Monday, July 13, 2020
U.S. Securities Crowdfunding: A Way to Economic Inclusion for Low-Income Entrepreneurs in the Wake of COVID-19?
Earlier today, I submitted a book chapter with the same title as this blog post. The chapter, written for an international management resource on Digital Entrepreneurship and the Sharing Economy, represents part of a project on crowdfunding and poverty that I have been researching and thinking through for a bit over two years now. My chapter abstract follows:
The COVID-19 pandemic has exacerbated and created economic hardship all over the world. The United States is no exception. Among other things, the economic effects of the COVID-19 crisis deepen pre-existing concerns about financing U.S. businesses formed and promoted by entrepreneurs of modest means.
In May 2016, a U.S. federal registration exemption for crowdfunded securities offerings came into existence (under the CROWDFUND Act) as a means of helping start-ups and small businesses obtain funding. In theory, this regime was an attempt to fill gaps in U.S. securities law that handicapped entrepreneurs and their promoters from obtaining equity, debt, and other financing through the sale of financial investment instruments over the Internet. The use of the Internet for business finance is particularly important to U.S. entrepreneurs who may not have access to funding because of their own limited financial and economic positions.
As the pandemic continues and the fifth year of effectiveness of the CROWDFUND Act progresses, observations can be made about the role securities crowdfunding has played and may play in sustaining and improving prospects for those limited means entrepreneurs. A preliminary examination indicates that, under current legal rules, securities crowdfunding is a promising, yet less-than-optimal, financing vehicle for these entrepreneurs. Nevertheless, there are ways in which U.S. securities crowdfunding may be used or modified to play a more positive role in promoting economic inclusion through capital raising for the innovative ventures of financially disadvantaged entrepreneurs and promoters.
I value the opportunity to contribute to this book with scholars from a number of research disciplines and countries. I have been looking for ways to concretize some of my ideas from this project in a series of shorter publications, and this project seems like a good fit. Nevertheless, I admit that I have been finding it challenging to segment out and organize my ideas about how securities crowdfunding may better serve entrepreneurs and investors, especially in the current economic downturn. As always, your ideas are welcomed.
Wednesday, June 24, 2020
Tomorrow (6/25/20) at 9am EST, Colin Mayer (Oxford) will debate Lucian Bebchuk (Harvard) on the topic of stakeholder v. shareholder capitalism.
Oxford is streaming the debate for free here.
Monday, March 2, 2020
I recently had occasion to offer background to, and be interviewed by, a local television reporter about a publicly traded firm that owns several health care facilities in East Tennessee and has been financed significantly through loans from and corporate payments made by a member of its board of directors. The resulting article and news clip can be found here. Since the story was published, a Form 8-K was filed reporting that the director has resigned from the board and the firm is negotiating with him to cancel its indebtedness in exchange for preferred stock.
In reviewing published reports on the firm, Rennova Health, Inc., I learned that it had been delisted from NASDAQ back in 2018. The reason? The firm engaged in too many stock splits.
I also came across an article reporting that another health care firm, a middle Tennessee skilled nursing provider, Diversicare Healthcare Services, Inc., had been delisted in late 2019. The same article noted two additional middle Tennessee health care firms also were in danger of being delisted from stock exchanges. One was subsequently delisted.
Health care mergers and acquisitions also have been in the news here in Tennessee. A Tennessee/Virginia health care business combination finalized in 2018 is one of two under study by the Federal Trade Commission. The combining firms, Mountain States Health Alliance and Wellmont Health System, avoided federal and state antitrust merger approvals and challenges through the receipt of a certificate of public advantage (COPA) under Tennessee law and a coordinated process in Virginia. The resulting firm, Ballad Health, is an effective health care monopoly in the region and has had well publicized challenges in meeting its commitment to provide cost-effective, quality patient care.
I can only assume that these health care corporate finance issues in Tennessee are a microcosm of what exists nationally.
All of this has made me interested in the U.S. healthcare industry as an engaging and useful lens through which one could teach and write about the legal aspects of corporate finance . . . . Many of the current business law issues in U.S. health care firms stem from well-known financial challenges in the industry and the related governmental responses (or lack thereof). With public debates--including in connection with this year's presidential caucuses, primaries, and election--over the extent to which the federal government should provide financial support to the health care industry under existing conditions and whether the health care industry has become too big to fail, health care examples and hypotheticals seem very salient now, in the same way that banking or telecomm examples and hypotheticals may have had pedagogical and scholarly traction in corporate finance in the past.
Some of the business law issues facing U.S. health care firms may be quite the same as they are for firms in any other industry. Yet, some also may be unique to the health care industry and worth further, individualized exploration in the classroom or in the research realm. For example, innovation and entrepreneurship--intricately tied to corporate finance--may be different in the health care space, as currently configured in the United States. This article makes arguments in that regard.
In all, it seems there is a synergy worth examining in the connections between the U.S. health care crisis and business law teaching and research. Unless and until something fundamental changes in the U.S. health care delivery system, corporate finance lawyers and professionals are likely to have important (if somewhat hidden) roles in ensuring that health care firms survive while providing cost-effective care to those who need it. Business law analyses and innovations are sure to play strong roles in this environment, making business law professors key potential contributors. Time for us to step up and take the challenge!
Sunday, November 10, 2019
I have a new(ish) essay that focuses on the concept of eliminating the fiduciary duty in an LLC, as permitted by Delaware law, and what that could mean for future parties. The paper can be found here (new link). When parties A and B get together to create an LLC, if they negotiate to eliminate their fiduciary agreements as to one another, I’m completely comfortable with that. They are negotiating for what they want; they are entering into that entity and operating agreement together of their own free will. So there may be differences in bargaining power—one may be wealthier than the other or have different kinds of power dynamics—but they are entering into this agreement fully aware of what the obligations are and what the options are for somebody in creating this entity.
My concern with eliminating fiduciary obligations comes down the road. That is, how do we make sure that if people are going to disclaim the fiduciary duty of loyalty, particularly, what happens if this change is made after formation? In such a case, I like to look at our traditional partnership law, which says there are certain kinds of decisions, at least absent an agreement to the contrary, that have to go to the entire group of entity participants. That is, a majority vote is not sufficient; there is essentially a minority veto.
