Monday, May 3, 2021
Please join me in participating in Well-Being Week in Law (WWIL), #WellbeingWeekInLaw. WWIL is a week-long event that is aligned with Mental Health Awareness Month. (Yes, that's this month!) From the event website:
What’s The Purpose of WWIL?
The aim of WWIL is to raise awareness about mental health and encourage action and innovation across the profession to improve well-being. In 2021, the event’s name was changed from “Lawyer Well-Being Week” to Well-Being Week in Law to be more explicitly inclusive of all of the important contributors to the legal profession who are not lawyers.
Each day in the week, the WWIL program invites participants to focus on a different aspect of well-being, using this graphic as a guide:
I am planning on participating in WWIL activities as much as I can in this busy week filled with exams, papers, and the graduation for our third-year students.
Today's WWIL focus is physical well-being. I had a lovely 10,000+ step walk planned for this morning with a colleague to start the week off right. Rainstorms put the kibosh on that. (We are rescheduling . . . .) But I will try to get a walk in later in the day--outdoors, if the rain lets up for a bit or tapers off. Moreover, while I have not written about it recently, I do continue to practice and teach yoga. I also will work some yoga into the day later. It's a super antidote to that scrunchy feeling I get sitting at the computer all day! Both walking and yoga--desk yoga, specifically (check it out!)--are mentioned on a nifty WWIL webpage that offers ideas for how individuals can participate.
In addition to these movement-oriented ways of looking out for my physical well-being, now that classes are done for the semester (yay for that!), I have refocused attention on getting at least seven hours of sleep and hydrating more frequently and consistently. I also am cutting way back on coffee, which has been doing a number on my stomach of late. I try to eat a balanced diet (I am a meat, fish, and poultry eater and love almost every food imaginable), although I know that I can always use more veggies and fruits in my day! Perhaps some of these things also represent helpful suggestions for your well-being.
A good diet is hard to come by, however--at least sometimes. And there are specific health issues that I must focus on as I prepare to start my seventh decade of life in less than two weeks. (Humbling.) So, maintaining physical wellness, for me, also involves taking supplements and medications. I have recently recommenced taking iron supplements for a slightly low iron count that has been dragging my energy level down lately (something I also wrestled with a year ago--cause investigated and still unknown), even though doing that makes me cranky because of the way I have to sequence taking those supplements and a GERD medication that I dutifully take every morning. I also am restarting omega-3 supplements, which are known to lower high triglyceride levels (something I have contended with in the past). And I regularly take vitamin D supplements and an anti-cholesterol medication, as prescribed by my doctor. It's a lot to focus on, but I am worth it!
Gratefully, there is a lot of solid programming out there for lawyers who desire to improve their well-being. Even continuing legal education programs now cover this space (I have given two sessions on mindfulness) as part of professional responsibility/ethics training. And if you are interested in lawyer wellness--or just in avoiding burnout (read on)--you may want to check out a new podcast series that premieres on Wednesday: Leveraging Latitude. One of the co-hosts, Candice Reed, is an engaging UT Law alum who is the co-founder of a legal services recruitment/placement firm. She teaches in UT Law's Institute for Professional Leadership. (I sat through her "Thriving as Lawyer" class this semester. It was truly inspiring.) On LinkedIn, Candice notes the following about Wednesday's podcast:
Our first guest is former attorney and resilience expert Paula Davis. We'll be discussing her new book, Beating Burnout at Work: Why Teams Hold the Secret to Well-being and Resilience. This book is fantastic and full of pragmatic, science-backed strategies for addressing burnout, and Paula is a dynamic speaker and teacher. I hope that you will listen to our conversation.
Sounds like a highly relevant program, especially for us law professors at the end of a difficult semester and academic year.
Finally, I want to give a loving shout-out to co-blogger Marcia Narine Weldon. If you are not connected with her through LinkedIn, you are missing out in many ways--including as to tips on lawyer well-being. Her latest post, from yesterday, is here. In that post and the embedded video, Marcia honors Mental Health Awareness Month and advises us to take care of ourselves, especially if we take care of others. She offers multiple suggestions for ways to accomplish that self-care. Marcia also has shared wisdom on lawyer well-being here on the BLPB. She started us off in 2021 by counseling us on how to thrive this year and recently offered information on the business case for promoting, supporting, and even prioritizing attorney well-being. The courage and candor she shows in all of these communications is laudable and evidence of her caring nature and support for the legal community. Her work is an inspiration for this post.
Be well, y'all.
Friday, April 23, 2021
Cancel culture has been a hot topic for years, so when the University of Miami Law Explainer podcast asked me to talk about it, I had some reservations. I'm not shy, but I'm also not looking to be a headline in our campus newspaper, a meme, or a topic on Fox News. But I have strong feelings about this, and I agreed to speak.
I'm providing the link to the 20-minute interview here. I talked about my history as a radical protestor in college and law school (and my run in with Rush Limbaugh), the effect of boycotts and buycotts, whether Teen Vogue missed a teachable moment after firing an editor for tweets she made as a teenager, whether corporations are doing the right thing when they bow to pressure from vocal consumers, the uproar over the 1619 project, and more. If you want a break from drafting contracts or writing exams, take a listen and let me know what you think.
Friday, April 9, 2021
As regular readers of the blog know, my passion is business and human rights, particularly related to supply chain due diligence and disclosure. The ABA has just released thirty-three model clauses based on the United Nations Guiding Principles on Business and Human Rights, and the OECD Due Diligence Guidance for Responsible Business Conduct. The ABA committee's reasoning for the model clauses is here:
The human rights performance of global supply chains is quickly becoming a hot button issue for anyone concerned with corporate governance and corporate accountability. Mandatory human rights due diligence legislation is on the near-term horizon in the E.U. Consumers and investors worldwide are increasingly concerned about buying from and investing in companies whose supply chains are tainted by forced or child labor or other human rights abuses. Government bodies such as U.S. Customs and Border Protection are increasingly taking measures to stop tainted goods from entering the U.S. market. And supply chain litigation, whether led by human rights victims or Western consumers, is on the rise. There can therefore be little doubt that the face of global corporate accountability for human rights abuses within supply chains is changing. The issue is “coming home,” in other words. ... Some of the key MCCs 2.0 obligations include: (1) Human Rights Due Diligence: buyer and supplier must each conduct human rights due diligence before and during the term of the contract. This requires both parties to take appropriate steps to identify and mitigate human rights risks and to address adverse human rights impacts in their supply chains. (2) Buyer Responsibilities: buyer and supplier must each engage in responsible sourcing and purchasing practices (including practices with respect to order changes and responsible exits). A fuller description of responsible purchasing practices is contained in the Responsible Buyer Code of Conduct (Buyer Code), also developed and published by the Working Group. (3) Remediation: buyer and supplier must each prioritize stakeholder-centered remediation for human rights harms before or in conjunction with conventional contract remedies and damage assessments. Buyer must also participate in remediation if it caused or contributed to the adverse impact.
