Sunday, September 29, 2019
Friend-of-the-BLPB Seth Oranburg informs me that the call for papers is now open for the #Futurelaw 4.0 Junior Faculty Workshop, offering newer scholars the opportunity to present and respond to research and writing in law-and-technology areas of endeavor. Details (including how to apply for inclusion) are available at www.duq.edu/future-law-4. The workshop is to be held on November 22, 2019. Submissions are due on October 14, and complete drafts are due on November 8.
Please spread the word quickly! This sounds like an exciting opportunity, but there is a short fuse on applications.
Saturday, September 7, 2019
Have you ever wanted to learn the basics about blockchain? Do you think it's all hype and a passing fad? Whatever your view, take a look at my new article, Beyond Bitcoin: Leveraging Blockchain to Benefit Business and Society, co-authored with Rachel Epstein, counsel at Hedera Hashgraph. I became interested in blockchain a year ago because I immediately saw potential use cases in supply chain, compliance, and corporate governance. I met Rachel at a Humanitarian Blockchain Summit and although I had already started the article, her practical experience in the field added balance, perspective, and nuance.
The abstract is below:
Although many people equate blockchain with bitcoin, cryptocurrency, and smart contracts, the technology also has the potential to transform the way companies look at governance and enterprise risk management, and to assist governments and businesses in mitigating human rights impacts. This Article will discuss how state and non-state actors use the technology outside of the realm of cryptocurrency. Part I will provide an overview of blockchain technology. Part II will briefly describe how public and private actors use blockchain today to track food, address land grabs, protect refugee identity rights, combat bribery and corruption, eliminate voter fraud, and facilitate financial transactions for those without access to banks. Part III will discuss key corporate governance, compliance, and social responsibility initiatives that currently utilize blockchain or are exploring the possibilities for shareholder communications, internal audit, and cyber security. Part IV will delve into the business and human rights landscape and examine how blockchain can facilitate compliance. Specifically, we will focus on one of the more promising uses of distributed ledger technology -- eliminating barriers to transparency in the human rights arena thereby satisfying various mandatory disclosure regimes and shareholder requests. Part V will pose questions that board members should ask when considering adopting the technology and will recommend that governments, rating agencies, sustainable stock exchanges, and institutional investors provide incentives for companies to invest in the technology, when appropriate. Given the increasing widespread use of the technology by both state and non-state actors and the potential disruptive capabilities, we conclude that firms that do not explore blockchain’s impact risk obsolescence or increased regulation.
Things change so quickly in this space. Some of the information in the article is already outdated and some of the initiatives have expanded. To keep up, you may want to subscribe to newsletters such as Hunton, Andrews, Kurth's Blockchain Legal Resource. For more general information on blockchain, see my post from last year, where I list some of the videos that I watched to become literate on the topic. For additional resources, see here and here.
If you are interested specifically in government use cases, consider joining the Government Blockchain Association. On September 14th and 15th, the GBA is holding its Fall 2019 Symposium, “The Future of Money, Governance and the Law,” in Arlington, Virginia. Speakers will include a chief economist from the World Bank and banking, political, legal, regulatory, defense, intelligence, and law enforcement professionals from around the world. This event is sponsored by the George Mason University Schar School of Policy and Government, Criminal Investigations and Network Analysis (CINA) Center, and the Government Blockchain Association (GBA). Organizers expect over 300 government, industry and academic leaders on the Arlington Campus of George Mason University, either in person or virtually. To find out more about the event go to: http://bit.ly/FoMGL-914.
Blockchain is complex and it's easy to get overwhelmed. It's not the answer to everything, but I will continue my focus on the compliance, governance, and human rights implications, particularly for Dodd-Frank and EU conflict minerals due diligence and disclosure. As lawyers, judges, and law students, we need to educate ourselves so that we can provide solid advice to legislators and business people who can easily make things worse by, for example, drafting laws that do not make sense and developing smart contracts with so many loopholes that they cause jurisdictional and enforcement nightmares.
Notwithstanding the controversy surrounding blockchain, I'm particularly proud of this article and would not have been able to do it without my co-author, Rachel, my fantastic research assistants Jordan Suarez, Natalia Jaramillo, and Lauren Miller from the University of Miami School of Law, and the student editors at the Tennessee Journal of Business Law. If you have questions or please post them below or reach out to me at email@example.com.
September 7, 2019 in Compliance, Conferences, Contracts, Corporate Governance, Corporations, CSR, Current Affairs, Financial Markets, Human Rights, Law Reviews, Lawyering, Legislation, Marcia Narine Weldon, Securities Regulation, Shareholders, Technology | Permalink | Comments (0)
Friday, August 2, 2019
Later today, the students in my nine-week online Transactional Lawyering: Drafting and Negotiating Contracts Course will breathe a sigh of relief. They will submit their final contracts, and their work will be done. They can now start reading for their Fall classes knowing that they have completed the work for their required writing credit. My work, on the other hand, won’t end for quite a while. Although this post will discuss teaching an online course, much of my advice would work for a live, in person class as well.
If you’ve ever taught a transactional drafting course, you know that’s a lot of work. You are in a seemingly never ending cycle of developing engaging content, teaching the material, answering questions, reviewing drafts, and grading the final product. Like any writing course, you’re in constant editing and feedback mode with the students.
If you’ve ever taught an online course, you know how much work it can be. I taught asynchronously, meaning I uploaded materials and the students had a specific time within which to complete assignments, typically one week or more. Fortunately, I had help from the University of Miami’s instructional design team, otherwise, I would likely have been a disaster. They provided me with a template for each module, which forced me to really think through the objectives for each class session, not just the course as a whole. In my traditional courses I have learning objectives, but I have never gone into so much detail either in my head or in writing about what I wanted the student to get out of each individual class.
Teaching a drafting course online was much more work than I expected, but I can’t wait to do it again. If you’re thinking about it, learn from my travails and triumphs. First, here are my suggested “Do’s”:
- Find a way to build community: I wanted to ensure that students felt connected to me. I scripted a welcome video and the instructional design team filmed and edited it. This way students saw my face. I wanted the students to see each other as well, so I required them to film a 2-minute introductory video of themselves and upload it so that students could “see” their classmates. Students then commented on their peers’ videos welcoming them to the class. I did short videos for most of the modules, but these did not always show my face. No video was more than 10 minutes long because apparently today’s students can’t pay attention for too much longer than that.
- Have students work in groups (at first): I divided the 16 students into 4 law firms based in part on what I saw in their videos. I wanted some diversity of gender, race, and experience in the groups. Students drafted a law firm agreement outlining how they would interact with each other, meet deadlines, and resolve disputes. They also picked a firm name and managing partner. They assessed themselves and each other as group members based on criteria that I provided. The group work minimized the amount of feedback that I had to provide. As a group, they drafted the law firm agreement, a client engagement letter, and worked on a short contract. Some assignments were graded and some were ungraded. The group work counted for 10% of the grade. This percentage wasn’t enough of the grade to cause panic, and the team assessment ensured that they didn’t slack off and benefit from their peers’ hard work.
