Later today, the students in my nine-week online Transactional Lawyering: Drafting and Negotiating Contracts Course will breathe a sigh of relief. They will submit their final contracts, and their work will be done. They can now start reading for their Fall classes knowing that they have completed the work for their required writing credit. My work, on the other hand, won’t end for quite a while. Although this post will discuss teaching an online course, much of my advice would work for a live, in person class as well.

If you’ve ever taught a transactional drafting course, you know that’s a lot of work. You are in a seemingly never ending cycle of developing engaging content, teaching the material, answering questions, reviewing drafts, and grading the final product. Like any writing course, you’re in constant editing and feedback mode with the students.

If you’ve ever taught an online course, you know how much work it can be. I taught asynchronously, meaning I uploaded materials and the students had a specific time within which to complete assignments, typically one week or more. Fortunately, I had help from the University of Miami’s instructional design team, otherwise, I would likely have been a disaster. They provided me with a template for each module, which forced me to really think through the objectives for each class session, not just the course as a whole. In my traditional courses I have learning objectives, but I have never gone into so much detail either in my head or in writing about what I wanted the student to get out of each individual class.

Teaching a drafting course online was much more work than I expected, but I can’t wait to do it again. If you’re thinking about it, learn from my travails and triumphs. First, here are my suggested “Do’s”:

  1. Find a way to build community: I wanted to ensure that students felt connected to me. I scripted a welcome video and the instructional design team filmed and edited it. This way students saw my face. I wanted the students to see each other as well, so I required them to film a 2-minute introductory video of themselves and upload it so that students could “see” their classmates. Students then commented on their peers’ videos welcoming them to the class. I did short videos for most of the modules, but these did not always show my face. No video was more than 10 minutes long because apparently today’s students can’t pay attention for too much longer than that.
  2. Have students work in groups (at first): I divided the 16 students into 4 law firms based in part on what I saw in their videos. I wanted some diversity of gender, race, and experience in the groups. Students drafted a law firm agreement outlining how they would interact with each other, meet deadlines, and resolve disputes. They also picked a firm name and managing partner. They assessed themselves and each other as group members based on criteria that I provided. The group work minimized the amount of feedback that I had to provide. As a group, they drafted the law firm agreement, a client engagement letter, and worked on a short contract. Some assignments were graded and some were ungraded. The group work counted for 10% of the grade.  This percentage wasn’t enough of the grade to cause panic, and the team assessment ensured that they didn’t slack off and benefit from their peers’ hard work.
  3. Mix it up: For each class, I had students review a presentation on Echo 360. Often, they answered questions that I posed in the presentation or did exercises from Tina Stark’s contract drafting book. On other occasions, they posted responses to prompts on the discussion boards and commented (constructively) on other responses, citing the rule or principle that buttressed their position.
  4. Make them keep track of their time and do a bill: Every lawyer hates tracking time, but it’s a necessity. I tell the students that they’ll thank me later. Each student, even on group assignments had to track their time and turn in a bill. This helped me gauge how the groups and students compared to each other. I also knew which student worked on which parts of the contracts.
  5. Let them negotiate:  After the group work portion of the course ended,the students negotiated the terms of their final contract using a set of secret facts. I required them to develop and turn in a negotiation strategy using materials and videos that I put together. Armed with their BATNAs, WATNAs, and ZOPAs, I told them to spend no more than one hour negotiating. I required them to film their negotiations, upload them, and send them to me. They then worked on individual term sheets (for a grade). After the negotiations ended and I had received all term sheets, I released the secret facts and had the students assess themselves and their opposing counsel on their negotiation skills and tactics. I also provided feedback to each student on their negotiation performance and term sheets.
  6. Require them to communicate with the client:I required a 1-2 page client cover memo or email for almost every assignment focusing on tone, language, use of legalese, etc. In my comments, I explained the importance of this type of legal writing and of tailoring the language to different types of business clients. When they worked on NDAs, I reminded that them that client may never actually read the contract, so they needed to ensure that the cover memo was sufficiently detailed to provide material information without being overwhelming.
  7. Make them teach: They say that when you teach, you learn twice. I required the each student to develop a 5-7 minute video on an assigned topic. Each student “presented” to either a group of lay/business people or a group of junior associates attending a CLE. They then had to write a blog post of  between 750-1000 words. I required students to watch each other’s videos and comment as either a business person or a junior lawyer. This provided a review of the class for the viewers. This assignment counted for 10% of the grade, but as an extra incentive to take the assignment seriously, the student with the “best” video received an extra week to turn in the joint final contract, meaning that the opposing counsel also benefitted. FYI, I was generally blown away by the videos.
  8. Allow them to use precedents and then instruct them on the limitations: Many of the students had never seen an NDA, and I allowed them to use precedents. Most were surprised by how many comments I had on their final products, especially since many of the precedents came from big firms. This was a valuable lesson for them on precision and the dangers of blind cutting and pasting.
  9. Make them redline and draft a contract with opposing counsel:The final assignment required them to draft a contract based on their negotiated terms. They soon realized that they had to do additional negotiation because some of the terms did not make sense once they started to memorialize them.
  10. Have office hours and use video conferencing:I practically had to beg the students to have office hours with me. They had no problem emailing with questions, but generally didn’t utilize my office hours, which were incredibly flexible. I offered online and in person hours, but only two students met with me during the semester outside of the live mandatory office hours. I had a mandatory live grading session by video to discuss their NDAs, their upcoming negotiations, and any questions they had about the course. During that live grading session, I acted as a partner in their law firm and then stepped into professor role.

