Saturday, May 3, 2008

More Proof That Not All Lawyers Are Brilliant, On Several Levels: "It's My Wife's Marijuana, Officer"

Posted by Alan Childress

The blog Western Justice {"from a small town DA") shares its nominee for the "we've heard it all" file, which "is the elected DA who was pulled over, and had less than one ounce of marijuana. . ."

Now, this is probably not the first time it has happened to a corrupt/stupid DA. Here in my state, that is not a felony, and it rarely carries jail time if it is your first offense, so what was flabbergasting about the case is that normally, people mitigate their offense and cop to a lesser crime ("Oh, it's not that much marijuana"). This DA was not so smart. He told the officer (obviously not verbatim), "Oh, um, the marijuana? Ha ha . . . . eh . . . it's not mine!!! Yeah, that's it, it's not mine! It's for my wife. She's sick, and I'm bringing it home to her."

The poor fellow just copped to a higher charge--distribution of marijuana, a felony.

See, and I am thinking the second-level stupid thing is to ever, ever narc on your spouse.

May 3, 2008 in Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Monday, April 28, 2008

Fischer on Controlling the Bar From Without, Especially By Insurers & Legislators

Posted by Alan Childress

James Fischer (Southwestern Univ. School of Law), shown left [Southwestern has the best faculty pics], has posted to SSRN his article, "External Control Over the American Bar."  It was first published in 19 Getimage_2 Georgetown Journal of Legal Ethics, winter 2006.  Here is his abstract:

Professional regulation is primarily about self-regulation. Codes of Professional Responsibility and Rules of Professional Conduct promulgated by the American Bar Association are prime examples of forum and content of self-regulation. While this approach does much to inform lawyers of their professional obligations, it does so at the macro-level, focusing on general obligations and duties. Professional codes and rules are largely silent at the micro-level; they often fail to inform lawyers of their day-to-day obligations, which are building blocks of the larger professional obligations set forth in the codes. Historically, these day-to-day activities were left to lawyers to work out on their own. With increasing frequency and detail, however, non-professional regulators are stepping in to regulate and control lawyer conduct and much of their attention is focused on the day-to-day activities of lawyers that the professional bar has largely ignored.

In this paper, I examine two non-professional groups who have entered the field of profession regulation: insurers and legislators. While for the most part insurers and legislators complement professional self-regulation, both insurers and legislators are taking positions regarding required lawyer behavior that is different in degree and kind from that required by professional codes and rules. The trend has been for both insurers and legislators to assume more aggressive postures. To date, courts have tempered the most aggressive impulses, but whether they will continue to do so is unclear.

April 28, 2008 in Abstracts Highlights - Academic Articles on the Legal Profession, Bar Discipline & Process, Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Friday, April 25, 2008

Update, FWIW: Yes, the Talented Mr. Phipps Went to Loyola-N.O.

Posted by Alan Childress

Last week, I posted this item on a lawyer, Roger Phipps, whom the Fifth Circuit admonished by name for being unprepared at oral argument, to the point where he flippantly argued without reading cases.  The Court asked where he went to school (BTW, no good ever comes of that question in this setting!). And the Court's opinion quoted his reply that it was "Loyola."  Yesterday, an administrator at Loyola-N.O. sent out a mass email denying in caps ("GOOD NEWS") that Mr. Phipps was their graduate (see comments to the earlier post); the email was -- obviously, foreseeably -- posted widely on the internet. 

Because that email publicly disagreed with this blog's (rather uneventful) statements that Phipps's Martindale-Hubbell entry was wrong and that he had indeed gone to LoyNO (not my main point), and because internal research rather than relying on the internet would have revealed the error, I expected a correction to be forthcoming.  When silence followed and it appeared I was supposed to just accept the implicit characterization that I was stating the facts falsely, I asked the registrar at Loyola-Chicago whether Mr. Phipps was their graduate as MarHub showed (and made clear I was asking for no other information, other than confirmation or not of the public listing as J.D., 1990, from Loy.-Chi.).  I identified myself and my purpose.

This morning, I received an email from the registrar at Loyola-Chicago confirming that Roger Phipps did not attend their law school.  The email added that the registrar had further contacted Loyola-New Orleans, which emailed her (per a dean) to "confirm that a Roger D. Phipps is a 1990 graduate of Loyola University New Orleans" after all.

