White collar crime followers will remember that before we started being concerned about DOJ hiring practices, we had begun to be concerned with the DOJ's prosecutorial practices, including pressuring corporate targets to waive attorney-client privilege and refuse to pay attorney fees for employees who were potential defendants.  These tactics were the result of guidelines outlined in an internal memo, first called the Thompson Memo, then the McNulty Memo, after the Deputy AGs who oversaw the drafting of those memos.  Well, the memo had been revised again, under the direction of Deputy AG Mark Filip.  So, why the Filip Memo?

These guidelines have been revised following congressional interest in regulating the DOJ's tactics.  In an effort to head off congressional action, specifically this proposed bill, the new guidelines "[prevent] prosecutors from asking companies under investigation to disclose attorney-client privileged information" and specify that "whether a company is paying legal fees of employees under investigation, or whether a company has entered into a joint defense agreement with employees" will not be relevant to a determination of whether the company is "cooperating" with prosecutors for purposes of the sentencing guidelines.

So, we'll see whether this attempt at self-regulation will halt proposed legislation and of course, what effects the revisions will have in practice.

UPDATE:  Apropos of pressuring companies not to pay attorney fees for employees, Miriam Baer just tells me that the Second Circuit just affirmed Judge Kaplan's slapdown of KPMG.

Permalink | White Collar Crime | Comments (0) | TrackBack (0) | Bookmark

Since coming to Maryland I have been involved in projects at the city and state level aimed at developing specialized business and/or technology courts.  Many states have created or are contemplating creating such courts, which generally take the form of programs or divisions within existing court systems.  The rationales for such specialty programs include reducing the time and expense associated with complex business litigation, and as a result freeing up time for non-business cases, ensuring that judges develop expertise in business matters (which expertise further expedites such matters while building confidence in the judicial system with respect to those matters), and attracting businesses to the state by increasing confidence in the quality and efficiency of the state courts' ability to handle business litigation.  And of course lurking in the background of at least some of these programs is the hope that, even if they can't be like Delaware, they can at least develop a court system that businesses are not seeking to avoid at all costs--and giving businesses predictability, efficiency and quality certainly helps to achieve this goal.  At this point, while there have been concerns raised about these specialty courts including issues involving whether they could achieve their goals as well as concerns about the appropriateness of focusing on business as opposed to other forms of cases, it seems that such courts have been a positive development.  Maryland' Journal of Business & Technology Law recently created a website that provides information about the various state programs in this area, and tracks some of the key cases that arise from those programs.  Thus, it allows one to see how different states are developing their programs as well as the kinds of cases and issues that arise.  And since many of these programs are evolving, it is interesting to track their development and try to determine what kind of impact these programs have.  In particular, it is interesting to see whether and to what extent these programs can have an impact on the development and predictability of the business law doctrine within the states that have such programs.   

Permalink | Corporate Law | Comments (0) | TrackBack (0) | Bookmark

The SEC announced today that it might mandate that American public companies prepare their returns pursuant to the world's - but not the US's GAAP's - accounting principles.  But not until loads of comment, a reassessment in 2011, and a target date of 2014.  It's pretty global when other countries are defining the way that American companies will have to prepare their books.  But, as IFRS and GAAP expert Larry Cunningham reminded me, this is a careful approach to harmonization - and a very preliminary first step.  We will wait eagerly what will appear in the SEC's notice actually detailing their approach, not to mention the public comment that will follow, let alone the milestones that must be met before harmonization is required.

Chairman Cox:

"The increasing worldwide acceptance of financial reporting using IFRS, and U.S. investors' increasing ownership of securities issued by foreign companies that report financial information using IFRS, have led the Commission to propose this cautious and careful plan. Clearly setting out the SEC's direction well in advance, as well as the conditions that must be met, will help fulfill our mission of protecting investors and facilitating capital formation."

Permalink | Securities | Comments (1) | TrackBack (0) | Bookmark

So I was listening to Kai Ryssdal's interview with Peter Chapman, author of Bananas: How the United Fruit Company Shaped the World, when Chapman remarked casually, as if we all knew already, "it's a highly vulnerable crop and at the moment is suffering from diseases which might soon -- within the next decade or so -- wipe it out."