What didn’t work as well? As you can imagine, to do the job correctly, I had a LOT of work to do. I clearly gave too much work over a nine-week period, because I know much work I had to do to give them feedback. I just wanted them to be armed with the skills they will need in the real world, but I overdid it. And this meant that sometimes I did not meet my own deadlines for getting feedback to them. Truthfully, I imposed some of that burden on myself. I offered students the chance to turn in drafts of almost every assignment for feedback. About 25-30 percent of the students took me up on that offer, but every week, I emailed all of the students with tips to improve based on the trends that I saw. In retrospect, I would give fewer assignments over a longer period of time, and would better utilize the discussion boards to foster that sense of live class discussion.

After all of that, I’m gearing up to do it again for the Fall, this time over a 15-week period. Even though I will have more time, both I and the students will have other classes. I’m also teaching business associations and legal writing, and the students will have their own classes, jobs, law reviews, and extracurricular activities to contend with.

If you have any questions or tips, leave them below or email me at mweldon@law.miami.edu. I plan to learn more about course development at the University of Denver hybrid/online learning conference on September 26th. I’ll update this post after that conference. In the meantime, this weekend, I’ll be retooling my syllabus based on my summer experience and what I’ve learned this week at SEALS. Correction, I’ll retool in between grading the joint contracts.

Villanova University Charles Widger School of Law and the John F. Scarpa Center for Law and Entrepreneurship are pleased to host the Nineteenth Annual Meeting of the Midwestern Law & Economics Association (MLEA) October 18-19, 2019 in Villanova, Pennsylvania. Presentations will begin Friday morning and end late afternoon on Saturday.

Villanova invites participants from across the nation (not just the Midwest) and abroad. Papers can be on any topic that touches on law and economics. This includes, for example, papers with empirical analysis and economic modeling, as well as papers that address legal doctrine or theory that have been informed by economic thought. To apply, submit a paper or abstract to Tammi Etheridge (Tammi.Etheridge@law.villanova.edu) no later than 4:00 pm EST on Friday, August 9, 2019.

There are no registration or membership fees. Participants will finance their own travel and hotel costs. Please register at https://app.smartsheet.com/b/form/c993420b5e284ac2b073d7931ccf9725. A block of rooms at The Radnor Hotel has been reserved for conference participants at a rate of $165/night (excluding tax). You can book by calling the hotel directly at (610) 688-5800. Use Group ID “Midwestern Law and Economics Conference” to receive the special conference rate. You will need to reserve your room by September 16, 2019 to receive this conference rate.