I have all along suggested that I don't think it reflects much on Loyola (any Loyola) either way that some 1990 graduate is a poor advocate who spoke without doing his homework.  I stand by that, though the irony here is not lost on me.  I have taught classes at Loyola, proudly, and I admire many of their professors, students, and graduates.  I constantly read in the news about a clinical professor from the school fighting hard for criminal justice in a broken post-Katrina system.  I co-teach in Greece with a family law professor doing cutting-edge work on reproductive technologies.  One of their legal ethics professors literally wrote the book on Louisiana ethics.  I have even taught some of their professors (am I that old?), such as one just named full professor for his outstanding publications on civil law property.  I have hired, over the years, three of their graduates as attorneys to represent me in matters crucial to my life.  One of their graduates sat as a Judge on that Fifth Circuit panel (making the attorney Phipps's gaffe even worse) and is one of the finest judges and people I have ever known. I have justifiably recommended their students, my students there, to clerkships and graduate programs. 

Now I find that it is six hours four days after Loy.-Chi. received the private correction, and way more than 24 hours after the mass email.  And I still have heard nothing of a public correction.  So I will just post this.

Continue reading

April 25, 2008 in Straddling the Fence | Permalink | Comments (3) | TrackBack (0)

Tuesday, March 11, 2008

Arrogance, Self-Deception, and Civility - A Thesis on the Balance between Principle and Learning

Posted by Jeff Lipshaw

I was already reeling, in a way, from the spin now coming out of the Clinton campaign, distinguishing between primary delegates and caucus delegates, all apparently in an effort to persuade superdelegates that Senator Clinton really is winning, despite the fact that she is losing.  This was consistent with the "let's make Obama" the VP move, which reminded me of the scene at the end of Searching for Bobby Fischer when the little chess master Josh Waitzkin sticks out his hand and offers a draw to the arrogant little snot who appears to be winning.   Except there was nothing cynical about Josh.  (Somebody please explain to me the "Obama is not qualified to be commander-in-chief now, but he may be by the convention" logic.)  It occurred to me in the middle of the night:  "I'll bet she has calculated that it's a no lose proposition to trash Obama.  Either she gets the nomination or he does, and then he loses to McCain, having been given fodder from Senator Clinton herself, and she's back in 2012 at the relatively young age of 64."  Who do they think they are fooling?

Then the Spitzer thing.  I have never been a big Spitzer fan (see Matt Bodie's comment over at PrawfsBlawg for an expression of that particular sense of betrayal) so I haven't followed it closely, but obviously there is a pattern of self-righteous (and foul-mouthed) combativeness, all in the pursuit of what he is sure is right.  The New York Times reports this morning that this is a fellow not particularly attuned to listening to somebody else, or learning.  What could he have been thinking?  Who did he think he was fooling?

And finally, I had already been thinking, after perusing the blogosphere this weekend, about the issue of civility in academic debate. 

It seems to me there is a common thread here, perhaps tenuously so, but I don't think so.  It has to do with arrogance and self-deception.  I wrote an article awhile back that concluded with this paragraph:

When I am faced with a difficult choice, I fear nothing like my ability to persuade myself.  Kant understood that we can never really tell if the principle of our action is determined by our material wants and inclinations, or by recognition of the universality of the rightness in what we are choosing.  I agree.  Whether in our own minds, or in a group of like-minded executives, we are wholly capable of mistaking what makes us happy or fulfilled for what is right.  And, the only check on the power of reason, and its thirst for rationality that produces lies, is openness to the insight and reality, however uncomfortable or distasteful or opposed to our own reasoned conclusions, that come from another.

Just how do you check your intuitions about right and wrong before they reach dogmatism?  Just how do you balance principle with learning?  I think consciously recasting one's visceral reactions into civil and temperate speech may be a start. 

More below the fold.