- Mix it up: For each class, I had students review a presentation on Echo 360. Often, they answered questions that I posed in the presentation or did exercises from Tina Stark’s contract drafting book. On other occasions, they posted responses to prompts on the discussion boards and commented (constructively) on other responses, citing the rule or principle that buttressed their position.
- Make them keep track of their time and do a bill: Every lawyer hates tracking time, but it’s a necessity. I tell the students that they’ll thank me later. Each student, even on group assignments had to track their time and turn in a bill. This helped me gauge how the groups and students compared to each other. I also knew which student worked on which parts of the contracts.
- Let them negotiate: After the group work portion of the course ended,the students negotiated the terms of their final contract using a set of secret facts. I required them to develop and turn in a negotiation strategy using materials and videos that I put together. Armed with their BATNAs, WATNAs, and ZOPAs, I told them to spend no more than one hour negotiating. I required them to film their negotiations, upload them, and send them to me. They then worked on individual term sheets (for a grade). After the negotiations ended and I had received all term sheets, I released the secret facts and had the students assess themselves and their opposing counsel on their negotiation skills and tactics. I also provided feedback to each student on their negotiation performance and term sheets.
- Require them to communicate with the client:I required a 1-2 page client cover memo or email for almost every assignment focusing on tone, language, use of legalese, etc. In my comments, I explained the importance of this type of legal writing and of tailoring the language to different types of business clients. When they worked on NDAs, I reminded that them that client may never actually read the contract, so they needed to ensure that the cover memo was sufficiently detailed to provide material information without being overwhelming.
- Make them teach: They say that when you teach, you learn twice. I required the each student to develop a 5-7 minute video on an assigned topic. Each student “presented” to either a group of lay/business people or a group of junior associates attending a CLE. They then had to write a blog post of between 750-1000 words. I required students to watch each other’s videos and comment as either a business person or a junior lawyer. This provided a review of the class for the viewers. This assignment counted for 10% of the grade, but as an extra incentive to take the assignment seriously, the student with the “best” video received an extra week to turn in the joint final contract, meaning that the opposing counsel also benefitted. FYI, I was generally blown away by the videos.
- Allow them to use precedents and then instruct them on the limitations: Many of the students had never seen an NDA, and I allowed them to use precedents. Most were surprised by how many comments I had on their final products, especially since many of the precedents came from big firms. This was a valuable lesson for them on precision and the dangers of blind cutting and pasting.
- Make them redline and draft a contract with opposing counsel:The final assignment required them to draft a contract based on their negotiated terms. They soon realized that they had to do additional negotiation because some of the terms did not make sense once they started to memorialize them.
- Have office hours and use video conferencing:I practically had to beg the students to have office hours with me. They had no problem emailing with questions, but generally didn’t utilize my office hours, which were incredibly flexible. I offered online and in person hours, but only two students met with me during the semester outside of the live mandatory office hours. I had a mandatory live grading session by video to discuss their NDAs, their upcoming negotiations, and any questions they had about the course. During that live grading session, I acted as a partner in their law firm and then stepped into professor role.
What didn’t work as well? As you can imagine, to do the job correctly, I had a LOT of work to do. I clearly gave too much work over a nine-week period, because I know much work I had to do to give them feedback. I just wanted them to be armed with the skills they will need in the real world, but I overdid it. And this meant that sometimes I did not meet my own deadlines for getting feedback to them. Truthfully, I imposed some of that burden on myself. I offered students the chance to turn in drafts of almost every assignment for feedback. About 25-30 percent of the students took me up on that offer, but every week, I emailed all of the students with tips to improve based on the trends that I saw. In retrospect, I would give fewer assignments over a longer period of time, and would better utilize the discussion boards to foster that sense of live class discussion.
After all of that, I’m gearing up to do it again for the Fall, this time over a 15-week period. Even though I will have more time, both I and the students will have other classes. I’m also teaching business associations and legal writing, and the students will have their own classes, jobs, law reviews, and extracurricular activities to contend with.
If you have any questions or tips, leave them below or email me at firstname.lastname@example.org. I plan to learn more about course development at the University of Denver hybrid/online learning conference on September 26th. I’ll update this post after that conference. In the meantime, this weekend, I’ll be retooling my syllabus based on my summer experience and what I’ve learned this week at SEALS. Correction, I’ll retool in between grading the joint contracts.
Monday, May 20, 2019
Last week, a wonderful man in my life died. Jonathan Spencer, a classmate from and fellow class leader for Brown University, died unexpectedly a week ago. He collapsed while exercising and was unable to be revived. At the time of his death, he was the General Counsel of the Museum of Science Fiction in Washington, DC, a museum that he helped to found. The above photo was taken last year at our 35th reunion celebrations. Although we did not see each other a lot in between reunions, we shared a passion for Brown and our class.
We also shared a professional connection, as the title of this post indicates. Jonathan was a fellow business lawyer. He focused on communications technology for much of his career. His formal professional bio as currently posted at the Museum of Science Fiction is as follows:
Jonathan Spencer, General Counsel. Jonathan is a technology and transactional attorney with over 25 years of experience having held senior and executive level positions with several Internet and telecommunications companies. Jonathan has also representedtechnology and media companies, financial institutions and nonprofit organizations. Jonathan is a former chair of the Association of Corporate Counsel’s IT, Privacy and E-Commerce Committee and has spoken at programs for the American Bar Association, the Association of Corporate Counsel, the American Society of Association Executives and the International Technology Law Association. Jonathan is a graduate of Brown University and Duke University School of Law.
I can assure you, as impressive as his professional accomplishments are, Jonathan was far more than an impressive business lawyer. He had a seemingly boundless intellectual capacity. At his memorial services in Falls Church, Virginia yesterday, it was noted by family that "Before Google and Wikipedia, there was Jonathan." That rang so true to me. But more importantly, perhaps, Jonathan had an incredible joy for life. He was "all in" when he chose to do things--from simple conversations with friends and classmates about mutual interests through event planning and fundraising work for Brown to world travel (and much more in between). He lived life--making sure that he enjoyed the present moment as he strived to achieve all that he accomplished. His altogether too-short life reminds me to do the same.
The photo below was taken of the two of us at Brown Homecoming back in 2007. We were on campus for a leadership weekend and attended the football game while we were there. A fellow classmate found this picture for me a few days ago. I will treasure it and all of the memories of our times together. Jonathan, may you rest in eternal peace, and may your family be comforted in their time of grief. You will be missed by us all.
Friday, May 3, 2019
I blogged two weeks ago about whether we were teaching law students the wrong things, the wrong way, or both. I’ve been thinking about that as I design my asynchronous summer course on transactional lawyering while grading asset and stock purchase agreements drafted by the students in my spring advanced transactional course. I taught the spring students face to face, had them work in groups, required them to do a a negotiation either in person or online, and am grading them on both individual and group work as well as class participation. When I looked at drafts of their APAs and SPAs last week, I often reminded the students to go back to old PowerPoints or the reading because it seemed as though they missed certain concepts or maybe I went through them too quickly— I’m sure they did all of the reading (ha!). Now, while designing my online course, I’m trying to marry the best of the in person processes with some of the flipped classroom techniques that worked (and tweaking what didn’t).
