Students, want to learn more in law school? Look back, not just forward. As the semester begins, instead of focusing solely on the new classes you’re taking, review the exams you took last semester. Those exams aren’t just for assigning you a grade; you can also use them as a learning tool.

Read the exam questions and your answers. Look at the professor’s comments on your exam and any model answers the professor has provided. What did you get wrong? What in the course did you misunderstand? If some areas are still unclear to you, make an appointment with the professor and review the exam with him or her.

If you do that, you’ll have a much better understanding of the courses you took than if you let your learning stop at the end of your final moment of exam preparation. Professors constantly reevaluate what we know and whether we’re right; you should too. You don’t want to carry that B grade into your legal career; you want to be an A lawyer. If you review your exams, you emerge from that review process with a better understanding of the subject matter.

You might think you’ll never use that material again, but it’s surprising what you draw on in practice. When I was in law school, back when we were chiseling our exam answers on stone tablets, I took a conflict of laws course just because I thought it was interesting. I didn’t think I would ever use it in practice. To my surprise, two years out of law school, I was faced with a major choice-of-law research question. Don’t assume you can leave those old courses behind when you graduate. And, if it comes up, you want to understand it as well as you possibly can.

Few of my students take advantage of the opportunity to review exams. I have never had more than a handful of students stop by to review their exams or even ask me questions about something on the exam. Some semesters, I see no students at all. I don’t even see students who did badly on my Business Associations exam and are taking more advanced courses from me. You would think those students especially would want to clear up where they went wrong.

I provide model answers, so it’s possible students are reviewing those, but I doubt it. My guess is that most students are thankful to have the past semester’s exams behind them and don’t look back as they breeze on to the next semester’s classes.

If students are interested only in earning the credit required for their eventual graduation, that attitude is understandable. But I hope that most of my students are interested in more than just obtaining a credential required to practice. I hope they’re interested in learning as much as they can to be the best lawyers they can be. If that’s their goal, they ought to be reviewing their exams.

Jonas Heese has posted an interesting paper to SSRN, Government Preferences and SEC Enforcement, where he argues that the SEC goes easy on firms that contribute significantly to employment in a particular area.  He finds that the effect is magnified in presidential election years in swing states, and for firms that are headquartered in districts senior congresspersons who have SEC oversight responsibilities.  This effect cannot be explained by the hypothesis that labor-intensive firms simply have better accounting; according to Hesse, they actually have worse accounting than other comparable businesses (which may in fact reflect their knowledge that the SEC is less likely to target them).  He concludes, essentially, that the SEC is responding to political/voter pressures to take a hands-off approach to firms that are responsible for providing jobs.

One of the interesting points he makes is that this kind of pressure is independent of “special interest” lobbying; rather, this kind of pressure is a result of government actors responding to voter preferences.

The paper is available for download here.

I recently purchased and read two Cass Sunstein (Harvard) books: Simpler: The Future of Government and Wiser: Getting Beyond GroupThink to Make Groups Smarter (with Reid Hastie (Chicago))

Cass Sunstein is a enjoyable writer to read, and Simpler was an easy, relatively short read (though he admits that his editor prompted the cutting of 30,000 words from the original manuscript). I may do a separate post on Wiser at a later date.

Simpler provides an inside look at Cass Sunstein’s time at the head of the Office of Information and Regulatory Affairs (“OIRA”) from 2009-2012. Supposedly, OIRA was created by the Paperwork Reduction Act in 1980. OIRA plays an important role in overseeing federal regulation.