I like the freedom of contract elimination of fiduciary duties provides, but I also am sensitive to the risks such eliminations can provide. Thus, I argue that Delaware (and other states allowing reduction or elimination of the duty of loyalty) should require an express statement about the fiduciary duties (when modified from the default) and an express statement of how those duties can be modified, whether expanding, restricting, or eliminating the duties. To protect against the predatory modification of fiduciary duties, I believe that states should include a statutory requirement that changes to fiduciary duties must be express. Here’s my proposal:
Any limited liability company agreement that provides for a modification of the default rules for what constitutes a breach of duties (including fiduciary duties) of a member, manager or other person to a limited liability company, whether to expand, restrict, or eliminate those duties, must expressly state if the modifications are intended to expand, restrict, or eliminate the duties. Any limited liability company agreement that allows the modification of fiduciary duties must state expressly how those modifications can be made and by whom. Absent such any such statement, fiduciary duties may only be modified by agreement of all the members.
Supporting freedom of contract has value, but I also think we need to account for the fact that we did not traditionally allow for the elimination of fiduciary duties. As such, we should make sure that those participating in LLCs should know both what they signed up for initially, and also if the entity has provided the opportunity for a majority to make a fundamental change to traditional duties. This balance, I think, is essential to protecting investor expectations while still allowing for entities to develop the model that best serves the members’ goals.
Monday, September 30, 2019
Call for Proposals – Feminist Judgments: Rewritten Corporate Law
DEADLINE: Friday November 1, 2019
The U.S. Feminist Judgments Project seeks contributors of rewritten judicial opinions and private contracts, and commentaries on rewritten opinions and contracts, for an edited collection tentatively titled Feminist Judgments: Rewritten Corporate Law. This edited volume is part of a collaboration among law professors and others to rewrite, from a feminist perspective, key judicial decisions in the United States. The initial volume, Feminist Judgments: Rewritten Opinions of the United States Supreme Court, edited by Kathryn M. Stanchi, Linda L. Berger, and Bridget J. Crawford, was published in 2016 by Cambridge University Press. Cambridge University Press has approved a series of Feminist Judgments books. In 2017, Cambridge University Press published the tax volume titled Feminist Judgments: Rewritten Tax Opinions. Other volumes in the pipeline include rewritten opinions in the areas of reproductive justice, family law, torts, employment discrimination, trusts and estates, and health law. More information about the project can be found at https://law.unlv.edu/us-feminist-judgments.
Corporate law volume editors are Anne Choike, Usha R. Rodrigues and Kelli Alces Williams. The corporate law volume’s advisory panel is comprised of Alina Ball; Lisa Fairfax; Theresa Gabaldon; Joan MacLeod Heminway; Kristin Johnson; Elizabeth Pollman; Poonam Puri; Darren Rosenblum; Cindy Schipani; Kellye Testy; Cheryl Wade; and Cindy Williams.
With the guidance of the advisory panel, the editors have selected cases that have not appeared in other Feminist Judgments volumes, doctrinally significant cases, and cases that raised issues of particular salience to women’s lives. This volume also seeks to include a rewritten “contract,” given corporate law’s emphasis upon default law and the precedent-setting power of privately negotiated arrangements. Potential authors are welcome to suggest other opinions or contracts that they would like to address, but the overall number of cases and contracts finally included in the volume must remain limited.
Interested prospective contributors should submit a proposal to either: 1) rewrite an opinion or contract (subject to a 10,000 word limit), or 2) comment on a rewritten opinion (4,000 word limit). Rewritten opinions may be majority opinions, concurrences, dissents, or private contracts.
Authors of rewritten opinions or contracts will be bound by the law and precedent in effect at the time of the original decision. Commentators will explain the original court decision or contract and its context, how the feminist opinion or contract differs from the original, and the impact that the rewritten feminist opinion or contract might have made. The volume editors conceive of feminism as a broad movement and welcome proposalsthat bring into focus intersectional concerns beyond gender, such as race, class, disability, gender identity, age, sexual orientation, national origin, and immigration status.
To facilitate collaboration among contributors across the entire volume, the editors tentatively plan to host a gathering at the Law & Society Annual Meeting on May 28–31, 2020 in Denver, Colorado. All contributors are invited, but not required, to participate in the workshop. Contributors attending the gathering must cover their own travel, lodging and meal expenses.
The editors will notify accepted authors and commentators by Saturday, November 30, 2019. Abstracts of rewritten opinions or contracts will be due on April 30, 2020 for circulation to fellow authors. Abstracts of commentaries will be due on May 15, 2020 for circulation to fellow authors. First drafts of rewritten opinions will be due on Wednesday, July 15, 2020. First drafts of commentaries will be due on Tuesday, September 15, 2020. The target date for submission of the completed, compiled manuscript for publication is February 2021.
To submit a proposal for rewriting an opinion or contract or providing commentary, please e-mail the following information to the volume co-editors, Anne Choike, email@example.com, Usha R. Rodrigues, firstname.lastname@example.org, and Kelli Alces Williams, email@example.com by Friday, November 1, 2019:
- Your CV, your areas of corporate law interest or expertise, and why you are interested in and well suited to participate in this project. The Feminist Judgments Project and the Corporate Law volume editors are committed to including authors from diverse backgrounds. If you feel an aspect of your personal identity is important to your participation, please feel free to include that in your expression of interest.
- Your top two or three preferences of cases or contracts to write about from the list below. Alternatively, if you have another case or contract that you feel strongly should be included instead of one of the selected cases or contracts and that you would like to write about, provide a summary of the case or contract (no more than 250 words), a copy of the full text of the case or contract, and a brief summary (no more than 250 words) of the reasons that you think it should be included. Contributors who wish to co-author a rewritten opinion, rewritten contract or commentary, or work together on a rewritten opinion or contract and the commentary thereupon, are welcome to indicate that in the application.
- Your preference for contributing a rewritten opinion or contract, or a commentary.
- Any time constraints and other obligations that may impact your ability to meet the submission deadlines.
- Your willingness and ability to attend the tentatively planned gathering at the Law & Society Annual Meeting in Denver, Colorado in May 2020. Selection of contributors does not depend on their ability or willingness to attend this gathering.