Unlike many naysayers, I have no doubt that students and lawyers can learn and work remotely. For the past nine years, I have participated as a mentor in LawWithoutWalls, a mostly virtual experiential learning program started by University of Miami professor Michele DeStefano. Also known as LWOW, the program matches students from around the world with business people and practicing lawyers to develop a project of worth over sixteen weeks. Team members meet in January in person and never see each other in person again until April during a competition that is judged by venture capitalists, lawyers, entrepreneurs, and academics. I mentored a team of students from Bucerius in Germany, Wharton in Pennsylvania, and the University of Miami. Banking behemoth HSBC sponsored our project and staffed it with lawyers from Singapore, Canada, and the UK. Other mentors on the team hailed from Spain and the UK. On any given week, 7-10 people joined Skype calls, chatted in WhatsApp, drafted on Google Docs, and accessed Slack. They attended mandatory webinars weekly via Adobe Connect on developing business plans, pitching to VCs, and working with clients. Seventy percent of the people on the seventeen teams spoke languages other than English as the first language.
How did this virtual experience work? Extremely well, in my view. After some growing pains, students adjusted quickly as did the business partners, who are used to setting up conference calls and working across borders. Some of the winning teams developed projects that provided virtual reality training on implicit bias for police officers; informed consumers about food freshness to combat food waste; and organized health information for foster care children on a blockchain-powered platform. Humble brag- my team won best overall project by developing a solution to use blockchain and smart contracts in syndicated lending that has the potential to save the bank almost 2 million per year. I also mentored last year’s winner, Team Spotify, with students from Miami, Colombia, and Chile and lawyers housed in Sweden, California, and New York. Each year, teams do almost all of this hard work remotely, across time zones, and with language differences. Students collectively interview hundreds of subject matter experts over 16 weeks, and the vast majority of those interviews take place via phone or video and with people in different countries. Other sponsors for LWOW included Accenture, White and Case, Pinsent Mason, Microsoft, Cozen O'Connor, LegalZoom, Eversheds Sutherland, LatAm Airlines, and Legal Mosaic-- all companies and law firms that see the benefit of these skill sets. Significantly, every year, a cohort of teams does all of the work virtually, never meeting in person for a kickoff. That virtual team winner competes in person with the traditional teams each April, and often wins the whole competition. Clearly, these students develop special skills by necessity. I plan to learn from those experiences as I design my course.
My experience with LawWithoutWalls and as a former compliance officer (where we often did training online and via video) makes me optimistic about online learning and working. In my summer course, I will have students work in groups, where they will use the latest virtual teaming tools. I will have live office hours via Skype, Zoom, or FaceTime, and I will require that some of the groups do their meetings via video as well to have a connection outside of email. Students will draft and edit on community bulletin boards. They will post their own video presentations and "webinars" geared toward fictitious business clients. Working collaboratively and creatively are key skills in the real world, and they will be key in my class.
But there is a lot of resistance in both the legal community and academia regarding the online world. Last week, I attended a seminar at a law firm and met a member of the Florida Board of Bar Examiners. I asked his opinion on the state of students and young lawyers. I was particularly interested in his thoughts because he’s also a partner at a large law firm in our state. Like some quoted in my prior post, he believes that online coursework is a poor substitute for face to face learning. He further opined that when people don’t work in offices, they miss the camaraderie of being around peers and their work suffers. These are valid concerns. Many lawyers are unhappy in general, and the way people hide behind digital devices (even when in the same room/office) can lead to isolation, depression, and poor networking and social skills.
But these drawbacks should not doom online learning and remote working. Most of my graduating 3Ls will take their bar prep courses online. They claim that it makes no sense to drive to campus “just to watch a video of a professor speaking.” They also like the idea of being able to rewind videos to take notes. The indicated that they will meet up with friends when they want to study together and may even come on campus to watch their online coursework for a sense of community. But significantly, they don’t see the need to learn in the traditional ways. Personally, I love good online courses but I also love the ability to have face to face interaction with teammates- even if that’s via video. Being in the same physical space also allows for chance interactions that can lead to enriching conversations. On the other hand, sometimes there's no choice. Many readers may remember that years ago, in harder economic times, companies cancelled non essential business travel and people got used to video meetings. Many employers now interview candidates by Skype first before bringing them in. Learning and working virtually is no longer a novelty. Some of our students will work in co-working spaces for firms or companies where everyone works from home.
Change is coming and in many places, already here. Law professors must prepare students to practice in this new world while not sacrificing pedagogical gains. This requires training on project management and effective communication with team members— all non-substantive topics and that will give many people pause. We also need to make sure that students know how to communicate with clients and employers face to face in business and social settings. Some professors will say- correctly- that they have enough to contend with making sure students understand the law and can pass the bar. But, for those of us interested in online learning, we need to do more. We have to make sure that we prepare students for both the "hard" and "soft" skills. Most important, we need to make sure that these online courses have the rigor of traditional classes-- US News is watching.
I’m open to suggestions of what has worked for you and what hasn’t so please feel free to comment below or email me at email@example.com.
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.
Monday, September 24, 2018
This past Friday, Burr & Forman LLP and the Clayton Center for Entrepreneurial Law at the University of Tennessee College of Law (including its business law journal, Transactions: The Tennessee Journal of Business Law), cosponsored a conference entittled "Law and Business Tech: Cybersecurity, Blockchain and Electronic Transactions." This was, as you may recognize, the second business law conference UT Law sponsored in a week's time (the first being the Business Law Prof Blog symposium, "Connecting the Threads II," the week before). It has been a busy time for business law faculty and students at UT Law!
(Parenthetically, I will note here that one of the attendees at Friday's event, who also had been at the Business Law Prof blog symposium, came back to this past week's conference because he was so jazzed up about Marcia's presentation at the first event--which she mentions here and here. Thanks, Marcia, for encouraging this interest in blockchain technology in our legal community!)
At Friday's conference, I moderated and participated in a panel on "The Coming Second Wave of Digital and other Electronic Signatures in Commerce." The panelists included Ed Snow of Burr & Forman and Katy Blackwell from SIGNiX. The panel walked through a history and course of conduct from handwritten signatures to electronic signatures to digital signatures, discussing the transitions from one to another (which are, as yet, incomplete). Interesting questions emerged as among us as to, e.g., why banking/credit transactions and mergers/acquisitions tend to lag behind in the adoption of new signature technologies. (Your thoughts are welcomed.)
At the end of the prepared program, my co-panelists asked me to speak about Tennessee's adoption of a digital signature statute back in the spring. This was another of the legislative review projects that I have undertaken as a member of the Tennessee Bar Association Business Section Executive Council. We were given 24-48 hours to comment on a digital signature bill that had been introduced in the Tennessee General Assembly based on an Arizona statute adopted in 2017 (information available here). Although I personally thought the bill/statutory revision was likely unnecessary and would have preferred to spend more time studying it before commenting on it, two of us on the Executive Council pooled comments on the draft bill, which also received comments from other quarters.