A few random thoughts about Simpler:

  • If you have read Sunstein’s earlier work, Kahneman (Princeton), and Ariely (Duke) much of Simpler will be familiar behavioral economics;
  • Sunstein’s political confirmation process sounds absolutely awful. I wonder how many qualified potential civil servants are scared away by processes like this;
  • The Food Plate (below) is much simpler than the Food Pyramid I grew up with;
  • Sunstein reminded me that sometimes rule-makers (including professors – e.g. with our syllabi) can become experts in rule systems, and not realize how complex their rules may seem to outsiders;
  • The impact of the complex regulation is felt by many, including by small businesses (and by all of us during tax season); 
  • Sunstein admits that there is a tenancy to regulate from hunches, anecdotes, and to please (or not upset) special interests, but he claims he tried to favor statistics, cost-benefit analysis, randomize controlled trials, and public comments;
  • Government has a long way to go before it gets “simple.” Sunstein’s biggest challenge was explaining the ACA and Dodd-Frank in the context of this book; I don’t think he rose to this challenge and he did not even try very hard. He pointed to a few simple parts of the complex laws, but then concluded by saying “Rome was not built in a day.”

Food Plate

For those who are interested, Cass Sunstein’s talk on Simpler at University of Chicago is here. 

 

I oppose the Dodd-Frank conflict minerals rule, which requires companies to conduct due diligence and report on their sourcing of certain minerals from the war-ravaged Democratic Republic of Congo and surrounding countries. As I have written before repeatedly on this blog, a law review article, and an amicus brief, it is a flawed “name and shame law” that assumes that consumers and investors will change their purchasing decisions based upon a corporate disclosure, which they may not read, understand, or care about. The name and shame portion of the law was struck down on First Amendment grounds, and the business lobby, the SEC, and the NGO community are eagerly awaiting a decision by the full DC Circuit Court of Appeals.

A disclosure law that does not take into account the true causes for the violence that has killed millions is not the most effective way to have a meaningful impact for the Congolese people. The Democratic Republic of Congo needs outside governments to provide more aid on security sector, criminal justice, education, and judicial reform at the very least. Indeed, the Congolese government is still trying to defeat the rebels that this law was meant to weaken (see here for example). I have strong feelings about the law as a former supply chain professional and an advisory board member of an NGO that operates in eastern DRC.

I am currently working on an article about the defects in disclosure laws that attempt to address human rights impacts, and the conflict minerals rule is one of them. In that context, I was excited to read a recent draft article entitled The Conflict Minerals Experiment by Professor Jeff Schwartz. Although I don’t agree with his conclusion that the best way to fix the law is, among other things, to employ a disclose or explain approach and greater transparency (which I also discuss in my article), I do agree that reform and not necessarily repeal is in order. Schwartz’ article is particularly useful because he provides empirical evidence of the relative uselessness of the first round of corporate disclosures. I look forward to citing it in my upcoming piece. The abstract is below:

In Section 1502 of Dodd-Frank, Congress instructed the SEC to draft rules that would require public companies to report annually on whether their products contain certain Congolese minerals. This unprecedented legislation and the SEC rulemaking that followed have inspired an impassioned and ongoing debate between those who view these efforts as a costly blunder and those who view them as a measured response to human-rights abuses committed by the armed groups that control many mines in the Congo. 

This Article for the first time brings empirical evidence to bear on this controversy. I present data on the inaugural disclosures that companies submitted to the SEC. Based on a quantitative and qualitative analysis of these submissions, I argue that Congress’s hope of supply-chain transparency goes unfulfilled, but amendments to the rules could yield useful information without increasing compliance costs. The SEC filings expose key loopholes in the regulatory structure and illustrate the importance of fledgling institutional initiatives that trace and verify corporate supply chains. This Article’s proposal would eliminate the loopholes and refocus the transparency mandate on disclosure of the supply-chain information that has come to exist thanks to these institutional efforts.

 

There’s a very interesting sentence in a New York Times story today about the Chinese company Alibaba.  China’s State Administration for Industry and Commerce has released a report criticizing illegal practices on Alibaba’s shopping web sites. Here’s the sentence that I as a securities lawyer found most interesting:

“The agency said that it had presented the findings to unidentified top Alibaba executives in a July 17 meeting at the company’s headquarters . . . , but that it had kept the results confidential at the time so as ‘not to affect Alibaba’s preparations for a stock market listing.’”

