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Joan Heminway

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Professor Heminway brought nearly 15 years of corporate practice experience to the University of Tennessee College of Law when she joined the faculty in 2000. She practiced transactional business law (working in the areas of public offerings, private placements, mergers, acquisitions, dispositions, and restructurings) in the Boston office of Skadden, Arps, Slate, Meagher & Flom LLP from 1985 through 2000.

She has served as an expert witness and consultant on business entity and finance and federal and state securities law matters and is a frequent academic and continuing legal education presenter on business law issues. Professor Heminway also has represented pro bono clients on political asylum applications, landlord/tenant appeals, social security/disability cases, and not-for-profit incorporations and related business law issues. Read More

With the recent release of bar results in many states, I have been obsessed of late about the sorry state of bar passage across the country–as well as specific bar passage issues relating to our graduates.  So, rather than (as I should and will do soon) responding to Steve Bradford’s prompting post on the final JOBS Act Title III crowdfunding rules and the related proposals regarding Rules 147 and 504 under the Securities Act of 1933, as amended (as well as his follow-up post on the Rule 147 proposal), I have decided to focus on bar passage for my few minutes of air time this week.  Specifically, I want to begin to explore the question of what we can do, if anything, as business law professors to help more of our students succeed in passing the bar on the first attempt.

At a base level, this means we should endeavor to understand something about the reasons why our individual students fail the bar the first time around.  A lot has been written about the national trends (inconclusively, as a general rule).  And I am sure every law school is now analyzing the data on its own bar passage shortcomings.  But my experience teaching Barbri and my conversations with former students who have not passed the bar indicate a number of possible causes.  They include (and these are my descriptions based on that experience and those conversations, in no particular order):

  • Failing to state the applicable legal rule(s) and apply them to the facts;
  • Difficulty in processing legal reasoning in the time allotted;
  • Nerves, sleep deprivation, illness and the like; and
  • Engaging insufficiently with study materials and practice examinations.

Assuming that these anecdotal observations are, in fact, causes contributing to bar exam failures for at least some students, how might we be able to help?

I had the honor of being invited to speak at the annual symposium for the Wayne Law Review two weeks ago.  The event, which focused on Corporate Counsel as Gatekeepers, was well organized and attended–and also very stimulating.  Speakers included Tony West as a keynote, a few of us academics, and a bunch of current and former practitioners–prosecutors, in-house counsel, and outside counsel.

My presentation focused on a story that bugs me–a story built on an experience I had in practice.  In the story (which modifies the true facts), an executive flagrantly violates a securities trading compliance plan that I drafted in connection with a subsequent transaction that I worked on for the executive’s firm.  Specifically, the executive informs a friend about the transaction the day before it is announced, believing that the friend will never trade on the information.  The friend trades.  The incident results in a stock exchange and Securities and Exchange Commission (SEC) inquiries.  No enforcement is undertaken against the firm.  However, the executive signs a consent decree with–and pays a cash penalty to–the SEC and, together with the firm, suffers public humiliation via a front-page article in the local newspaper (since the SEC would not agree to forego a press release).  This fact pattern gnaws at me because I wonder whether there is anything more legal counsel can do to prevent an executive from violating a compliance policy to the detriment of himself and the firm . . . .

This hit my mailbox this morning.  If the report is correct, we’ll know in a few days whether we have a path to unregistered, broad-based securities crowdfunding in the United States.  More as news is reported . . . .

[Additional information:  Based on the link to the SEC’s notice of meeting in Steve Bradford’s comment to this post, it also appears that the SEC is considering amendments to Rules 147 (intrastate offerings) and 504 (limited offerings under Regulation D of up to $1,000,000).]

As Steve Bradford mentioned in his post on Monday (sharing his cool idea about mining crowdfunded offerings to find good firms in which to invest), our co-blogger Haskell Murray published a nice post last week on venture capital as a follow-on to capital raises done through crowdfunding.  He makes some super points there, and (although I was raised by an insurance brokerage executive, not a venture capitalist), my sense is that he’s totally right that the type of crowdfunding matters for those firms seeking to follow crowdfunding with venture capital financing.  I also think that, of the types of crowdfunding he mentions, his assessment of venture capital market reactions makes a lot of sense.  Certainly, as securities crowdfunding emerges in the United States on a broader scale (which is anticipated by some to happen with the upcoming release of the final SEC rules under Title III of the JOBS Act), it makes sense to think more about what securities crowdfunding might look like and how it will fit into the cycle of small business finance.