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March 11, 2008 in Blogging, Hot Topics, Law & Society, Straddling the Fence | Permalink | Comments (3) | TrackBack (0)

Wednesday, December 12, 2007

Plug: New Video Promotes Tulane Law School Post-Katrina

The message seems to be that the parts of New Orleans affecting students, and Tulane Law School itself, are back strong.  Here is the new video.  I have been noting that reality on this blog for over a year now, since we suspended classes for a semester in 05 and got all caught back up by summer 06.  Our recent classes and hiring are top notch by every measure -- and show no signs of post-Katrina Video_icon_lg regression.  But stereotypes and assumptions die hard, and it is impossible to go to an academic conference without somone in the elevator asking  if we are having classes yet.  (I want to say, "Yeah, since January 2006, and our 06 graduation featured former presidents Bill Clinton and George Bush, plus Ellen DeGeneres in a bathrobe.  You?")  Anyway, this youtube-style video makes the point well.  And here is a campus-wide slideshow.  (I am not on either show, so this is not directly a plug for me.)

But even if a reader has no interest in Tulane or New Orleans, or is already studying law elsewhere, I still recommmend our summer school in Spetses, Greece, where I will teach Comparative Legal Profession.  My former pics from the program are here.  (This is a plug for me.)

[Alan Childress]

December 12, 2007 in Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Thursday, September 20, 2007

The Last Lecture

Posted by Jeff Lipshaw

Jeff Zaslow has a moving story in today's Wall Street Journal about the "last lecture" of Prof. Randy Pausch at Carnegie-Mellon, who is forty-six years old, has three small children, and has terminal pancreatic cancer.  I can't imagine what courage and zest for life he must have.  What a way to see it tested.

Zaslow introduces the story as a particularly poignant and non-academic example of something gaining some currency:  the "'Last Lecture' series in which top professors are asked to think deeply about what matters to them and to give hypothetical final talks.  For the audience, the question to be mulled is this:  What wisdom would we impart to the world if we knew it was our last chance?"

This strikes a familiar chord, and perhaps more so if one has spent most of one's life chasing lucre instead of knowledge.  With a sigh, the Type-A lawyer or business person reflects, "you know, nobody ever says on their deathbed, 'I wish I had spent more time in the office.'"

What would you say in your last fifty minute lecture?

September 20, 2007 in Law & Society, Straddling the Fence, Teaching & Curriculum | Permalink | Comments (0) | TrackBack (0)

Thursday, September 13, 2007

UNLV, Boyd School of Law is hiring!

Posted by Nancy Rapoport. 

I've blogged, on my own site, about the Boyd School of Law (see here for my latest post about Boyd).  Well, I'm on the faculty appointments committee this year, and Jeff very kindly said that I'm allowed to post our ad.  Please see below for our ad, and please consider applying.

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September 13, 2007 in Rapoport, Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 11, 2007

Character Screening for Fitness to Practice Law and the Playboy "Controversy"

Posted by Alan Childress
Over at, Miami's Michael Froomkin asks, "Does Posing Naked for Playboy TV Have Anything to Do With Your Fitness to Practice Law?"  In a word, No, says he.  Despite all the hype and hypothetical questions about the effect on bar admission, particularly at WSJ Law Blog, of one Brooklyn Law Student's posing, Froomkin has it right that protected First Amendment activity cannot be the basis for denying bar admission.*

Most of the WSJ comments (61!) also say it's about judgment and being taking seriously,Froomkin not the NY bar screening process.  [Though one nicely asks the real question buzzing around law faculties these days:  "Did she use a laptop in her law school classes and was it online?"]

Even more insightful is Froomkin's ending:  "...well, really, who in the end cares?" 

Correction:  The photo left is of Froomkin, not the Brooklyn Law Student. LPB apologizes for the error and any initial confusion.

Froomkin has an even better post (admittedly unrelated to this blog), quoting a 1797 U.S. treaty with Tripoli and Barbary promising not to use religion as "pretext."  A unanimous Senate approved it, and this part, all read aloud:

Art. 11. As the Government of the United States of America is not, in any sense, founded on the Christian religion; as it has in itself no character of enmity against the laws, religion, or tranquillity, of Mussulmen; and, as the said States never entered into any war, or act of hostility against any Mahometan nation, it is declared by the parties, that no pretext arising from religious opinions, shall ever produce an interruption of the harmony existing between the two countries.


