On Monday, The University of Tennessee (UT) College of Law hosted Larry Cunningham to talk about his book, Berkshire Beyond Buffett: The Enduring Value of Values, which he previewed with us here on the BLPB a few months ago in a series of posts (here, here, and here).  As you may recall, the book focuses on corporate culture and succession planning at Berkshire Hathaway.  Joining Larry at the book session was UT College of Law alumnus James L. (Jim) Clayton, Chairman and principal shareholder of Clayton Bank and the founder of Clayton Homes, one of the Berkshire Hathaway subsidiaries featured in the book.  The impromptu conversation between Larry and Jim was an incredible part of the event (although Larry’s prepared presentation on the book also was great).

As part of the event, Larry and Jim answered a variety of  audience questions.  Included among them was a question from UT College of Law Dean Doug Blaze on the role of lawyers in management,  transactions, and entrepreneurialism.  As part of Jim Clayton’s response, he noted the value of preventative lawyering–advising businesses to keep them out of trouble.  I was so glad, as a business law advisor, to hear him say that! 

Following on that, given that (a) Larry’s book focuses on the factors influencing succession planning,  (b) I am teaching the Disney case to my Business Associations students this week, and (c) the Disney case is about . . . well . . . failed succession and executive compensation, I asked about management compensation in the context of succession planning at Berkshire Hathaway.  Both Larry and Jim (whose son Kevin is President and Chief Executive Officer of Clayton Homes) were clear that Warren Buffett is an exacting manager, but that he believes in paying his portfolio company managers well.  Of course, the precise nature of the compensation arrangements of those portfolio firm executives (unlike Michael Ovitz’s compensation arrangements at issue in the Disney case) are not a matter of public record.  But given the markedly different contexts, I assume the arrangements are very different . . . .

As I approach discussing the Disney case once again in the classroom, I am (as always) looking for new angles, new insights to share with the class (in addition to the core fiduciary duty doctrine).  One I will share this year is Jim Clayton’s advice about preventative lawyering.  What could lawyers have done to reduce the likelihood of controversy and litigation?  I have some thoughts and will develop others in the next 24 hours.  Leave your thoughts here, if you have any . . . .

Note to all legislators and regulators: don’t do anything until you’ve thought through all the consequences.

One of the most important things I learned as a student of public policy was the difference between static and dynamic analysis. Static analysis looks only at the immediate consequences of a change. Dynamic analysis looks at the long-term consequences of a change, taking into account how people will adjust to that change.

If I tell my students they must write a 50-page paper by Friday or fail, most of them will at least try to write the 50-page paper. That’s the static effect. But no one will ever take my Business Associations class again. That’s the dynamic effect.

For some people today, including an increasing number of politicians on both sides of the aisle, neither static nor dynamic effects matter. It’s enough just to have good intentions. “Don’t you care?”, those people ask. “We need to do something.”

Even when policy makers do consider the effects of their policy choices, many of them consider only the immediate effects—static analysis—and don’t think about the long-term consequences. That’s unfortunate, because legislation and regulation often have unintended consequences.

That’s the point of Thomas E. Hall’s new book, Aftermath: The Unintended Consequences of Public Policies. Hall, a professor of economics at Miami (Ohio), looks at the unintended consequences of four policies: (1) the federal income tax; (2) cigarette taxes; (3) minimum wage laws; and (4) Prohibition.

None of the evidence Hall lays out will surprise anyone familiar with these four policies, and the results are predictable to anyone familiar with economics. But the book is a great introduction to the idea of unintended consequences, and an illustration of the need for dynamic analysis (although Hall doesn’t use that term).

The book is short; it won’t take you long to read it. And Hall writes well, using non-technical language, so the book won’t put you to sleep. I recommend it to anyone interested in public policy—which should cover most of the readers of this blog.

Skittles

(demonstrating that variety isn’t always a good thing)

Well, Halloween was yesterday, but the chocolate-y remains will last for … at least another 5 3 2 hours.  Which brings me to this article on how, despite increases in chocolate prices, sales of chocolate continue to rise:

Chocolate candy sales for last Halloween hit $217 million, up 12 percent from the year before, the consumer market research firm Packaged Facts reported in September. For all of 2013, the American market for chocolate grew 4 percent, to $21 billion in sales. But chocolate lovers took a hit this summer, when Hershey and Mars announced price increases of 8 percent and 7 percent…  But don’t expect higher prices to dampen sales, analysts said….