The ostensible legislative policy was to ensure the enforceability of legally valid and binding transactions occurring in a distributed ledger environment. Tennessee proponents of the bill wanted to support business in this environment, as I noted in commentary quoted in this article. With that in mind, two issues were, in the short time we had, important.
Saturday, September 1, 2018
Did I lose you with the title to this post? Do you have no idea what a DAO is? In its simplest terms, a DAO is a decentralized autonomous organization, whose decisions are made electronically by a written computer code or through the vote of its members. In theory, it eliminates the need for traditional documentation and people for governance. This post won't explain any more about DAOs or the infamous hack of the Slock.it DAO in 2016. I chose this provocative title to inspire you to read an article entitled Legal Education in the Blockchain Revolution.
The authors Mark Fenwick, Wulf A. Kaal, and Erik P. M. Vermeulen discuss how technological innovations, including artificial intelligence and blockchain will change how we teach and practice law related to real property, IP, privacy, contracts, and employment law. If you're a practicing lawyer, you have a duty of competence. You need to know what you don't know so that you avoid advising on areas outside of your level of expertise. It may be exciting to advise a company on tax, IP, securities law or other legal issues related to cryptocurrency or blockchain, but you could subject yourself to discipline for doing so without the requisite background. If you teach law, you will have students clamoring for information on innovative technology and how the law applies. Cornell University now offers 28 courses on blockchain, and a professor at NYU's Stern School of Business has 235 people in his class. Other schools are scrambling to find professors qualified to teach on the subject.
To understand the hype, read the article on the future of legal education. The abstract is below:
The legal profession is one of the most disrupted sectors of the consulting industry today. The rise of Legal Tech, artificial intelligence, big data, machine learning, and, most importantly, blockchain technology is changing the practice of law. The sharing economy and platform companies challenge many of the traditional assumptions, doctrines, and concepts of law and governance, requiring litigators, judges, and regulators to adapt. Lawyers need to be equipped with the necessary skillsets to operate effectively in the new world of disruptive innovation in law. A more creative and innovative approach to educating lawyers for the 21st century is needed.
For more on how blockchain is changing business and corporate governance, come by my talk at the University of Tennessee on September 14th where you will also hear from my co-bloggers. In case you have no interest in my topic, it's worth the drive/flight to hear from the others. The descriptions of the sessions are below:
Session 1: Breach of Fiduciary Duty and the Defense of Reliance on Experts
Many corporate statutes expressly provide that directors in discharging their duties may rely in good faith upon information, opinions, reports, or statements from officers, board committees, employees, or other experts (such as accountants or lawyers). Such statutes often come into play when directors have been charged with breaching their procedural duty of care by making an inadequately informed decision, but they can be applicable in other contexts as well. In effect, the statutes provide a defense to directors charged with breach of fiduciary duty when their allegedly uninformed or wrongful decisions were based on credible information provided by others with appropriate expertise. Professor Douglas Moll will examine these “reliance on experts” statutes and explore a number of questions associated with them.
Session 2: Fact or Fiction: Flawed Approaches to Evaluating Market Behavior in Securities Litigation
Private fraud actions brought under Section 10(b) of the Securities Exchange Act require courts to make a variety of determinations regarding market functioning and the economic effects of the alleged misconduct. Over the years, courts have developed a variety of doctrines to guide how these inquiries are to be conducted. For example, courts look to a series of specific, pre-defined factors to determine whether a market is “efficient” and thus responsive to new information. Courts also rely on a variety of doctrines to determine whether and for how long publicly-available information has exerted an influence on security prices. Courts’ judgments on these matters dictate whether cases will proceed to summary judgment and trial, whether classes will be certified and the scope of such classes, and the damages that investors are entitled to collect. Professor Ann M. Lipton will discuss how these doctrines operate in such an artificial manner that they no longer shed light on the underlying factual inquiry, namely, the actual effect of the alleged fraud on investors.
Session 3: Lawyering for Social Enterprise
Professor Joan Heminway will focus on salient components of professional responsibility operative in delivering advisory legal services to social enterprises. Social enterprises—businesses that exist to generate financial and social or environmental benefits—have received significant positive public attention in recent years. However, social enterprise and the related concepts of social entrepreneurship and impact investing are neither well defined nor well understood. As a result, entrepreneurs, investors, intermediaries, and agents, as well as their respective advisors, may be operating under different impressions or assumptions about what social enterprise is and have different ideas about how to best build and manage a sustainable social enterprise business. Professor Heminway will discuss how these legal uncertainties have the capacity to generate transaction costs around entity formation and management decision making and the pertinent professional responsibilities implicated in an attorney’s representation of such social enterprises.
Session 4: Beyond Bitcoin: Leveraging Blockchain for Corporate Governance, Corporate Social Responsibility, and Enterprise Risk Management
Although many people equate blockchain with bitcoin, cryptocurrency, and smart contracts, Professor Marcia Narine Weldon will discuss how the technology also has the potential to transform the way companies look at governance and enterprise risk management. Companies and stock exchanges are using blockchain for shareholder communications, managing supply chains, internal audit, and cybersecurity. Professor Weldon will focus on eliminating barriers to transparency in the human rights arena. Professor Weldon’s discussion will provide an overview of blockchain technology and how state and nonstate actors use the technology outside of the realm of cryptocurrency.
Session 5: Crafting State Corporate Law for Research and Review
Professor Benjamin Edwards will discuss how states can implement changes in state corporate law with an eye toward putting in place provisions and measures to make it easier for policymakers to retrospectively review changes to state law to discern whether legislation accomplished its stated goals. State legislatures often enact and amend their business corporation laws without considering how to review and evaluate their effectiveness and impact. This inattention means that state legislatures quickly lose sight of whether the changes actually generate the benefits desired at the time off passage. It also means that state legislatures may not observe stock price reactions or other market reactions to legislation. Our federal system allows states to serve as the laboratories of democracy. The controversy over fee-shifting bylaws and corporate charter provisions offers an opportunity for state legislatures to intelligently design changes in corporate law to achieve multiple state and regulatory objectives. Professor Edwards will discuss how well-crafted legislation would: (i) allow states to compete effectively in the market for corporate charters; and (ii) generate useful information for evaluating whether particular bylaws or charter provisions enhance shareholder wealth.