Alibaba made an initial public offering in the United States in September. If the story’s accurate, it means: (1) a Chinese government regulator deliberately withheld a government report so a Chinese company could sell its stock to U.S. investors at a higher price; (2) the Chinese company, knowing the Chinese regulator was going to issue an unfavorable report, intentionally withheld that information from offerees.

New reading recommendation:  The (Un)Enforcement of Corporate Officers’ Duties, by Megan Shaner at Univ. of Oklahoma COL, published in UC Davis Law Review, November 2015.

Abstract:  

Over the past few decades, officers have arguably become some of the most important individuals in the corporation. From the implosions of Enron and WorldCom, to the success of companies like Apple and Microsoft, to the Wall Street crisis that sunk the world into near global recession, corporate officers have played a role in each of these storylines and countless (albeit lesser known) others. In spite of the well-publicized scandals, officers continue to be given wide latitude to carry out their role of managing the day-to-day operations of their companies. The primary constraint on this power under state corporate law is the imposition of fiduciary obligations. Fiduciary duties thus play a vital role in checking the considerable power and authority of officers. Fiduciary duties will only affect officer behavior, however, if there is an effective enforcement scheme that holds officers accountable. This Article discusses how the development of corporate doctrine, coupled with the dynamic in today’s corporate management has created impediments and disincentives for the enforcement of officer fiduciary duties. In light of the problematic state of the current enforcement scheme, this Article evaluates possible changes that would alleviate deterrents in the enforcement process. This Article concludes that in order to regulate officer behavior with fiduciary duties, there must be a collective correction to the enforcement mechanisms in place for internal enforcers beginning with reevaluating stockholder derivative litigation burdens.

This is a great article for the arguments advanced and careful observations made.  It also provides such a thorough and useful discussion of officers that I plan to add it to a seminar reading list.  Professor Shaner’s article also earned the top prize at the 2014 George Washington University C-LEAF Junior Faculty Workshop.

-Anne Tucker

 

Megan Shaner at the University of Oklahoma College of Law first workshoped this paper at George Washington’s CLEAF Junior Faculty Workshop last spring.  

Lawrence Cunningham has written an interesting piece for the Wall Street Journal, The Secret Sauce of Corporate Leadership: Splitting the CEO and chairman jobs is beside the point. What’s needed is a skeptical No. 2.

Cunningham argues that measures to split the role of board chair and CEO largely miss the point because such a move, and similar moves, don’t clearly lead to the desired goal.  He explains:

Research on the effects of splitting the chief and chairman roles shows that results can depend on where the split takes place: It tends to improve performance at struggling companies—but it impairs prosperous firms. Yet exact effects vary depending on the circumstances, such as whether the switch happened with the appointment of a new CEO or with the demotion of an incumbent.

The movement to split the two roles is part of corporate America’s tendency to address problems with procedural remedies such as expanding board size, adding independent directors, adopting a new code of ethics, updating firm compliance programs, and appointing a monitor to oversee it all. While such steps get attention and can improve an organization’s health, the informal norms that define a corporate culture are more powerful, and Bank of America is right to examine itself in the light of basic principles.

There is a better way to foster excellence in chief executives: Appoint a noncombative but skeptical partner as second in command. This model has been the secret sauce in outstanding corporate cultures at dozens of America’s best companies.

I have a few thoughts to add to this.  First, I agree that whether to allow a single person to hold the chair and CEO position is case dependent. I am inclined to defer to the board of directors on that decision, but if enough shareholders want the positions separate (or combined), more power to them.  

Second, I think there is a bigger issue at play here in corporate (and other group) decision making. That is, as a general matter, rules and policies should be made based on the desired goals and the long-term plans, and not based on an individual.  Thus, deciding to never allow a combined CEO and chair position because we don’t want a particular person to hold the role is silly.  Just don’t let that person have both roles.  Any time we create rules designed to punish (or benefit) a particular person, we often create unintended consequences that punish or benefit others in ways that were not contemplated.  