A world without bananas!?

As it turns out, I probably am the last person in the world to get the news. Websites on the Panama Disease are abundant. Bananas have a fascinating history, and clearly the most popular fruit in the Smith household. I will be so sad if they vanish ...

Thanks to loop_oh for the photo.

Permalink | Food | Comments (1) | TrackBack (0) | Bookmark

While we’re on the subject of teaching, the Socratic method, and laptops, I thought I’d post a version of a little speech I gave my Corporations class yesterday. We’ve been having the laptop discussion at Georgia for a while, and one of the major complaints people here have is that students inherit “scripts” from prior classes, and thus are primed with the “right answers” to the professor’s questions. I extemporized from my notes, but this is the gist:

I want to talk about what we’re doing here. I’m talking, you’re listening and typing. I’m asking you questions, you’re responding, and we’re wending our way through business organizations.

This could work differently. I could talk and you could type rather than listen. I could bring in a tape player to play the lecture; you could bring in recorders to record what the machine said. But instead we have a dialogue of questions and answers. I want to use this place and time for you and I to engage in the material. To think differently, to think critically.

Many of my students have had laptops over the years, and there are, I know, scripts and outlines floating around. Having an idea of where I’m going is comforting to you; I can understand that. But my advice to you, in terms of getting the most out of class, is not to look at any material from past classes. There are three reasons. First, in terms of what’s out there—it might not be right, it won’t be exactly what I cover because a student answer might take me a different direction. I read the material anew each year and see different things, go different places.

Second, as the syllabus specifies, you can’t use it in the final, only notes that you create. The exam will have a question that will address an issue that you’ve never seen—to test your ability to read the code, to find the answers for yourselves. You won't have a script for that.

Finally, it’s for the same reason I don’t read the prefaces to books or movie reviews before I’ve watched a movie. I want my first reaction to be MINE. Authentic, real. I don’t want anyone else telling me what I should think, or coloring my perception. I’m not using the Socratic method to put you on the spot, but to talk with you. So I urge you to come to class fresh and ready to talk, but without a preconceived idea of where I might be going. Otherwise I think you’re losing out.

Permalink | | Comments (0) | TrackBack (0) | Bookmark

Inspired by various posts on teaching around the legal blogosphere, Jerome M. Organ, Professor of Law and Associate Dean of Academic Affairs at the University of St. Thomas School of Law in Minneapolis sent me a thoughtful and provocative email, which I reproduce in relevant part below with Jerry's permission:

I am writing to try to tie some threads together from some of your observations, and Eugene Volokh's and  Ann Althouse's observations and some of the responses that you have received to your postings, particularly from students focused on grades and competition for grades and jobs.

Eugene Volokh stated – "I want to argue that students — though they of course pay lots of money to us — are not just customers of legal education, but are also in a sense a sort of employee: Law school classes rely on students' participating in the class, as a means of helping educate the other students. Learning, the theory goes, is a cooperative endeavor, in which students benefit from hearing each other's comments."

Ann Althouse, in response, stated – "They should feel an ethical responsibility to the classroom community they asked to join and to the rejected applicants they are displacing."

And yet, when you posted a syllabus explicitly requiring that your students work together as a "classroom community" and engage in "team" projects that might impact their grades, one student expressed significant reservations about collaboration (particularly if it impacted grades) and several people posted comments objecting to the team approach and demonstrating the view that law school is a competitive environment in which students must compete as individuals for grades (and the corresponding high paying jobs at a big firm).

There would appear to be a significant tension between what we as professors have as aspirations for our "classroom communities of learning" and for what students have been acclimated to understand as their "classrooms of competition."

Dean Cramton wrote 30 years ago about the "ordinary religion of the classroom," including the following quote on individualism, competition and professionalism:

. . . Too often the young lawyer must grope alone toward an effective strategy for mingling humanism and professionalism in the lawyer-client relationship.

The atomistic character of the student’s work in law school accentuates this difficulty.  Much professional work involves cooperative activity, but law school does little to assist a law student to work effectively as a member of a team.  The competitive environment of law school tends to pit each student against all others and, not surprisingly, feelings of isolation, suspicion, and hostility develop among students.