This list of cases and contracts that the editors have selected for consideration to be included in the volume Feminist Judgments: Rewritten Corporate Law, is as follows:
Legal Personality, Identity, and Limited Liability of Corporate Entities:
- Citizens United (rights of corporate “persons” and nature of corporate personality)
- Walkovszky v. Carlton (limited liability/veil piercing)
Role and Purpose of the Corporation and Corporate Combinations in Society
- Dodge v. Ford (shareholder primacy)
- Merriam v. Demoulas Super Mkts. (stakeholder responsibility in family-owned business)
- Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. (directors’ duty to maximize share price in corporate takeover)
Fiduciary Duties in Corporate Governance
- Meinhard v. Salmon (duty of loyalty)
- Smith v. Van Gorkom (duty of care and business judgment rule)
- Francis v. United Jersey Bank (duty of care to understand business)
- In re Walt Disney Derivative Litigation (duty of care regarding executive compensation)
- Harvey Weinstein Employment Agreement (duty of care to monitor compliance)
Closely Held Businesses and Other Considerations Regarding the Composition of Boards, Management, and Owners
- Ringling Bros.--Barnum & Bailey Combined Shows, Inc. v. Ringling (dispute over board seats)
- Beam ex rel. Martha Stewart Living Omnimedia, Inc. v. Stewart (legitimacy of board member personal relationships)
- Donohue v. Rodd Electrotype (close corporations and minority shareholder oppression)
Protecting Vulnerable Investors and Potential Investors in Corporations
- Jordan v. Duff & Phelps (duty to disclose material information)
- SEC v. Howey (definition of investment contract)
- US v. Chestman (culpability for insider trading based on personal relationships)
Monday, August 5, 2019
I am just back from the 2019 Southeastern Association of Law Schools (SEALS) conference. I participated in several different kinds of activities this year. This post reports out on each.
I first served as a participant in a series of discussion groups tailored to provide information to aspiring law professors. The attendees included newly minted fellows and VAPs, mid-to-later-career lawyers/judges looking to switch to full-time law faculty (some already adjuncts or visitors), and (in general) law practitioners testing the waters for possible engagement with the Association of American Law Schools faculty recruitment process. SEALS has served selected prospective law professors with a specialized track of preparative programming for a number of years. This set of discussion groups represents an extension of that type of programming, on a more general informational level, to a wider audience of folks interested in careers in law teaching.
I also presented in a discussion group, sponsors by West Academic, on "Teaching to Engage." Steve Friesland of Elon Law moderated the session. I shared some of my "first class" and assessment simulations for business law doctrinal and experiential courses. I learned from many others who shared their own ways of engaging students. It was a rich discussion.
The anual SEALS "Supreme Court and Legislative Update: Business and Regulatory Issues" featured a presentation from me on a few cases and things to watch for from a legislative viewpoint. I was joined on the panel by several super-fun business and administrative law colleagues. One of them, Lou Virelli, posted a summary of the session on the SEALS Blog. You can find it here.
Michigan State law prof Carla Reyes's "New Scholar" presentation of her draft paper currently entitled "Autonomous Business Reality," was fascinating. I was proud to serve as her assigned mentor for this session. I hope I lived up to that role, considering she is a leader in law-and-technology research and I already cite to her work on blockchain technology! Humbling to be a mentor under those circumstances, for sure.
As part of the Free Speech Workshop, I related the history and current status of student free speech issues involving registered student organizations at The University of Tennessee, Knoxville, based on my experience as a faculty advisor to a controversial student organization on our campus. That presentation was part of a larger discussion group on campus free speech issues. My UT Law colleague David Wolitz was a co-discussant. Howard Wasserman of FIU Law summarized the session here.
Last--but certainly not least--I co-moderated/moderated two substantive law SEALS discussion groups.
First, John Anderson of Mississippi College Law (with only a bit of help from me) organized and moderated a session entitled "Insider Trading Stories," in which participants focused on the narratives underlying insider trading cases--known and unknown. This proved to be an incredibly robust and diverse discussion, highlighting issues in insider trading theory, policy, and doctrine. Longer versions of some of the discussion group offerings will be presented at a symposium at UT Law in the fall, sponsored by the Tennessee Journal of Law and Policy (TJLP). The TJLP will publish the edited papers in a forthcoming volume. I was pleased to see BLPB co-blogger Marcia Narine Weldon in the room!
Second, I moderated a discussion group entitled "Benefit Corporation (or Not)? Establishing and Maintaining Social Impact Business Firms." The program description of the session follows:
As the benefit corporation form nears the end of its first decade of "life" as a legally recognized form of business association, it seems important to reflect on whether it has fulfilled its promise as a matter of legislative intent and public responsibility and service. This discussion group is designed to take on the challenge of engaging in that reflective process. The participating scholars include doctrinal and clinical faculty members who both favor and tend to recommend the benefit corporation form for social enterprises and those who disfavor or hesitate to recommend it.
The final group pf participants included researchers/writers from the United Kingdom and Canada as well as the United States. BLPB co-blogger (and newly minted dean) Josh Fershee was among the group, and BLPB co-blogger Marcia Narine Weldon was again in attendance. The discussion was spirited and there were more than a few "aha" moments for me.
All-in-all, a busy--but enlightening--week's work.
It soon will be time to propose programs for the 2020 SEALS annual meeting, to be held in Fort Lauderdale, Florida. The date of the conference is likely to be moved up to start on July 30 to accommodate the very early (and getting earlier) starts for schools in the Southeastern United States (and probably elsewhere, too). If you have business law program ideas or would like to moderate or participate in a business law program, please contact me by email. I find that this conference (especially the discussion groups) helps to energize my teaching and scholarship in meaningful ways. Perhaps you also would find this a great place to jumpstart the academic year.
Friday, July 5, 2019
The dark side of entrepreneurial finance
Editors: Arvind Ashta, Olivier Toutain
Theme of the special issue
Whether we are talking about start-ups, more recently "grow up" or more broadly about company creation-takeover, entrepreneurial finance attracts a lot of attention, from the entrepreneurs' side and from the side of private and public financing organisations and the media. Entrepreneurial finance includes Founder's equity, Love Money, Business Angel, Venture Capital, LBO Funds, banks, IPOs and various alternative financing treated as shadow banking: micro-credit, loan sharking, leasing, crowdfunding, Initial Coin Offerings, among others (Block, Colombo, Cumming, & Vismara, 2018; Wright, Lumpkin, Zott, & Agarwal, 2016).