Session 6: An Overt Disclosure Requirement for Eliminating the Duty of Loyalty
When Delaware law allowed parties to eliminate the duty of loyalty for LLCs, more than a few people were appalled. Concerns about eliminating the duty of loyalty are not surprising given traditional business law fiduciary duty doctrine. However, as business agreements evolved, and became more sophisticated, freedom of contract has become more common, and attractive. How to reconcile this tradition with the emerging trend? Professor Joshua Fershée will discuss why we need to bring a partnership principle to LLCs to help. In partnerships, the default rule is that changes to the partnership agreement or acts outside the ordinary course of business require a unanimous vote. See UPA § 18(h) & RUPA § 401(j). As such, the duty of loyalty should have the same requirement, and perhaps that even the rule should be mandatory, not just default. The duty of loyalty norm is sufficiently ingrained that more active notice (and more explicit consent) is necessary, and eliminating the duty of loyalty is sufficiently unique that it warrants unique treatment if it is to be eliminated.
Session 7: Does Corporate Personhood Matter? A Review of We the Corporations
Professor Stefan Padfield will discuss a book written by UCLA Law Professor Adam Winkler, “We the Corporations: How American Businesses Won Their Civil Rights.” The highly-praised book “reveals the secret history of one of America’s most successful yet least-known ‘civil rights movements’ – the centuries-long struggle for equal rights for corporations.” However, the book is not without its controversial assertions, particularly when it comes to its characterizations of some of the key components of corporate personhood and corporate personality theory. This discussion will unpack some of these assertions, hopefully ensuring that advocates who rely on the book will be informed as to alternative approaches to key issues.
September 1, 2018 in Ann Lipton, Compliance, Conferences, Contracts, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Employment Law, Human Rights, Intellectual Property, International Business, Joan Heminway, Joshua P. Fershee, Law School, Lawyering, LLCs, Marcia Narine Weldon, Real Property, Shareholders, Social Enterprise, Stefan J. Padfield, Teaching, Technology, Web/Tech | Permalink | Comments (0)
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)
Tuesday, February 20, 2018
Law Teaching for Adjunct Faculty and New Professors Conference
Law Teaching for Adjunct Faculty and New Professors is a one-day conference for new and experienced adjunct faculty, new full-time professors, and others who are interested in developing and supporting those colleagues. The conference will take place on Saturday, April 28, 2018, at Texas A&M University School of Law, Fort Worth, Texas, and is co-sponsored by the Institute for Law Teaching and Learning and Texas A&M University School of Law.
Sessions will include:
Course Design and Learning Outcomes – Michael Hunter Schwartz
Assessment – Sandra Simpson
Active Learning – Sophie Sparrow
Team-based Learning – Lindsey Gustafson
Technology and Teaching – Anastasia Boles
Details are here.
CALL FOR PRESENTATION PROPOSALS
Institute for Law Teaching and Learning—Summer 2018 Conference Exploring the Use of Technology in the Law School Classroom June 18-20
Gonzaga University School of Law
The Institute for Law Teaching and Learning invites proposals for conference workshops addressing the many ways that law teachers are utilizing technology in their classrooms across the curriculum. With the rising demands for teachers who are educated on active learning techniques and with technology changing so rapidly, this topic has taken on increased urgency in recent years. The Institute is interested in proposals that deal with all types of technology, and the technology demonstrated should be focused on helping students learn actively in areas such as legal theory and knowledge, practice skills, and guided reflection, etc. Accordingly, we welcome proposals for workshops on incorporating technology in the classrooms of doctrinal, clinical, externship, writing, seminar, hybrid, and interdisciplinary courses.
The Institute invites proposals for 60-minute workshops consistent with a broad interpretation of the conference theme. The workshops can address the use of technology in first-year courses, upper-level courses, required courses, electives, or academic support roles. Each workshop should include materials that participants can use during the workshop and when they return to their campuses. Presenters should model effective teaching methods by actively engaging the workshop participants. The Institute Co-Directors are glad to work with anyone who would like advice on designing their presentations to be interactive.
Second, our summer conference will be at Gonzaga Law, June 18-20 and will focus on the use of technology in the classroom. We're currently accepting proposals for that conference (and the deadline has been extended to March 2). More info here.
Monday, January 29, 2018
Indiana University legal studies professor Abbey Stemler sent along this description of an article she co-wrote with Harvard Business School Professor Ben Edelman. They recently posted the article to SSRN and would love any feedback you may have, in the comments or via e-mail.
Perhaps the most beloved twenty-six words in tech law, Section 230 of the Communications Decency Act of 1996 has been heralded as a “masterpiece” and the “law that gave us the modern Internet.” While it was originally designed to protect online companies from defamation claims for third-party speech (think message boards and AOL chat rooms), over the years Section 230 has been used to protect online firms from all kinds of regulation—including civil rights and consumer protection laws. As a result, it is now the first line of defense used by online marketplaces to shield them from state and local regulation.
In our article recently posted to SSRN, From the Digital to the Physical: Federal Limitations on Regulating Online Marketplaces, we challenge existing interpretations of Section 230 and highlight how it and other federal laws interfere with state and local government’s ability to regulate online marketplaces—particularly those that dramatically shape our physical realities such as Uber and Airbnb. We realize that the CDA is sacred to many, but as Congress pays renewed attention to this law, we hope our paper will support a richer discussion about what the CDA should and should not be expected to do.
Friday, October 27, 2017
A former student brought this fundraising website to my attention: To the Stars Academy of Arts and Sciences ("TTS Academy). (Image above from a Creative Commons search).
This article describes TTS Academy as follows: "Former Blink-182 singer and guitarist Tom DeLonge is taking his fascination with/conspiracy theories about UFOs to their logical conclusion point: He's partnering with former government officials on a public benefit corporation studying 'exotic technologies' from Unidentified Aerial Phenomenon (UAP) that the consortium says can 'revolutionize the human experience.'"
Remember the Blink-182 song Aliens Exist?
I couldn't make this up. And I did spend some time trying to determine if it was a joke, but TTS Academy's 63-page offering circular suggests that it is no joke. And TTS Academy appears to have already raised over $500,000.
According to the organization's website, Tom DeLonge of Blink-182 fame is in fact the CEO and President. Supposedly, DeLonge has teamed with former Department of Defense official Luis Elizondo who confirmed to HuffPost that the TTS Academy is planning to "provide never before released footage from real US Government systems...not blurry, amateur photos, but real data and real videos." Rolling Stone reports that "DeLonge has long been interested in UFO and extraterrestrial research. After parting ways with Blink-182 in 2015, he delved deeper into the subject, releasing the book Sekret Machines: Gods earlier this year and he's also working on a movie that is related to those interests called Strange Times." TTS Academy is a Public Benefit Corporation, formed in Delaware.
The TTS Academy website states: "To The Stars Academy is a Public Benefit Corporation (PBC), which means our public benefit purpose is a core founding principle of our corporate charter alongside the traditional goal of maximizing profit for shareholders." Hmm... How does one pursue a public benefit purpose and seek to maximize profit for shareholders? A main point of benefit corporations is liberate companies from the perceived restrictions of shareholder wealth maximization.
The website continues: "Our public purpose: Education - Community - Sustainability - Transparency. PBCs have enjoyed a surge in popularity as the public becomes more interested in corporate responsibility, transparency, and more recently, the concept of impact investing.* It’s clear that an expanding portion of the general population is looking to make an impact on the world around them, not only through volunteering, or speaking out on social media, but through financial decision making.** We believe raising resources through Regulation A+ crowdfunding will allow us to expedite expansion of TTS Academy’s PBC initiatives, like promoting citizen science, enhancing traditional education with science, engineering and art-related programming, supporting veterans and their families, and promoting underrepresented people in film." Color me skeptical.
