.
The Clinic represents current students at MIT and BU on matters related to a wide range of legal issues faced by early-stage business ventures. The attorney would be expected to help law students counsel clients and represent students in transactional settings. Clients often present questions of law involving for-profit and nonprofit entity formation, allocations of equity, startup financing, employment and independent contractor issues, ownership of intellectual property, privacy policies, terms of service and other third-party contractual relationships, and trademark and copyright matters. Experience representing startup ventures is considered a plus.
The attorney’s primary responsibility will be to supervise and assist students with direct client representation matters. The attorney will also assist the Clinic Director and Assistant Director in preparing and teaching a year-long seminar for students enrolled in the Clinic, including developing materials, performing research, and coordinating classroom activities and guest presentations. The position is a year-round position and the attorney also would work with student fellows hired to continue the work of the clinic during the summer. As time allows, the attorney would also work with the Clinic Director and Assistant Director to develop generalized legal resources and informational material to inform MIT and BU students on the legal aspects of forming and operating for-profit and nonprofit entities.
The ideal candidate is a member of the Massachusetts bar or is eligible for membership via admission by motion, with at least two years of experience advising clients in a transactional setting, and a willingness to support the work of creative and innovative young clients. Teaching experience or a strong interest in developing as a clinical faculty member is also considered a plus. Exceptional writing, editing, organizational, and managerial skills are required.
The attorney will be hired as a Visiting Clinical Assistant Professor to a two-year contract. The ideal start date is May 24, 2021.
Since we opened our doors in 1872, Boston University School of Law has been committed to admitting and building our classes without regard to race, gender, or religion. We are dedicated to building a just, inclusive, and engaged community of faculty and students. We have more work to do to make our environment more just. Boston University School of Law is committed not only to the ideals of faculty diversity and inclusion but also to the work of creating and implementing practices that combat exclusion and inequity by race, gender, gender identity, disability status, religion, or other identities subject to historical subordination. We strive to foster a more inclusive intellectual culture that represents and encourages a broad range of intellectual traditions and approaches to the law. We welcome expressions of interest from applicants of all identities, intellectual traditions, and perspectives.
DO NOT APPLY THROUGH THE BU WEBSITE:
Applicants should send a letter of interest and a resume to Jim Wheaton, Clinical Associate Professor and Director of the Startup Law Clinic. Email applications are encouraged and should be sent to email@example.com. Applications received on or before January 31, 2021 will be given full consideration.
To learn more about the law school, visit our website at www.bu.edu/law, and to learn more about the Clinic, please visit https://sites.bu.edu/startuplaw/. If you have specific questions about the position, contact Jim Wheaton at firstname.lastname@example.org.
We are an equal opportunity employer and all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability status, protected veteran status, or any other characteristic protected by law. We are a VEVRAA Federal Contractor.
BOSTON, Massachusetts, United States
Friday, October 9, 2020
How are you doing? I'm exhausted between teaching, grading, consulting, writing, and living through a pandemic. I actually wasn't planning to post today because I post every other Friday, as a way to maintain some balance. I may not post next Friday because I'll be participating in Connecting the Threads, IV, our business law professor blog annual conference. It's virtual and you may get up to 8 CLE credits, including an ethics credit. If you love our posts, you'll get to see us up close and personal, and you won't even need a mask.
I decided to do this short post today because it may help some of you, whether you're professors or practitioners. Several years ago, Haskell Murray wrote that he does a mid-semester survey. He asks his students what they like and don't like. I love this idea ... in theory. How many of us really want to know how we're doing? I've done it a couple of times when I knew that the class was going great, but I don't do it consistently. I decided to do it this year because we are piloting a new program modeled after Emory's Transactional Law Program. I used to teach one or two sections of transactional drafting every semester by myself, but now I do the lecture portion (asynchronously) and six adjuncts teach the skills portion in live classes via Zoom (for now). In some ways, it was easier to teach by myself. Five of the six adjuncts are teaching for the first time, and online at that. It's not easy. I also do pre-recorded videos with questions embedded via Feedback Fruits that students must answer. Each week, I review the answers for each of the classes, look for trends and gaps in knowledge, debrief with the adjuncts, hold office hours with the students, and try to find current events related to what we are doing. I also teach two sections of legal writing to 1Ls. My life is a constant stream of conferences and marking up drafts.
Students tell me they love the transactional drafting class, but what about those who don't say anything? So, I bit the bullet and sent out an anonymous survey to the seventy students enrolled. So far less than 1/3 have responded, but I've already gleaned valuable insight. I sent the survey out two days ago and I've already changed the structure of my videos and am holding a mid-semester review. The students validated my concerns about one of our books. Some students were just glad to be asked. Most important, I won't have to wait until the evaluations at the end of the semester.
Ironically, when I consult with companies on employee relations or corporate culture issues, I recommend that they do a Start, Stop, Continue or Do More, Do Not Change, Do Less exercise with the employees. I've even led focus groups on this, and employees love it because they feel engaged. As long as the company actually commits to making changes as appropriate, it's a powerful tool.