Knowledgeable observers comment that law students become more isolated, suspicious, and verbally aggressive as they progress through law school; their aptitude for verbal articulation increases, but they rarely stop to listen to others.  If so, will they be good counselors?  Will they need to unlearn a number of things in order to operate successfully as a professional?   The sharing, helping and serving aspects of human endeavor, especially important to future professionals, are not recognized adequately in the law school experience.

Roger C. Cramton, Ordinary Religion of the Law School Classroom, 29 Journal of Legal Education 247, 262 (1978)

If the "ordinary religion of the classroom" still communicates a message of individual, atomistic competition (and I would suggest that the student's response to your syllabus and some of the comments to your post evidence that this competitive environment remains as part of the "ordinary religion of the classroom"), then students are likely to act on that cultural signal and function based on competitive individualism and are going to be resistant to our calls for them to engage in a "classroom community of learning" based on a collaborative model.  Indeed, if I am functioning within a "competitive" context, and I believe I have a better understanding of the material than some of my classmates, my rational choice will be to refrain from participating (and possibly to participate with misinformation and sow confusion) so that I do not erode my perceived competitive advantage by "helping" my classmates come to a better understanding of the material.

My point here is that we are sending mixed signals. Eugene Volokh and Ann Althouse and Gordon Smith may be encouraging, perhaps somewhat explicitly, the communal nature of the learning experience where each participant benefits from the insights and contributions of a diversity of voices drawing on different educational and experiential backgrounds, but there appear to be other "signals" our students are receiving (from us or others on the faculty or from each other) that convince many of them that this is an atomistic competitive environment in which collaboration and teamwork are to be avoided (and perhaps disdained).

Notably, for those students pursuing joint degrees, particularly JD/MBA students, the cultural shift from the atomism of legal education to the collaboration of the business school environment can be jarring.

The reality is that law school can be (and should be) more collaborative.  This happens in clinical contexts and perhaps intermittently in some courses, but I suspect very few law schools are intentional about creating an institutional commitment to collaborative learning that overrides the culture of individual, atomistic competition that Cramton described and which still manifests itself in this new millenium.

Here at the University of St. Thomas, we have tried to tackle this issue to some degree with a week-long introductory course as part of our Orientation Week in which we have students read and discuss excerpt's from Cramton's article, Joseph Singer's recent article on Normative Methods for Lawyers, my colleague Rob Vischer's article Legal Advice as Moral Perspective, Patrick Schiltz's article On Being a Happy, Healthy, and Ethical Member of an Unhappy, Unhealthy, and Unethical Profession and my article From Those to Whom Much has Been Given, Much is Expected:  Vocation, Catholic Social Teaching, and the Culture of a Catholic Law School, along with a variety of other materials related to the role of the lawyer, the pressures of the legal profession and the challenges of legal education.  While one of the primary motives for this course is to engage students in an explicit conversation about integrating their moral compass into their professional identity  (the third apprenticeship reflected in the recent Carnegie Report – Educating Lawyers), part of our purpose also is to explicitly engage students in a conversation about whether they want to define their success in law school and in the profession by the types of extrinsic rewards that are identified with "winning the competition" -– grades, big firm jobs, large salaries -– or whether they want to define their success in law school and in the profession based on intrinsic factors -- their sense of mastery of material and the development of understanding about those job opportunities within the legal profession that reflect their vocation -– using their gifts and expertise to serve society.    (While we didn’t assign any excerpts from Larry Krieger’s and Ken Sheldon’s research on law student well-being, we do reference the literature in the positive psychology field highlighting that those motivated by intrinsic factors have a much greater tendency for well-being and fulfillment than those motivated by extrinsic factors.)

If students can shift their paradigm from a perception that all are competing against each other for some extrinsic goal –- great grades that will lead to high-paying jobs –- to a paradigm motivated by intrinsic factors -- that each is trying to live out his or her vocation as law student and spouse and parent and friend and volunteer while beginning to discern his or her vocation as a lawyer –- it becomes much easier to promote collaboration rather than competition. I cannot be in competition with someone else to find and live out my vocation. I can also find joy in supporting others (who may perform better than me on a law school exam) because I am not competing with them as they try to find and live out their vocation.