As Professor Christine Hurt noted way back in 2014/15, the crowdfunding and social enterprise circles may overlap significantly. Professor Hurt wrote, "for-profit social entrepreneurship may find equity crowdfunding both appealing and available. For-profit social entrepreneurs may be able to use the crowdfunding vehicle to brand themselves as pro-social, attracting individual and institutional cause investors who may operate outside of traditional capital markets and may look for intangible returns. Just as charitable crowdfunders rebut the conventional wisdom that donors expect tax-deductibility, prosocial equity crowdfunders may rebut the conventional wisdom that early equity investors expect high returns or an exit mechanism." Not sure if she, or any of us, predicted exactly this type of company.
Wednesday, October 25, 2017
Today I sat through a panel at the ABA International Law Section Meeting entitled, I, Robot - The Increasing Use and Misuse of Technology by In-House Legal Departments. I have already posted here about Ross and other programs. I thought I would share other vendors that in-house counsel are using according to one of the panelists:
- Deal point - virtual deal room.
- Casetext - legal research.
- Disco AI; Relativity; Ringtail - apply machine learning to e-discovery.
- Ebrevia; Kira Systems; RAVN - contract organization and analysis.
- Julie Desk - AI "virtual assistant" for scheduling meetings.
- Law Geex - contract review software that catches clauses that are unusual, missing, or problematic.
- Legal Robot - start-up uses AI to translate legalese into plain English; flags anomalies; IDs potentially vague word choices.
- LexMachina - litigation analytics.
- NeotaLogic - client intake and early case assessment.
- Robot Review - compares patent claims with past applications to predict patent eligibility.
- Ross Intelligence - AI virtual attorney from IBM (Watson).
These and their future competitors lead to new challenges for lawyers, law professors, and bar associations. Will robots engage in the unauthorized practice of law? What are the ethical ramifications of using artificial intelligence in legal engagements? How much do you tell clients about how or what is doing their legal research? What about data security issues for this information? How do we deal with discovery disputes? Can robot lawyers mediate? Why should lawyers who bill by the hour want the efficiency of artificial intelligence and machine learning? Finally, how do we help students develop skills in “judgment” and how to advise and counsel clients in a world where more of the traditional legal tasks will be automated (and 23% of legal task already are)? These are frightening and exciting times, but I look forward to the challenge of preparing the next generation of lawyers.
Monday, October 2, 2017
As some of our BLPB readers know, I am a habitual 12,000-step-a-day walker. I monitor my progress on steps, stairs, and sometimes sleep using a Fitbit "One" that I have had since Christmas Day 2012. Fitbit recently announced that it is discontinuing the One. So, if my existing One dies off, I will have to switch trackers. And, sadly, I am likely to have to switch suppliers. While Fitbit has been good to me, the rest of its trackers are not at all interesting or suitable for my desired uses. They are almost all wrist models, and the one clip-on tracker Fitbit sells is relatively bulky and antiquated.
I am not the only one who is unhappy about the discontinuation of the One tracker. Fitbit has discussion boards for members of its "community." The discussion board titled "Is Fitbit One being discontinued?" (which was started over the summer) has lit up over the past week. As of the time of this post, there were 519 posts in the Fitbit forum.
I have been impressed by the passion of the folks who have posted comments and responses. Many posted reviews of other Fitbit products and competitor products that might be adequate substitutes for the One for some users. But I have been fascinated by the nature of several posts, including a number that focus on corporate governance and finance matters. Community members were motivated to check into and comment on Fitbit's published financial statements, litigation profile, and trends in the mix of product sales. Some encouraged calling either Fitbit's customer service line or mutual funds that hold Fitbit shares (and they named the funds) to express concerns. One member of the community posted that he is worried about Fitbit's employees, customers, and shareholders in the event Fitbit's business goes South.
The comments made on the Fitbit community discussion board reminded me of Hillary Sale's work on publicness, including her article entitled Public Governance. In that article, she observes:
Publicness is both a process and an outcome. When corporate actors lose sight of the fact that the companies they run and decisions they make impact society more generally, and not just shareholders, they are subjected to publicness. Outside actors like the media, bloggers, and Congress demand reform and become involved in the debate. Decisions about governance move from Wall Street to Main Street.
Friday, September 29, 2017
I recently finished Elizabeth Pollman and Jordan Barry's article entitled Regulatory Entrepreneurship. The article is thoughtfully written and timely. I highly recommend it.
This Article examines what we term “regulatory entrepreneurship” — pursuing a line of business in which changing the law is a significant part of the business plan. Regulatory entrepreneurship is not new, but it has become increasingly salient in recent years as companies from Airbnb to Tesla, and from DraftKings to Uber, have become agents of legal change. We document the tactics that companies have employed, including operating in legal gray areas, growing “too big to ban,” and mobilizing users for political support. Further, we theorize the business and law-related factors that foster regulatory entrepreneurship. Well-funded, scalable, and highly connected startup businesses with mass appeal have advantages, especially when they target state and local laws and litigate them in the political sphere instead of in court.
Finally, we predict that regulatory entrepreneurship will increase, driven by significant state and local policy issues, strong institutional support for startup companies, and continued technological progress that facilitates political mobilization. We explore how this could catalyze new coalitions, lower the cost of political participation, and improve policymaking. However, it could also lead to negative consequences when companies’ interests diverge from the public interest.
Wednesday, September 20, 2017
Friend of the blog and South Texas College of Law (Houston) Professor Joe Leahy sent over the following post he authored. It is cross-posted at UberLaw.Net and Medium. Embarrassingly, I had not heard about Loftium before reading this post, though at least I know of and have used Airbnb. Joe has some interesting thoughts, and I am happy to include his post on this blog.
Loftium will provide prospective homebuyers with up to $50,000 for a down payment, as long as they are willing to continuously list an extra bedroom on Airbnb for one to three years and share most of the income with Loftium over that time.
At first glance, the arrangement between Loftium and participating homebuyers might sound like a loan. (Indeed, the Times even describes it as such in an infographic.) But upon a closer look, the arrangement that Loftium contemplates with homebuyers clearly is not a loan. First of all, Loftium says it is not a loan; rather, according to Loftium, the down payment assistance it provides to homebuyers is “a part of a services agreement” lasting 12-36 months. Second, and more important, the arrangement between Loftium and homebuyers has none of the characteristics of a traditional (term) loan. There is no “principal” amount that the homebuyer is required to repay in a set period of time, and Loftium does not charge the homeowner any “interest.” In fact, the homebuyer is not required to make anypayments to Loftium in return for the company’s cash (unless the homeowner breaches the parties’ agreement and stops renting on Airbnb before the term expires).