Financing is considered as an inherent dimension of the entrepreneurial development process (Panda, 2016; Yunus, 2003). Without financing, there is no investment and, therefore, little chance of starting a business with adequate production tools and an organization capable of absorbing the trials and tribulations of starting and developing entrepreneurial activities. Without funding, the risk of lack of legitimacy is also high: what does it mean in the entrepreneurial ecosystem not to have the support of one or more funding agencies? More so in the start-up world! Is that conceivable? Finally, can the entrepreneur now free himself from financial support, even if he does not really need it to start his business? If the reasoning is pursued further, does the entrepreneur have a choice? In other words, is it possible to create and develop your company without mobilizing the financial resources of the territory? Without entering into a financial system and ecosystem that regulates the creation and takeover of companies in a territory? Or a system that pushes the entrepreneur to finance so much that the system itself collapses by bringing forth a financial crisis (Boddy, 2011; Diamond & Rajan, 2009; Donaldson, 2012; Guérin, Labie, & Servet, 2015; Mishkin, 2011).
Applying for funding today is often considered as a difficult adventure: is it really a fighter's path given the particularly numerous mechanisms in France? But are they also numerous in Europe? In the world? Is the cost of financing transparent or hidden (Attuel-Mendes & Ashta, 2013)? In any case, to adventure is to walk and remove obstacles while following a guide... often at the funder's request... which is often called coaching or mentoring. Or following the guide, sometimes - or often, depending on the reader's appreciation – results in respecting rules, imposed steps, in short, to adopt a good conduct... to such an extent that the entrepreneur can lose track of his North Star, or at least part of his project, modified by "pitching" and integrating the comments, suggestions, strong suggestions of potential funders... In other words, if we push the reflection further, the accompanying logic proposed in the form of good intentions by the funders of an ecosystem, are they not likely, by force, to respond to external constraints, to generate effects opposite to expectations: inhibited entrepreneurs, whose project has lost its originality, vitality and excellence through the coaching or mentoring of initially imagined value creation (Collewaert, 2009)? Isn't the finance injected into the support systems finally a Dr Jekyll and Mr Hyde of entrepreneurship? In other words, if it constitutes an unprecedented measure of support for entrepreneurial growth in the world, does it not at the same time generate "antipreneurial" effects? Normative and highly biased, do financial actors deserve such a place in the creative process? What is it that basically legitimizes their central place? (Bateman, 2010; Sinclair, 2012) What is the hidden face of entrepreneurial finance (Henderson & Pearson, 2011; Krohmer, Lauterbach, & Calanog, 2009; Toe, Hollandts, & Valiorgue, 2017)?
The purpose of this issue is to extract itself from the normative fields and discourses that highlight, in the vast majority of cases, the important role of finance in the development of entrepreneurship, whether purely economic, social or environmental. In other words, we are asking ourselves here about the secondary, even hidden, effects of finance on the emergence and development of new companies in France and around the world.
The proposals will address, among other things, the following topics:
- What place does finance occupy today in the feeling of success and accomplishment of an entrepreneurial activity?
- How do entrepreneurs interact with potential funders?
- How do funders dialogue with each other?
- How do funders make their investment decisions? Rationality, Short termism, information asymmetry....
- How do entrepreneurs and funders negotiate? On which elements of the project or company? Are there any losers? What is lost in the process?
- How does the relationship between entrepreneurs and funders change over time?
- Can finance harm the value creation produced by entrepreneurial activity? Can it affect entrepreneurial freedom?
- Is it possible to free oneself from financing circuits? How?
Finally, what is the dark side of entrepreneurial finance?
Submission of texts: By April 30, 2020 at the latest
Publication: March 2021
[I have omitted here the list of references supporting the text citations. Please contact me by email if you would like a .pdf copy of the call for papers that includes the list. There is more information after the jump.]
Friday, June 21, 2019
Today, the 10th annual National Business Law Scholars Conference concluded. Jill Fisch gave today's keynote lecture at lunchtime. She masterfully (really) tied together the scholarship of the far-and-away vast majority of the business law scholars attending the conference by weaving together corporate purpose, private ordering, and choice of entity. In tying these themes together, she encouraged us all to use our scholarship to serve multiple audiences--including the judiciary, the law practice community, and industry.
This talk resonated with me from start to finish. I was riveted. I knew Jill was talking directly to me and so many others in the room who have plumbed the core of corporate governance and tried to address multiple audiences with our work. She validated, and encouraged us to continue (and expand), our work in these somewhat unsettled (and sometimes unsettling!) areas of business law.
Take me for example (since I know myself best . . . ). As Jill talked about corporate purpose, I heard her to be validating part of my article on Corporate Purpose and Litigation Risk in Publicly Held U.S. Benefit Corporations. When she addressed private ordering, I understood her to be endorsing my observations on that subject (as well as corporate purpose!) in Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents. And when she extolled the virtues of scholarship on choice of entity, I realized she was supporting work like mine in Let's Not Give Up on Traditional For-Profit Corporations for Sustainable Social Enterprise. In each of those pieces, I was talking to audiences that include those outside the business law academy. I have recently focused more direct attention on these additional audiences in essays like Why Can't We Be Friends? A Business Finance Lawyer's Plaintive Plea to Entrepreneurs and Professional Responsibility in an Age of Alternative Entities, Alternative Finance, and Alternative Facts. I know that others in the audience saw similar reflections of Jill's words in their own work.
Mike Guttentag observed in summary that Jill's words represented both a "call to action" and a celebration. I could not have summed Jill's talk up any better than that. (And she seemed pleased by that summary--indicating that if she had achieved those objectives, she had done the job she set out to do.)
I left the keynote program uplifted and, frankly, jazzed up about what I have done, am doing, and plan to continue to do. The great comments I got on my insider trading project in the session right after her talk were icing on this beautiful cake. Thank you, Jill, for your rousing endorsement of business law scholarship.
Wednesday, February 13, 2019
Posted by request. Looks like a good event:
Law and Ethics of Big Data
Hosted and Sponsored by:
Washington and Lee University School of Law
Kenan Institute for Ethics, Duke University; The Virginia Tech Center for Business Intelligence Analytics; The
Department of Business Law and Ethics, Kelley School of Business, Indiana University Bloomington
Wednesday-Thursday, April 24-25, 2019
Abstract Submission Deadline: Friday, March 1, 2019
We are pleased to announce the annual research colloquium, “Law and Ethics of Big Data,” which will be held this
year at Washington and Lee University School of Law in Lexington, Virginia. This year’s colloquium is co-hosted
by Associate Professor Margaret Hu at Washington and Lee University School of Law and Kenan Visiting Professor
at Duke University’s Kenan Institute for Ethics, Associate Professor Angie Raymond of Indiana University, and
Professor Janine Hiller of Virginia Tech.