I challenge you to ask your students or your employees how you're doing, especially in these trying times. You may be surprised. If you have other novel recommendation for getting feedback from students or employees, let us know in the comments.
I hope to see you next week at the Connecting the Threads Conference.
Friday, October 2, 2020
No. You didn't miss Part 1. I wrote about Weinstein clauses last July. Last Wednesday, I spoke with a reporter who had read that blog post. Acquirors use these #MeToo/Weinstein clauses to require target companies to represent that there have been no allegations of, or settlement related to, sexual misconduct or harassment. I look at these clauses through the lens of a management-side employment lawyer/compliance officer/transactional drafting professor. It’s almost impossible to write these in a way that’s precise enough to provide the assurances that the acquiror wants or needs.
Specifically, the reporter wanted to know whether it was unusual that Chevron had added this clause into its merger documents with Noble Energy. As per the Prospectus:
Since January 1, 2018, to the knowledge of the Company, (i), no allegations of sexual harassment or other sexual misconduct have been made against any employee of the Company with the title of director, vice president or above through the Company’s anonymous employee hotline or any formal human resources communication channels at the Company, and (ii) there are no actions, suits, investigations or proceedings pending or, to the Company’s knowledge, threatened related to any allegations of sexual harassment or other sexual misconduct by any employee of the Company with the title of director, vice president or above. Since January 1, 2018, to the knowledge of the Company, neither the Company nor any of its Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or other sexual misconduct by any employee of the Company with the title of director, vice president or above.
Whether I agree with these clauses or not, I can see why Chevron wanted one. After all, Noble’s former general counsel left the company in 2017 to “pursue personal interests” after accusations that he had secretly recorded a female employee with a video camera under his desk. To its credit, Noble took swift action, although it did give the GC nine million dollars, which to be fair included $8.3 million in deferred compensation. Noble did not, however, exercise its clawback rights. Under these circumstances, if I represented Chevron, I would have asked for the same thing. Noble’s anonymous complaint mechanisms went to the GC’s office. I’m sure Chevron did its own social due diligence but you can never be too careful. Why would Noble agree? I have to assume that the company’s outside lawyers interviewed as many Noble employees as possible and provided a clean bill of health. Compared with others I’ve seen, the Chevron Weinstein clause is better than most.
Interestingly, although several hundred executives have left their positions due to allegations of sexual misconduct or harassment since 2017, only a small minority of companies use these Weinstein clauses. Here are a few:
Except in each case, as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the Knowledge of the Company, (i) no allegations of sexual harassment have been made against (A) any officer or director of the Acquired Companies or (B) any employee of the Acquired Companies who, directly or indirectly, supervises at least eight (8) other employees of the Acquired Companies, and (ii) the Acquired Companies have not entered into any settlement agreement related to allegations of sexual harassment or sexual misconduct by an employee, contractor, director, officer or other Representative.
- Merger between Genuine Parts Company, Rhino SpinCo, Inc., Essendant Inc., and Elephant Merger Sub Corp.:
To the knowledge of GPC, in the last five (5) years, no allegations of sexual harassment have been made against any current SpinCo Business Employee who is (i) an executive officer or (ii) at the level of Senior Vice President or above.
- AGREEMENT AND PLAN OF MERGER BY AND AMONG WORDSTREAM, INC., GANNETT CO., INC., ORCA MERGER SUB, INC. AND SHAREHOLDER REPRESENTATIVE SERVICES LLC:
(i) The Company is not party to a settlement agreement with a current or former officer, employee or independent contractor of the Company or its Affiliates that involves allegations relating to sexual harassment or misconduct. To the Knowledge of the Company, in the last eight (8) years, no allegations of sexual harassment or misconduct have been made against any current or former officer or employee of the Company or its Affiliates.
- AGREEMENT AND PLAN OF MERGER By and Among RLJ ENTERTAINMENT, INC., AMC NETWORKS INC., DIGITAL ENTERTAINMENT HOLDINGS LLC and RIVER MERGER SUB INC.:
(c) To the Company’s Knowledge, in the last ten (10) years, (i) no allegations of sexual harassment have been made against any officer of the Company or any of its Subsidiaries, and (ii) the Company and its Subsidiaries have not entered into any settlement agreements related to allegations of sexual harassment or misconduct by an officer of the Company or any of its Subsidiaries.
Here are just a few questions:
- What's the definition of "sexual misconduct"? Are the companies using a legal definition? Under which law? None of the samples define the term.
- What happens of the company handbook or policies do not define "sexual misconduct"?
- How do the parties define "sexual harassment"? Are they using Title VII, state law, case law, their diversity training decks, the employee handbook? None of the samples define the term.
- What about the definition of "allegation"? Is this an allegation through formal or informal channels (as employment lawyers would consider it)? Chevron gets high marks here.