*But cf. Brad Wendel's excellent post (and comments) on Matthew Hale and bar prediction of unethical acts, linked here, e.g., for racist and sexist rants (now arising because of  "anonymous" xoxohth posts).  I still think the Playboy TV example would be distinguished from prior cases of denial where there is a common thread Brad sees:  "The bar committee was able to characterize speech as evidence of a propensity to violate the norms governing the legal profession." 

UPDATE:  More from Brad here, and he's tied it to the Playboy TV non-controversy:  "[E]ven given these deficiencies in the [C&F] process, there's no way the applicant in the Playboy videos should have any difficulty with the character and fitness process."  Still, he is right that Eugene Volokh and others overstate the First Amendment protection that state bar C&F committees (and courts) traditionally afford in matters more related to the practice of law, e.g., Hale, filing complaints, oaths of allegiance.

April 11, 2007 in Bar Discipline & Process, Blogging, Straddling the Fence | Permalink | Comments (1) | TrackBack (0)

Wednesday, February 28, 2007

Conley on Racial Equity in Private Firms

Posted by Jeff Lipshaw

One of the wonderfully rewarding aspects about jumping into academia after so long in the practice is to realize that part of the job description of professional teacher is (or should be) to be a professional learner.  (That we are professional learners even in business was part of my management philosophy, so perhaps that says something, but I don't know quite what.)

That's an introduction to my recommendation of a tremendously interesting article, methodologically J_conley_2 and substantively, by John Conley (North Carolina, left), who I featured in a post yesterday.  The article is "Tales of Diversity:  What Lawyers Say About Racial Equity in Private Firms," 31 Law & Social Inquiry 831 (2006).  Professor Conley is an anthropologist and law professor, so the first part of the paper is an explanation of the scholarly discipline of ethnographic narrative - what you can learn and just how much you can generalize from what people say about their culture - in this case, lawyers about their jobs and their firms.  The second part is a report on what lawyers in different kinds of firms actually say about racial diversity.  The abstract follows below the fold, but as Larry Solum would say: download it while it's hot!

Continue reading

February 28, 2007 in Abstracts Highlights - Academic Articles on the Legal Profession, Associates, Law & Society, Law Firms, Partners, Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Monday, February 5, 2007

Moonlighting Law Professors Bring "The Wow Factor" to Law Firms

Santa Clara Law School's Eric Goldman blogs here on reports that some law firms are adding marquee law professor names as "Of Counsel," with an eye towarding creating "a 'wow factor.' "  Says a Quinn Emanuel partner about affiliating with Kathleen Sullivan:  "Honest t300pxthe_scream_1o God, having Kathleen with you at a meeting is like walking in with Mick Jagger."

I am more interested, obviously, in that affiliation down the road with some law prof for whom, honest to God, dragging him to a meeting is like meandering in with Keith Richards.  Until then, I simply note that my own affiliation would bring the Woah Factor (right).  [Alan Childress]

UPDATE:  Here is the story on such consulting.

February 5, 2007 in Straddling the Fence | Permalink | Comments (1) | TrackBack (0)

Saturday, January 6, 2007

New Carnegie Report Calls for More Law School Attention to Training on Practice and Ethics

How to become a more competent and ethical lawyer?  Says Carnegie, "Practice."

Image_618Not really.  There is actually a call for the law school to make a difference in the realistic training of young and aspiring lawyers to become socially responsible and focused on clients rather than just case law.  In a new report issued this week, the Carnegie Foundation for the Advancement of Teaching seeks more academic training in practical and ethical skills.  Their press release, Carnegie Examines the Education of Lawyers and Calls for Change, is here.  The full report can be ordered ($40) from Wiley here, and a 15-page summary in PDF format is down-laudable here.