Even if you're not obsessed with business and human rights like I am, you may find the work product provides an interesting context in which to discuss contract clauses such as representations, warranties, and damages either in a first-year contract course or a transactional drafting course.
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, February 26, 2021
This isn't the post I had planned to write. In fact, I had two other ideas. But I feel compelled to write this, knowing that it may cause more controversy than it's worth.
My colleague Stefan Padfield wrote a post called "The Marxism In Your Diversity Training" that some would call provocative. Others would call it offensive. I had planned to comment on it, but he's taken it down. Did I agree with everything he said? No. Did I disagree with everything he said? Also no.
I have a unique perspective. I'm a Black female. I protested about race and gender issues in college and law school. I've been a management-side employment lawyer for 25 years both as outside counsel and in house. I still consult with companies, deliver training on EEO laws and polices, conduct discrimination investigations, and advise plaintiffs. I work hard to make sure that companies do the right thing. I've posted here before about my skepticism about certain diversity mandates. Not that we don't need MUCH more work in this area, but I'm not sure the approaches that some states and companies are taking will have long-term benefits.
My law school, like all others, is trying to figure out how to deal with race and social justice in the classroom. My conversations with some students and certain faculty members have been painful, draining, and exhausting. Closer to home, I have a 25-year old Black son. He's a gifted artist, has gone to school in Paris, has visited almost 20 countries, and wouldn't hurt a fly, but he's more likely to get stopped, frisked, arrested, or shot by police than his friends because of his skin color and hair style. If I don't hear from in within a 24-hour period, I panic.
So I have lots of thoughts about Stefan's post. Right or wrong, Stefan said what a lot of people that our students will encounter think. We owe it to them and each other to use our analytical skills and face volatile issues.
I've listened to presentations by outside speakers at my law school in the face of protests by some of our students because I believe in teaching and learning through reasoned debate, when possible. But I can't comment on Stefan's post because he took it down in the face of criticism. So I'm sad, but not for the reason that most would think. I'm sad because I think we could have had a thoughtful dialogue on some uncomfortable topics and been an example on how to disagree without being disagreeable. And that's a loss for everyone.
Friday, January 29, 2021
Please join me for this ABA Conference on February 10-11. I'm excited to serve as a mock board member on the 11th as well as on the plenary panel on “Leading Voices in ESG Initiatives” with representatives from United Airlines, Microsoft Asia, and others focusing on the many and sometimes conflicting imperatives of implementing ESG goals. I'll be particularly interested in the session by the General Motors GC, who will speak about the plan to go away from gasoline-powered vehicles, which GM just announced.
You can register by clicking here.
About the Virtual Conference:
The state of New York, on December 9, 2020, announced that its pension fund with over $226 billion in assets would divest its oil and gas stocks in companies that, in its view, contribute to global warming. The announcement emphatically highlights how ESG factors (Environmental, Social and Governance) across borders represent business risks but also opportunities for companies, their stockholders, and their other stakeholders. In-house legal departments are the first line of defense to re-orient business operations to address global ESG issues and to identify risks. These challenges, risks and opportunities are creating additional demands on legal departments with constrained resources as they navigate this “New Normal” in addition to their traditional responsibilities to stockholders. This two-day conference will provide in-depth critical analysis through three tracks that efficiently canvas each of the ‘E’, ‘S’ and ‘G’ elements. Through these three tracks, the conference will identify, explore, and evaluate key areas of relevance to in-house counsel wanting to navigate the numerous complex legal and operational issues raised by ESG in jurisdictions around the globe.
- Craig Glidden, Executive Vice President and General Counsel, General Motors
- Tim O’Connor, Senior Director, Environmental Defense Fund
- Olga V. Mack, CEO, Parley Pro
- Ashley Scott, Senior Counsel, Lime
- In-House Executives: Several current and former General Counsel, along with numerous senior in-house counsel across various industries, including Google, Nestle, Microsoft, General Motors, Accenture, LexisNexis, Chubb, United Airlines, Liberty Mutual, OPEC, Lazard, Iron Mountain, Willis Towers Watson, Norsk Hydro, and Equinor.
- ESG leaders: Leading ESG voices from law firms, non-profit organizations, and universities
What to Expect
This two-day cutting-edge conference will provide opportunities for-in-depth analysis of these issues through three tracks of interactive panel discussions that canvas each of the ‘E’, ‘S’ and ‘G’ elements, including how COVID-19 is accelerating ESG trends. Key areas of relevance to in-house counsel wanting to navigate the numerous complex legal and operational issues raised by ESG in jurisdictions around the globe, including NGO and government stakeholder perspectives, will also be examined.
CLEs will be available. I hope to see you there!
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!
Friday, December 18, 2020
If you read the title, you’ll see that I’m only going to ask questions. I have no answers, insights, or predictions until the President-elect announces more cabinet picks. After President Trump won the election in 2016, I posed eleven questions and then gave some preliminary commentary based on his cabinet picks two months later. Here are my initial questions based on what I’m interested in -- compliance, corporate governance, human rights, and ESG. I recognize that everyone will have their own list:
- How will the Administration view disclosures? Will Dodd-Frank conflict minerals disclosures stay in place, regardless of the effectiveness on reducing violence in the Democratic Republic of Congo? Will the US add mandatory human rights due diligence and disclosures like the EU??
- Building on Question 1, will we see more stringent requirements for ESG disclosures? Will the US follow the EU model for financial services firms, which goes into effect in March 2021? With ESG accounting for 1 in 3 dollars of assets under management, will the Biden Administration look at ESG investing more favorably than the Trump DOL? How robust will climate and ESG disclosure get? We already know that disclosure of climate risks and greenhouse gases will be a priority. For more on some of the SEC commissioners’ views, see here.
- President-elect Biden has named what is shaping up to be the most diverse cabinet in history. What will this mean for the Trump administration’s Executive Order on diversity training and federal contractors? How will a Biden EEOC function and what will the priorities be?