Due to the success of this multi-year event that now is in its sixth year, the colloquium will be expanded and we seek broad participation from multiple disciplines. Please consider submitting research that is ready for the discussion stage. Each paper will receive detailed constructive critique. We are targeting cross-discipline opportunities for colloquium participants.
Examples of topics appropriate for the colloquium include: Ethical Principles for the Internet of Things, Intellectual Property and Data Intelligence, Bribery and Algorithms, Ethical Use of Big Data, Health Privacy and Mental Health, Employment and Surveillance, National Security, Civil Rights, and Data, Algorithmic Discrimination, Smart Cities and Privacy, Cybersecurity and Big Data, and Data Regulation. The organizers have a special interest in papers focused on the law and ethics of Artificial Intelligence. We seek a wide variety of topics that reflects the broad ecosystem created by ubiquitous data collection and use, as well as its impacts on society.
TENTATIVE Colloquium Details:
• The colloquium begins at 9:00 am with breakfast on April 24 and concludes at ~1:00 pm at the conclusion of lunch on April 25. The University will host a research colloquium dinner on April 24. Breakfast and lunch will be provided at Washington and Lee University on April 24-25.
• Approximately 40 minutes is allotted for discussion of each paper presentation; 5-10 minutes for an introductory presentation by the discussant, followed by 30-35 minutes of group discussion. Authors will not present their own papers to the group; rather, a paper discussant presents the work and leads the group dialogue that follows.
• Manuscripts will be circulated among participants only.
• Participants agree to read and be prepared to participate in the discussion of all papers. Each author may be asked to lead discussion of one other submitted paper.
• A limited number of participants will be provided with lodging, and all participants will be provided meals during the colloquium. Travel and all other expenses will be individually assumed by each participant.
Submissions: To be considered, please submit an abstract of 500-750 words to Margaret Hu at firstname.lastname@example.org no later than Friday, March 1, 2019. Abstracts will be evaluated based upon the quality of the abstract and the topic’s fit with the theme of the colloquium and other presentations. Questions may be directed to Margaret Hu (email@example.com), Angie Raymond (firstname.lastname@example.org), or Janine Hiller (email@example.com). If you are interested in being a discussant, but do not have a paper to present, please send a statement of interest to the same.
Authors will be informed of the decision by Friday, March 8, 2019. If accepted, the author agrees to submit a discussion paper by Friday, April 12, 2019. While papers need not be in finished form, drafts must contain enough information and structure to facilitate a robust discussion of the topic and paper thesis. Formatting can be either APA or Bluebook. In the case of papers with multiple authors, only one author may present at the colloquium.
Monday, January 7, 2019
Twitter tells me that there was a good bit of conversation at the AALS conference about the law review-based system of scholarship. If you want to try your hand at a different system, namely the double-blind peer-reviewed system, here is a call for papers from a legal journal in that system.
The Atlantic Law Journal is now open for submissions and is soliciting papers for its upcoming Volume 21 with an expected publication date in summer 2019. We are now also accepting book review submissions for books related to business law/society/legal studies. The Atlantic Law Journal is listed in Cabell's, fully searchable in Thomson-Reuters Westlaw, and listed by Washington & Lee. The journal is a double-blind peer-reviewed publication of the Mid-Atlantic Academy of Legal Studies in Business (MAALSB). Acceptance rates are at or less than 25%, and have been for all our recent history. We publish articles that explore the intersection of business and law, as well as pedagogical topics. Please see our website at http://www.atlanticlawjournal.org/submissions.html for the submission guidelines, the review timeline, and more information regarding how to submit. Submissions or questions can be sent to Managing Editor, Dr. Evan Peterson, at firstname.lastname@example.org.
Friday, December 21, 2018
If you are looking for podcasts over the break, I recommend Professor Brian Frye's Ipse Dixit. I have only listened to a handful of the 75 episodes, but I learned something new in each one.
A big thanks to Brian for putting all of these podcasts on legal scholarship together. The podcasts cover a wide range of legal topics, mostly in an interview format with other professors.
Wednesday, November 28, 2018
Colleen Baker is joining us as a guest blogger at Business Law Prof Blog for the next month. Colleen Baker is an Assistant Professor at the Price College of Business at the University of Oklahoma. She is also affiliate faculty at the University of Oklahoma College of Law. Her research interests primarily lie in the banking and financial institutions law and regulation space. Additional information about her education, practice, and publications can be found at her bio, linked to above. We are looking forward to Professor Colleen Baker's posts and hope our readers will engage with her work.
Friday, November 9, 2018
My fellow BLPB editor Joan Heminway and I both have chapters in the book, along with many others.
The introduction is posted on SSRN, for those who are interested. Also, editor Ben Means has many talents, as he did the cover artwork below as well.
Monday, October 29, 2018
Last Friday, I had the honor of being the keynote speaker for the 64th annual conference of the Southeastern Academy of Legal Studies in Business (SEALSB). The invitation for this appearance was extended to me months ago by BLPB contributing editor Haskell Murray. It was a treat to have the opportunity to mingle and talk shop with the attendees (some of whom I already knew).
The participants in SEALSB are largely business law faculty members teaching at business schools. Having never before attended one of their meetings and as a bit of a "foreigner" in their midst, I wondered for quite a bit about what I should talk about. Should I take the conservative route and present some of my work, hoping to dazzle the group with my legal knowledge (lol), or should I take a riskier approach and tell them what was really on my heart when I accepted Haskell's kind invitation?
I chose the latter. I spoke for 15-20 minutes on "Valuing and Visioning Collaboration" between business law faculties in business and law schools and then took about 10 minutes of questions. I started with the stories of two of my students--who could have been the students of anyone in the room. Sarah took a business (accounting) major as an undergraduate and then came to law school; Ryan completed law school and went on to an MBA. Both achieved lofty learning objectives and engaged in productive scholarship. Both landed the jobs they wanted--ironically at the same firm (but years apart). For me, the stories of these two students--what they did and how they became successful--illustrates both the power of business school law faculty and law school business law faculty working together and the high value in that relationship as to both teaching and scholarship.
