Saturday, June 20, 2009

Lawyer and Financial Crisis Lessons from the Sieur de Champlain

Posted by Jeff Lipshaw

My life partner now of thirty years, Alene, knows me too well.  She just finished David Hackett Fischer's 6E1580E86F6D59A9716817FA05DD7CC57B0BA28 (left) massive biography, Champlain's Dream, and walked into the office to show me Fischer's last couple of pages, and in particular this:

Champlain argued that a leader must be prévoyant, a word that has no exact equivalent in modern English. His idea of prévoyance was different from foresight in its common meaning. It is not a power to foresee the future. To the contrary, prevoyance was the ability to prepare for the unexpected in a world of danger and uncertainty. It was about learning to make sound judgments on the basis of imperfect knowledge. Mainly it is about taking a broad view in projects of large purpose, and about thinking for the long run.

What is really cool about this, for one thing, is the accessibility of the source materials.  I was curious about what Champlain actually said on the subject,  and Fischer's annotations take you back to the onlineImages resources of the Champlain Society in Toronto, where in a couple clicks, you arrive at the very page where Champlain used the word preuoyant in the original French.

There's more than a micro and a macro nugget of wisdom for lawyers and regulators here.  The micro has to do with a theme we talked about last week at the AALS Mid-Year Conference on the basic business associations course, and on which I previously blogged:

As to the conception of business law and lawyering, I noted that the data of the world doesn't just organize itself; there is a relationship between the observer and the observed in which the observer brings something to the party. The predominant approach within the academy is to be, as Ronald Gilson observed, entomologists studying the beetles, and Usha had it right: entomologists telling the beetles how to BE beetles. It means academic conceptions of the law and its role are retrospective, objective, litigious, and analytical, while the practice conceptions of transactional law are forward-looking, subjective, transactional, and strategic/tactical. Moreover, what academic business law usually leaves out is the integration of doctrine, and the law itself, into the business (or Flog) game, which means dealing with (a) the exercise of good judgment, and (b) the limits of the law as means to the ends of the game.

Champlain seems to have had the same thing in mind for mariners: you have to be a master of the detail (pricking the charts, knowing longitude and latitude, selecting food, understanding the construction of the ship, etc., etc., etc.,) but "[b]esides what is said above, a good sea-captain ought not to forget anything necessary [to be done] in a sea-fight, in which he may often find himself engaged.  He should be brave, foreseeing [preuoyant], prudent, governed by good sound judgment, taking every advantage he can think of, whether for attack or defence, and if possible keep windward of his enemy." 

That exercise of judgment is a subtle trick, because Champlain makes it clear that the "wise and cautious mariner ought not to trust too fully to his own judgment" on important decisions, but to "take counsel with those whom he recognizes as the most sagacious, and particularly with old navigators . . . for it is not often that one head holds everything, and, as the saying goes, experience is better than knowledge."  At the same time, there is a place for individual mettle, for when there is real danger "you must display manly courage," use a "steady voice," and "dispel fear from the most cowardly bosoms."

The macro has to do with foresight or prévoyance itself, and how it applies to big crises like the present financial meltdown.  Not to press the point too repeatedly (well, okay, if I must), but as I have just argued in a newly posted piece on the epistemology of the financial crisis, and on which topic David Zaring has some sage comments, politicians and regulators, like generals, are usually fighting the last war. Sarbanes-Oxley, as well as the "money-loosening" that followed the bursting of the Internet bubble are examples.  Why it is so hard (despite the couple of lucky or prescient souls who saw it coming, but then again, I've hit long shots at the race track too) to regulate systemic risk looking forward rather than backward? The gist of the metaphor is that it's awfully hard to prescribe the medicine when you are still trying to figure out what the disease is!

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