- Building on Question 3, now that California and the NASDAQ have implemented rules and proposals on board diversity, will there be diversity mandates in other sectors of the federal government, perhaps for federal contractors? Is this the year that the Improving Corporate Governance Through Diversity Act passes? Will this embolden more states to put forth similar requirements?
- What will a Biden SEC look like? Will the SEC human capital disclosure requirements become more precise? Will we see more aggressive enforcement of large institutions and insider trading? Will there be more controls placed on proxy advisory firms? Is SEC Chair too small of a job for Preet Bharara?
- We had some of the highest Foreign Corrupt Practices Act fines on record under Trump’s Department of Justice. Will that ramp up under a new DOJ, especially as there may have been compliance failures and more bribery because of a world-wide recession and COVID? It’s more likely that sophisticated companies will be prepared because of the revamp of compliance programs based on the June 2020 DOJ Guidance on Evaluation of Corporate Compliance Programs and the second edition of the joint SEC/DOJ Resource Guide to the US Foreign Corrupt Practices Act. (ok- that was an insight).
- How will the Biden Administration promote human rights, particularly as it relates to business? Congress has already taken some action related to exports tied to the use of Uighur forced labor in China. Will the incoming government be even more aggressive? I discussed some potential opportunities for legislation related to human rights abuses abroad in my last post about the Nestle v Doe case in front of the Supreme Court. One area that could use some help is the pretty anemic Obama-era US National Action Plan on Responsible Business Conduct.
- What will a Biden Department of Labor prioritize? Will consumer protection advocates convince Biden to delay or dismantle the ERISA fiduciary rule? Will the 2020 joint employer rule stay in place? Will OSHA get the funding it needs to go after employers who aren’t safeguarding employees with COVID? Will unions have more power? Will we enter a more worker-friendly era?
- What will happen to whistleblowers? I served as a member of the Department of Labor’s Whistleblower Protection Advisory Committee for a few years under the Obama administration. Our committee had management, labor, academic, and other ad hoc members and we were tasked at looking at 22 laws enforced by OSHA, including Sarbanes-Oxley retaliation rules. We received notice that our services were no longer needed after the President’s inauguration in 2017. Hopefully, the Biden Administration will reconstitute it. In the meantime, the SEC awarded record amounts under the Dodd-Frank whistleblower program in 2020 and has just reformed the program to streamline it and get money to whistleblowers more quickly.
- What will President-elect Biden accomplish if the Democrats do not control the Congress?
There you have it. What questions would you have added? Comment below or email me at email@example.com.
December 18, 2020 in Compliance, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Financial Markets, Human Rights, International Business, Legislation, Marcia Narine Weldon, Securities Regulation, Shareholders, White Collar Crime | Permalink | Comments (2)
Friday, December 4, 2020
Did A Child Slave Help Make Your Chocolate Bar and If So, Who Should Be Responsible? The Supreme Court and Nestle v. Doe
If you’re sipping some hot chocolate while reading this post or buying your Hanukah or Christmas candy, chances are you’re consuming a product made with cocoa beans harvested by child slaves in Africa. Almost twenty years ago, the eight largest chocolate companies, a US Senator, a Congressman, the Ambassador to the Ivory Coast, NGOs, and the ILO pledged through the Harkin Engel Protocol to eliminate “the worst forms of” child slavery and forced labor in supply chains. In 2010, after seeing almost no progress, government representatives fom the US, Ghana, and the Ivory Coast released a Framework of Action to support the implementation and to reduce the use of child and forced labor by 70% by 2020. But, the number of child slaves has actually increased.
2020 has come and almost gone and one of the Harkin Engel signatories, Nestle, and another food conglomerate, Cargill, had to defend themselves in front of the Supreme Court this week in a case filed in 2005 by former child slaves. The John Does were allegedly kidnapped in Mali and forced to work on cocoa farms in the Ivory Coast, where they worked 12-14 hours a day in 100-degree weather, spoke a different language from the farmers, lived off dirty water and bowls of rice, and were never paid. According to counsel for the Respondents who gave a debrief earlier this week, the children were locked up at night, told to work or starve, whipped, and when one tried to escape, his feet were slashed and then hot chilis were rubbed into his soles. Respondents sued under the Alien Tort Statute, which Congress passed in 1789 to allow foreign citizens to sue in US federal courts for violations of “the law of nations” to avoid international tensions. In two recent cases, the Court has limited the use of the ATS against foreign corporations sued for acts against foreign plaintiffs because of jurisdictional grounds and ruled that foreign corporations were not subject to the ATS. But the Nestle and Cargill case is different. Respondents sued a US company and the US arm of a Swiss company. (Click here for access to the briefs and here to listen to the oral argument.) For an excellent symposium on the issues see here.
Respondents claim that the companies provided money and resources to the farmers in Africa and knew that child slaves harvested their cocoa. The two questions before the Court were:
- May an aiding and abetting claim against a domestic corporation brought under the Alien Tort Statute overcome the extraterritoriality bar where the claim is based on allegations of general corporate activity in the United States and where the Respondents cannot trace the alleged harms, which occurred abroad at the hands of unidentified foreign actors, to that activity?
- Does the judiciary have the authority under the Alien Tort Statute to impose liability on domestic corporations?
To those who obsess about business and human rights and ESG issues like I do, this case has huge potential implications. Regular readers of this blog know that I’ve written more than half a dozen posts, law review articles, and an amicus brief on the Dodd-Frank conflict minerals disclosures, which purport to inform consumers about the use of forced labor and child slaves in the harvesting of tin, tungsten, tantalum, and gold. I’ve been skeptical of those disclosure rules that don’t have real penalties. The Nestle case could change all of that by crafting a cognizable cause of action.
To my surprise, the Justices weren’t completely hostile to the thought of corporate liability under the ATS. Here are some of the more telling questions to the counsel for the companies:
Justice Alito: Mr. Katyal, many of your arguments lead to results that are pretty hard to take. So suppose a U.S. corporation makes a big show of supporting every cause de jure but then surreptitiously hires agents in Africa to kidnap children and keep them in bondage on a plantation so that the corporation can buy cocoa or coffee or some other agricultural product at bargain prices. You would say that the victims who couldn't possibly get any recovery in the courts of the country where they had been held should be thrown out of court in the United States, where this corporation is headquartered and does business?