- Have the target companies used the best knowledge qualifiers to protect themselves?
- How will the target company investigate whether the executives and officers have had “allegations”? Should the company lawyers do an investigation of every executive covered by the representation to make sure the company has the requisite “knowledge”? If the deal documents don't define "knowledge," should we impute knowledge?
- What about those in the succession plan who may not be in the officer or executives ranks?
Will we see more of these in the future? I don’t know. But I sure hope that General Motors has some protection in place after the most recent allegations against Nikola’s founder and former chairman, who faces sexual assault allegations from his teenage years. Despite allegations of fraud and sexual misconduct, GM appears to be moving forward with the deal, taking advantage of Nikola’s decreased valuation after the revelation of the scandals.
I’ll watch out for these #MeToo clauses in the future. In the meantime, I’ll ask my transactional drafting students to take a crack at reworking them. If you assign these clauses to your students, feel free to send me the work product at email@example.com.
Take care and stay safe.
October 2, 2020 in Compliance, Contracts, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Employment Law, Ethics, Lawyering, M&A, Management, Marcia Narine Weldon, Securities Regulation | Permalink | Comments (1)
Friday, September 18, 2020
Two weeks ago, I wrote about the role of compliance officers and general counsel working for Big Pharma in Where Were the Gatekeepers- Part 1. As a former compliance officer and deputy general counsel, I wondered how and if those in-house sentinels were raising alarm bells about safety concerns related to rushing a COVID-19 vaccine to the public. Now that I’ve watched the Netflix documentary “The Social Dilemma,” I’m wondering the same thing about the lawyers and compliance professionals working for the social media companies.
The documentary features some of the engineers and executives behind the massive success of Google, Facebook, Pinterest, Twitter, YouTube and other platforms. Tristan Harris, a former Google design ethicist, is the star of the documentary and the main whistleblower. He raised concerns to 60 Minutes in 2017 and millions have watched his TED Talk. He also testified before Congress in 2019 about how social media companies use algorithms and artificial intelligence to manipulate behavior. Human rights organizations have accused social media platforms of facilitating human rights abuses. Facebook and others have paid billions in fines for privacy violations. Advertisers boycotted over Facebook and hate speech. But nothing has slowed their growth.
The documentary explicitly links the rising rate of youth depression, suicide, and risk taking behavior to social media’s disproportionate influence. Most of my friends who have watched it have already decreased their screen time or at least have become more conscious of it. Maybe they are taking a cue from those who work for these companies but don’t allow their young children to have any screen time. Hmmm …
I’ve watched the documentary twice. Here are some of the more memorable quotes:
”If you’re not paying for the product, then you’re the product.”
“They sell certainty that someone will see your advertisement.”
“It’s not our data that’s being sold. They are building models to predict our actions based on the click, what emotions trigger you, what videos you will watch.”
“Algorithms are opinions embedded in code.”
”It’s the gradual, slight, imperceptible change in our own behavior and perception that is the product.”
“Social media is a drug.”
”There are only two industries that call their customers ‘users’: illegal drugs and software.”
”Social media is a marketplace that trades exclusively in human futures.”
”The very meaning of culture is manipulation.”
“Social media isn’t a tool waiting to be used. It has its own goals, and it has its own means of pursuing them.”
“These services are killing people and causing people to kill themselves.”
“When you go to Google and type in “climate change is,” you will get a different result based on where you live … that’s a function of … the particular things Google knows about your interests.”
“It’s 2.7 billion Truman Show. Each person has their own reality, their own facts.”
“It worries me that an algorithm I worked on is increasing polarization in society.”
“Fake news on Twitter spreads six times faster than real news.”
“People have no idea what is true and now it’s a matter of life and death.”
“Social media amplifies exponential gossip and exponential hearsay to the point that we don’t know what’s true no matter what issue we care about.”
“If you want to control the operation of a country, there’s never been a better tool than Facebook.”
"The Russians didn't hack Facebook. What they did was use the tools Facebook created for legitimate advertisers and legitimate users, and they applied it to a nefarious purpose."
“What [am I] most worried about? In the short term horizon? Civil War.”
“How do you wake up from the matrix when you don’t know you’re in the matrix”?
“You could shut down the service and destroy . . . $20 billion in shareholder value and get sued, but you can’t in practice put the genie back in the model.”
“We need to accept that it’s ok for companies to be focused on making money but it’s not ok when there’s no regulation, no rules, and no competition and companies are acting as de facto governments and then saying ‘we can regulate ourselves.’ “
“There’s no fiscal reason for these companies to change.”
This brings me back to the beginning of my post. We’ve heard from former investors, engineers, and algorithm magicians from these companies, but where were and are the gatekeepers? What were they doing to sound the alarm? But maybe I’m asking the wrong question. As Ann Lipton’s provocative post on Doyle, Watson, and the Purpose of the Corporation notes, “Are you looking at things from outside the corporation, in terms of structuring our overall legal and societal institutions? Or are you looking at things from inside the corporation, in terms of how corporate managers should understand their jobs and their own roles?”