I noted that, in these two (of the three principal) aspects of our common academic existence, teaching and scholarship, there are a number of ways that we can collaborate, offering examples of each:
- conference organization and attendance;
- work in interdisciplinary centers;
- scholarship co-authorships;
- co-teaching and teaching for each other;
- co-currocular and extra-curricular programs (e.g., competitions and journals);
- curriculum development; and
I bet you can guess what blog I mentioned as an example in addressing that last collaborative method . . . .
I also noted, however, that there are barriers to these collaborations--or at least to some of them in certain contexts. Those barriers may include: the fact that reaching across the aisle may be, for the relevant institutions and faculty members, new--that there is no history--and that it may therefore be more of a challenge to scope out and implement collaboration; differences in methodology, norms, and terminology; potential disagreements about institutional or personal credit allocation (including because of ego); questions about the necessary sources of funding and human capital; and overall, a lack of institutional or departmental incentives and rewards for collaboration (including credit in tenure and promotion deliberations at many schools).
Nevertheless, I offered that, even if institutions do not act to support collaborative efforts, we should strike out to overcome the barriers and engage with each other because the benefits are worth the costs. To do so, however, we must both understand and truly appreciate the benefits of collaboration. We also must be willing to take some attendant risk (or pick collaborative methods that avoid or limit risk). I indicated that I plan to head down the collaborative path with increased focus.
To conclude my remarks, in the spirit of my invitation from Haskell to attend and speak at SEALSB, I encouraged the assembled crowd to join me on that collaborative journey, quoting from Patrick Lencioni's book The Five Dysfunctions of a Team: A Leadership Fable. In that book, he wrote: "Remember teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability." [p. 58; emphasis added] Here, I invite all of you who teach business law in a business or law school setting to embrace vulnerability and reach across the aisle to work with your business law colleagues. And if you already have done so, please leave a comment on the outcome--positive or negative.
Sunday, October 21, 2018
5th Conference of the French Academy of Legal Studies in Business (Association Française Droit et Management)
June 20 and 21, 2019 – emlyon - Paris Campus
CALL FOR PAPERS 2019 Social Issues in Firms
Social issues and fundamental rights occupy an increasingly important space in the governance of today’s companies. Private enterprises assume an increasingly active role not only in a given economy but also in society as a whole. Firms become themselves citizens. They recognize and support civic engagement by the men and women who work for them. Historically, the role of the modern firm that resulted from the Industrial Revolution has been torn between two opposing viewpoints.
[More information under the break.]
October 21, 2018 in Business Associations, Business School, Call for Papers, Conferences, Corporate Governance, Corporations, Ethics, Haskell Murray, International Business, International Law, Management, Research/Scholarhip | Permalink | Comments (0)
Tuesday, October 2, 2018
Following is an announcement for an upcoming symposium that will tackle some challenging topics, including those related to the role corporate law plays in addressing poverty. I, of course, would probably talk about the role of "entity law," rather than "corporate law," but that's just me. Regardless, this should be an interesting and enlightening discussion, and I look forward to seeing the papers that come from it.
On Thursday, October 25, 2018, The University of Tennessee Law School and the Tennessee Journal of Race, Gender, & Social Justice will be hosting a Symposium titled The Urgency of Poverty. The Symposium reflects on the Poor People's Campaign of 1968 and the continued injustices which have led to the current revival. The Symposium further explores the important role transactional lawyers and scholars must play in advocating for economic justice in modern America.
The Symposium will include panels on (1) Environmental Justice, (2) Intersection of Civil Rights and Economic Justice, (3) Solidarity Economies, and (4) Reforming Corporate Law. Professor Philip Alston, the U.N. Special Rapporteur on Extreme Poverty, and Human Rights, will deliver the keynote. The Symposium is accompanied by a dedicated publication featuring essays and articles from Transactional Professors of Color.
More information is available here: https://law.utk.edu/alumni/get-involved/cle/the-urgency-of-poverty/
Friday, August 24, 2018
Two weeks ago, I blogged about why lawyers, law professors, and judges should care about blockchain. I'll be speaking about blockchain, corporate governance, and enterprise risk management on September 14th at our second annual BLPB symposium at UT. To prepare, I'm reading as many articles as I can on blockchain, but it can be a bit mind numbing with all of the complexity. After hearing Carla Reyes speak at SEALS, I knew I had to read hers, if only because of the title If Rockefeller Were A Coder.
I recommend this article in general, but especially for those who teach business organizations and want to find a way to enliven your entity selection discussions. The abstract is below.
The Ethereum Decentralized Autonomous Organization (“The DAO”), a decentralized, smart contract-based, investment fund with assets of $168 million, spectacularly crashed when one of its members exploited a flaw in the computer code and stole $55 million. In the wake of the exploit, many argued that participants in the DAO could be jointly and severally liable for the loss as partners in a general partnership. Others claimed that the DAO evidenced an entirely new form of business entity, one that current laws do not contemplate. Ultimately, the technologists cleaned up the exploit via technological means, and without engaging in any further legal analysis, many simply concluded that the DAO, other decentralized autonomous organizations, and the Ethereum protocol itself signify opportunities to do away with legal business organizational forms as they presently exist. In this Article, I argue that precisely the opposite is true. Instead of creating a new type of corporate entity through computer code, The DAO and other smart contract-based organizations may resurrect a very old, frequently forgotten, business entity—the business trust, which Rockefeller first used to solve the technology-business organization law divide of his time.
This Article offers the first analysis of blockchain-based business ventures under business organization law at three separate levels of the technology: protocols, smart contracts and decentralized autonomous organizations. The Article first reveals the practical and theoretical deficits of using partnership as the only default entity option for blockchain-based business ventures. The Article then demonstrates that incorporation and LLC formation will also pose both practical and doctrinal difficulties for some such businesses. When faced with a similar conundrum in the nineteenth century, Rockefeller turned to the common law business trust as a substitute business entity. This Article argues that if Rockefeller were a coder building a blockchain-based business, he would again turn to the business trust as an additional choice of entity. The Article concludes by considering, in light of Rockefeller’s history, whether the law should anticipate any challenges with the rise of blockchain-based business trusts.