Nicely done, Jerry. I assume it is not mere coincidence that St. Thomas' law school website contains the subtitle, "Faith, Reason, Community."

The elephant in this room is the law school curve, which has always been justified in part as an incentive mechanism for students and in part as a sorting mechanism used by law schools to make their graduates more employable (by identifying the "best" of those graduates for judges and big firms). Jerry's post accurately identifies the mixed messages we send to students, and I wonder: can "communities of learning" flourish in "classrooms of competition"? Or must one triumph over the other?

Permalink | Teaching | Comments (4) | TrackBack (0) | Bookmark

Some folks in the Solicitor General's office think that you best prepare for oral argument by thinking of answers to the twenty possible questions the judges might ask.  For economics workshops, it turns out, you need to come up with a few - but not many - more responses.  My colleague Justin Wolfers reminds us of George Stigler's classic articulation of the thirty-two possible questions in an economics workshop.  I'm trying to remember the last time I didn't ask "What empirical finding would contradict your theory?," number 20 on Stigler's index.

Josh Wright has his own take here.

Permalink | Economics | Comments (0) | TrackBack (0) | Bookmark

I've been reading a bit lately about the field of Econophysics, which I think is pretty cool. At heart, it doesn't really seem to apply "physics" to economics, so much as bring some uber-robust statistical methods physicists have crafted to inform the (comparatively) simpler (but still hard) methods of financial economists. A critical view would be it's just a bunch of physics geeks who, disillusioned by the barriers of their field, sold out to peddle their quantitative wares to Wall Street. Either way, it got me thinking about how analogy between seemingly unrelated fields is a basis for our most interesting inter-disciplinary scholarship. Hence, this experimental, yoga-stretch of a post and its motivating question. What can physics teach us about corporate governance and financial regulation?

To begin, consider Heisenberg's Uncertainty Principle. Our layman's take-home: one cannot measure a phenomenon without affecting it. The Uncertainty Principle requires that when the position of an atom is measured with a photon, the reflected photon will change the momentum of the atom by an uncertain amount inversely proportional to the accuracy of the position measurement. In other words, in order to view something, one needs to shoot a photon particle at it, but at the quantum level that photon changes the momentum of the particle you are trying to measure. This is similar to how one cannot, some believe, regulate financial activity without affecting the design of the financial system. Lawyers and bankers counseling issuers will help their clients design their activity to either comply or evade the regulatory apparatus (a.k.a. regulatory arbitrage). Thus, regulation designed to affect a financial system that is informed only by the system design pre-regulation will be outmoded before it even goes into effect.

Let us also think for a moment about how waves (e.g. sound waves) transmit energy. We subdivide our observation of this energy transference into two boxes: amplitude (the disparity between the baseline and the wave's peaks and troughs) and wavelength (the distance between distinct waves). This may be a useful dichotomy to inform our understanding of related dualities in our business such as (i) the debate over principles-based regulation vs. rules-based regulation in financial accounting [or, complicate it a bit, analogize it instead to the related distinction between amplitude modulation and frequency modulation used to regulate airwaves] or (ii) the disparity between quantitative and qualitative materiality in federal securities law so aptly identified in the last junior scholar paper. Two distinct qualities to the very same phenomenon, and easily confused by the non-specialist. In both of the analogous fields, my understanding is that we are measuring two distinct phenomena that are at heart related on one dimension we can understand and measure, but unrelated on another dimension we can understand and measure. The same challenge we see in the acoustics problems that the physics nerds specializing in wave theory contend with. Spooky. But hopefully a thought useful to someone out there.

I know nothing more of quantum physics that what I learned from Stephen Hawking's two books that, from his perspective, politely omit "For Dummies" in the title. (Still, to me they seemed more difficult to digest than tamales from a street cart at a Texas border town.) Check them out, they're awesome. Now let's consider the wave/particle duality of matter and energy. Matter and energy, to the quantum physicist, are two sides of the same coin, but they need the distinction; without it, their theories don't make sense. It is a useful fiction helpful to understand and to manipulate even though the description remains beyond complete human understanding (except for the realm of pure math). This is similar to the notions of market efficiency we use in justifying the fraud on the market theory, merely useful fictions for our models. Then again, should we scrap that in favor of a chaos theory approach, incorporating what we would otherwise describe as "trading noise" into models of market efficiency itself? Analogous on some ways to what the behavioral people have been trying to do?