Finally, Cunningham is certainly correct when he says, “Effective corporate leaders also stress that a strong culture matters because it translates into economic gain.”  That said, sometimes its seems some boards (and other entities and institutions seeking leaders) believe a strong culture can be built overnight.  Tweaking rules and policies can sometimes help, but trying to rush that culture sometimes simply ensures mediocrity.  Just ask the New York Jets. 

As some of you know, my beloved cat, Meowth (yes, named after the Pokemon character) has been battling squamous cell carcinoma.  Today, he went on to the everlasting life beyond this Earth.  This post is dedicated to his memory.  Here he is, meowing with me and my daughter a bit over a week ago.

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One of the things that we have been blessed with over the years–in Massachusetts and here in Knoxville–is great veterinary medical care.  Since The University of Tennessee’s College of Veterinary Medicine (CoVM) is located on the West (agricultural) campus in Knoxville, it is a stone’s throw from the College of Law, where I teach.  We have been assisted in various ways, including with Meowth, by veterinarians and veterinary technicians from the CoVM.   The CoVM also boast a veterinary social work program, and we were helped in Meowth’s end-of-life care by one of the veterinary social workers in the CoVM program.  Many of the local veterinarians were trained at our CoVM.  We have worked with several private practice groups in Knoxville.

All this interaction with veterinarians has made me wonder how private veterinary medical practice groups are organized, from a legal entity point of view.  (Yeah, I know.  I am a true law nerd.  I admit that.)  My impression (although many practice groups are not very transparent about their form of legal organization) is that many of these practice groups are professional corporations (PCs) or professional limited liability companies (PLLCs).  I suppose this makes sense to me.  

But it reminds me of a question commonly asked by astute Business Associations students: “Why do professionals form professional business entities, given that the owners of limited liability entities already enjoy protection from liability for the obligations of the entity?”  I am sure many of you have been asked this same question.  If not, you soon may be.

Continue Reading In Memory of Meowth (1998-2015): Choice of Entity for Veterinary Medical Practices

PrawfsBlawg has posted its Submission Angsting thread, which prompted me to write this post to ask our readers (including my co-bloggers) two questions:

  1. In your opinion, what is the ideal date to submit a spring law review article?
  2. When deciding between offers, how do you evaluate specialty law reviews?

Ideal Submission Date. When I first started as a professor, I heard that March 1 was the date most people thought was the best for spring submissions. The ideal date seems to be moving earlier and earlier, and I have heard February 1 or February 15 mentioned with increasing frequency. Some might suggest not worrying about the submission date — just submit when your article when it is ready. While I agree that you should wait to submit an article until it is ready (whenever “ready” is…), I have had colleagues who seemed to seriously under-place articles because they submitted at a poor time. Admittedly, most of these professors submitted well outside of the traditional windows.

Evaluating Specialty Law Reviews. The question about how to evaluate specialty law reviews reoccurs every time I submit an article. The conventional wisdom is – find out how your P&T committee values those journals and follow their lead. That is good advice, though I imagine some readers would like to hear how the market, in general, values specialty law reviews. Personally, I have published in a number of specialty law reviews — for two main reasons — (1) readership (e.g., I used to see the Delaware Journal of Corporate Law on my judge’s desk regularly) and (2) name recognition (the Harvard Business Law Review is probably going to go much further with many readers (and my P&T committee) than many flagship law reviews). I’ve heard formulas to rank specialty journals like — take ~25 spots [the PrawfsBlawg post in the update below says +25 to +50] off the publishing school’s rank if it is a specialty journal (this doesn’t work well when a top journal in your area is published by a low-ranked school) OR the top 10% or so specialty journals in your area are roughly equal to a 31-100 ranked flagship journal; and you should take a top-30 flagship journal over virtually any specialty journal. I know different schools will treat the question of specialty journals differently, and ideally we wouldn’t have to play this game (because the articles all end up on WestLaw), but I am truly interested in the different approaches.

Update: On the second question I found this helpful post on PrawfsBlawg from 2011, but I am still interested in other thoughts. 

Feel free to share thoughts in the comments, or e-mail me directly.