Two weeks ago, I blogged about an interesting new book on bitcoin, the digital currency. I noted that the backbone of bitcoin is the blockchain software that verifies bitcoin transactions.

The Wall Street Journal reports that NASDAQ is testing blockchain technology as a settlement mechanism for trading in the shares of private companies. If the test is successful–and that’s a huge “if” given the need to scale up the software to unaccustomed heights–blockchain could be used to verify that buyers and sellers actually made reported trades. It could potentially eliminate the need for a centralized settlement system.

One more reason for business lawyers to read the Vigna and Casey book and get up to speed on bitcoin.

In Williams-Yulee v. The Florida Bar (.pdf), the Supreme Court rejected a First Amendment challenge to the Florida Canon of Ethics that bans judicial candidates from personally soliciting campaign contributions.  And I realize this is an odd case to discuss on this blog – nothing about it explicitly engages business law issues – but bear with me as I get to the (perhaps, ahem, somewhat attenuated) business-related point.

Continue Reading A Business Law Professor’s Take on Williams-Yulee

Thanks to faithful BLPB reader Scott Killingsworth for the tip about this new article appearing in the New Yorker detailing the scholarship and advocacy of renowned Harvard constitutional law professor Laurence Tribe.  The article raises questions about conflicts of interest between scholarship and advocacy.

[I]t would also be foolish to ignore the inherent tension in searching for truth while also working for paying clients. The scholar-warrior may lapse into a far more contemptible figure: the scholar for hire, who sells his name and his title for cash. A subtler danger comes from the well-known and nearly unavoidable tendency lawyers have of identifying with their clients. 

The article also highlights his role in the current debate on corporate constitutional rights.

Tribe has taken a strong view of individual rights; his view of corporate rights is similar, and in this capacity he has at times advanced constitutional arguments that might invalidate great parts of the administrative state, in a manner recalling the Supreme Court’s jurisprudence of the nineteen-twenties and thirties. In that sense, the current condemnation of Tribe can be seen as part of a larger progressive backlash against the use of the Bill of Rights to serve corporate interests.

This short article is absolutely worth making your Friday procrastination list or your weekend “catch-up” reading list.

-Anne Tucker

CNM

On May 12, 2015, I will present at a breakout session of the Center for Nonprofit Management’s 8th Annual Bridge to Excellence Nonprofit Conference. My talk will focus on the legal issues facing entities with multiple bottom lines. 

If interested, you can register here.

As you can tell from the conference description, this conference is designed for nonprofit and community leaders. From the conference schedule, it appears that I will be the only professor presenter. While I enjoy academic conferences, and find them useful, I also think it is important for professors to engage with practitioners. Professors should share the knowledge they have uncovered and should also listen to the current, practical concerns. 

I currently teach two classes that are on the bar exam—civil procedure and business associations. Many of my BA students are terrified of numbers and don’t know much about business and therefore likely would not take the course if it were not required. I know this because they admit that they take certain classes only because they are required or because they will be tested on the bar, and not because they genuinely have an interest in learning the subject. I went to Harvard for law school and although I had an outstanding education, I learned almost nothing that helped me for the NY, NJ, or FL bars (hopefully that has changed). I owe all of my bar passages to bar review courses so naturally (naively?), I think that almost any student can learn everything they need to know for the bar in a few short months assuming that they had some basic foundation in law school and have good study habits.

The pressure to ensure that my students pass the bar exam definitely informs the way I teach. Though there has only been one round of civil procedure testing on the multistate, this semester I found myself ensuring that I covered certain areas and glossed over others, even though I know having litigated for 20 years, that some subjects are more relevant in real life. Similarly, in BA, I had to make sure that I covered what will be on the Florida bar, while still ensuring that my students understand Delaware law and some basic finance and accounting, which isn’t on the Florida bar, but which they need to know.

New York recently announced that it would join other states in adopting the uniform bar examination effective July 2016. The other states using the UBE include Alabama, Alaska, Arizona, Colorado, Idaho, Kansas, Minnesota, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Utah, Washington, and Wyoming. New York, as the largest adopter, hopes to inspire other states to do the same.