All the homebuyer must do in exchange for Loftium’s money is (1) list her spare room on Airbnb continuously through the term of her agreement with Loftium, (2) be a decent host (i.e., “not be rude to guests”) and (3) split her Airbnb rental revenue with Loftium (with two-thirds going to the company.) If, at the end of the term, Loftium has not been repaid its initial investment, the homeowner is not required to repay Loftium’s initial contribution. Hence, if renting out the homeowner’s spare room is not profitable during the term of the parties’ agreement, “Loftium takes full responsibility for that loss.”
Of course, Loftium expects that the total income from renting out a homeowner’s spare room will greatly exceed the amount that it originally provided to the homebuyer, so that both will profit. If Loftium makes more in rental income than it pays towards the homeowner’s down payment, Loftium will make a profit.
Further, by all appearances, there is no cap on Loftium’s potential profit is its business arrangement with homebuyers. In fact, Loftium makes clear that it wants to maximize the income that it splits with homebuyers: Loftium promises that it will work with them “to increase monthly bookings as much as possible, so both sides can benefit from the additional income.” To that end, Loftium provides homebuyers with some start-up supplies for their spare bedroom (and a keyless entry lock), access to advice and know-how regarding how to rent an Airbnb room, and online tools to help maximize their rental income.
So, if the business arrangement between Loftium and homeowners is not a loan, what is it? It is almost certainly a general partnership for a term (i.e., a “joint venture”).
[Post continues after the page break]
Thursday, September 7, 2017
As previously mentioned, I am always looking for good podcasts. I listen to podcasts while mowing our lawn and on road trips.
StartUp is the latest podcast series that I have uncovered, thanks to a recommendation from my sister Anna who works for a media/marketing start up herself.
From what I have uncovered so far, StartUp seems to be quite like NPR's How I Built This, which I mentioned in a previous post. Hosts of both podcasts interview entrepreneurs about the founding of their businesses and the ups and downs thereafter. The biggest difference I see is that StartUp seems to focus on smaller companies (a number that I had never heard of), while How I Built This seems to focus on companies that are now quite large and successful. In early seasons of StartUp there appear to be a number of the podcasts that depart from the entrepreneur-interview model, but I haven't dug into the early seasons yet. I am mainly focused on the recent podcasts.
Perhaps most interestingly, I recently listened to a podcast on StartUp about Mokhtar Alkhanshali and his specialty coffee. Mokhtar sources his coffee beans from war-torn Yemen and a cup of his coffee sells for $16 a cup. At first, this seemed like a ridiculous price for a cup of coffee, but after hearing how Mokhtar risked his life for his business in Yemen (bombings, escaping on a tiny boat, being captured, etc.) and listening to the specialty coffee to wine comparison, the pricing does make more sense. I might pay $16 once, just for the story, but I couldn't see a $16 cup of coffee becoming even a semi-regular purchase for me. That said, I know people who are getting increasingly serious about their coffee and perhaps it can be sustained in some cities.
Monday, August 14, 2017
Former BLPB editor Steve Bradford has posted a new paper adding to his wonderful series of articles on crowdfunding (on which I and so many others rely in our crowdfunding work). This article, entitled "Online Arbitration as a Remedy for Crowdfunding Fraud" (and forthcoming in the Florida State University Law Review), focuses on a hot topic in many areas of lawyering--online dispute resolution, or ODR. Steve brings the discussion to bear on his crowdfunding work. Specifically, he suggests online arbitration as an efficacious way of resolving allegations of fraud in crowdfunding. Here's the abstract:
It is now legal to see securities to the general public in unregistered, crowdfunded offerings. But offerings pursuant to the new federal crowdfunding exemption pose a serious risk of fraud. The buyers will be mostly small, unsophisticated investors, the issuers will be mostly small startups about whom little is known, and crowdfunded offerings lack some of the protections available in registered offerings. Some of the requirements of the exemption may reduce the incidence of fraud, but there will undoubtedly be fraudulent offerings.
An effective antifraud remedy is needed to compensate investors and help deter wrongdoers. But, because of the small dollar amounts involved, neither individual litigation nor class actions will usually be feasible; the cost of suing will usually exceed the expected recovery. Federal and state securities regulators are also unlikely to focus their limited enforcement resources on small crowdfunding offerings. A more effective remedy is needed.
Arbitration is cheaper, but even ordinary arbitration will often be too expensive for the small amounts invested in crowdfunding. In this article, I attempt to design a simplified, cost-effective arbitration remedy to deal with crowdfunding fraud. The arbitration remedy should be unilateral; crowdfunding issuers should be obligated to arbitrate, but not investors. Crowdfunding arbitration should be online, with the parties limited to written submissions. But it should be public, and arbitrators should be required to publish their findings. The arbitrators should be experts on both crowdfunding and securities law, and they should take an active, inquisitorial role in developing the evidence. Finally, all of the investors in an offering should be able to consolidate their claims into an arbitration class action.
Although I haven't yet read the paper (which was just posted this morning, it seems), Steve's idea totally makes sense to me on so many levels. Among other things, ODR has a history in e-commerce and social media, two front-runners and foundations of crowdfunding. Also, the dispute resolution expense issue that Steve alludes to in the abstract is real. It has been raised by a number of us, including by me in this draft paper, in which I assert, among other things:
Prosecutors and regulators may not be willing or able to devote financial and human resources to enforcement efforts absent statutory or regulatory incentives or extraordinary policy reasons for doing so . . . . Individual funders also are unlikely to bring private actions or even engage alternative dispute resolution since the cost of vindicating their rights easily could exceed their invested money and time, although the availability of treble damages (often a statutory right for willful violations of consumer protection statutes) or other extraordinary remedies may change the calculus somewhat.
. . . [C]lass actions tend to be procedurally complex—difficult to get in front of a court—and may not be available in some jurisdictions. Moreover, the prospects for recovery are unknown and, based on recent information from U.S. securities class action litigation, financial compensation to individual members of the plaintiff class is likely to be relatively insignificant in dollar value and in relationship to losses suffered, even if the aggregate amount of damages paid by the defendant is relatively high . . . . Accordingly, class action litigation also may be of limited utility in bringing successful legal claims in the crowdfunding context.
This will be an area for much further thought as the crowdfunding adventure continues . . . .
Monday, July 10, 2017
Conference Announcement and Call for Papers
2017 Junior Scholars #FutureLaw Workshop 2.0 at Duquesne
The conference is organized by Seth Oranburg, Assistant Professor, Duquesne University School of Law. Funding is provided in part by the Federalist Society. All papers are selected based on scholarly merit, with an emphasis on scholarly impact, topical relevance, and viewpoint diversity.
September 7-8, 2017
By invitation only
OVERVIEW: The conference aims to foster legal and economic research on “FutureLaw” (as defined below) topics particularly by junior and emerging scholars by bringing together a diverse group of academics early in their career focusing on cutting-edge issues.