As noted by the Chronicle of Higher Education, "By focusing on cases rather than clients, law schools offer too little practical training or grounding in ethics and social responsibility, the Carnegie Foundation for the Advancement of Teaching concluded in a report issued on Thursday."  [Alan Childress, with HT to Ray Diamond]

January 6, 2007 in Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Sunday, November 19, 2006

Winning, Burn-Out, and Other Random Thoughts in an Airport on Sunday Morning

Posted by Jeff Lipshaw

My philosophical musings several weeks ago on the joy of winning were tested severely last night as Bogdanski my beloved Wolverines fell to Ohio State 42-39.  I remember watching the Stanford moot court finals many years ago (in which, as I recall, Lewis & Clark Professor Jack Bogdanski, left, was a finalist) where one of the judges was the late A. Leon Higginbotham of the Third Circuit Court of Appeals.  Either in post-argument or pre-argument comments, the judge said "a well-prepared lawyer never loses; the client may not prevail, but the lawyer never loses."  Is it mere rationalization, am I getting more mature (unlikely if you have seen me teach!), or does the outcome just not matter as much to me as heart and valor, even in defeat, and respect for a great opponent?  Congratulations to the Buckeyes.  You earned it.

On a completely different matter, the New York Times Business section this morning has a profile on Philip Kent, currently the chairman and CEO of Turner Broadcasting.  What struck me was the peripatetic nature of his career, from ad sales in the media business, to producing and selling news inserts for TV stations, to being a Hollywood agent at CAA (of Michael Ovitz and Disney fame), to running a book publishing and video distribution business at Turner.  I don't think the track of the typical law professor's career encounters this, and perhaps it is just me, but I've concluded after all these years that spending an entire law career, as many do, in the same firm, doing the same kind of work, progressing in the level of oversight and client contact, is still not a natural act.  There was kind of an unwritten rule in the corporate world that three to five years in most jobs was about the time it took to learn the job, do it well, and then begin the slide toward boredom (or in the extreme case, burnout).  I don't know if there is empirical data, but it seems to me that career angst - boredom, combined with attractive incomes that make it difficult to change - is relatively more common among lawyers than perhaps other professions (though I wonder what keeps filling cavities as a dentist new and fresh year after year).  But it always seems like the ex-yuppies running a B&B in Maine were big firm lawyers.

November 19, 2006 in Billable Hours, Law Firms, Lipshaw, Straddling the Fence, The Practice | Permalink | Comments (0) | TrackBack (1)

Saturday, October 28, 2006

Follow Up to Hricik Post on Facial Prosecutorial Misconduct

Posted by Alan Childress

Over on Legal Ethics Forum, David Hricik (Mercer) had previously posted, in "Naked Prosecutors, Oh My!," about a Ohio prosecutor arrested for wandering around his building without legal briefs.  Apparently a prosecutor in Seattle (or two) read David's post and determined to one-up the merely-naked Ohio prosecutor.  A post on CrimProf Blog reports (from the Seattle Times) that he (but not she) was arrested after patrons complained they were having sex in a bathroom stall at Qwest Field during a Seahawks game [editor's commentary: eww].  He is a senior deputy prosecutor, not unlike the title held by "Jack McCoy" (Sam Waterston) in Law & Order. Because NBC producer Dick Wolf always prides himself on taking the show's plots straight from recent headlines -- and fearful that the actors including Fred Dalton Thompson are method-trained Stanislavskians who always do their research before playing a role -- we at LPB are determined to simply 'hold it' at any future sporting event to avoid hearing that donk-donk musical cue coming out of the stall next door.

October 28, 2006 in Blogging, Partners, Straddling the Fence | Permalink | Comments (0) | TrackBack (0)

Saturday, October 21, 2006

"Being Right Is Not All It's Cracked Up to Be": A Reply to Professor McGowan (with a nod to Professor Schneider)

Posted by Jeff Lipshaw

David McGowan (San Diego) over at Legal Ethics Forum has a thoughtful response to my earlier post on law and morality - in particular, my cryptic concern over the impact of what I called "reducto-empiricism" as the underlying world view of young lawyers going out into the world.  If I may fairly summarize it, David contests whether there are in fact any articulable moral universals that are useful in resolving legal-ethical dilemmas.  Indeed, as the human race has not been able to agree on any moral universals (except maybe one or two like "don't kill so many of your society that your existence is threatened") in all of recorded history, appealing to them constitutes a "crutch substituting for analysis."

David, of course, hits at the very heart of my dilemma - which is that I like the concept of Kantian derived universalisms, but I can't justify any of them, except the concept itself, which seems to me to invoke some kind of first principle, even if I don't know what it is.  (For that reason, people call it God, but that's way too concrete for me.  See my Yom Kippur post.)