Now, let's switch gears, and talk about the Laws of Thermodynamics. At heart, one cannot escape the entropy (eventual escape) of heat from a dynamic system. Agency Costs can be analogized to energy entropy in these models. Let's compare these laws and the notion that using financial intermediaries to overcome the agency problem creates a new agency problem. In both cases, we're really just talking about leakage from the system, and refining the system to limit this leakage of valued energy. I'm not saying that law schools should start hiring JD/PhD chem people as the next corporate law scholars (especially since had to look it up to spell Mendeleev). But agency costs and energy displacement are, ultimately, a perfectly analogous form of entropy from a dynamic system, and it can't hurt for chemical engineers and corporate law scholars to try to talk to each other and compare notes.

The Basel II Accords use capital adequacy requirements that take into account noise in systems, but also leave room for additional subjective judgments. Is this supported by conclusions of the bad boys of mathematics, the chaos theorists? Mandelbrot described both the "Noah effect" (in which sudden discontinuous changes can occur) and the "Joseph effect" (in which persistence of a value can occur for a while, and then rapidly change). Our minds resist the principles of chaos theory, just like the mathematicians do, because notions that we cannot predict the world aren't helpful. In other words, if there is no predictability to the future we want at least the comfort of the myth of predictability. But chaos theory is more sophisticated. Simply put, it can help to predict when systems will become completely unpredictable, or at least cement the need for a cushion against predictability when regulatory or investor bias causes the whole system to run off the rails. In short...cut the SEC Enforcement budget in half, and give that money over to the SEC Office of Risk Assessment...and have them hire some econophysicists!!!

Permalink | Corporate Governance | Comments (4) | TrackBack (0) | Bookmark

Two tidbits from the CNN story about sleep and productivity:

The evidence that sleep matters is irrefutable and constantly growing. Let's start with a newly discovered link between sleep deprivation and serious illnesses such as diabetes and cancer. A 2008 research project at the University of Chicago's medical school kept young, healthy volunteers awake for all but four hours a night for six nights running. The result: The levels of subjects' hormones shifted -- in particular a hormone called leptin that affects appetite. They became ravenously hungry, scarfing down pizza and ice cream long after they would have felt full normally, and their blood sugar shot up to pre-diabetic levels -- an ominous result after less than one week of inadequate sleep. Other studies duplicate those results so regularly that researchers now believe that not getting enough sleep is a top cause of obesity and diabetes

...

One experiment at U. Penn's medical school kept subjects up until 4 A.M., woke them at 8 A.M., and then gave them a series of tests designed to measure memory, alertness, and the ability to react quickly to new information. The researchers were startled to find that subjects' mental acuity declined markedly after just one night and kept dropping with each successive night of four hours' sleep.

I would look up the studies, but I need to get to bed. After all, I am a morning person now!

Permalink | Productivity | Comments (1) | TrackBack (0) | Bookmark

Teaching has become all the rage in the legal blogosphere over the past week, and Eugene Volokh adds an important contribution on the importance of class participation. This is a pitch I have been making to my students for years, and I made it again this morning in my first Business Associations class of the new semester:

I want to argue that students — though they of course pay lots of money to us — are not just customers of legal education, but are also in a sense a sort of employee: Law school classes rely on students' participating in the class, as a means of helping educate the other students. Learning, the theory goes, is a cooperative endeavor, in which students benefit from hearing each other's comments.

Eugene is engaged in a debate about whether banning laptops is libertarian or paternalistic, and I am not at all interested in that, but I am interested in the notion of students as participants in the learning process. For many years, I have used the "present and prepared" system (which I describe in my syllabus) precisely to reward students who contribute to the learning environment in the classroom. My own experience suggests that this is a more useful and less controversial means of inducing quality classroom discussions than banning laptops.