Chocolate makers have also adopted a marketing strategy that is increasingly driving sales: the variety bag, a single package filled with several different types of bars. Mars said sales of the variety bag it introduced a few years ago (with Milky Ways, Three Musketeers and such) grew by 14.5 percent in 2012, accounting for 54 percent of its total Halloween sales growth, and have remained strong.

Scientists who research how our brains respond to food have another term for variety: the smorgasbord effect (as in stuffing yourself at Chinese buffets). Studies show that we quickly acclimate to any food or flavor we’re eating, causing the brain to register a feeling of fullness. Variety delays this process by keeping food exciting.

Okay, look, I’m not denying that we habituate to certain flavors, or that variety packs can introduce consumers to things they wouldn’t otherwise buy.  But people buy big bags of smaller candies for a reason:  To distribute.  And in that context, they like variety not because they get bored with one flavor, but because as a Halloween candy-giver, you want to give trick-or-treaters a choice.  You never know which kid will hate almonds or love dark chocolate or which kid (uh, kid, yes, we’ll go with kid) treats peanut butter cups as a meal replacement.  Variety packs are an easy way of making sure you offer the best treats in the apartment complex no matter who shows up at your door.  I’d rather buy two variety bags than 10 bags of different single-type candies just to give trick or treaters a choice. 

I mean, if I bought 10 bags of candies to make sure I catered to every kid’s idiosyncratic tastes, I’d have the equivalent of 8 bags left over.  Which would be… terrible. 

Yes.  Terrible.  That’s totally the word I was looking for.

Daniel Fisher at Forbes has posted an interesting story about Columbia Law Professor Robert Jackson’s attempt to obtain information about investment advisors from the SEC. The SEC first denied they had the information, then said it would be too burdensome to produce the information. The kicker: an SEC economist has published a study using that very data. Fisher provides copies of Professor Jackson’s persistent FOIA requests and the SEC’s responses.

It’s a fascinating study in bureaucratic favoritism and stubbornness. Not particularly surprising, but fascinating.

At least two law reviews currently have exclusive submission windows. See below for details.

Exclusive submission windows seem like a good idea, in general, and more law reviews seem to be using them recently. Most of the traditional peer reviewed journals already require exclusive submissions and it is nice to see some law reviews following along. The exclusivity requirement should cut down, substantially, on the number of submissions, allowing for a more thorough review. Exclusivity will also likely lead to some helpful self-selection because professors will not want to submit to a journal that is either too far above their target (unlikely to be accepted, which will delay their process) or below their target (may be accepted and they will be prevented from trading up). 

I still think more law journals should move to blind review, which these exclusive submission window announcements do not promise, but the fact that exclusive submission windows cut submissions to a manageble number is important as well. While law review websites usually say the editors review each submitted article carefully, I find that unlikely when some of those law reviews get 2,000 or more submissions. The editors don’t even have time to read each abstract carefully. 

The promised information about the exclusive submission windows is below.

The University of Memphis Law Review:

The University of Memphis Law Review has 3 immediate openings for submissions for publication in issue 3 of this year’s volume, which will be published in April 2015. The Editorial Board is looking for authors willing to submit exclusively to The University of Memphis Law Review in return for a guaranteed quick and thorough review and response (not later than four days after receipt). This expedited, exclusive review will be open until November 8, 2014.  Articles may be submitted after this date, however there is not guarantee of an expedited response and open slots will be filled on a first-come basis.

 

Please direct submissions to Nick Margello at lawreview_editorinchief@memphis.edu and include the subject line “Exclusive Review.” No specific topics are requested, but the Law Review seeks timely, relevant articles between 7,000-18,000 words in the text. The University of Memphis Law Review  has an excellent staff that works professionally with authors and consistently meets its own strict deadlines.  If you have an article looking for a placement, please consider sending it along. Thanks for your interest.