If you’re a board member or C-Suite executive of a social media company, you have to ask yourself, what if hate speech, fake news, polarization, and addiction to your product are actually profitable? What if perpetuating rumors that maximize shareholder value is the right decision? Why would you change a business model that works for the shareholders even if it doesn’t work for the rest of society? If social media is like a drug, it’s up to parents to instill the right values in their children. I get it. But what about the lawyers and the people in charge of establishing, promoting, and maintaining an ethical culture? To be clear, I don’t mean in any way to impugn the integrity of lawyers and compliance professionals who work for social media companies. I have met several at business and human rights events and privacy conferences who take the power of the tech industry very seriously and advocate for change.
The social media companies have a dilemma. Compliance officers talk about “tone at the top,” “mood in the middle,” and the “buzz at the bottom.” Everyone in the organization has to believe in the ethical mandate as laid out and modeled by leadership. Indeed, CEOs typically sign off on warm, fuzzy statements about ethical behavior in the beginning of the Code of Conduct. I’ve drafted quite a few and looked at hundreds more. Notably, Facebook’s Code of Conduct, updated just a few weeks ago, has no statement of principle from CEO Mark Zuckerberg and seems very lawyerlike. Perhaps there’s a more robust version that employees can access where Zuckerberg extols company values. Twitter’s code is slightly better and touches more on ethical culture. Google’s Code states, “Our products, features, and services should make Google more useful for all our users. We have many different types of users, from individuals to large businesses, but one guiding principle: “Is what we are offering useful?”’ My question is “useful” to whom? I use Google several times a day, but now I have to worry about what Google chooses to show me. What's my personal algorithm? I’ve been off of Facebook and Instagram since January 2020 and I have no plans to go back.
Fifty years ago, Milton Friedman uttered the famous statement, “There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The social media companies have written the rules of the game. There is no competition. Now that the “Social Dilemma” is out, there really isn’t any more deception or fraud.
Do the social media companies actually have a social responsibility to do better? In 2012, Facebook’s S-1 proclaimed that the company’s mission was to “make the world more open and connected.” Facebook’s current Sustainability Page claims that, “At Facebook, our mission is to give people the power to build community and bring the world closer together.” Why is it, then that in 2020, people seem more disconnected than ever even though they are tethered to their devices while awake and have them in reach while asleep? Facebook’s sustainability strategy appears to be centered around climate change and supply chain issues, important to be sure. But is it doing all that it can for the sustainability of society? Does it have to? I have no answer for that. All I can say is that you should watch the documentary and judge for yourself.
September 18, 2020 in Ann Lipton, Compliance, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Ethics, Family, Film, Human Rights, Lawyering, Management, Marcia Narine Weldon, Psychology, Shareholders, Television | Permalink | Comments (0)
Monday, September 14, 2020
Lawyers as leaders.
Reputation is sacred.
So, guard it closely.
In my new role as Interim Director of UT Law's Institute for Professional Leadership (IPL, for short), I have made a commitment to sit in on the classes in the Institute's curriculum. One of them, Lawyers as Leaders, is the flagship course--the course that catalyzed the establishment of the IPL. This semester, it is being hosted on Zoom.
In that course this afternoon, the students wrestled with attorney misconduct--and how to punish it. During the first hour of the two-hour session, they spent time in breakout rooms discussing three cases that involved different lapses of professional responsibility rules (and, in some cases, criminal law rules). They were asked to report out/comment on several things about those cases, including the propriety and relative severity of the penalties imposed on the respective transgressor attorneys. During the second hour of class, the students had the opportunity to listen to one of the three offenders tell his story and share what he learned about leadership through his misconduct. They also were invited to ask him questions.
The story that the students heard was the one involved in this case. But they heard about the facts in a way that the Tennessee Supreme Court could not possibly convey them. And they heard about the personal family tragedy that intersected with the case.
The class was a very moving experience for me--even though I have heard the story told before. I can only hope that the learning done by the students was as powerful as the teaching. The haiku that introduces this post only covers the top line; there is so much more richness there that can only be appreciated by hearing the story in person. I found myself wishing that I had been afforded the opportunity to learn about professional responsibility and leadership in a similarly compelling way during my law school career. I am grateful for the opportunity to lead this program.
Saturday, September 5, 2020
I think that the GCs at Big Pharma have hacked into my Zoom account. First, some background. Earlier this week, I asked my students in UM’s Lawyering in a Pandemic course to imagine that they were the compliance officers or GCs at the drug companies involved in Operation Warp Speed, the public-private partnership formed to find a vaccine for COVID-19 in months, rather than years. I asked the students what they would do if they thought that the scientists were cutting corners to meet the government’s deadlines. Some indicated that they would report it internally and then externally, if necessary.