One of the great benefits of Kantian schizophrenia is that I can critique undue empiricism, but I can also beware of fanaticism or dogmatism, and call it transcendental illusion - the mistake of belief for truth. (In my view, even Kant erred if he thought he had derived "Truth," say about lying, from the categorical imperative.  Reason can give you an ought but that is beyond or apart from truth or falsity.)

David called himself a Humean empiricist, and I'd certainly agree on form.  If you have read Professor McGowan's work, you know that, like Hume, he has a charming and witty skepticism about there being any right answer, so at least he feel pretty good about the law not necessarily giving us one.   (Recall that it was Hume's skepticism that shook Kant from his "dogmatic slumbers.")  His pragmatism is a fair successor to Hume's congeniality as the standard by which we conduct ourselves.  I think it gets to the same place Larry Solum would get in his aretaic philosophy - no sense worrying about the metaphysics, but trust that virtuous people (virtues being derived inductively from what has generally been considered good) make virtuous decisions.

More below the fold.

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October 21, 2006 in Abstracts Highlights - Academic Articles on the Legal Profession, Clients, Economics, Ethics, Law & Society, Straddling the Fence, The Practice | Permalink | Comments (0) | TrackBack (0)

Friday, October 20, 2006

"Them": Availability Heuristics and the Scholarship of Corporate Demons

Yesterday in my Business Enterprises I class, we moved into the fiduciary duties of corporate directors, a subject close to my heart, having counseled a public company board from 1999 to 2005, a period that spanned the burst of the Internet bubble, the Enron fiasco and its ilk, the passage of Sarbanes-Oxley, and the New York Stock Exchange's adoption of the governance standards in it revised listing requirements.  During that period, we did an partial IPO of an wholly-owned subsidiary, resulting in a controlled public company listed on NASDAQ, and later acted on behalf of all of the shareholders of the subsidiary to sell it in a cash-out merger.  We also pondered significant strategic redirection, saw the resignation of a CEO, and then merged the company out of existence.

So, as I observed to my class, I have perhaps a harder time seeing corporate directors as "them," and prefer to think not of directors as demons, or even as Richard Posner's faceless and automatonic "rational frogs," but as real human beings faced with difficult choices, and without the benefit of the hindsight that either litigators or law professors bring to the table.  Perhaps that is why I was taken with the even-handed approach of Professors Rasmussen and Baird in the article I highlighted several days ago.  I also suggested to the class, whether someday they are in the position of counseling, defending, or suing directors, they would be well served to appreciate the complexity of the ex ante decisions (whether or not it is a calculation) facing corporate directors.  Indeed, my pedagogical point is that this is at least some basis for the deference that courts give to directors, absent breach of the duties of care and loyalty, for actions taken in good faith under the business judgment rule.

Should we look at corporate directors with the glass half full or half empty?  I confess, having watched a white male conservative Republican director (one of our curmudgeons) argue that our non-discrimination policy should include a ban on discrimination on account of sexual orientation, and similar displays of independent-mindedness against type on a fairly regular occasion, I incline toward the former.  But I cannot deny the reality of what seems to me good judgment gone awry in what viscerally seems to be a non de minimis number of backdating cases.  (I have already expressed my view on that issue:  I would have criticized a general counsel who did not go beyond the strictly legal in pointing out the issues of truth-telling - or its opposite - in undertaking the practice.)

More below the fold.

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October 20, 2006 in Abstracts Highlights - Academic Articles on the Legal Profession, Clients, Economics, General Counsel, Lipshaw, Straddling the Fence, The Practice | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 17, 2006

Teaching Future Board Counselors - World View?

Check back over the next few days as I will be blogging - in the Straddling series - on teaching corporate law to future counselors to corporate boards.  I am just now getting to Van Gorkom, Disney, Caremark, etc. in my syllabus, and I've been thinking about the world view implicit in The Prime Directive, by Rasmussen & Baird, on which I have commented previously, and that in The Unimportance of Being Earnest:  Reflections on Director Liability and Good Faith, recently posted on SSRN by Elizabeth Nowicki (I listened to Professor Nowicki give an overview of this paper at the Law & Society Annual Meeting in July as well).