University of Georgia, Terry College of Business Assistant or Associate Professor of Legal Studies Department of ILSRE 

The Department of Insurance, Legal Studies and Real Estate in the Terry College of Business at The University of Georgia invites applications for a full-time tenure-track or tenured faculty position of Legal Studies at the assistant or associate professor level, beginning Fall 2020. 

Candidates must hold a juris doctorate or equivalent degree. For appointment at the assistant professor rank, strong communication skills and demonstrated potential for excellent teaching and high quality research is preferred. For appointment as an associate professor, a research record commensurate with rank and demonstrated excellence in teaching legal studies at the graduate and/or undergraduate level also are required. For information regarding the requirements for each faculty rank, please see the University of Georgia Guidelines for Appointment, Promotion & Tenure (https://provost.uga.edu/_resources/documents/UGA_Guidelines_for_APT_4_2017_online.pdf) and the Promotion & Tenure guidelines for the Terry College of Business (https://provost.uga.edu/_resources/documents/Business_2015.pdf). To be eligible for tenure on appointment, candidates must be appointed as an associate professor, have been tenured at a prior institution, and bring a demonstrably national reputation to the institution. Candidates must be approved for tenure upon appointment before hire. 

Participation in service activities appropriate to the rank is expected. Salary is competitive and commensurate with qualifications. 

Applications received by September 20, 2019, are assured of consideration; however, applications will continue to be accepted until the position is filled. Interested candidates should upload a cover letter, a full vitae, and contact information for three references (including email addresses) to http://www.ugajobsearch.com/postings/106535. The department will reach out to your references at the appropriate time in the process. No additional materials will be considered. Applications submitted in other ways will not be considered. 

The University of Georgia is located in Athens, Georgia. Georgia is well known for its quality of life with both outdoor and urban activities (www.georgia.gov). UGA is a land grant/sea grant institution located approximately 60 miles northeast of Atlanta (www.uga.edu). 

The University of Georgia is an Equal Opportunity/Affirmative Action employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, ethnicity, age, genetic information, disability, gender identity, sexual orientation or protected veteran status. Persons needing accommodations or assistance with the accessibility of materials related to this search are encouraged to contact Central HR (hrweb@uga.edu). Please do not contact the department or search committee with such requests. 

I made a similar post on social media last night, but with the first bar exam of my time as a law school dean beginning this morning, I thought I post those thoughts here.  To this taking this bar exam (and any future bar exam): 

You have worked hard, now is the time for you to show what you know. I wish you success. As you get ready to sit for the exam, your preparation is done. But there are still things you can do to improve your odds. Here’s what I ask you to do when you take the #BarExam:

*Be thorough.* Answer every question, written and multiple choice. Leave nothing blank. Give yourself a chance.

*Be focused.* Pay attention to time. Don’t spend twenty-five minutes on one multiple choice question or fail to get to an essay. Spend no more than your allotted time for each question, give an answer, and move on. Come back if you have time after everything else is answered.

*Be relentless.* If you make a mistake, do your best to work around it. If you don’t know something, give it your best guess and move on. Don’t give up. Don’t walk away. Don’t quit. You can do this.

And last, but not least, try to remember that this exam does not define you. The results don’t make you good or bad. This test is not who you are. It is is simply a result. It’s an important one, and it can impact you. But don’t ever let it define you.

My thoughts and good wishes are with you.

For last year’s Business Law Prof Blog symposium at UT Law, I spoke on issues relating to the representation of business firms classified or classifiable as social enterprises.  Last September, I wrote a bit about my presentation here.  The resulting essay, Lawyering for Social Enterprise, was recently posted to SSRN.  The SSRN abstract follows.

Social enterprise and the related concepts of social entrepreneurship and impact investing are neither well defined nor well understood. As a result, entrepreneurs, investors, intermediaries, and agents, as well as their respective advisors, may be operating under different impressions or assumptions about what social enterprise is and have different ideas about how to best build and manage a sustainable social enterprise business. Moreover, the law governing social enterprises also is unclear and unpredictable in respects. This essay identifies two principal areas of uncertainty and demonstrates their capacity to generate lawyering challenges and related transaction costs around both entity formation and ongoing internal governance questions in social enterprises. Core to the professionalism issues are the professional responsibilities implicated in an attorney’s representation of social enterprise businesses.