Justice Breyer: …I don't see why exempt all corporations, including domestic corporations, from this -- the scope of the statute.
Justice Kagan: If you could bring a suit against 10 slaveholders, when those 10 slaveholders form a corporation, why can’t you bring a suit against the corporation?
Justice Kavanaugh: The Alien Tort Statute was once an engine of international human rights protection. Your position, however, would allow suits by aliens only against individuals, as you've said, and only for torts international law recognized that occurred in the United States. And Professor Koh's amicus brief on behalf of former government officials, for example, says that your position would "gut the statute." So why should we do that?
Here are some of the more interesting questions to the government, which supports the companies’ positions against application of the ATS to corporations:
Chief Justice Roberts: We don't have objections from foreign countries in this case. As far as we can tell, they're perfectly comfortable having U.S. citizens, U.S. corporations hailed into their U -- in U.S. courts. What should we make of that, and doesn't that suggest we ought to be a little more -- a little less cautious about finding a cause of action here?
Justice Breyer: …what’s new about suing corporations? When I looked it up once, there were 180 ATS lawsuits against corporations. Most of them lost but on other grounds. So why not sue a domestic corporation? You can't sue the individual because, in my hypothetical, the individuals have all moved to Lithuania. All you have is the corporate assets in the bank and minutes that prove it was a corporate decision. What's new about it? Why is it creating a form of action?
Justice Alito: Won't your arguments about aiding and abetting and extraterritoriality all lead to essentially the same result as holding that a domestic corporation cannot be sued under the ATS? Corporations always act through natural persons, so if a corporation can't aid and abet, there -- there will be only a sliver of activity where they could be responsible under respondeat superior, isn't that true?
Justice Amy Coney Barrett: You say that the focus of the tort should be the primary conduct, so, here, what was happening in Cote d'Ivoire, rather than the aiding and abetting, which you characterize as secondary. But why should that be so? I mean, let's imagine you have a U.S. corporation or even a U.S. individual that is making plans to facilitate the use of child slaves, you know, making phone calls, sending money specifically for that purpose, writing e-mails to that effect.Why isn't that conduct that occurs in the United States something that touches and concerns, you know, or should be the focus of conduct, however you want to state the test?
Finally, here are some of the tough questions posed to counsel for the Respondents:
Justice Thomas: The TVPA [Trafficking Victims Protection Act] seems to suggest that Congress does not see the ATS the way you do. Obviously, there, you don't have corporate liability and you don't have aiding and abetting liability. So why shouldn't we take that as an indication that Congress sought limitations on -- on the ATS jurisdiction?
Justice Breyer: Assume that there is corporate liability for domestic corporations. Assume that there is aiding and abetting liability. Now what counts as aiding and abetting for purposes of this statute? When I read through your complaint, it seemed to me that all or virtually all of your complaint amount to doing business with these people.They help pay for the farm. And that's about it.And they knowingly do it. Well, unfortunately, child labor, it's terrible, but it exists throughout the world in many, many places. And if we take this as the norm, particularly when Congress is now working in the area, that will mean throughout the world this is the norm. And I don't know, but I have concern that treating this allegation, the six that you make here, as aiding and abetting falling within that term for purposes of this statute, if other nations do the same, and we do the same, could have very, very significant effects. I'm just saying I'm worried about that.
Justice Alito: So, after 15 years, is it too much to ask that you allege specifically that the -- the defendants involved -- the defendants who are before us here specifically knew that forced child labor was being used on the farms or farm cooperatives with which they did business? Is that too much to ask?
To be fair, Nestle and Cargill have worked to remedy these issues. Nestle’s 2019 Shared Values Report tracks its commitments to individuals and families, communities, and the planet to the UN Sustainable Development Goals. Among other things, the report highlights Nestle's work to reduce human rights abuses and links to its December 2019 report on child labor and cocoa farms. The company touts its progress but admits it has a long way to go. Cargill has a separate Cocoa Sustainability Progress Report, which describes its 2012 Cargill Cocoa Promise for capacity building and a more transparent supply chain. But is it enough?
In any event, we won’t know what the Court decides until Spring. In the meantime, despite the best efforts of the companies, almost two million children still work in the cocoa harvesting business and most aren’t kidnapped anymore. They need the work. The local governments have taken notice in part due to the terrible publicity from the media. Allegedly, however, Hershey and Mars are trying to avoid the $400 a ton premium that the West African governments are levying to provide more funding for the farmers. The companies deny these allegations. But there’s now a chocolate war. This means your chocolate may get more expensive, and that’s not necessarily a bad thing.
How will this all shake out? There’s a chance that the Court could find for the Respondents. More likely, though advocates will focus on convincing Congress to expand the Trafficking Victims Protection Act to include corporations. Some NGOs are already talking about increasing consumer awareness and spurring boycotts. Perhaps, advocates will put pressure on the Biden administration to ban the import on chocolate harvested with child labor, similar to the ban on some products produced by Uighurs in China.I expect that there will be a lot of lobbying at the state and federal level to deal with the larger issue of whether corporations that have some of the rights of natural persons should also have the responsibilities. Boards and companies should get prepared. In the meantime, do you plan to give up chocolate?
Friday, November 20, 2020
Today is my birthday and the last thing I want to do is blog or work. So I'm off to take care of myself in this beautiful Florida sunshine. Tomorrow, I'm going to delve into these materials and all of the briefs about the Nestlé USA, Inc. v. Doe I and Cargill Inc. v. Doe I cases that the Supreme Court will hear on December 1. These cases will revisit the applicability of the Alien Tort Statute and extraterritoriality. This case could change the game in terms of corporate responsibility for human rights abuses abroad. Having spent the past three days listening to the virtual UN Forum on Business and Human Rights, I know that the issue is ripe for resolution. I'll post about it in two weeks. In the meantime, have a safe, healthy, and Happy Thanksgiving.
Friday, October 23, 2020
It’s hard to believe that the US will have an election in less than two weeks. Three years ago, a month after President Trump took office, I posted about CEOs commenting on his executive order barring people from certain countries from entering the United States. Some branded the executive order a “Muslim travel ban” and others questioned whether the CEOs should have entered into the political fray at all. Some opined that speaking out on these issues detracted from the CEOs’ mission of maximizing shareholder value. But I saw it as a business decision - - these CEOs, particularly in the tech sector, depended on the skills and expertise of foreign workers.
