Partnership

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If you practiced as a transactional attorney before law teaching, chances are that you looked at form agreements provided in treatises, saved on your law firm database, handed to you by partners from past deals, or saved in your own template archives.  This is no different from what litigators do either—they look for model existing memos, complaints, document requests, etc. that guide the first draft and let you start somewhere past “zero”.  The rapidly changing legal environment and unique needs of each client in each deal limits the shelf life of form agreements and saddles them with all sort of potential downsides if they aren’t used thoughtfully, verified by research, or tailored to the specific deal.  This disclaimer aside, I am curious about how we teach students about the role of exemplars, and as a starting point, where to find exemplars.  Students and junior attorneys, if not given the right tools to find the best models, will use bad model forms.  If you don’t believe me, see what you get when you search for “standard asset purchase agreement”. 

This raises the question of where should students, attorneys, law professors wanting to incorporate experiential learning exercise modules into their courses look…

Robert H. Sitkoff recently posted “An Economic Theory of Fiduciary Law” on SSRN.  Here is the abstract:

This chapter restates the economic theory of fiduciary law, making several fresh contributions. First, it elaborates on earlier work by clarifying the agency problem that is at the core of all fiduciary relationships. In consequence of this common economic structure, there is a common doctrinal structure that cuts across the application of fiduciary principles in different contexts. However, within this common structure, the particulars of fiduciary obligation vary in accordance with the particulars of the agency problem in the fiduciary relationship at issue. This point explains the purported elusiveness of fiduciary doctrine. It also explains why courts apply fiduciary law both categorically, such as to trustees and (legal) agents, as well as ad hoc to relationships involving a position of trust and confidence that gives rise to an agency problem.

Second, this chapter identifies a functional distinction between primary and subsidiary fiduciary rules. In all fiduciary relationships we find general duties of loyalty and care, typically phrased as standards, which proscribe conflicts of interest and prescribe an objective standard of care. But we also find specific subsidiary fiduciary duties, often…

This paper is a look back, but it seems appropriate for today. Happy holidays, all!  Who Owns the Christmas Trees? – The Disposition of Property Used by a Partnership, by Daniel S. Kleinberger.  Abstract: 

Abstract:      

Two partners form an enterprise. One (the K partner) supplies the assets used by the enterprise. The other partner (the L partner) supplies only labor. When the enterprise ends, the partners disagree about how to divide the property used in the partnership business. The K partner wants his or her property returned. The L partner wants his or her share of the business assets. If some of the property has appreciated while in partnership use, the dispute will be especially complicated. How do the partners divide the value of the property as originally brought into the business? Who benefits from the previously unrealized appreciation? 

This Article explores the property allocation issues that arise when the members of a K and L partnership lack a dispositive agreement. In such circumstances the default rules should provide clear guidance, and the Uniform Partnership Act (U.P.A.) seeks to do so. Unfortunately, many of the decided cases misapply or distort the U.P.A. As a body, the decided cases

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As someone who has focused his research, scholarship, and teaching on business law and energy law, it’s long been my argument that energy is the key to long-term prosperity and quality of life.  Access to energy is critical, as are sustainable practices to ensure access to energy goes along with, and is not in lieu of, access to clean air and clean water.  See, e.g., my article: North Dakota Expertise: A Chance to Lead in Economically and Environmentally Sustainable Hydraulic Fracturing.

As I often do, this morning I visited the Harvard Business Law Review Online to see what topical issues were taking center stage.  A quick look reveals that three of the eight articles under the U.S. Business Law heading were energy related.  The articles are worth a look.  Here’s a quick link to each:

The Regulatory Challenge Of Distributed Generation, by David B. Raskin

Investing in U.S. Pipeline Infrastructure: Could the Proposed Master Limited Partnerships Parity Act Spur New Investment?, by Linda E. Carlisle, Daniel A. Hagan & Jane E. Rueger

Why Are Foreign Investments in Domestic Energy Projects Now Under CFIUS Scrutiny?, by Stephen Heifetz & Michael Gershberg

As my friend and colleague Marie…

A recent study, Who Owns West Virginia? (full report pdf), gives a glimpse into the land ownership in the state.  The report finds that much of the state’s private land is “owned by large, mainly absentee corporations, [but] the list of top owners – once dominated by energy, land holding and paper companies – now includes major timber management concerns.”  

As reported by Ken Ward Jr. in the Charleston Gazette, the report finds that “[n]one of the state’s top 10 private landowners is headquartered in West Virginia.”  Although it is accurate that the top ten owners are not indivdual owners,  I will note that not all of the top ten owners are “corporations.”  There is at least one master limited partnership and one limited liability company (LLC).  That may not mean much in the sense of absentee ownership, but it is a doctrinal distinction I maintain is still important.  

It’s not shocking that these entity owners would be out of state, especially because that was true back in 1974, too, when the last study was done.  There are relatively few large entities chartered or headquartered in West Virginia, and it appears that many of the…

The Economist has an interesting piece on how “[a] mutation in the way companies are financed and managed will change the distribution of the wealth they create.”  You can read the entire article here.  A brief excerpt follows.

The new popularity of the [Master Limited Partnership] is part of a larger shift in the way businesses structure themselves that is changing how American capitalism works…. Collectively, distorporations such as the MLPs have a valuation on American markets in excess of $1 trillion. They represent 9% of the number of listed companies and in 2012 they paid out 10% of the dividends; but they took in 28% of the equity raised…. [The] beneficiaries, though, are a select class. Quirks in various investment and tax laws block or limit investing in pass-through structures by ordinary mutual funds, including the benchmark broad index funds, and by many institutions. The result is confusion and the exclusion of a large swathe of Americans from owning the companies hungriest for the capital the markets can provide, and thus from getting the best returns on offer….

Another booming pass-through structure is that of the “business development company” (BDC). These firms raise public equity and…

Grant M. Hayden & Matthew T. Bodie have posted “Larry
from the Left: An Appreciation” on SSRN. 
Here is the abstract:

This essay approaches the scholarship of the late Professor
Larry Ribstein from a progressive vantage point. It argues that Ribstein’s
revolutionary work upended the “nexus of contracts” theory in
corporate law and provided a potential alternative to the regulatory state for
those who believe in worker empowerment and anti-cronyism. Progressive
corporate law scholars should look to Ribstein’s scholarship not as a hurdle to
overcome, but as a resource to be tapped for insights about constructing a more
egalitarian and dynamic economy.