The most interesting aspect of Eugene's post, however, is his description of the modern Socratic classroom:

Most law school classes are between seminars and lectures: The professor talks more than he does in a seminar, and class discussion is less important than in a seminar, but class discussion still takes up a large part of the time, and the professor's conversations with the students — and sometimes students' conservations with each other — are an important pedagogical tool. Some question whether it's an effective tool; perhaps we'd be better off lecturing more and drawing the students in less. But most of our classes do heavily rely (rightly or wrongly) on this tool.

This means that whether students are paying attention in class affects not just themselves, but their classmates. Students who tune out, either because they're distracted by non-class materials, or because they are so focused on taking verbatim notes that they aren't really mentally engaging the information, aren't doing the job they're supposed to do. (Again, I recognize that they're not being directly paid for the job, but rather have to pay us; but part of the educational transaction is that they get an education and a credential in exchange for money and class participation.) When fewer students participate in class, other students get less out of the class discussion. When a student is called on and doesn't give a good answer, other students get less out of the class discussion (especially since time is wasted, and the conversation is interrupted).

Notice the classroom dynamic: the professor is speaking with some students (usually one at a time, though some professors manage to involve several students simultaneously) while other students listen. Or not. The non-participants may "tune out" because they are distracted or bored or busily acting as scribes.

In my view, student passivity is the core challenge in the modern law school classroom. Eugene observes that most classes are larger than seminars. As a result, a single teacher cannot engage each student in the classroom personally, so we resort to theater to hold their attention. We speak in excited tones to show our passion for our subject and we bring props (like PowerPoint slides) and tell stories or jokes. Or we become very rigorous in our questioning of the students so that, like Kingsfield, we scare the bejabbers out of them. (Or we hold auctions! I don't intend to be critical of J.W.'s exercise, which I did in my Securities Regulation class last semester. It's a wonderfully engaging exercise, especially for the first day.) At the end of the semester, if we have been entertaining or impressive enough, the students reward us with high scores on our teacher evaluations. Ugh!

If you are unhappy with that state of affairs, I would suggest that you give teams a try. Even if you don't like the idea of assigning team projects for grades (a topic that I will address in a separate post), using teams in class is a no-brainer.

I first experimented with teams several years ago, but my efforts were tentative. I asked the students to work as teams only a couple of times during the semester. Each time I requested that they form ad hoc teams for the day. These were serious design problems. My students had become accustomed to the modern Socratic classroom, and the team assignments disrupted their routines. As a result, the students inevitably wasted time getting organized and spent many awkward minutes moving from the passivity to which they had been accustomed to a group interaction. They viewed the teams as a "gimmick," and often never achieved any sort of meaningful discussion.

When my teaching advisors from CTL first suggested last fall that I move in the direction of using teams, therefore, I was very skeptical. But their pitch was simple for someone who was seeking a more engaging classroom: start from the first day, making teamwork part of the classroom routine, so that your students expect to be engaged with each other every day.

I tried this approach in both of my classes last semester, more systematically in Securities Regulation. One day, as I walked around the classroom listening to my students discuss a hypothetical problem from the casebook, I had a revelatory moment. Instead of having me and one student discuss this problem as a not-very-gripping theater performance, I was watching all 50 students in the class engaging with the problem. All of them were speaking the words of securities regulation. All of them were struggling to one degree or another with the basic themes of the course. They were looking at each other, not at their computers. And they appeared to be thinking!

And that's how I became sold on teams in the classroom.

P.S. For a provocative and insightful follow-up to Eugene's post, read Ann Althouse's thought experiment, concluding that students "should feel an ethical responsibility to the classroom community they asked to join and to the rejected applicants they are displacing."

I probably should note that I expect classroom participation beyond the team discussions (see the present and prepared system referenced above), but those portions of my class are now much smaller than they once were.

Permalink | Teaching | Comments (0) | TrackBack (0) | Bookmark

Thanks Gordon for the introduction, I am honored by the invitation to visit at the Conglomerate. Today was my first day teaching, and since the Conglomerate’s sage advice about the teaching market got me into this mess in the first place (See Gordon here and Christine here.) I thought that I would talk about an exercise I conducted on my first day teaching Securities Regulation.