That was 2017. In 2018, Larry Fink, CEO of BlackRock, told the largest companies in the world that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society…Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders.” Fink’s annual letter to CEOs carries weight; BlackRock had almost six trillion dollars in assets under management in 2018, and when Fink talks, Wall Street listens. Perhaps emboldened by the BlackRock letter, one year later, 181 CEOs signed on to the Business Roundtable's Statement on the Purpose of a Corporation, which “modernized” its position on the shareholder maximization norm. The BRT CEOs promised to invest in employees, deal ethically and fairly with suppliers, and embrace sustainable business practices. Many observers, however, believed that the Business Roundtable statement was all talk and no action. To see how some of the signatories have done on their commitments as of last week, see here.
Then came 2020, a year like no other. The United States is now facing a global pandemic, mass unemployment, a climate change crisis, social unrest, and of course an election. During the Summer of 2020, several CEOs made public statements on behalf of themselves and their companies about racial unrest, with some going as far as to proclaim, “Black Lives Matter.” I questioned these motives in a post I called “"Wokewashing and the Board." While I admired companies that made a sincere public statement about racial justice and had a real commitment to look inward, I was skeptical about firms that merely made statements for publicity points. I wondered, in that post, about companies rushing to implement diversity training, retain consultants, and appoint board members to either curry favor with the public or avoid the shareholder derivative suits facing Oracle, Facebook, and Qualcomm. How well had they thought it out? Meanwhile, I noted that my colleagues who have conducted diversity training and employee engagement projects for years were so busy that they were farming out work to each other. Now the phones aren’t ringing as much, and when they are ringing, it’s often to cancel or postpone training.
Why? Last month, President Trump issued the Executive Order on Combatting Race and Sex Stereotyping. As the President explained:
today . . . many people are pushing a different vision of America that is grounded in hierarchies based on collective social and political identities rather than in the inherent and equal dignity of every person as an individual. This ideology is rooted in the pernicious and false belief that America is an irredeemably racist and sexist country; that some people, simply on account of their race or sex, are oppressors; and that racial and sexual identities are more important than our common status as human beings and Americans ... Therefore, it shall be the policy of the United States not to promote race or sex stereotyping or scapegoating in the Federal workforce or in the Uniformed Services, and not to allow grant funds to be used for these purposes. In addition, Federal contractors will not be permitted to inculcate such views in their employees.
The Order then provides a hotline process for employees to raise concerns about their training. Whether you agree with the statements in the Order or not -- and I recommend that you read it -- it had a huge and immediate effect. The federal government is the largest procurer of goods and services in the world. This Order applies to federal contractors and subcontractors. Some of those same companies have mandates from state law to actually conduct training on sexual harassment. Often companies need to show proof of policies and training to mount an affirmative defense to discrimination claims. More important, while reasonable people can disagree about the types and content of diversity training, there is no doubt that employees often need training on how to deal with each other respectfully in the workplace. (For a thought-provoking take on a board’s duty to monitor diversity training by co-blogger Stefan Padfield, click here.)
Perhaps because of the federal government’s buying power, the U.S. Chamber of Commerce felt compelled to act. On October 15th, the Chamber and 150 organizations wrote a letter to the President stating:
As currently written, we believe the E.O. will create confusion and uncertainty, lead to non-meritorious investigations, and hinder the ability of employers to implement critical programs to promote diversity and combat discrimination in the workplace. We urge you to withdraw the Executive Order and work with the business and nonprofit communities on an approach that would support appropriate workplace training programs ... there is a great deal of subjectivity around how certain content would be perceived by different individuals. For example, the definition of “divisive concepts” creates many gray areas and will likely result in multiple different interpretations. Because the ultimate threat of debarment is a possible consequence, we have heard from some companies that they are suspending all D&I training. This outcome is contrary to the E.O.’s stated purpose, but an understandable reaction given companies’ lack of clear guidance. Thus, the E.O. is already having a broadly chilling effect on legitimate and valuable D&I training companies use to foster inclusive workplaces, help with talent recruitment, and remain competitive in a country with a wide range of different cultures. … Such an approach effectively creates two sets of rules, one for those companies that do business with the government and another for those that do not. Federal contractors should be left to manage their workforces and workplaces with a minimum amount of interference so long as they are compliant with the law.
It’s rare for the Chamber to make such a statement, but it was bold and appropriate. Many of the Business Roundtable signatories are also members of the U.S. Chamber, and on the same day, the BRT issued its own statement committing to programs to advance racial equity and justice. BRT Chair and WalMart CEO Doug McMillon observed, “the racial inequities that exist for many Black Americans and people of color are real and deeply rooted . . These longstanding systemic challenges have too often prevented access to the benefits of economic growth and mobility for too many, and a broad and diverse group of Americans is demanding change. It is our employees, customers and communities who are calling for change, and we are listening – and most importantly – we are taking action.” Now that's a stakeholder maximization statement if I ever heard one.
Those who thought that some CEOs went too far in protesting the Muslim ban, may be even more shocked by the BRT’s statements about the police. The BRT also has a subcommittee to address racial justice issues and noted that “For Business Roundtable CEOs, this agenda is an important step in addressing barriers to equity and justice . . . This summer we took on the urgent need for policing reform. We called on Congress to adopt higher federal standards for policing, to track whether police departments and officers have histories of misconduct, and to adopt measures to hold abusive officers accountable. Now, with announcement of this broader agenda, CEOs are supporting policies and undertaking initiatives to address several other systems that contribute to large and growing disparities.”
Now that stakeholders have seen so many of these social statements, they have asked for more. Last week, a group of executives from the Leadership Now Project issued a statement supporting free and fair elections. However, as Bennett Freeman, former Calvert executive and Clinton cabinet member noted, no Fortune 500 CEOs have signed on to that statement. Yesterday, the Interfaith Center on Corporate Responsibility (ICCR) sent a letter to 200 CEOs, including some members of the BRT asking for their support. ICCR asked that they endorse:
- Active support for free and fair elections
- A call for a thorough and complete counting of all ballots
- A call for all states to ensure a fair election
- A condemnation of any tactics that could be construed as voter intimidation
- Assurance that, should the incumbent Administration lose the election, there will be a peaceful transfer of power
- Ensure that lobbying activities and political donations support the above
Is this a pipe dream? Do CEOs really want to stick their necks out in a tacit criticism of the current president’s equivocal statements about his post-election plans? Now that JPMorgan Chase CEO Jamie Dimon has spoken about the importance of respect for the democratic process and the peaceful transfer of power, perhaps more executives will make public statements. But should they? On the one hand, the markets need stability. Perhaps Dimon was actually really focused on shareholder maximization after all. Nonetheless, Freeman and others have called for a Twitter campaign to urge more CEOs to speak out. My next post will be up on the Friday after the election and I’ll report back about the success of the hashtag activism effort. In the meantime, stay tuned and stay safe.