Along those lines, what about debt crowdfunding as a precursor to venture capital funding?  Andrew Schwartz has written a bit about that.  Others…

Last week was the oral midterm examination week for students in my in Business Associations class.  I admit to exhaustion and jubilation at the end of that week every year.  I think the students feel about the same way . . . .

This year’s examination related to an expulsion of members in a member-managed limited liability company (LLC).  The facts were based on an interesting Tennessee case with which many LLC aficionados are no doubt familiar: Anderson v. Wilder.  The exam questions related to the validity and effects of the expulsion under the Revised Uniform Limited Liability Company Act and the LLC’s operating agreement, the potential breaches of fiduciary duty and failure to comply with the contractual obligation of good faith and fair dealing, and the possible resulting causes of action and remedies–including any effects of the members’ dissociation.

In a blog post last weekend from Lou Sirico and our other friends at the Legal Skills Prof Blog, I divined support for all of us who engage in practice-focused legal education: these teaching/learning methods can help students to thrive, not merely survive.  It has been my (admittedly anecdotal) observation that students who engage in simulations (as well as those who participate in clinics and internships/externships) in law school are happier and more well-adjusted about their education and their post-graduation employment.  Last week’s oral midterms–conducted in groups of three–gave me some windows on that world.  I will share a few here.

As some of you may know, I have been focused on crowdfunding intermediation in my research of late.  My articles in the U.C. Davis Business Law Journal and the Kentucky Law Journal both touch on that topic, and a forthcoming chapter in an international crowdfunding book and several articles in process follow along that trail.  (I also have the opportunity to look into gatekeeper intermediary issues outside the crowdfunding context at an upcoming symposium at Wayne State University Law School, about which I will say more in a subsequent post.)  The underlying literature on financial intermediation is super-interesting, and it continues to grow in breadth and depth as I research and write.

Given my interest in this area, I was delighted to see that Larry Cunningham is contributing to the debate, following on his already-rich work relating to Warren Buffett and Berkshire Hathaway.  As you may recall, Larry was our guest here at the Business Law Prof Blog back in 2014.  You can read my Q&A with him here and his posts here and here.

Larry recently posted an essay responding to Kathryn Judge‘s Intermediary Influence, 82 U Chi L Rev 573 (2015).  In her article, Professor…

Last night, I took my husband (part of his birthday present) to see The Illusionists, a touring Broadway production featuring seven masters of illusion doing a three-night run in Knoxville this week.  I admit to a fascination for magic shows and the like, an interest my husband shares.  I really enjoyed the production and recommend it to those with similar interests.

At the show last night, however, something unusual happened.   I ended up in the show.  I made an egg reappear and had my watch pilfered by one of the illusionists.  It was pretty cool.  After the show, I got kudos for my performance in the ladies room, on the street, and in the local gelato place.

But I admit that as I thought about the way I had been tricked–by sleight of hand–into performing for the audience and allowing my watch to be taken, I realized that these illusionists have something in common with Ponzi schemers and the like–each finds a patsy who can believe and suckers that person into parting with something of value based on that belief.  That’s precisely what I wanted to blog about today anyway–scammers.  Life has a funny way of making these kinds of connections . . . .

So, I am briefly posting today about a type of affinity fraud that really troubles me–affinity fraud in which a lawyer defrauds a client.  Most of us who teach business law have had to teach, in Business Associations or a course on professional responsibility, cases involving lawyers who, e.g., abscond with client funds or deceive clients out of money or property.  I always find that these cases provide important, if difficult, teaching moments: I want the students to understand the applicable law of the case, but I also want them to understand the gravity of the situation when a lawyer breaches that all-important bond of trust with a client.

The 2015 American Bar Association LLC Institute will be held November 12-13 in Arlington, Virginia.  I’m speaking this year (on LLC dissolution with Carter Bishop and Doug Moll and on a panel hashing out issues at the intersection of LLC [operating] agreements and contract law), and have attended/spoken at several earlier Institutes.  The complete program is available on Tom Rutledge’s blog.

If you would like to attend this year and need information on how to get registered, you can reach out to Tom (Thomas.rutledge@skofirm.com) and he will get you whatever you need.  Tom is very user-friendly and an amazing colleague, if you haven’t yet met him.  He is particularly adept (among his many talents) at bringing the law academy and the law practice community together in productive ways.  The LLC Institute is a great example.

Also, if you are working on issues relating to LLC law or are considering wading into those waters, be thinking about program ideas for future Institutes.  Planning for the 2016 LLC Institute already is underway.  Many of the sessions at the Institute focus or are based on the scholarship of law academics on LLCs and other unincorporated business associations.  For example, at…