I hated to burst their bubbles, but I explained that the current administration hasn’t been too welcoming to whistleblowers. I had served on a non-partisan, multi-stakeholder Department of Labor Whistleblower Protection Advisory Committee when President Trump came into office, which was disbanded shortly thereafter. For over a year after that, I received calls from concerned scientists asking where they could lodge complaints. With that background, I wanted my students to think about how company executives could reasonably would report on cutting corners to the government that was requiring the “warp speed” results in the first place. We didn’t even get into the potential ethical issues related to lawyers as whistleblowers.
Well the good news is that Pfizer, Moderna, Johnson & Johnson, GlaxoSmithKline, and Sanofi announced on Friday that they have signed a pledge to make sure that they won’t jeopardize public safety by ignoring protocols. Apparently, the FDA may be planning its own statement to reassure the public. I look forward to seeing the statements when they’re released, but these companies have been working on these drugs for months. Better late than never, but why issue this statement now? Perhaps the lawyers and compliance officers – the gatekeepers – were doing their jobs and protecting the shareholders and the stakeholders. Maybe the scientists stood their ground. We will never know how or why the companies made this decision, but I’m glad they did. The companies hadn’t announced this safety pledge yet when I had my class and at the time, almost none of the students said they would get the vaccine. Maybe the pledge will change their minds.
Although the drug companies seem to be doing the right thing, I have other questions about Kodak. During the same class, I had asked my students to imagine that they were the GC, compliance officer, or board member at Kodak. Of course, some of my students probably didn’t even know what Kodak is because they take pictures with their phones. They don’t remember Kodak for film and cameras and absolutely no one knows Kodak as a pharmaceutical company. Perhaps that’s why everyone was stunned when Kodak announced a $765 million federal loan to start producing drug ingredients, especially because it’s so far outside the scope of its business. After all, the company makes chemicals for film development and manufacturing but not for life saving drugs. Kodak has struggled over the past few years because it missed the boat on digital cameras and has significant debt, filing for bankruptcy in 2012. It even dabbled in cryptocurrency for a few months in 2018. Not the first choice to help develop a vaccine.
To be charitable, Kodak did own a pharmaceutical company for a few years in the 80’s. But its most recent 10-K states that “Kodak is a global technology company focused on print and advanced materials and chemicals. Kodak provides industry-leading hardware, software, consumables and services primarily to customers in commercial print, packaging, publishing, manufacturing and entertainment.”
The Kodak deal became even more newsworthy because the company issued 1.75 million in stock and options to the CEO and other grants to company insiders and board members before the public announcement of the federal loan. The CEO had only had the job for a year. I haven’t seen any news reports of insiders complaining or refusing the grants. In fact, the day after the announcement of the loan, a Kodak board member made a $116 million dollar donation to charity he founded. Understandably, the news of the deal caused Kodak’s shares to soar. Insiders profited, and the SEC started asking questions after looking at records of the stock trades.
Alas, the deal is on hold as the SEC investigates. The White House’s own trade advisor has said that this may be “one of the dumbest decisions by executives in corporate history.” I’m not sure about that, but there actually may be nothing to see here. Some believe that there was a snafu with the timing of the announcement and that the nuances of Reg FD may get Kodak off the hook .I wonder though, what the gatekeepers were doing? Did the GC, compliance officer, or any board member ask the obvious questions? “Why are we doing something so far outside of our core competency?” They didn’t even get the digital camera thing right and that is Kodak’s core competency. Did anyone ask “should we really be issuing options and grants right before the announcement? Isn’t this loan material, nonpublic information and shouldn’t we wait to trade?”
I’ll keep watching the Kodak saga and will report back. In coming posts, I’ll write about other compliance and corporate governance mishaps. In the meantime, stay safe and please wear your masks.
September 5, 2020 in Compensation, Compliance, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Ethics, Financial Markets, Lawyering, Management, Marcia Narine Weldon, Securities Regulation, Shareholders, Technology | Permalink | Comments (0)
Sunday, August 2, 2020
(A bit of the harvest picked from my parent's garden in north Georgia yesterday)
Last Thursday my neighborhood book club discussed work by poet David Whyte. This book club has been especially life-giving during the pandemic. I have deep admiration for every member of the group and always learn from our meetings. In March and April, we briefly moved to Zoom, but were unable to capture the same energy. We then decided to meet in person, bringing chairs to a member’s spacious driveway that backs up to common green space.
The work we discussed last week was not actually a book, but rather a few hours of David Whyte’s musings, only available in audio form. Much of the talk involves Whyte reading poetry – primarily his own, Rainer Maria Rilke’s and Mary Oliver’s – and relating that poetry to questions many of us ponder in midlife.
While I can’t locate the exact quote in the long recording, Whyte used a harvesting metaphor effectively. Whyte suggests that if we don’t slow down to be present for the harvest times in our lives, the fruit will rot on the vine. He reminds us, for example, that our child will only be five years old for a relatively short season. By being present for the harvest, I think Whyte means celebrate (among other things).