To illuminate legal and professional responsibility issues relevant to representing social enterprises, this essay proceeds in four parts. First, using as its touchstone a publicly available categorization system, the essay defines and describes types of social enterprises, outlining three distinct business models. Then, in its following two parts, the essay focuses in on two different aspects of the legal representation of social enterprise businesses: choice of entity and management decision making. Finally, reflecting on these two aspects of representing social enterprises, the essay concludes with some general observations about lawyering in this specialized business context, emphasizing the importance of: a sensitivity to the various business models and related facts; knowledge of a complex and novel set of laws; well-practiced, contextual legal reasoning skills; and judgment borne of a deep understanding of the nature of social enterprise and of clients and their representatives working in that space.

I hope that this essay is relatable and valuable to both academics and practicing lawyers.  Feedback is welcomed.  So are comments.  

Also, I will no doubt be talking more about aspects of this topic at a SEALS discussion group later this week entitled “Benefit Corporation (or Not)? Establishing and Maintaining Social Impact Business Firms,” which I proposed for inclusion in this year’s conference and for which I will serve as a moderator.  The description of the discussion group is as follows:

As the benefit corporation form nears the end of its first decade of “life” as a legally recognized form of business association, it seems important to reflect on whether it has fulfilled its promise as a matter of legislative intent and public responsibility and service. This discussion group is designed to take on the challenge of engaging in that reflective process. The participating scholars include doctrinal and clinical faculty members who both favor and tend to recommend the benefit corporation form for social enterprises and those who disfavor or hesitate to recommend it.

As you can see from the SEALS program for the meeting, the participants represent both academics (doctrinal and clinical) and practitioners who care about social enterprise and entity formation.   If you are at SEALS, please come and join us!

When I first met co-blogger Haskell Murray at SEALSB, we talked about running.  Last month, he shared stories of inspirational runners embodying toughness, self-discipline, humility, and perseverance.  I loved his post.  Yesterday at a family gathering, my sister ribbed me for telling everyone and anyone who would listen about one of the most inspirational books I’ve ever read: Running for My Life: One Lost Boy’s Journey from the Killing Fields of Sudan to the Olympic Games.  While running this morning with a friend, I found myself proving her point.  And when I saw that three days ago, Another chapter in the amazing life story of the Bowerman Track Club’s Lopez Lomong had been written, I decided it was my turn to share with BLPB readers about one of the runners who most inspires me.

As a six-year-old, now two-time U.S. Olympian Lopez Lomong was taken from his mother’s arms by soldiers during a church service in Sudan.  After several weeks, he and three older boys he calls his “angels” escaped from a rebel prison camp and ran towards what they thought was their village, Kimotong.  Instead, they were running towards Kenya, where they encountered border guards who took the boys to the UN refugee camp, Kakuma.  This would be the six-year-old’s home for the next ten years. 

During the hardships of those years, soccer became a favorite activity and distraction.  Though having an actual soccer ball was a rarity, having too many soccer players on the field was not.  Consequently, the older boys solved this problem by making up a rule that one had to run Kakuma’s perimeter – a mere 30 kilometers or 18 miles – each day before being allowed on the field to play.  The toughness, self-discipline, and perseverance Lomong practiced in these daily runs and during those difficult years helped develop the toughness, self-discipline, and perseverance needed by world-class athletes. 

At sixteen, Lomong learned of a program that would give 3500 boys living in Kakuma the opportunity to move to the U.S.  However, applicants had to write their story in English, a language Lomong hardly knew.  His response: “I won’t let a little thing like that get in my way.” (p.61)  This inspirational attitude – whether about running 18 miles, writing a letter in a barely known language, or a plethora of equally challenging circumstances – has been a constant in Lomong’s amazing life story.