NY students would still have to take online courses and pass a 50-question test regarding specific NY laws, but the students would take the MBE, and MPT or multistate performance test. According to the National Conference of Bar Examiners, the two 90-minute MPT exercises are “designed to test an examinee’s ability to use fundamental lawyering skills in a realistic situation and complete a task that a beginning lawyer should be able to accomplish. The MPT is not a test of substantive knowledge. Rather, it is designed to evaluate certain fundamental skills lawyers are expected to demonstrate regardless of the area of law in which the skills arise.” The NY graduates will also no longer have to write on 6 NY-based essays, but will instead write the multistate essay examination. Students will have to write on topics including: Business Associations (Agency and Partnership; Corporations and Limited Liability Companies), Civil Procedure, Conflict of Laws, Constitutional Law, Contracts, Criminal Law and Procedure, Evidence, Family Law, Real Property, Torts, Trusts and Estates (Decedents’ Estates; Trusts and Future Interests), and Uniform Commercial Code (Secured Transactions).

In adopting the change, New York officials explained, a “significant advantage of adopting the UBE is that passage of the test would produce a portable score that could be used by the bar applicant to gain admission in other UBE states, assuming the applicant satisfies any other jurisdiction-specific requirements. This portability is crucial in a legal marketplace that is increasingly mobile and requires more and more attorneys to engage in multi-jurisdictional practice.”

I think this is sound reasoning. Many of today’s graduates do not know where they will end up, and I personally know that the thought of taking yet another bar exam was a reason that I decided to stay in Florida when I was in private practice. But the better reason to move to the UBE is the testing of the practical skills that lawyers say recent graduates lack. It won’t solve the problem of the lack of legal work, but it will make it easier for students who want to try to find work in other states. I doubt that Florida, which wants to make it as difficult as possible for snowbirds to set up practice here, will ever adopt the UBE but it should. Many oppose the adoption because schools may not have the faculty or resources to prepare students for the new test. But I welcome the change. Despite the pressure to prep my students for the bar, I have ensured that my students work on drafting client memos, discovery plans, markups of poorly written documents, and even emails to partners and clients so that they can be ready for the world that awaits them. If Florida joins the UBE bandwagon, they will be ready for the MPT too.

 

Last year, I blogged about a Fourth Circuit case, Prousalis v. Moore, which held that the Janus Capital definition of “maker” in Rule 10b-5 did not apply in criminal cases. For those who are interested, a short article on wrote on that topic, “Make” Means “Make”: Rejecting the Fourth Circuit’s Two-Headed Interpretation of Janus Capital, is now available on SSRN.

The paper is to be included in a symposium honoring the late Alan Bromberg, an outstanding securities scholar, as well as a mentor and friend.

This coming Monday, I will be presenting – virtually – at the above titled conference. My piece of the presentation will cover my recent research on benefit corporation reporting.

Further information is available here and reproduced below. Personally, I am looking forward to hearing from the many impressive speakers, including Sara Burgess, the Regulator of Community Interest Companies in the UK.

May 11, 2015

08:00 AM – 06:00 PM ET

 

Morgan Lewis, in conjunction with the Impact Investing Legal Working Group, invites you to join us for an exclusive all-day conference featuring panels of leading lawyers who work in the area of impact investing—in business, academia, government, multilateral development institutions, and nonprofit organizations and foundations.

 

Topics will include:

How are investors aggregating capital for impact investing?

What are the newest social finance innovations in impact investing?

How can we build a robust legal community of practice in impact investing?

How can we advance the development of regulatory regimes and government policies that promote impact investing?

 

Details

8:00 – 8:30 AM | Registration

8:30 – 6:00 PM | Program

6:00 PM | Networking reception

 

View the agenda >>

 

Credit

CLE credit in CA (1.25 hours), FL, IL, MA, NY, NJ, PA, VA, and TX is currently pending approval.

 

For more information/registration

Please contact Gail Sobha Lynes at +1.617.951.8607 or gail.sobhalynes@morganlewis.com.

 

As I begin my guest spot here at Business Law Profs Blog, I’ve really enjoyed reading the recent posts by Ann Lipton (here) and Marcia Narine (here) on corporate whistleblowers.  What has always fascinated me about whistleblowers is the “why” question: why do they do it knowing all the negatives—to their career, their family, their psyche—in store for them? 