TOPICS: The conference organizers encourage the submission of papers about all aspects of FutureLaw, which includes open-data policy, machine learning, computational law, legal informatics, smart contracts, crypto-currency, block-chain technology, big data, algorithmic research, LegalTech, FinTech, MedTech, eCommerce, eGovernment, electronic discovery, computers & the law, teaching innovations, and related subjects. FutureLaw is an inter-disciplinary field with cross-opportunities in crowd science, behavioral economics, computer science, mathematics, statistics, learning theory, and related fields. Papers may be theoretical, archival or experimental in nature. Topics of interest include, but are not limited to:
- Innovation in legal instruments (e.g., new securities, new corporate forms, new litigation procedures, etc.)
- Innovation in legal technology (e.g., new law firm governance, legal automatic, democratizing access to legal services, legal chatbots, etc.)
- Innovation in legal teaching (e.g., new classroom techniques, distance learning studies, experiential learning, transactional clinics, etc.)
Papers regarding the effect of these innovations (e.g., diversity, inclusion, equity, equality, fairness, return on investment, productivity, security, etc.) are also welcome.
DUAL SUBMISSION PROCESS: For the 2017 conference, the FutureLaw Workshop and the Duquesne Law Review (DLR) announce a new, non-exclusive, combined submission process. At your discretion, a paper submitted to the 2017 FutureLaw Workshop 2.0 may also be considered for publication by DLR free of charge. The rules for this dual submission process are as follows:
(1) You must apply online at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20. Submitted papers will be considered for publication by the DLR free of charge. A reply to your submission in acceptance to the Workshop or invitation to publish in the DLR is your option, not your obligation.
(2) If you do not wish to be considered by the DLR while submitting for the FutureLaw Workshop, please indicate this in the comments field provided.
(3) Papers submitted for dual consideration must not already be accepted by another journal.
(4) While under consideration as a dual submission for the 2017 FutureLaw Workshop and invitation by the DLR, a paper may be submitted to another journal (or JAR).
PAPER SUBMISSION PROCEDURE: Please upload a PDF version of your working paper, by August 4, 2017 via the online submission form at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20. When you select the radio button for “Attendance Category: Participant,” you will see an option to upload a paper.
The FutureLaw Workshop may reimburse presenters and discussants reasonable travel expenses and accommodations. Please let us know if your academic institution does not provide you with travel and accommodation expenses.
CONFERENCE ATTENDANCE: Attendance is free and by invitation only. Academics interested in receiving an invitation to attend but who do not wish to submit a paper may apply online as “observers” at http://law.duq.edu/events/junior-scholars-futurelaw-workshop-20.
Friday, July 7, 2017
A few weeks ago, Stephen Bainbridge asked about the benefits of the social media site LinkedIN. His question caused me to revisit the costs/benefits of social media. Below I reflect on the social media websites I use.
With so many professors getting in trouble on social media - see, e.g., here, here, here, here, and here - it may make sense to ask if any of the websites are worth the risk. As long as you are wise when you post, and assume a post will be seen in the worst possible light, I think social media can be worth using.
- Benefits. Facebook has a broader network of people than any of the other social media sites I use. My parents are on Facebook, as is my wife's grandmother and great aunt, as are my peers, as are my much younger cousins. Facebook also has a wide range of user generated content -- photos, links, short & long posts, groups, etc. The "Friends in ___ City" feature has allowed me to catch up with old acquaintances when traveling for conferences or family trips. Just a few weeks ago, I visited with two of my old coaches for the first time since high school. Neither of their e-mails were online, and I have only kept up with them via Facebook.
- Costs. For me, Facebook is the biggest time waster among the various social media sites. Recently, I deactivated my Facebook account for the time being. I will probably be back at some point. The benefits of Facebook could probably be achieved in about 30 minutes a week, but until I learn to limit my use to around that amount of time, I will likely continue to deactivate for periods of time to cut back usage.
- Use for Work. I don’t allow current students to “friend” me, given the more personal nature of Facebook, but I have allowed alums to connect, which has been rewarding. I follow my university and my alma maters on Facebook. I am Facebook friends with a handful of professional contacts.
- Benefits. I have kept Twitter almost entirely professional; I rarely tweet about my family or my personal hobbies. As such, for me, the benefits of Twitter are captured in the "Use for Work" section below.
- Costs. Twitter can also eat time, though unlike Facebook, I am rarely tempted to spend long amounts of time on Twitter. Twitter doesn't allow for very nuanced debate and your posts can be taken the wrong way. Professor Eric Posner recently posted some harsh comments about Twitter; his comments have a kernel of truth. That said, I do think he is overly negative. For example, I think Twitter can actually be better than newspapers for some information. With Twitter you get the news directly from the source, and the news reaches you more quickly and with fewer words. Also, newspapers are unlikely to cover niche topics, like the latest happenings in social enterprise law.
- Use for Work. I maintain two hashtags - #MGT2410 and #MGT6940 – for news tweets related to my two primary courses. I allow current students to follow me, though I do not require it nor do I post anything necessary for my classes. I follow mostly professional contacts and professional organizations on Twitter. Given the accounts that I follow, Twitter can be a relatively good place to get quick news. Finally, I have found that a number of C-level executives, lawyers, and well-known academics are easier to engage via Twitter than any other medium.
- Benefits. In thinking about Steven Bainbridge’s question about LinkedIN, I had a difficult time thinking of many significant benefits. I see LinkedIN as a place to connect with professional contacts that you want to share less information than you share on Facebook. I rarely log into LinkedIN, but I haven’t deleted my account either, as the costs of being on the website are incredibly low.
- Costs. LinkedIN takes the least amount of my time among the various social media sites. I spend 0 to 30 minutes on LinkedIN most months. There does appear to be a fair bit of spam in the various work groups I have joined, but it is pretty easy to ignore by unsubscribing to group e-mail updates.
- Use for Work. LinkedIN seems to be my MBA students' preferred method of connecting, and the site is worthwhile just to stay connected to them. I belong to a number of work related LinkedIN groups, but, as mentioned, most have been overtaken by spammers, so I almost never read the shared content.
- Benefits. Strava is a social media website for runners, cyclists, and swimmers. For me, Strava’s main purpose is as an online place to log my runs without annoying my friends on other social media websites. On Strava, I only have about 30 friends, all of whom are committed to fitness. The website is an incredibly good accountability tool, as those friends can see if you have been slacking for a few days, and some of them will even call you out. It is also nice to have a few people notice when you have a good race or workout. You can also borrow workout ideas from posts.
- Costs. I don't love that people can tell when you are out of town, based on the location of your runs, but with only 30 friends and the privacy settings set tight as to other users, this isn't a huge issue. Strava doesn't take much time. The routes automatically upload from my Garmin and the newsfeed isn't designed to keep you engaged with it.
- Use for Work. I don't really use Strava for work other than staying in touch with a couple attorney runner friends.
Instagram, Pinterest, Etc. I never got into Instagram, Pinterest, or any other social media websites. Instagram does seem to be quite popular among my somewhat younger friends and students, but it also appears to be a giant time waster, so I am glad I never got hooked.
Feel free to share any comments or additional thoughts.