The Kentucky Law Journal (h/t Faculty Lounge):

The Kentucky Law Journal is opening an exclusive submission window for articles until November 14, 2014, at 5:00 PM EDT. All papers submitted during this window will be reviewed for publication in Volume 103, Issue 4, set for publication in Spring 2015. By submitting your article during this window, you agree to accept a publication offer, should one be extended. This window is available for articles on all topics, including articles previously submitted to the Kentucky Law Journal, though resubmission will be required. Submissions should be between 15,000 and 25,000 words with citations meeting the requirements of The Bluebook.

 

Submissions should be sent via email to chrisheld.klj@gmail.com. Please include your article, a copy of your C.V. and a short abstract or cover letter.

 

 

 

Miriam Schwartz-Ziv from Michigan State University and Russ Wermers from the University of Maryland have written an interesting article in time for the next proxy season. The abstract is below:

This paper investigates the voting patterns of shareholders on the recently enacted “Say-On-Pay” (SOP) for publicly traded corporations, and the efficacy of vote outcomes on rationalizing executive compensation. We find that small shareholders are more likely than large shareholders to use the non-binding SOP vote to govern their companies: small shareholders are more likely to vote for a more frequent annual SOP vote, and more likely to vote “against” SOP (i.e., to disapprove executive compensation). Further, we find that low support for management in the SOP vote is more likely to be followed by a decrease in excess compensation, and by a more reasonable selection of peer companies for determining compensation, when ownership is more concentrated. Hence, the non-binding SOP vote offers a convenient mechanism for small shareholders to voice their opinions, yet, larger shareholders must be present to compel the Board to take action. Thus, diffuse shareholders are able to coordinate on the SOP vote to employ the threat that large shareholders represent to management.

 

The West Virginia University College of Law is seeking applications and nominations to replace our former dean, Joyce McConnell, who is now the provost of the University. The College of Law just completed the addition of a new wing (part of a $26 million infrastructure project), and has made significant and exciting progress. We’re seeking a dean who can help continue that trend.  

WVUSunrise

Sunrise at WVU College of Law

 

Admitting my bias, WVU is a great place to be. It’s beautiful, especially in the fall, and we have access to much more than many people recognize.  In addition to a solid opportunities to enjoy music and the arts in Morgantown, we’re a lot closer to other areas of interest, if big city access is desired. We’re 75 miles to Pittsburgh; about 3 hours and 15 minutes to Baltimore, Washington, DC, and Cleveland, OH; 6 hours to New York City; a little less to Niagara Falls; 5 hours to Philadelphia, PA, and Lexington, KY. You get the idea.  

Sunset

Sunset at the WVU College of Law

The posting is below. Please apply if you are interested, and please share this with anyone else you think might be interested.  And, of course, please feel free to contact me directly with any questions. 

http://employmentservices.hr.wvu.edu/wvu_jobs/non-classified_positions/dean-of-the-west-virginia-university-college-of-law

The full posting is available at the link above or just click the button below. 

Continue Reading Dean Search: WVU College of Law

Compliance is a hot business law topic in and outside of the industry.  JD as compliance officers is a very likely future as law schools respond to hiring market pressures and what corporate employers’ need.  So what does this mean in terms of curriculum and in a future practice?  A handful of law schools now offer courses focusing on compliance (see this Harvard Forum on Corporate Goverance and Financial Regulation Post from May 2014).  Professors like Jenifer Arlen as the Director of the Program on Corporate Compliance and Enforcement at NYU and Mike Koehler, at Southern Illinois University School of Law with his FCPA Professor Blog, are certainly pioneers in the emerging field.  At my law school–Georgia State University in Atlanta, GA–we are wondering how best to utilize the industry resources in our backyard.  I am a new board member of a compliance-focused round table that draws membership from our fortune 500 corporate neighbors . With these questions at the forefront of my mind, I found today’s article on the FCPA Blog (an industry-focused resource) titled, Memo to law schools: The world needs compliance officers to be particularly interesting. In this post, law schools are encourged to:

Teach [students] the hallmarks of an effective compliance program and how board and management oversight are supposed to work. Teach them how to train employees. How to identify and assess the risks of intermediaries and how due diligence is done. Teach them about feedback loops, internal reporting, and whistleblower laws and programs….But aside from a few isolated examples, the concept of training students to be compliance officers hasn’t taken root in the law schools’ curricula. 

Do any of you have good examples from your law school or practice about the role of lawyers in corporate compliance positions?

-Anne Tucker