July 2017

Clinical Faculty Position
The Ohio State University, Michael E. Moritz College of Law

*          *          *

Description: The Moritz College of Law invites applications for the position of Assistant Clinical Professor of Law in its Entrepreneurial Business Law Clinic (EBLC), to start in late 2017. The EBLC professor has primary responsibility for directing and teaching the Entrepreneurial Business Law Clinic, which provides third-year law students with the opportunity to learn lawyering skills by representing entrepreneurs and their start-up businesses. EBLC students typically work with clients on all phases of starting a business, including client intake, entity formation, legal business planning, and contract drafting (including employment and independent contractor contracts). When relevant for the client, students also learn how to protect the intellectual property of a business. The EBLC’s clinical professor will have several areas of responsibility, including 1) supervising law students who represent clients under the Ohio Supreme Court’s student practice rule 2) classroom teaching of lawyering skills, 3) engaging with the local and regional entrepreneurial community, and 4) participating in the life and governance of the College of Law.

We will consider all applicants; however, we prefer candidates with significant…

I received this morning an announcement for the Central States Law Schools Association (CSLSA) 2017 Scholarship Conference, and I wanted to pass it along.  When I started teaching, I participated in this CSLSA conference, and I found it to be incredibly useful. It was helpful both in sharing my work in a supportive, yet rigorous, setting, and it also allowed me to meet some great people. I think the program is useful people at all levels, but I would especially encourage newer scholars to participate.  Get to know people at other schools and get used to sharing your work.  A good scholarly community outside of your law school is a valuable asset.  
 
Registration is Open for the CSLSA 2017 Conference
 
Registration is now open for the Central States Law Schools Association 2017 Scholarship Conference, which will be held on Friday, October 6 and Saturday, October 7 at Southern Illinois University School of Law in Carbondale, Illinois. We invite law faculty from across the country to submit proposals to present papers or works in progress.

CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity

…

     Most LLC statutes provide an exclusive charging order remedy that creditors can use against a member’s interest.  A charging order is effectively a lien on the member’s transferable interest (i.e., the member’s financial rights) in the LLC.  If a court imposes a charging order, the judgment creditor is entitled to any distributions made by the LLC that would otherwise have gone to the debtor-member.  The entitlement to distributions continues until the judgment creditor has received enough proceeds to pay off the judgment.  The creditor is not permitted, however, to execute on a member’s interest in the same way that a creditor could normally execute on the debtor-member’s non-exempt personal property.  If the LLC does not make sufficient distributions, some statutes allow a court to order foreclosure of the charging lien, which effectively results in a sale of the debtor-member’s transferable interest.  Significantly, even with foreclosure, the purchaser at the foreclosure sale will only become a transferee and will not have the status of a member (nor the rights of a member).  This charging order scheme protects the rights of the non-debtor members to control the admission of new members to the LLC.

     In Olmstead v. Federal…

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…

As most readers of this blog are likely aware, Hobby Lobby is in the news again.

Hobby Lobby is a privately-held corporation that runs a chain of arts and crafts stores.  Its shareholders consist of members of the Green family, who also manage the corporation on a day to day basis.  The Greens are religious Christians, and Hobby Lobby’s statement of purpose declares that the company will be run in accordance with biblical principles.

When Hobby Lobby last made the news, it had just won its case in the Supreme Court, Burwell v. Hobby Lobby Stores.  The Greens argued, successfully, that the Affordable Care Act impermissibly burdened their religious beliefs by requiring that Hobby Lobby provide birth control coverage to its employees.  The difficulty with this argument, from a corporate law perspective, is that it draws no distinction between burdens placed on Greens in their personal capacities, and burdens placed on the Hobby Lobby corporation itself.  (The Supreme Court opinion did little to clarify the matter, which is why I use it in my class as part of my introduction to business law).

Now the company making headlines again, for smuggling ancient artifacts out of Iraq.

Cuneiform

[More under the jump]

Bernard Sharfman has written another interesting article on shareholder empowerment. I wish I had read A Private Ordering Defense of a Company’s Right to Use Dual Class Share Structures in IPOs before I discussed the Snap IPO last semester in business associations.

The abstract is below:

The shareholder empowerment movement (movement) has renewed its effort to eliminate, restrict or at the very least discourage the use of dual class share structures in initial public offerings (IPOs). This renewed effort was triggered by the recent Snap Inc. IPO that utilized non-voting stock. Such advocacy, if successful, would not be trivial, as many of our most valuable and dynamic companies, including Alphabet (Google) and Facebook, have gone public by offering shares with unequal voting rights.

This Article utilizes Zohar Goshen and Richard Squire’s “principal-cost theory” to argue that the use of the dual class share structure in IPOs is a value enhancing result of the bargaining that takes place in the private ordering of corporate governance arrangements, making the movement’s renewed advocacy unwarranted.

As he has concluded:

It is important to understand that while excellent arguments can be made that the private ordering of dual class share structures must incorporate certain…

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. 

Facebook. 

  • 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

…

Tomasz Piotr Wisniewski, Liafisu Sina Yekini, and Ayman M. A. Omar posted “Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns” on SSRN on June 13, 2017. You can find their abstract here. 

I was particularly interested in how the authors measured psychopathy. Here is a relevant excerpt:

Using UK data, we construct a number of corporate psychopathy indicators and link them to the returns that ensue over the next 250 trading days – a period roughly equivalent to one calendar year.

Even if clear guidance exists on how to diagnose psychopathic personality disorder in humans (Hare 1991, 2003), the practical difficulty is that executives will be generally unwilling to participate in time consuming surveys, particularly those that are likely to expose the dark side of their character. We choose to follow a more pragmatic approach and, similarly to Chatterjee and Hambrick (2007), collect information in an unobtrusive way by going through company-related archives and data. Firstly, using automated content analysis we assess to what extent the language in annual report narratives is symptomatic of psychopathy. This is done by counting the frequency of words that are aggressive, characteristic of speakers who are self-absorbed and who have…

Please forgive the self-promotion, but the Columbia Law School Blue Sky Blog recently published a blog post on my recent article with Professor Julie Hill, The Duty of Care of Bank Directors and Officers, 65 Ala. L. Rev. 965 (2017).

The blog post is reprinted below, and the link to the article is here:  https://ssrn.com/abstract=2965023

The 2008 financial crisis was catastrophic for the U.S. banking industry. Between 2007 and 2014, 510 banks failed. Another 700-plus banks received some type of federal monetary assistance. Unsurprisingly, this led to calls to hold bank directors and officers legally accountable for harm they may have caused.

One federal regulator with the power to hold directors and officers of failed banks financially responsible is the Federal Deposit Insurance Corporation (FDIC). The FDIC acts as a receiver for failed banks. It has authority to sue directors and officers for losses they caused to failed banks and has been aggressive in doing so.  Yet even as the FDIC brings director and officer suits, the standard of liability for breach of the duty of care in the banking setting is misunderstood.

Duty of care liability in non-bank corporations is typically governed by state statute and common law.