October 23, 2020 in Contracts, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Employment Law, Ethics, Financial Markets, Human Rights, Legislation, Management, Marcia Narine Weldon, Nonprofits, Stefan J. Padfield | Permalink | Comments (1)
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.
Monday, October 5, 2020
The fourth annual Business Law Prof Blog symposium, Connecting the Threads, is happening, despite the pandemic. We are proceeding in a virtual format, hosted on Zoom on Friday, October 16. More information is available here.
The line-up includes an impressive majority of our bloggers speaking on a wide range of topics from shareholder proposals to social enterprise, opting out of partnership, and much more. Most papers will have a faculty and student discussant. My submission, “Business Law and Lawyering in the Wake of COVID-19,” is coauthored with two students and carries one hour of Tennessee ethics credit. While I wish we could host everyone in person in Knoxville, it always is an amazing day when we all get together. I look forward to learning more about what everyone is working on and hearing what everyone has to say.
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 firstname.lastname@example.org.
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)
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)
Friday, August 28, 2020
Two weeks ago, I wrote about wokewashing and the board of directors. I discussed companies that tout their social justice credentials to curry favor with consumers but in fact treat their employees differently. I touched on the difference between companies jumping on the “anti-racism” bandwagon and those like Nike, which took an unpopular stand in 2018 by supporting Colin Kapernick, who at the time was considered a pariah for taking a knee during the national anthem. Some commentators predicted boycotts but in fact, Nike had a 31% increase in sales following the ad campaign. One sporting good store owner who publicly called for a boycott actually went out of business.
Four years after Kapernick took a knee, professional basketball, hockey, soccer, and tennis players took a walk protesting a police-involved shooting of a Black man. Although the Milwaukee Bucks spurred the walkout by refusing to play against the Orlando Magic in the playoffs on Wednesday, LeBron James reportedly led what could have been a season-ending strike of the West Coast teams. One hundred league staffers also temporarily walked off the job today in support. Michael Jordan, basketball legend and team owner, helped broker a deal for the NBA teams to resume play tomorrow (Saturday).
What does all of this have to do with business? According to Forbes, “since 2010, the average NBA team value is up nearly sixfold and growing at a much faster rate than the other three major U.S. sports leagues, thanks to strong international growth prospects and blockbuster media deals.” The NBA’s 30 teams generated over $8 billion in revenues and several teams are worth $4billion each. NBA players aren’t doing too badly either. LeBron James earns almost $40 million a year from the NBA but is worth almost $500 million from endorsements and other deals. Athletes and entertainers are big business -- as rapper/producer Jay-Z once sang, “I’m not a businessman, I’m a business, man.”
Remember that store owner who went out of business after boycotting Nike products? He apparently realized that "being a sports store and not having Nike jerseys is kind of like being a milk store without milk or a gas station without gas." Being a sports league without marquee players is the same thing. Although the players received threats and vitriol, they chose to follow the example of the Bates 7 of NYU, Muhammad Ali refusing to go to VietNam, Tommie Smith and John Carlos in the Summer Olympics in 1968, the Boston Celtics in 1961, and countless others.
While some have argued that ball players should “shut up and dribble,” tennis legend Billie Jean King has stated that athletes must lead. No one complained when football player Aaron Rodgers took a stand on conflict minerals at the height of his playing career. But arguing for a law that prevents rape, murder, and child slavery isn’t really controversial. The Milwaukee Bucks did more than walk out. They apparently called the Wisconsin Attorney General from the locker room. The NBA players led and the NBA followed. League Commissioner Adam Silver stated that he supported the players, even though they initially took action without notifying the league or the union.
Is the NBA wokewashing? Not likely, even though NBA fans tend to be younger and more diverse than other sports fans. Today, the NBA and NBPA issued a statement promising to establish a social justice coalition to advocate for “meaningful police and criminal justice reform,” promote voting in ads, and work with cities to convert arenas into polling locations. Time will tell. I’m the mother of a Black 24-year old artist. He wouldn’t hurt a soul. But I worry every single day that he could be the next George Floyd or Jacob Blake. I thank the athletes who risked being “Kapernicked” or blacklisted. The NBA and other leagues know that if they don’t live up their commitments, they may not just lose fans, they’ll lose the game.
Friday, August 14, 2020
As an academic and consultant on environmental, social, and governance (ESG) matters, I’ve used a lot of loaded terms -- greenwashing, where companies tout an environmentally friendly record but act otherwise; pinkwashing, where companies commoditize breast cancer awareness or LGBTQ issues; and bluewashing, where companies rally around UN corporate social responsibility initiatives such as the UN Global Compact.
In light of recent events, I’ve added a new term to my arsenal—wokewashing. Wokewashing occurs when a company attempts to show solidarity with certain causes in order to gain public favor. Wokewashing isn’t a new term. It’s been around for years, but it gained more mainstream traction last year when Unilever’s CEO warned that companies were eroding public trust and industry credibility, stating:
Woke-washing is beginning to infect our industry. It’s polluting purpose. It’s putting in peril the very thing which offers us the opportunity to help tackle many of the world’s issues. What’s more, it threatens to further destroy trust in our industry, when it’s already in short supply… There are too many examples of brands undermining purposeful marketing by launching campaigns which aren’t backing up what their brand says with what their brand does. Purpose-led brand communications is not just a matter of ‘make them cry, make them buy’. It’s about action in the world.
The Black Lives Matter and anti-racism movements have brought wokewashing front and center again. My colleague Stefan Padfield has written about the need for heightened scrutiny of politicized decisions and corporate responses to the BLM movement here, here, and here, and Ann Lipton has added to the discussion here. How does a board decide what to do when faced with pressure from stakeholders? How much is too much and how little is too little?