We ran an auction for a “gift certificate for dinner for two, plus drinks, at a local restaurant,” the proceeds of which would be donated to the American Cancer Society. I informed them, by way of a disclosure statement via email, that I informally asked some friends on the faculty what they would bid based on the same limited information that the students received. I told the students that the result of that informal survey was an average bid of $93.50, and I mentioned that if the students obtained the item for lower than its value they might even sell it for a profit. My disclosure email was riddled with the sort of dry and equivocal statements one might find in a registration statement, and my first day sales pitch was a little more puffed up.

The result: The winning bid was $85 for a $10 gift certificate to McDonald’s. I think it got their attention, which was a good intro to my overview of what we’ll cover in the class. (Also, at the end of class I let the winner keep her money and the gift certificate, and I promised to make the donation anyway.) My hope is to use this as a teaching tool for all of the chapters that follow, from “what is an investment” to 10b-5 liability and beyond.

I get excited about Sec Reg, but most people find it to be a bit of a snoozer. I remember having law professors that went out of their way to make classes interesting; including using items in the news, showing 3 minute movie clips, corny knock-knock jokes, and one who even kept wind up stuffed animals around her podium. As long as it doesn’t suck up too much class time, I think it’s a useful pedagogical device. It lightens an otherwise dry subject, breaks up monotony, and piques their interest. I would be interested to hear from readers what sorts of gimmicks they use or have seen put to effective use as teaching aids in their legal courses.

I am looking forward to our time together.

Permalink | Teaching | Comments (4) | TrackBack (0) | Bookmark

According to today’s WSJ, the National Football League is protesting new IRS rules that require it to disclose the salaries of “key employees” earning more than $150,000 a year. This disclosure has long been required of charities, but recently expanded to include 501(c)(6) organizations--and the NFL has been specifically listed in that category since Bart Starr led the Packers to victory over the Chiefs in Super Bowl I.

One of the reasons the NFL is crying foul is, according to lawyer Martin Gold, “We’re not a charity and we pay taxes. Therefore, I don’t think the public is subsidizing us.” Uh, not so fast. NFL teams pay taxes. The NFL is a non profit trade association that doesn’t pay taxes–and even some of the dues the teams pay to the NFL are tax deductible. Gold’s machinations are a lawyer’s Statue of Liberty; we should ignore the pump fake and keep our eyes on the ball. The teams are receiving a public benefit by participating in a tax-exempt trade association.

P.S. I had help on that second-to-last sentence. I don't speak football.

Permalink | | Comments (3) | TrackBack (0) | Bookmark

Day 6 - hello again, but probably for the last time.  My expiration date is fast approaching, but I've thoroughly enjoyed being a guest blogger.  Thanks, Gordon!

The comments to my Friday post on teaching transactional law highlighted for me the fraught nature of any discussion of pedagogical reform.  On the one hand, any mention of "skills" seems to summon up the specter that law school is to regress into a mere trade school.  On the other hand, true believers want much more.  They want a significant overhaul of the curriculum to incorporate more transactional thinking.  For me, however, there is a middle ground that promises to bear real fruit without disrupting what I believe to be the high quality results that law schools currently produce.

As I mentioned in Friday's post, the first step is to incorporate much more in the way of transactional thinking into our upper-level business law courses.  Happily, we can do this on our own and without the permission of our associate deans or faculties.  We can simply change what and how we teach.  (More problematically, however, it probably also means placing a greater emphasis on hiring faculty who have enough experience to have developed some deal sense of their own.)

Today, then, I want to comment on what I see to be the main challenges facing attempts to incorporate more transactional skills into the curriculum.  On the positive side, I've heard a lot of terrific ideas and I know that many very serious people  are striving to improve what we do.  On the negative side, however, I think that most of the ideas that I've encountered so far fit within one of the following categories:

• Too little - many of the proposals (including mine?) are likely to have impact only at the margins.  While important - margins matter and we shouldn't ignore the pursuit of excellence - they fall short of real reform.
• Too much - I doubt that there are many law schools that would entertain the kind of full-scale reform that has been envisioned by some.  Certainly, I share interest in the goals, but most law school faculties are too entrenched in what they do to engage in a complete overhaul in favor of transactional theory and skills.
• Impossible to replicate - several schools have programs that are absolutely fantastic, but that cannot be replicated by law schools that aren't in New York or Philadelphia or that have faculties (and alumni bases) that aren't sufficiently well connected with prominent dealmakers.