Sunday, August 19, 2018
The following comes to us from Sergio Alberto Gramitto Ricci, Visiting Assistant Professor of Law and Assistant Director, Clarke Program on Corporations & Society, Cornell Law School. I had the pleasure of listening to Sergio discuss this project at our recent SEALS discussion group on Masterpiece Cakeshop, and I found particularly interesting his conclusion that "Roman slaves could not own property, but ius naturale provided them with the right to exercise religion. To the contrary, Roman corporations could contract, own assets and bear liabilities, but they had no exercise rights as religion liberties were typical of personae—physically sound humans." The concept of robo-directors is also fascinating, and adds another layer to my ongoing dystopian (utopian?) novel plot wherein corporations are allowed to run for seats in Congress directly (as opposed to what some would argue is the current system wherein we get: "The Senator from [X], sponsored by Big Pharma Corp."). You can download the full draft via SSRN here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3232816.
In an era where legal persons hold wealth and power comparable to those of nation states, shedding light on the nature of the corporate form and on the rights of business corporations is crucial for defining the relations between the latter and humans. Recent decisions of the U.S. Supreme Court, including Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission and Burwell v. Hobby Lobby Stores, Inc., have called for a closer investigation of the role that corporate separateness plays in the business corporation formula. Moreover, legal personhood is a sophisticated legal technology, which employment can revolutionize the strategies to protect cultural heritage or natural features and can address emerging phenomena, including artificial intelligence and learning machines. This paper adopts archeology of corporate law to analyze three intertwining legal and organizational technologies based on legal personhood. Archeology of corporate law excavates ancient laws and language in order to solve salient issues in contemporary and future corporate debates. First, this paper sheds light on the origins and nature of legal personhood and on the rights of business corporations by analyzing laws and language that the Romans adopted when they invented the corporation. For example, excavating roman law shows how Roman slaves could not own property, but ius naturale provided them with the right to exercise religion. To the contrary, Roman corporations could contract, own assets and bear liabilities, but they had no exercise rights as religion liberties were typical of personae—physically sound humans. In sum, the Romans drew a line between the legal capacities of their corporations and the rights and liberties that persons possessed by virtue of being human. Second, this paper discusses the separation of ownership and control. It explains how the separation of ownership and control, together with legal personhood, constitutes the essential formula of the business corporation model. Last, this paper explores artificial intelligence in boardrooms to assist, integrate or replace human directors drawing a parallelism between robo-directors and Roman slaves appointed to run joint-enterprises. Barring the statutory restrictions that require for board directors to be natural persons and overcoming the moral concerns related to appointing robo-directors, the remaining issue that AI in boardrooms raises is that of accountability.
Sunday, August 12, 2018
We’re a month away from our second annual Business Law Professor Blog CLE, hosted at the University of Tennessee on Friday, September 14, 2018. We’ll discuss our latest research and receive comments from UT faculty and students. I’ve entitled my talk Beyond Bitcoin: Leveraging Blockchain for Corporate Governance, Corporate Social Responsibility, and Enterprise Risk Management, and will blog more about that after I finish the article. This is a really long post, but it’s chock full of helpful links for novices and experts alike and highlights some really interesting work from our colleagues at other law schools.
Two weeks ago, I posted some resources to help familiarize you with blockchain. Here’s a relatively simple definition from John Giordani at Forbes:
Blockchain is a public register in which transactions between two users belonging to the same network are stored in a secure, verifiable and permanent way. The data relating to the exchanges are saved inside cryptographic blocks, connected in a hierarchical manner to each other. This creates an endless chain of data blocks -- hence the name blockchain -- that allows you to trace and verify all the transactions you have ever made. The primary function of a blockchain is, therefore, to certify transactions between people. In the case of Bitcoin, the blockchain serves to verify the exchange of cryptocurrency between two users, but it is only one of the many possible uses of this technological structure. In other sectors, the blockchain can certify the exchange of shares and stocks, operate as if it were a notary and "validate" a contract or make the votes cast in online voting secure and impossible to alter. One of the greatest advantages of the blockchain is the high degree of security it guarantees. In fact, once a transaction is certified and saved within one of the chain blocks, it can no longer be modified or tampered with. Each block consists of a pointer that connects it to the previous block, a timestamp that certifies the time at which the event actually took place and the transaction data.
These three elements ensure that each element of the blockchain is unique and immutable -- any request to modify the timestamp or the content of the block would change all subsequent blocks. This is because the pointer is created based on the data in the previous block, triggering a real chain reaction. In order for any alterations to happen, it would be necessary for the 50%-plus-one of the network to approve the change: a possible but hardly feasible operation since the blockchain is distributed worldwide between millions of users.
In case that wasn’t clear enough, here are links to a few of my favorite videos for novices. These will help you understand the rest of this blog post.
- Blockchain Expert Explains One Concept in 5 Levels of Difficulty
- 19 Industries That Blockchain Will Disrupt
- How Blockchain is Changing Money and Business
To help prepare for my own talk in Tennessee, I attended a fascinating discussion at SEALS on Thursday moderated by Dean Jon Garon of Nova Southeastern University Shepard Broad College of Law called Blockchain Technology and the Law.
For those of you who don’t know how blockchain technology can relate to your practice or teaching, I thought I would provide a few questions raised by some of the speakers. I’ve inserted some (oversimplified)links for definitions. The speakers did not include these links, so if I have used one that you believe is incomplete or inaccurate, do not attribute it to them.
Del started the session by talking about the legal issues in blockchain consensus models. He described consensus models as the backbones for users because they: 1) allow users to interact with each other in a trustless manner; 2) ensure the integrity of the ledger in both normal and adversarial situations; and 3) create a “novel variety of networks with extraordinary potential” if implemented correctly. He discussed both permissioned (e.g. Ripple) and permissionless (Bitcoin) systems and how they differ. He then explained Proof of Work blockchains supported by miners (who solve problems to add blocks to the blockchain) and masternodes (who provide the backbone support to the blockchain). He pointed out how blockchains can reduce agency costs and problems of asymmetrical information and then focused on their utility in financial markets, securities regulation, and corporate governance. Del compared the issues related to off-chain governance, where decisionmaking first takes place on a social level and is then actively encoded into the protocol by the developers (used by Bitcoin and Ethereum) to on-chain governance, where developers broadcast their improvement protocols on-chain and then, once approved, those improvements are implemented into the code. He closed by listing a number of “big unanswered issues” related to regulatory guidance, liability for the performance of the technology and choice of consensus, global issues, and GDPR and other data privacy issues.