The practice of law, at least as it appears to be carried out by most major firms, leaves precious little time for celebration. In fact, during my handful of years at two major law firms, I can only recall a single occasion of truly pausing to celebrate the harvest.
This occasion involved a closing dinner. A celebratory dinner after closing a deal to buy or sell a company is relatively common in M&A practice. In my somewhat limited experience, however, law firms often organized these dinners to impress clients and tee up future deals. Networking, not savoring, is the focus. Often only the partners and clients attend closing dinners. The associates (or at least the junior associates) are usually back in the office working on the next matter.
This dinner was different. King & Spalding partner Russ Richards had just closed two relatively large deals in the same week with the assistance of same four associate attorneys. While the hours had been grueling, even by BigLaw standards, I didn’t expect to be invited to a closing dinner. Surprisingly, Russ not only invited the other three associates and me, but also encouraged us to bring a dates. Moreover, this was not a dinner to impress the clients; no clients were invited. We did not spend much time, if any, setting up future deals. We just celebrated work well done with wonderful wine, food, and company.
If there were more of this sort of unadulterated celebration of the harvest in BigLaw, I imagine the turnover would be much lower. And maybe one of the reasons Russ Richards excelled in a 45+ year career with the same firm is because he created moments of celebration and reflection like these. As I have argued before, I think one of the ways to make BigLaw more humane is to work in some time for celebration and rejuvenation, perhaps in the form of sabbaticals. A formal promotion to “senior associate” around the four-year mark, followed by a brief sabbatical (even as short as one month) would do wonders for the profession. Even longer sabbaticals, perhaps tied to a project improving the community, could be worthwhile as well.
Of course life is not, and probably should not be, constant celebration. To stretch Whyte’s metaphor further—as anyone who has tried their hand at farming knows—fruit that is the product of a season of sweat tastes sweeter than fruit obtained from a grocery deliver service. The gritty, difficult, back-spasm-inducing times are an important part of the process. That said, especially for those of us bent more in the direction of overwork, making some space to celebrate the harvest is essential.
Finally, and importantly, we should make a point to notice and celebrate the achievements of others. Whyte seems to focus on being present for the fruition of our own work, but I am convinced that pausing to celebrate the accomplishments of others can be even more worthwhile.
Friday, June 26, 2020
Last week, I wrote the first in a series of posts with tips for teaching online. I expect many more law schools to join Harvard and now UC Berkeley by doing all Fall classes online. I’m already teaching online this summer and will teach online in the fall. Our students deserve the best, so I’m spending my summer on webinars from my home institution and others learning best practices in course design.
Here are some tips that I learned this week from our distance learning experts. First, I need to adopt backward design. I have to identify the learning objectives for my courses, then decide how I will assess whether or not students successfully met the learning objective. Effective learning objectives are active, measurable, and focus on different levels of learning (e.g., remembering, understanding, applying, analyzing, evaluating, creating). Some people find Bloom's Taxonomy of Educational Objectives helpful.
Once I figure out my learning objectives, I will work backwards to determine what kinds of activities the students will work on either online or face to face (which for me will be Zoom). For more on this topic, see this guide to backward design from Vanderbilt University Center for Teaching. By the way, if you’re wondering why I’m not just saying click here, it’s because descriptive text is better for accessibility.
Then I will figure out the technology, which is important, but shouldn’t drive how or what I teach. Although we think our students are tech savvy, we still need to keep it simple and intuitive. We have to think about how to engage the students and facilitate learning without taking up too much bandwidth.
Finally, I need to ask myself some hard questions.
What do you want students to know when they have finished taking your blended course? What are the intended learning outcomes of the course?
- This actually takes some thought. We all have our mandated ABA learning objectives but what do they really mean, especially in today’s environment? How do I make sure that the learning objectives are pedagogically sound? What do students need to learn to be practical, strategic lawyers? What kinds of people, process, and tech skills do they need for the “new normal” when it comes to delivery of legal services? Yes, I want my students to know how to communicate more effectively to clients, counsel, and judges in my legal writing course. I want my students to know how to draft, edit, and negotiate contracts in my upper level skills courses. I want my compliance students to understand the law and the soft skills. But what other skills matter now? How will I communicate those over Zoom?
As you think about these outcomes, which would be better achieved in the online environment and which would be best achieved face-to-face in class?
- How much harder will it be to teach people skills and impart complex concepts online? I don’t have the option for face-to-face classes in the Fall and many of you won’t either, sorry to say. In the Fall, I will have one online asynchronous course and another hybrid. It will be all online but I will record some lectures and use the synchronous time for simulations, peer review, and discussions. I’m trying to determine how to make the synchronous time as engaging as possible – even more engaging than I would if I was standing in front of the room. I will have to compete with barking dogs, the comforts of a couch, and other electronic distractions that I would not have in an in-person environment. I’ll post more about keeping students engaged online in a subsequent post.
Blended teaching is not just a matter of transferring a portion of your existing course to the online environment. What types of learning activities do you think you will be using for the online portion of your course? For the face-to-face part of the course?