To come:  reflections from my present academic perch on the good old days when I was counseling a corporate board. [Jeff Lipshaw]

October 17, 2006 in Abstracts Highlights - Academic Articles on the Legal Profession, General Counsel, Lipshaw, Straddling the Fence, The Practice | Permalink | Comments (0) | TrackBack (0)

Saturday, October 14, 2006

Straddling: Reactions to Rasmussen and Baird on Corporate Governance

Posted by Jeff Lipshaw

Rasmussen2_1It's Saturday afternoon and I could watch the Tigers-Athletics game over at Cooter Brown's or Fat Harry's or I can sit here in the faculty lounge and multi-task by following the game and reading The Prime Directive, posted last month on SSRN by Robert Rasmussen (Vanderbilt, left) and Douglas Baird (ChicagoBaird2_2, right).  The paper has at least four things going for it off the bat:  (1) it is short; (2) it is highly readable; (3) it doesn't seem to be working off a political or theoretical agenda, and just wants to get it right; and (4) it makes a lot of sense.  Here's the abstract: 

Agency costs dominate academic thinking about corporate governance. The central challenge is to devise legal rules to align the interests of the managers (the agents) with those of the shareholders (the principals). This preoccupation is misplaced. Whether it is finding a baby-sitter or a dean, the challenge of hiring the right person dwarfs the challenge of aligning that person's incentives. The central task for corporate governance - its Prime Directive - is to ensure that the right person is running the business. In this essay, we suggest that the challenge of aligning the managers' incentives has been drastically overstated and the way in which legal rules affect hiring (and firing) decisions has been too often ignored.

Putting the emphasis on agency costs may lead to rules that slight what matters most. The current preoccupation with executive compensation runs the risk of inducing the board to worry more about the details of the employment contract rather than selecting the best person in the first instance. More important, the law can play an important role ensuring bad managers are fired. Once hired, all managers need to be mentored, monitored and, when necessary, replaced. There is little to suggest that a single entity is well-situated to perform all three. There is tension between the roles of confidant and policeman. Here, debt contracts play a crucial and largely neglected role. Covenants in debt contracts can insure that underperforming managers are called to task. Private debt holders' role in monitoring a business and ensuring that underperforming managers are replaced may be as important as the market for corporate control.

The fifth thing going for it is that the descriptive portion (I'll get to the prescriptive portion below the fold) comports with my own experience on the tensions that might exist between a board and a CEO.  (See "Background of the Merger" beginning at page 29 of the S-4 Registration Statement filed in connection with the merger between Great Lakes Chemical Corporation and Crompton Corporation.)  Board members are human beings.  I think the paper's attribution of perceived inaction to commitment bias is far more plausible than attribution by Bebchuk, Fried and others to capture of the board by the CEO.  There's an Occam's Razor aspect to this - does it make more sense that highly successful Type AAA directors are "captured" by another CEO, or that they are subject to the same bias as we would observe in any other group?  Capture is certainly a possibility - for all my regard for Sidney Poiter as a man and an actor, I wasn't quite sure what he would bring to the Disney board.  (I would have loved to see him stand up to Michael Eisner in the middle of a board meeting and announce:  "They call me... Mr. ..." Well, you get it.)  I agree with Rasmussen and Baird that capture ought to be the exception, not the rule.

For a little more, go below the fold.

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October 14, 2006 in Abstracts Highlights - Academic Articles on the Legal Profession, Straddling the Fence | Permalink | Comments (3) | TrackBack (0)

Friday, October 13, 2006

The Ultimate Blog Post: Backdating, Instrumentalism, the Good, Executive Compensation, the Right, Paris Hilton, and Delaware Law

Posted by Jeff Lipshaw

The front page of Thursday's Wall Street Journal features two stories as to which the horse is probably not only beaten (apologies to Ani Satz for this insensitve figure of speech) but has been sent to the knackers (why am I thinking of poor old Boxer?  "I will work harder" and "Napoleon is always right"): a redux of the general discussion of executive pay and the more specific discussion of backdating.