The students in my summer Regulatory Compliance, Corporate Governance, and Sustainability course were torn when they acted as board members deciding whether to make a public statement on Black Lives Matter and the murder of George Floyd. As fiduciaries of a consumer goods company, the “board members” felt that they had to say “something,” but in the days before class they had seen the explosion of current and former employees exposing companies with strong social justice messaging by pointing to hypocrisy in their treatment of employees and stakeholders. They had witnessed the controversy over changing the name of the Redskins based on pressure from FedEx and other sponsors (and not the Native Americans and others who had asked for the change for years). They had heard about the name change of popular syrup, Aunt Jemima. I intentionally didn’t force my students to draft a statement. They merely had to decide whether to speak at all, and this was difficult when looking at the external realities. Most of the students voted to make some sort of statement even as every day on social media, another “woke” company had to defend itself in the court of public opinion. Others, like Nike, have received praise for taking a strong stand in the face of public pressure long before it was cool and profitable to be “woke.”
Now it’s time for companies to defend themselves in actual court (assuming plaintiffs can get past various procedural hurdles). Notwithstanding Facebook and Oracle’s Delaware forum selection bylaws, the same lawyers who filed the shareholder derivative action against Google after its extraordinary sexual harassment settlement have filed shareholder derivative suits in California against Facebook, Oracle, and Qualcomm. Among other things, these suits generally allege breach of the Caremark duty, false statements in proxy materials purporting to have a commitment to diversity, breach of fiduciary duty relating to a diverse slate of candidates for board positions, and unjust enrichment. Plaintiffs have labeled these cases civil rights suits, targeting Facebook for allowing hate speech and discriminatory advertising, Qualcomm for underpaying women and minorities by $400 million, and Oracle for having no Black board members or executives. Oracle also faces a separate class action lawsuit based on unequal pay and gender.
Why these companies? According to the complaints, “[i]f Oracle simply disclosed that it does not want any Black individuals on its Board, it would be racist but honest…” and “[a]t Facebook, apparently Zuckerberg wants Blacks to be seen but not heard.” Counsel Bottini explained, “when you actually go back and look at these proxy statements and what they’ve filed with the SEC, they’re actually lying to shareholders.”
I’m not going to discuss the merits of these cases. Instead, for great analysis, please see here written by attorneys at my old law firm Cleary Gottlieb. I’ll do some actual legal analysis during my CLE presentation at the University of Tennessee Transactions conference on October 16th.
Instead, I’m going to make this a little more personal. I’m used to being the only Black person and definitely the only Black woman in the room. It’s happened in school, at work, on academic panels, and in organizations. When I testified before Congress on a provision of Dodd-Frank, a Black Congressman who grilled me mercilessly during my testimony came up to me afterwards to tell me how rare it was to see a Black woman testify about anything, much less corporate issues. He expressed his pride. For these reasons, as a Black woman in the corporate world, I’m conflicted about these lawsuits. Do corporations need to do more? Absolutely. Is litigation the right mechanism? I don’t know.
What will actually change? Whether or not these cases ever get past motions to dismiss, the defendant companies are likely to take some action. They will add the obligatory Black board members and executives. They will donate to various “woke” causes. They will hire diversity consultants. Indeed, many of my colleagues who have done diversity, equity, and inclusion work for years are busier than they have ever been with speaking gigs and training engagements. But what will actually change in the long term for Black employees, consumers, suppliers, and communities?
When a person is hired or appointed as the “token,” especially after a lawsuit, colleagues often believe that the person is under or unqualified. The new hire or appointee starts under a cloud of suspicion and sometimes resentment. Many eventually resign or get pushed out. Ironically, I personally know several diversity officers who have left their positions with prestigious companies because they were hired as window dressing. Although I don’t know Morgan Stanley’s first Chief Diversity Officer, Marilyn Booker, her story is familiar to me, and she has now filed suit against her own company alleging racial bias.
So I’ll keep an eye on what these defendants and other companies do. Actions speak louder than words. I don’t think that shareholder derivative suits are necessarily the answer, but at least they may prompt more companies to have meaningful conversations that go beyond hashtag activism.
August 14, 2020 in Ann Lipton, Compliance, Consulting, Corporate Governance, Corporate Personality, Corporations, CSR, Current Affairs, Delaware, Financial Markets, Management, Marcia Narine Weldon, Shareholders, Stefan J. Padfield | Permalink | Comments (0)
Sunday, August 2, 2020
Greetings from SEALS (virtually). I've just finished sitting in on the last of several excellent panels on online teaching. Below are tips from the panelists, some of my own lessons learned, and key takeaways from the excellent book Small Teaching Online. For more of the foundations of online teaching see Part I, Part II, Part III, and Part IV.
- Have a class zero- you and students can record an introduction of themselves, pets, hobbies, skills, talents etc. Make sure you’re smiling and conveying your excitement in the video about the class.
- You can also have a class zero where you spend 5 minutes on Zoom with each student before the first day of class talking to them about any questions they have about the class, their tech etc.
- Let students know that this online format is not just a pandemic issue. Virtual offices are increasingly common in practice.
- Think about how to motivate students- what counts as a grade? Should you raise the class participation component and if so, how will you measure it? Will watching videos before class and participating in discussion boards count?
- Stand when recording your video lectures or teaching synchronously. Students prefer it. You can get a standing desk or go old school like me and use a pile of textbooks to create a lectern.
- Think about creating mnemonic devices through your intentional use of imagery. Use images appropriately so that the students can connect the image with what you want them to remember.
- Allow the students to do more prep before class. Let them find the rule and the law and use a problem method during synchronous sessions where the students work on hypotheticals.
- Make sure that you explain the learning objectives each week or each module so the students know what they are doing, why, and where it fits in the course. You can even add how the module or unit will help them in practice.
- You can get information to students with an announcement or email, but consider using a short video, especially if you want to explain an assignment and add more nuance. Make sure to add your personality in to the video. You can also use video to explain information that students find confusing. This way you can avoid answering the same questions over and over again.
- Use the subtitle or caption feature for your powerpoints when you are recording your asynchronous lecture.
- Consider having a transcript of your lecture videos or a detailed outline, especially if you don’t have subtitles or captions in your videos. I don’t write out an outline for my classes, but if you do, you can post that outline.
- Have some questions for the students to think about while they watch the asynchronous video lecture. I will use Feedback Fruits so students will answer questions while they watch the videos and won’t be able to continue watching until they answer the questions. You could be more low tech and provide them with the question in advance and require them to answer the questions before class in a no or low-stakes quiz.
- Students seem to prefer short, informal videos to highly produced videos. Students respond better to conversational tones and unedited videos. Of course, don’t just read the slides.
- Try to avoid talking about dates or current events in your videos, unless it’s really relevant. Make sure the videos can stand alone as an independent product and don’t refer back to other videos.