While I don’t have any great insights as to the answer (although others do), trying to figure out why corporate executives do what they do—particularly in the realm of business ethics and white collar crime—is something I’ve been focused on for a while, first as a white collar criminal defense attorney and now as an academic.  One way I’ve tried to look at the issue is by pulling together disciplines that provide some understanding of why business people commit bad acts and what our collective response to that should be.  This has led me primarily into the areas of criminology, behavioral ethics, and federal sentencing.  And what emerges from that soup, at least for me, is the concept of rationalization—that very powerful, and very human, way of viewing oneself positively (say, as an upstanding citizen, family man, etc.), while taking actions inconsistent with that view according to society’s standards (say, by passing a stock tip to a friend, misrepresenting your company’s financials, etc.).  I see rationalization as the critical step in the commission of white collar crime, and thus what should be the focus of our corporate compliance and white collar crime enforcement efforts. 

Over the next few posts, I’ll try and flesh out these ideas, explaining how rationalizations operate, their most common iterations in the white collar world, and how our current regulatory and corporate compliance efforts, by failing to consider the role of rationalizations, might actually be leading to more corporate wrongdoing. 

Stay tuned.

The AALS Sections on Business Associations and Law & Economics are pleased to announce a Call for Papers for a joint program to be held on Friday, January 8, 2016 at the AALS 2016 Annual Meeting in New York City.  The topic of the program is “The Corporate Law and Economics Revolution 40 Years Later: The Impact of Economics and Finance Scholarship on Modern Corporate Law.”

Corporate law scholarship continues to engage in a dialogue with the wave of law and economics scholarship that exploded in the 1980s.  The law and economics revolution dramatically shifted the way that scholars, courts, practitioners, and business leaders see the relationship between management and shareholders. 

Modern corporate law theories owe much to literature in economics and finance, such as Jensen and Meckling’s 1976 article on agency costs within the firm and Eugene Fama’s work on efficient capital markets.  By the 1980s, many ambitious legal scholars were applying insights from economics and finance literature to corporate law and the capital markets.   They explored such ideas as the market for corporate control, the market for corporate law, the need for systematic corporate disclosure, the role of the board, and the role of shareholders in corporate governance. Of course, these issues live on.

Later generations questioned the assumptions of the first wave of corporate law and economics scholarship.  Critics questioned the agency cost framework, argued that the law and economics movement had created perverse incentives for managers, insisted that stakeholders other than shareholders held an important place in corporate law, and advanced critiques from behavioral economics and behavioral finance. 

Forty years since the Jensen and Meckling article, the time seems ripe to take stock of the impact of law and economics on corporate law: where has it been, where is it now, and where is it going?  How will economics and finance scholarship shape the next decade of corporate law scholarship and the next generation of corporate law scholars?  Taking stock also means asking some difficult questions: what is the comparative advantage of legal scholars compared to their colleagues in economics and finance departments when it comes to interpreting complex financial institutions?  What are the costs and benefits of the growing empirical movement in corporate law scholarship?  What is the next big idea? Or are all the big ideas already on the table?  Have we again reached “the end of corporate law?” 

Form and length of submission

Eligible law faculty are invited to submit manuscripts or abstracts that address any of the foregoing topics. Abstracts should be comprehensive enough to allow the review committee to meaningfully evaluate the aims and likely content of final manuscripts.   Manuscripts may be accepted for publication but must not be published prior to the Annual Meeting.  Untenured faculty members are particularly encouraged to submit manuscripts or abstracts.  

The initial review of the papers will be blind.  Accordingly, the author should submit a cover letter with the paper.  However, the paper itself, including the title page and footnotes must not contain any references identifying the author or the author’s school.  The submitting author is responsible for taking any steps necessary to redact self-identifying text or footnotes. 

Deadline and submission method

To be considered, manuscripts or abstracts must be submitted electronically to Professor Usha Rodrigues, Chair-Elect of the Section on Business Associations, at  rodrig@uga.edu.  The deadline for submission is  Tuesday, August 27, 2015.  Papers will be selected after review by members of the Executive Committees of the Section on Business Associations and the Section on Law & Economics.  The authors of the selected papers will be notified by Thursday, September 24, 2015.

Eligibility

Full-time faculty members of AALS member law schools are eligible to submit papers.  The following are ineligible to submit: foreign, visiting (without a full-time position at an AALS member law school) and adjunct faculty members, graduate students, fellows, non-law school faculty, and faculty at fee-paid non-member schools. Papers co-authored with a person ineligible to submit on their own may be submitted by the eligible co-author.

The Call for Paper participants will be responsible for paying their annual meeting registration fee and travel expenses.