As my sister would tell you, I could go on much more about Running for My Life and the inspiration it has provided to me.  However, I’d love for BLPB readers to read the book themselves (or at least watch a YouTube clip).  I’ll additionally share that Lomong was: among the 3500 boys selected; taken in by host-parents, Rob and Barbara Rogers, who lived in upstate New York, and would eventually host several additional youths from Sudan; the flag bearer for the U.S. delegation during his first Olympic games in 2008; and, a fall 2011 graduate of the W.A. Franke School of Business at Northern Arizona University.

Last summer after battling several years of injuries, Lomong’s characteristic perseverance, self-discipline, and grit once again paid off when he made History by Becoming First American to Win 1,500 and 10,000m Titles.  And as I shared in the first paragraph of this post, he’s been on a roll ever since!   

Lomong’s website mentions the words “excellence, sacrifice, dedication.”  It’s perhaps another way of stating the qualities of Haskell’s inspirational runners.  As impressive as his running, is Lomong’s humility in seemingly seeing one of his most important responsibilities as also using his opportunities, talents, and success to promote the development of others through the 4 South Sudan project, whose mission is to Provide Clean Water, Education, Health Care, and Nutrition to the world’s most vulnerable people in South Sudan.  Lomong aspires to run in his third Olympics next summer.  I’ll be rooting for him every step of the way!

(revised 7/29/19)                  

This just in from Ellen Yee at Drake Law School:

POSITION ANNOUNCEMENT – DIRECTOR OF THE ENTREPRENEURIAL/TRANSACTIONAL LAW CLINIC AND ASSISTANT/ASSOCIATE/PROFESSOR OF LAW

DRAKE UNIVERSITY LAW SCHOOL invites applications for the position of Director of the Entrepreneurial/Transactional Law Clinic. The position may begin in either the Spring 2020 or Fall 2020 semester and will be a twelve-month position. The directorship will be annual or long-term contract depending on the candidate’s qualifications and preferences. Duties will include supervising and assessing Clinic students representing nonprofit organizations and emerging entrepreneurs.   The Clinic primarily focuses on assisting startup businesses and nonprofits in underserved communities in Polk County, Iowa that are not able to afford retained counsel.   In addition, graduate students and other researchers at Iowa State University provide another source of Clinical transactional cases, many of which include advanced issues involving tech transfers, capital structures, and software licensing. The Director will have the opportunity to build on the success of the existing clinic, which serves a vibrant, diverse community of innovators.  In addition, there may be opportunities to teach doctrinal and experiential-learning courses depending on the law school’s curricular needs.

Candidates must possess a J.D. or comparable law degree and be admitted to, or able to satisfy the requirements for admission to the Iowa Bar. A distinguished record of clinical teaching or extensive practice-related experience, a demonstrated capacity for excellence in teaching, supervision and assessment, and service is preferred. At least three years of teaching and/or practice experience is also preferred.

Drake has long excelled in clinical education and is a pioneer in the area. Our six clinics provide students with an outstanding legal experience in Children’s Rights Law, Delinquency Law, Elder Law, General Civil Law, and Criminal Law. Housed in the state-of-the-art Neal and Bea Smith Law Center, the Legal Clinic is an integral part of the Law School program and is supported by a multi-million dollar endowment. The Law School is located in Des Moines, the capital of Iowa, a thriving metropolitan area of more than 600,000 people. Des Moines is consistently ranked in national surveys as one of the best places to live in the United States. 

Drake University is an equal opportunity employer and actively seeks applicants who reflect the diversity of the nation. No applicant shall be discriminated against on the basis of race, color, national origin, creed, religion, age, disability, sex, gender identity, sexual orientation, genetic information or veteran status. Diversity is one of Drake’s core values and applicants need to demonstrate an ability to work with individuals and groups of diverse socioeconomic, cultural, sexual orientation, disability, and/or ethnic backgrounds.

Confidential review of applications will begin in August 2019. Applications (including a letter of interest, a complete CV, teaching evaluations (if available) and the names and addresses of at least three references) should be sent to Professor Ellen Yee, Chair, Faculty Appointments Committee, Drake University Law School, 2507 University Ave., Des Moines, IA 50311 or e-mail: ellen.yee@drake.edu.