Thus, we are left with the usual (and somewhat obvious solutions) - a small business clinic, externships, full-scale simulations, and perhaps some sort of partnering with the business school.  All of these are excellent and worth doing.  However, they tend to be expensive (both in terms of faculty time and financial resources), reach relatively few students, and strike an uncomfortable balance between the teaching of doctrine and theory, on the one hand, and skills, on the other.  Thus, at the University of Oregon, we've begun experimenting with another model that I think is worth discussing.

We now offer two "transactional practice labs" which, just like your high school chemistry or biology lab, is appended to a traditional doctrinal course.  Thus, my course on Mergers & Acquisitions, as well as my colleague's course on real estate finance, each have a lab.  The labs are one-credit, pass/fail, and taught by adjuncts.  The very simple notion is that I (and my colleague) teach doctrine in the regular course, while students - who are simultaneously enrolled in the lab - learn transactional skills from practicing attorneys by engaging in a small-scale, semester-long deal while in the lab.  The idea isn't to graduate students with partner-level dealmaking skills, something that is beyond the capability of law school, but to give students a sense of what is involved in dealmaking so that they can hone their skills more effectively and more quickly once in practice.

The advantages of this model are several.  First, we have the labs sponsored by law firms, not by lawyers.  As a result, they are done pro bono (meaning that they cost us nothing) and involve a number of attorneys.  Second, they are completely scalable.  Almost any class could have a lab and they require very little supervision from the faculty member because the adjuncts are doing for our students almost exactly what they do in their professional lives.  Third, I believe they successfully navigate the tension between teaching doctrine and teaching skills - the academic faculty teach theory and doctrine while practicing attorneys teach skills.  Finally, they offer a host of non-academic but important benefits - they involve alumni more significantly in the school; they provide students with training in professionalism (several of the classes meet in the offices of the sponsoring law firm, several in the law school, the latter generally on football weekends); and they have a positive impact on job placement.  In fact, for a school like the University of Oregon that is outside of any major metropolitan area, these last few benefits are especially important.

Interest in the labs (and, as a result, the underlying doctrinal courses) is growing fast.  In the first year, we had nine M&A lab students.  In the second, twelve.  And this year we are attempting to accommodate over twenty by recruiting a second law firm to sponsor a second section.  Meanwhile, the sponsoring firm was so impressed by the results that they have floated the idea that they would involve some of their new hires as students.  Compare this to the fact that we recently increased the size of our small business clinic from eight to twelve students annually.  Certainly, this is terrific and I support it whole-heartedly, but the increase was difficult and expensive and unlikely to be repeated.

I spoke about the labs in more detail at Emory's transactional skills conference this past spring, and will again at the AALS mid-year meeting this coming summer.  I believe the transcripts of the Emory conference will be published in the fall in the University of Tennessee's journal Transactions, and I am hoping to complete a paper on the subject this winter.  Thus, if you are at all interested in the course format, I hope to have a lot more information available in the coming months.

Oh yes, and one final note - yes, it has been only two weeks since the new (and mostly awful) Star Wars movie was released; and yes, my six-year-old daughter has already dragged me to see it for a second time!  Thanks for reading.  Cheers all.

Permalink | Teaching | Comments (0) | TrackBack (0) | Bookmark

We are very pleased to have J.W. Verret as a guest blogger for the next two weeks. J.W. is a spring chicken, having graduated from Harvard Law School in 2006. Following a clerkship with Vice-Chancellor John W. Noble of the Delaware Court of Chancery, he was an associate in the SEC Enforcement Defense Practice Group at Skadden, Arps in Washington, D.C. (another Skaddenite!), and he joined the faculty at George Mason University School of Law this year. Welcome, J.W.!

Permalink | Administrative Law | Comments (0) | TrackBack (0) | Bookmark

A really short abstract of my sovereign wealth paper, via Wordle:

Permalink | | Comments (1) | TrackBack (0) | Bookmark