- Each week, I plan to use discussion boards and no-stakes short quizzes to ensure understanding for the asynchronous portions of my courses. My pre-recorded videos will be no longer than fifteen minutes, and ideally seven minutes or less. As stated above, for the synchronous Zoom sessions, I will use polls, breakout rooms, and panels of students. Because I will have a flipped classroom, the students will have learned the concepts so that we can apply them in class. As for class discussions, I have found that I sometimes have a more intimate connection with students in a class of fewer than 25 on Zoom than I did in the classroom, but large classes are much tougher. Professors appear to have mixed views on using the Socratic method on Zoom. Since my face-to-face classes are on Zoom, I require cameras on so that I can see their faces, unless they have permission in advance from me or temporary bandwidth issues.
Blended courses provide new opportunities for asynchronous online discussions. How will you use asynchronous discussions as part of the course learning activities? What challenges do you anticipate in using online discussions? How would you address these?
- I have used pre-class discussion boards and have required students to reply on two other submissions. These count for class participation so students can’t just write “great comment.” I have also experimented with post-class discussion board submissions. They key is to follow up and comment myself so that students don’t feel like they’re in a black hole. I also plan to have one or two students per week post a current event to the discussion board that relates to what we are doing in class. During class time, I will ask another student to discuss or summarize the current event.
How will the face-to-face, online and other “out of class” learning activities be integrated into a single course? In other words, how will all the course activities feed back into and support the other? How will you make the connections between the activities explicit to students?
- This will be tough and this is why I will spend weeks this summer planning. I need to make it clear what the students need to read, watch, and do pre-class, in-class, and post-class. Teaching online takes much more pre-work than most people realize. But this planning is critical to ensuring that the students have a seamless course experience.
When working online, students frequently have problems scheduling their work and managing their time. What do you plan to do to help your students address these issues and understand their own role and responsibility for learning in the course?
- Students really need structure, and even though they don’t like to admit it, they prefer it. Online learning means that students must have more discipline than they are used to. I plan to recommend a workload course estimator so that students can plan appropriately. I will also have to cut back on the work I give because economic and health issues will continue to plague my students during the pandemic. Our university and others have rolled out tools for students to manage their time, and more important, manage their stress. I also plan to do frequent check-ins and increase office hours.
Students can have challenges with using new instructional technologies to support their learning. What specific technologies will you use for the online and face-to-face portions of your course? What proactive steps can you take to assist students to become familiar with your course website and those instructional technologies? If students need help with technology later in the course, how will you provide support?
- As I mentioned in the last post, it’s best for all professors to use the same platforms for the learning management system. You can add bells and whistles for team communication or polling later. As for helping students get familiar with the website, our university has instructional designers and lots of webinars, but I plan to test drive my eventual set up with my research assistants over the summer and ask them to be brutally honest. Fortunately, we have several online resources for students as well.
There is a tendency for faculty to require students to do more work in a blended course than they normally would complete in a traditional face-to-face course. What are you going to do to ensure that you have not created a course and one-half? How will you evaluate the student workload (and your own) as compared to a traditional class?
- This is my biggest concern. I spend many more hours prepping my online courses than my traditional courses, and I haven’t even been doing anything particularly sophisticated. Now that I’m learning more tools and techniques, I anticipate that I will be spending more time prepping. In my zeal to make sure the students have a great experience and learn as much or more than in the traditional classroom, I will likely give them more work as well, if I’m not careful. The key is to use the findings from learning science to find a balance.
In my next post, I’ll talk about what I’m learning about how students learn. In case you can’t wait to see what I write, check out Learning How to Learn, Small Teaching Online, and Online Learning and the Future of Legal Education. If you have suggestions or comments, please leave them below so we can all learn from each other.
 Our instructional designers attributed these questions to the University of Wisconsin, Milwaukee.
Tuesday, May 19, 2020
I am teaching Business Associations this summer, and I am excited to get back in the classroom. Well, I was. Instead, I am teaching in virtual class room via Zoom. I am still glad to be interacting with students in a teaching capacity, but I sure miss the classroom setting. I am glad, though, to have this experience so I am closer to what this has been like for our students and faculty. I still have the benefit of my colleagues experiences, students who have been in the online learning environment, and a little time to plan, so it's better for me than it was for everyone in March. Still, there is quite a learning curve on all of this.
Over the past several years, I have asked students to create a fictional limited liability company (LLC) for our first class. It does a number of things. To begin, it connects them with a whole host of decisions businesses must make in choosing their entity form. It also introduces them to the use of forms and how that works. I always give them an old version of the form. This year, I used 2017 Articles of Organization for a West Virginia Limited Liability Company. It does a couple of things. There is an updated form (2019), so it gives me a chance to talk about the dangers of using precedent forms and accepting what others provide you without checking for yourself. (Side note: I used West Virginia even though I an in Nebraska, because Nebraska doesn't have a form. I use this one to compare and contrast.)