The debates continues to interest me, not so much for the specific criticisms and defenses of either, but for the gap between town and gown (with lawyers generally falling into a variant of gown).  While much in "town" values leave nothing to write home about (otherwise why would there be a Paris Hilton?), there's an underlying good sense out there somewhere.  Indeed, I wondered, looking at Brian Tamanaha's posts on his new book, whether his perception of "the spread of an instrumental view of law within the legal culture, concomitant with a loss of faith in the social good" is a thesis of intellectual history or social history.  I'd argue that Warren Buffett's use of the front page test to judge practices like backdating points to some shared notion of social right, if not social good.  The distinction here is between (a) the idea there is communal agreement on what makes all better off, and (b) the idea there is communal agreement on what is right, regardless of consequence.

More on this below the fold.

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October 13, 2006 in Economics, Ethics, Law & Society, Lipshaw, Straddling the Fence | Permalink | Comments (1) | TrackBack (0)

Friday, October 6, 2006

Straddling the Fence: Harvard's Take on Interdisciplinary Skill

Posted by Jeff Lipshaw

One more time on the interdisciplinary skills issue.  I was looking at the Empirical Legal Studies blog, where the recent blogosphere debate on interdisciplinary skills in the legal academy appears to have started.  Professor Solum in turn proposed a set of core competencies, to which Gerry Rosenberg observed:

I’m not sure I’ve ever met Solum’s "complete legal academic."  Indeed I’m not sure such a person exists.  I have met legal academics who are quite sure they meet the criteria.  My impression is that their knowledge is a mile wide and an inch deep.  That kind of foundation is incapable of supporting much academic weight.

I don't think Professor Solum was addressing how scholars ought to focus their energies.  What he was addressing was the continued vibrancy and flourish of law schools as institutions: "The alternative is the fragmentation of the legal academy into warring camps of specialists whose real loyalties lie with their home discipline. The legal academy will not flourish if we economists value only economics, philosophers only philosophy, and empricists only empirical work."  Professor Solum was addressing the flourishing of the legal academy as a scholarly institution; since I straddle the fence between academia and the practice, it's hard for me not to consider this as well in the context of teaching and the continuing relationship between a law school and its alumni.

It's serendipitous, then, that Harvard has just issued its Preliminary Report of the Task Force on General Education.  Here's what the preliminary report says about students' concentrations:

Concentrations are designed to ground students in a scholarly discipline, but less than four percent of our entering freshmen name college teaching as a career goal, and only five percent of seniors say that they intend to pursue doctoral study in the arts and sciences in the fall after graduation.  (Eighteen percent say that they plan to pursue a Ph.D. some time in the future.)  On the other hand, close to thirty percent of entering freshmen say that they plan to become a physician or lawyer, and last year, fifty-three percent of our seniors said that they were expecting to enter a professional school - business, medicine, or law.  We have tried to design a general education curriculum with these facts in mind.  The role of general education, as we conceive it, is to connect what students learn at Harvard to life beyond Harvard, and to help them understand and appreciate the complexities of the world and their role in it.  The mission of general education is not utilitarian or pre-professional.

What is the point of this general education?  To prepare graduates who will not be specialized scholars to deal with the inter-connectedness of the world:

Many of our graduates will become businesspersons, lawyers, policy-makers, educators, designers, and health care providers; all of our graduates will have to deal with, and will therefore need to understand something about, business, law, public policy, design, education, and health.  [The point is] that our students should see how the ideas, facts, and perspectives they are learning in the College come to life in real-world scenarios:  how philosophical ideas about justice and equality bear on legal decisions, how economic theory only partly explains the causes of poverty in different parts of the world, how an understanding of neuroscience translates into medical practice; how cultural and religious traditions affect debates over public policy.

I have this lingering desire to believe there is a place in the world for those who are a mile wide and an inch deep (remember, I spent most of a career as an M&A lawyer, and that's pretty much a professional pre-requisite - you need to be a corporate person, but a little bit tax, and a little bit HR, and a little bit ERISA), but perhaps they are only formally trained in business schools.  As I said earlier about the myth of the horizontal organization, somebody has to know enough about the specialties to see the issues and opportunities that lie in the gaps.  Harvard has done that for its general education; I wouldn't presume to put words in Professor Solum's mouth, but I think his vision is that law school faculty should be able to do the same.

October 6, 2006 in Law & Society, Lipshaw, Straddling the Fence | Permalink | Comments (0) | TrackBack (0)