And this from Jill Engle at Penn State Law in University Park:

Penn State Law in University Park is conducting several searches for tenured or tenure-track faculty in the 2019-20 academic year. This is part of a multi-year strategic hiring plan, and we will consider both entry level and lateral candidates. Lateral candidates may be at the assistant, associate, or full professor levels.

One of our searches will consider candidates in all subject areas, but we have a particular interest in those with research or teaching interests in criminal procedure and business law (including both domestic and international business).  In addition, Penn State Law will be making two interdisciplinary hires.  The first is a joint hire with the Penn State Institutes of Energy and the Environment for a position in energy and/or environmental law. The second is a joint hire with Penn State’s Institute for CyberScience, College of Engineering, and School of International Affairs on law and big data; for this position, we will consider scholars, interested in any area of the law, who incorporate big data into their research.

Candidates must have a J.D., Ph.D., or equivalent degree, a distinguished academic record, and demonstrated potential to produce outstanding scholarship. Penn State Law will be attending the AALS faculty recruitment conference, and entry level candidates are strongly encouraged to participate in the AALS Faculty Appointments Register. Lateral candidates should submit a current CV, four letters of reference, teaching evaluations, and a draft work-in-progress to Appointments@pennstatelaw.psu.edu. Specific inquiries should be addressed to the chair of the Appointments Committee, Professor Sam Thompson, atsct13@psu.edu.

Penn State Law is located on Penn State’s University Park, Pennsylvania campus. For more information, please visit our website at https://pennstatelaw.psu.edu/. Penn State is an equal opportunity, affirmative action employer and is committed to providing employment opportunities to all qualified applicants without regard to race, color, religion, age, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.

Please pass on a link to all who may be interested!

I’m intrigued by this unusual Section 11 decision out of the Third Circuit, Obasi Investment LTD v. Tibet Pharmaceuticals, Inc, 2019 WL 3294888 (3d Cir. 2019).   A company called Tibet held an IPO, but the registration statement failed to identify financial troubles at its operating subsidiary.  Eventually the subsidiary’s assets were seized, Tibet’s stock price plunged, and trading was halted.

A class of plaintiffs brought a Section 11 claim against, you know, everyone they could get their hands on, including two individual defendants: Hayden Zou and L. McCarthy Downs.  Zou was a Tibet shareholder who had come up with the idea for an IPO in the first place, and approached Downs, who was a managing director for an investment bank called Anderson & Strudwick (“A&S”).  A&S ended up underwriting the offering, and for reasons that are not explained, A&S agreed with Tibet that after the IPO, two A&S designees would serve as nonvoting Board observers for the foreseeable future.  Those designees were Zou and Downs, and the registration statement explained that even without votes “they may nevertheless significantly influence the outcome of matters submitted to the Board of Directors for approval.”

When the plaintiffs sued, they argued that Zou and Downs were proper Section 11 defendants, because that statute imposes liability on “every person who, with his consent, is named in the registration statement as being or about to become a director, person performing similar functions, or partner.” 15 U.S.C. §77k(a)(3). 

The Third Circuit, in a 2-1 split, held that Zou and Downs were not named in the registration statement as performing functions similar to those of directors.

And honestly this is sort of a stream of consciousness about the decision, which got very very long, so behind a cut it goes:

[More under the jump]

Continue Reading An odd little Section 11 problem

I’m at the tail end of teaching my summer transactional lawyering course. Throughout the semester, I’ve focused my students on the importance of representations, warranties, covenants, conditions, materiality, and knowledge qualifiers. Today I came across an article from Practical Law Company that discussed the use of #MeToo representations in mergers and acquisitions agreements, and I plan to use it as a teaching tool next semester. According to the article, which is behind a firewall so I can’t link to it, thirty-nine public merger agreements this year have had such clauses. This doesn’t surprise me. Last year I spoke on a webinar regarding #MeToo and touched on the the corporate governance implications and the rise of these so-called “Harvey Weinstein” clauses. 

Generally, according to Practical Law Company, target companies in these agreements represent that: 1) no allegations of sexual harassment or sexual misconduct have been made against a group or class of employees at certain seniority levels; 2) no allegations have been made against  independent contractors; and 3) the company has not entered into any settlement agreements related to these kinds of allegations. The target would list exceptions on a disclosure schedule, presumably redacting the name of the accuser to preserve privacy. These agreements often have a look back,  typically between two and five years with five years being the most common. Interestingly, some agreements include a material adverse effect clause, which favor the target. 