In addition, I like my students to see how most businesses start with entity choice and formation -- by starting one. It leads to some great conversations about limited liability, default rules, member/manager management choices, etc. Each year, I have had at least one person opt-in for personal liability, for example, for all members.
I also, which will shock no one, use the form to discuss the distinct nature of LLCs and how they are NOT corporations. And yet, the West Virginia LLC form tries to under cut me at each turn. For example, the form requires that the LLC name choose a "corporate name ending." From the instructions:
Enter the exact name of the company and be sure to include one of the required corporate name endings: “limited liability company,” “limited company,” or the abbreviations “L.L.C.,” “LLC,” “L.C.,” or “LC.” “Limited” may be abbreviated as “Ltd.” and “Company” may be abbreviated as “Co.” [WV Code §31B-1-105] Professional companies must use “professional limited liability company,” “professional L.L.C.,” “professional LLC,” “P.L.L.C.,” or “PLLC.” [WV Code §31B-13-1303]
Seriously, people. LLC are not corporate. In fact, choosing a corporate name ending would be contrary to the statute.
The form continues:
13. a. The purpose(s) for which this limited liability company is formed is as follows (required): [Describe the type(s) of business activity which will be conducted, for example, “real estate,” “construction of residential and commercial buildings,” “commercial painting,” “professional practice of law" (see Section 2. for acceptable "professional" business activities). Purpose may conclude with words “…including the transaction of any or all lawful business for which corporations may be incorporated in West Virginia.”] (final emphasis added)
Finally, the instructions state that
[t]he principal office address need not be in WV, but is the principal place of business for the company. This is generally the address where all corporate documents (records) are maintained.(final emphasis added)
My students know from day one this matters to me, and it's not just semantics. My (over) zealousness helps underscore the importance of entity decisions, and the unique opportunities entities can provide, within the default rules and as modified. My first day, I always make sure students see this at least twice: "A thing you have to know. LLCs are not Corporations!"
Is it overkill? Perhaps, we all have our things.
Oh, and it's time for West Virginia to add a 2020 update to the LLC form.
Wednesday, April 29, 2020
This has been quite a first year as a dean. Heck, it's been quite a year for all of us.
I woke up (very) early this morning, and it struck me that I hadn't been in contact with our students since Friday, which was our last day of classes. I don't want to be a distraction to their studies, but I also realized the midway through the first week, they might need a reminder of what they have accomplished in the face of unique and unprecedented challenges. Following is the note I sent our students, which I share for all of us who might need a reminder of what we're accomplishing. It is addressed to our Creighton Law students, but it's for all law students. Hang in there.
It’s the middle of the first week of what has to be the strangest finals we have ever experienced. This is always a time of hard work, long days, and high stress, but never before have we had to be so separate while going through it. We can’t experience study group or lunch breaks with friends, or play basketball or soccer in a group to blow off steam. In addition, there are health concerns for ourselves and loved ones, and many of us have kids at home, in wide ranges of ages who may need help with homework or just to be watched because the daycares are closed.
Despite all of this, you have shown up. You have worked, and you have learned. You are a remarkable group of people, and I am so proud of all you have accomplished. I know there is more to do, and I know this has not been easy. And there will continue to be bumps in the road, so I need you to know you can do this. Not just exams. Not just law school. All of it. You can do life, and you can be exceptional at what you do.
This is true even if you’re struggling right now. It’s not what happens in the next couple of days that will define you. It will be how you respond on the other side of this that matters, and from what I have seen, you are up to the task. And know you will have your Creighton Law community by your side, or at you back, when you need it.
I know you have a lot left to do, so I won’t take up more of your time. Please just know that even though we’re not in the law school, we’re still here for you. Keep at it, and know you’re not alone.
Tuesday, February 4, 2020
When do transactional business lawyers add value to projects? The literature tells us that transactional business lawyers can help correct information asymmetries and facilitate regulatory arbitrage through their knowledge and skills. That all seems right. But how can that message and other conceptions of value be conveyed to first-year law students in less than two hours in a mandatory, S/NC course (i.e., a course in which some--maybe many--of the students do not really want to be there and believe they have better uses for their time)? Welcome to my world, for today . . . .
Steve Bainbridge has a nice blog post relating to transactional business lawyers that our students are required to read before class. (Thanks, Steve!) We will discuss the absence of transactional business lawyers in popular culture, elucidate the value propositions they represent in real life, and work through some business transactional scenarios that illustrate the value (or lack thereof) of involving lawyers in the matter. I have worked out the class plan with my co-instructor (who cannot be there for this class meeting). But I am looking for more.
What, in your view, must I ensure that I cover--and how? Are there videos or charts that you recommend I "check out" for potential presentation to the class? I teach the main session on this topic tomorrow afternoon (and I had hoped to post this yesterday . . .), but I can always come back to this topic in a future class meeting, if I play my cards right. Let me know if you have ideas or views.