Catherine wants to help judges think about smart contracts. She asked, among other things, how judges should address remedies, what counts as substantial performance, and how smart contract audits would work. She questioned whether judges should use a consumer protection approach or instead follow a draconian approach by embracing automation and enforcing smart contracts as drafted to discourage their adoption by those who are not sophisticated enough to understand how they work.
Tonya focuses on blockchain and intellectual property. Her talked raised the issues of non-fungible tokens generated through smart contracts and the internet of value. She used the example of cryptokitties, where players have the chance to collect and breed digital cats. She also raised the question of what kind of technology can avoid infringement. For more on how blockchain can disrupt copyright law, read her post here.
In case you didn’t have enough trust issues with blockchain and cryptocurrency, Rebecca’s presentation focused on the “halo of immutability” and asked a few central questions: 1) why should we trust the miners not to collude for a 51% attack 2) why should we trust wallets, which aren’t as secure as people think; and 3) why should we trust the consensus mechanism? In response, some members of the audience noted that blockchain appeals to a libertarian element because of the removal of the government from the conversation.
Professor Carla Reyes, Michigan State University College of Law- follow her on Twitter at Carla Reyes (@Prof_CarlaReyes);
Carla talked about crypto corporate governance and the potential fiduciary duties that come out of thinking of blockchains as public trusts or corporations. She explained that governance happens on and off of the blockchain mechanisms through social media outlets such as Redditt. She further noted that many of those who call themselves “passive economic participants” are actually involved in governance because they comment on improvement processes. She also noted the paradox that off chain governance doesn’t always work very well because participants don’t always agree, but when they do agree, it often leads to controversial results like hard forks. Her upcoming article will outline potential fiduciaries (miner and masternode operators for example), their duties, and when they apply. She also asked the provocative question of whether a hard fork is like a Revlon event.
As a former chief privacy officer, I have to confess a bias toward Charlotte’s presentation. She talked about blockchain in healthcare focusing on these questions: will gains in cybersecurity protection outweigh specific issues for privacy or other legal issues (data ownership); what are the practical implications of implementing a private blockchain (consortium, patient-initiated, regulatory-approved); can this apply to other needed uses, including medical device applications; how might this technology work over geographically diverse regulatory structures; and are there better applications for this technology (e.g. connected health devices)? She posited that blockchain could work in healthcare because it is decentralized, has increased security, improves access controls, is more impervious to unauthorized change, could support availability goals for ransomware attacks and other issues, is potentially interoperable, could be less expensive, and could be controlled by regulatory branch, consortium, and the patient. She closed by raising potential legal issues related to broad data sharing, unanswered questions about private implementations, privacy requirements relating to the obligation of data deletion and correction (GDPR in the EU, China’s cybersecurity law, etc); and questions of data ownership in a contract.
Eric closed by discussing the potential tax issue for hard forks. He explained that after a hard fork, a new coin is created, and asked whether that creates income because the owner had one entitlement and now has two pieces of ownership. He then asked whether hard forks are more like corporate reorganizations or spinoffs (which already have statutory taxation provisions) or rather analogous to a change of wealth. Finally, he asked whether we should think about these transactions like a contingent right to do something in the future and how that should be valued.
Stay tuned for more on these and other projects related to blockchain. I will be sure to post them when they are done. But, ignore blockchain at your peril. There’s a reason that IBM, Microsoft, and the State Department are spending money on this technology. If you come to UT on September 15th, I’ll explain how other companies, the UN, NASDAQ, and nation states are using blockchain beyond the cryptocurrency arena.
August 12, 2018 in Commercial Law, Compliance, Conferences, Contracts, Corporate Governance, Corporations, Current Affairs, Entrepreneurship, Human Rights, Law School, Lawyering, Legislation, Marcia Narine Weldon, Research/Scholarhip, Securities Regulation, Shareholders, Teaching, Technology, Writing | Permalink | Comments (0)
Monday, July 30, 2018
Hello to all from Tokyo, Japan (Honshu). I have been in Japan for almost a week to present at and attend the 20th General Congress of the International Academy of Comparative Law (IACL), which was held last week in Fukuoka, Japan (Kyushu). By the time you read this, I will be on my way home.
As it turns out, I was at the Congress with old business law friends Hannah Buxbaum (Indiana Maurer Law), Felix Chang (Cincinnati Law), and Frank Gevurtz (McGeorge Law), as well as erstwhile SEALS buddy Eugene Mazo (Rutgers Law). I also met super new academic friends from all over the world, including several from the United States. I attended all of the business law programs after my arrival (I missed the first day due to my travel schedule) and a number of sessions on general comparative and cross-border legal matters. All of that is too much to write about here, but I will give you a slice.
I spoke on the legal regulation of crowdfunding as the National Rapporteur for the United States. My written contribution to the project, which I am told will be part of a published volume, is on SSRN here. The entire project consists of eighteen papers from around the world, each of which responded to the same series of prompts conveyed to us by the General Rapporteur for the project (in our case, Caroline Kleiner from the University of Strasbourg). The General Rapporteur is charged with consolidating the information and observations from the national reports and synthesizing key take-aways. I do not envy her job! The importance of the U.S. law and market to the global phenomenon is well illustrated by this slide from Caroline's summary.
The Congress was different from other international crowdfunding events at which I have presented my work. The diversity of the audience--in terms of the number of countries and legal specialties represented--was significantly greater than in any other international academic forum at which I have presented. Our panel of National Rapporteurs also was a bit more diverse and different than what I have experienced elsewhere, including panelists hailing from from Argentina, Brazil, Canada, France, Germany, Poland, and Singapore (in addition to me). At international conferences focusing on the microfinance aspects of crowdfunding, participants from India and Africa are more prominent. I expect to say more about the individual national reports on crowdfunding in later posts, as the need or desire arises.
A few outtakes on other sessions follow.
July 30, 2018 in Conferences, Contracts, Corporate Finance, Corporate Governance, Crowdfunding, Current Affairs, International Business, International Law, Joan Heminway, Research/Scholarhip, Securities Regulation, Social Enterprise | Permalink | Comments (0)