- Disclose your grading rubric early or have students develop a rubric based on what you have communicated. This will help you know whether they understand your materials and your grading standards.
- Learn from neuroscience- do ungraded short quizzes and spaced repetition before and after class. For a business associations class, for example, you can use old bar questions each week, which will get them familiar with those type of questions.
- Use some of what works in K-12 teaching about how to keep students engaged, where they empower the students to learn. We focus more on how we perform as teachers vs. how students learn. If you watch YouTube videos of K-12 teachers, you can learn a lot that will also apply to law students.
- Use non-graded events throughout the semester such as short essays or multiple choice so that they can see how they are doing. Do this anonymously and provide the answers or model answers.
- If your class is small enough, greet students by name when they come in the Zoom room.
- Start each synchronous class with a question in the chat- it can relate to the materials, something in the news, or pop culture etc. If you normally arrive early to the physical classroom, do the same on Zoom and recreate that casual conversation.
- Make sure to save the chat in Zoom so that you can refer to issues in the next class or you can send out an email or announcement to discuss what you may have missed in the class.
- If you have a TA, that person can monitor the chat for you while you're teaching.
- In the first week, think of creating an exercise that relates to what the students may do for the final exam. This may include multiples choice, a short essay etc.
- Have panels of students on call for certain parts of the class, just as you would in residential classes.
- Try peer-to-peer formative assessment through peer review and team-based learning. This will work better in an online than a residential setting. See my earlier posts for more information on TBL.
- Take a break in class if it’s more than an hour. Tell the students that they can use that time to take notes, talk with each other etc.
- Add humor to the course. Consider a contest for best virtual background but be mindful that some students may not have the bandwidth for this. If all of your students can do it, consider a “prize” for the best background.
- When you use breakout rooms, have a class document that students can fill out or download and then share the screen during the breakout rooms. While they can use a whiteboard in breakout groups, they can’t share their breakout room whiteboard in the main room. You can share using Google docs in Zoom. This may work better if students need to report back to the class.
- In class, reboot student attention with thumbs up, thumbs down, polls etc. Try to keep things moving every 10-15 minutes.
- Have students do a short reflection at the end of a unit to discuss what they learned or struggled with. Give them the choice of using video or written format.
- If your LMS allows it, have a conditional release system so students cant’t see certain content until they have reached a certain score or milestone with the materials.
- Use the discussion board feature for students to answer questions and then make sure that you answer within 24 hours.
- If you choose to use discussion board for substantive student submissions, make sure that you have a clear rubric, with word count requirements etc. Consider having students have a choice of questions to answer. You may decide that if a response does not meet the rubric, the student gets 0 points, so it’s all or nothing. You can also require students to post before they see other posts. If you have a very large class, you can divide them into groups so the students are only looking at a smaller group of posts.
- Think about providing feedback on assignments via audio or video, if your class is small enough. Many students find that this provides more of a connection to the professor.
- Early or midway through the semester, use Google forms, survey monkey, or another mechanisms for students to let you know anonymously what's working and what’s not. Ask them what you should start, stop, and continue doing.
- Send personal emails when a student misses class. Just asking if the student is ok and making sure s/he knows where to find the class recording, can further the sense of community and connection.
- At the end of the semester, have the students assess themselves. They can also discuss three takeaways from the course and how they plan to use it in practice.
Best of luck planning for the new semester. Stay safe!
Friday, July 24, 2020
Yesterday, I had the pleasure of moderating a panel of Black entrepreneurs sponsored by the Miami Finance Forum, a group of finance, investment management, banking, capital markets, private equity, venture capital, legal, accounting and related professionals. When every company and law firm was posting about Black Lives Matter and donating to various causes, my colleague Richard Montes de Oca, an MFF board member, decided that he wanted to do more than post a generic message. He and the MFF board decided to launch a series of webinars on Black entrepreneurship. The first panel featured Jamarlin Martin, who runs a digital media company and has a podcast; Brian Brackeen, GP of Lightship Capital and founder of Kairos, a facial recognition tech company; and Raoul Thomas, CEO of CGI Merchant Group, a real estate private equity group.
These panelists aren't the typical Black entrepreneurs. Here are some sobering statistics:
- Black-owned business get their initial financing through 44% cash; 15% family and friends; 9% line of credit; 7% unsecured loans; and 3% SBA loans;
- Between February and April 2020, 41% of Black-owned businesses, 33% of Latinx businesses, and 26% of Asian-owned businesses closed while 17% of White-owned business closed;
- As of 2019, the overwhelming majority of businesses in majority Black and Hispanic neighborhoods did not have enough cash on hand to pay for two weeks worth of bills;
- The Center for Responsible Lending noted that in April, 95% of Black-owned businesses were tiny companies with slim change of achieving loans in the initial rounds of the Paycheck Protection Program;
- Only 12% of Black and Hispanic business owners polled between April 30-May 12 had received the funding they requested from the stimulus program. In contrast half of all small business had received PPP funds in the same poll.
Because we only had an hour for the panel, we didn't cover as much as I would have liked on those statistics. Here's what we did discuss:
- the failure of boards of directors and companies to do meaningful work around diversity and inclusion- note next week, I will post about the spate of shareholder derivative actions filed against companies for false statements about diversity commitments;
- the perceptions of tokenism and "shallow, ambiguous" diversity initiatives;
- how to get business allies of all backgrounds;
- the need for more than trickle down initiatives where the people at the bottom of the corporation/society don't reap benefits;
- the fact that investing in Black venture capitalists does not mean that those Black VCs will invest in Black entrepreneurs and the need for more transparency and accountability;
- whether the Black middle class still exists and the responsibility of wealthier Black professionals to provide mentorship and resources;
- why it's easier for entrepreneurs to get investments for products vs. services, and a hack to convince VCs to invest in the service;
- whether a great team can make up for a so-so product when a VC hears a pitch;
- why there are so many obstacles to being a Black LGBTQ entrepreneur and how to turn it to an advantage when pitching; and
- whether reparations will actually help Black entrepreneurs and communities.
If you want to hear the answers to these questions, click here for access to the webinar. Stay safe and wear your masks!
July 24, 2020 in Corporations, CSR, Current Affairs, Entrepreneurship, Family Business, Management, Marcia Narine Weldon, Private Equity, Service, Shareholders, Technology, Venture Capital | Permalink | Comments (0)