Here’s an example of a  representation related to “Labor Matters” from the June 9, 2019 agreement between Salesforce.com, Inc. and Tableau Software, Inc.

b) The Company and each Company Subsidiary are and have been since January 1, 2016 in compliance with all applicable Law respecting labor, employment, immigration, fair employment practices, terms and conditions of employment, workers’ compensation, occupational safety, plant closings, mass layoffs, worker classification, sexual harassment, discrimination, exempt and non-exempt status, compensation and benefits, wages and hours and the Worker Adjustment and Retraining Notification Act of 1988, as amended, except where such non-compliance has not had, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

c) To the Company’s Knowledge, in the last five (5) years, (i) no allegations of sexual harassment have been made against any employee at the level of Vice President or above, and (ii) neither the Company nor any of the Company Subsidiaries have entered into any settlement agreements related to allegations of sexual harassment or misconduct by any employee at the level of Vice President or above.

The agreement has the following relevant definitions:

“Knowledge” will be deemed to be, as the case may be, the actual knowledge of (a) the individuals set forth on Section 1.1(a) of the Parent Disclosure Letter with respect to Parent or Purchaser or (b) the individuals set forth on Section 1.1(a) of the Company Disclosure Letter with respect to the Company, in each case after reasonable inquiry of those employees of such Party and its Subsidiaries who would reasonably be expected to have actual knowledge of the matter in question.

Even though I like the idea of these reps. in theory, I have some concerns.  First, I hate to be nitpicky, but after two decades of practicing employment law on the defense side, I have some questions. What’s the definition of “sexual misconduct”? What happens of the company handbook or policies do not define “sexual misconduct”? The Salesforce.com agreement did not define it. So how does the target know what to disclose? Next, how should an agreement define “sexual harassment”? What if the allegation would not pass muster under Title VII or even under  a more flexible, more generous definition in an employee handbook? When I was in house and drafting policies, a lot of crude behavior could be “harassment” even if it wouldn’t survive the pleading requirements for a motion to dismiss. Does a company have to disclose an allegation of harassment that’s not legally cognizable? And what about the definition of “allegation”? The Salesforce.com agreement did not define this either. Is it an allegation that has been reported through proper channels? Does the target have to go back to all of the executives’ current and former managers and HR personnel as a part of due diligence to make sure there were no allegations that were not investigated or reported through proper channels? What if there were rumors? What if there was a conclusively false allegation (it’s rare, but I’ve seen it)? What if the allegation could not be proved through a thorough, best in class investigation? How does the target disclose that without impugning the reputation of the accused? 

Second, I’m not sure why independent contractors would even be included in these representations because they’re not the employees of the company. If an independent contractor harassed one of the target’s employees, that independent contractor shouldn’t even be an issue in a representation because s/he should not be on the premises. Moreover,  the contractor, and not the target company, should be paying any settlement. I acknowledge that a company is responsible for protecting its employees from harassment, including from contractors and vendors. But a company that pays the settlement should ensure that the harasser/contractor can’t come near the worksite or employees ever again. If that’s the case, why the need for a representation about the contractors? Third, companies often settle for nuisance value or to avoid the cost of litigation even when the investigation results are inconclusive or sometimes before an investigation has ended. How does the company explain that in due diligence? How much detail does the target disclose? Finally, what happens if the company legally destroyed documents as part of an established and enforced document retention and destruction process? Does that excuse disclosure even if someone might have a vague memory of some unfounded allegation five years ago?

But maybe I protest too much. Given the definition of “knowledge” above, in-house and outside counsel for target companies will have to ask a lot more and a lot tougher questions. On the other hand, given the lack of clarity around some of the key terms such as “allegations,” “harassment,” and “misconduct,” I expect there to be some litigation around these #MeToo representations in the future. I’ll see if my Fall students can do a better job of crafting definitions than the BigLaw counsel did.