Business law has a broad overlap with tax, accounting, and finance.  Just how much belongs in a law school course is often a challenge to determine.  We all have different comfort levels and views on the issue, but incorporating some level of financial literacy is essential.  Fortunately, a more detailed discussion of what to include and how to include it is forthcoming.  Here’s the call: 

Call For Papers

AALS Section on Agency, Partnerships LLCs, and Unincorporated Associations

Bringing Numbers into Basic and Advanced Business Associations Courses: How and Why to Teach Accounting, Finance, and Tax

2015 AALS Annual Meeting Washington, DC

Business planners and transactional lawyers know just how much the “number-crunching” disciplines overlap with business law. Even when the law does not require unincorporated business associations and closely held corporations to adopt generally accepted accounting principles, lawyers frequently deal with tax implications in choice of entity, the allocation of ownership interests, and the myriad other planning and dispute resolution circumstances in which accounting comes into play. In practice, unincorporated business association law (as contrasted with corporate law) has tended to be the domain of lawyers with tax and accounting orientation. Yet many law professors still struggle with the reality that their students (and sometimes the professors themselves) are not “numerate” enough to make these important connections. While recognizing the importance of numeracy, the basic course cannot in itself be devoted wholly to primers in accounting, tax, and finance.

The Executive Committee will devote the 2015 annual Section meeting in Washington to the critically important, but much-neglected, topic of effectively incorporating accounting, tax, and finance into courses in the law of business associations. In addition to featuring several invited speakers, we seek speakers (and papers) to address this subject. Within the broad topic, we seek papers dealing with any aspect of incorporating accounting, tax, and finance into the pedagogy of basic or advanced business law courses.

Any full-time faculty member of an AALS member school who has written an unpublished paper, is working on a paper, or who is interested in writing a paper in this area is invited to submit a 1 or 2-page proposal by May 1, 2014 (preferably by April 15, 2014). The Executive Committee will review all submissions and select two papers by May 15, 2014. A very polished draft must be submitted by November 1, 2014. The Executive Committee is exploring publication possibilities, but no commitment on that has been made. All submissions and inquiries should be directed to Jeff Lipshaw, Chair.

Jeffrey M. Lipshaw
Associate Professor
Suffolk University Law School
Click here for contact info

What happens if short sellers of stock are unable to cover because no one has any shares to sell? That’s one of the many interesting issues in the new book, Harriman vs. Hill: Wall Street’s Great Railroad War, by Larry Haeg (University of Minnesota Press 2013). Haeg details the fight between Edward Henry Harriman, supported by Jacob Schiff of the Kuhn, Loeb firm, and James J. Hill, supported by J.P. Morgan (no biographical detail needed), for control of the Northern Pacific railroad. Harriman controlled the Union Pacific railroad and Hill controlled the Great Northern and Northern Pacific railroads. When Hill and Harriman both became interested in the Burlington Northern system and Burlington Northern refused to deal with Harriman, Harriman raised the stakes a level by pursuing control of Hill’s own Northern Pacific.

I’m embarrassed to admit that I wasn’t aware of either the Northern Pacific affair or the stock market panic it caused. I had heard of the Northern Securities antitrust case that grew out of the affair; I undoubtedly encountered it in my antitrust class in law school. (Everything the late, great antitrust scholar Phil Areeda said in that class is still burned into my brain.)

I’m happy I stumbled across this book, and I think you would enjoy it as well. Harriman vs. Hill has everything needed to interest a Business Law Prof reader: short selling; insider trading; securities fraud; a stock market panic; a hostile takeover; a historical antitrust case; and, of course, J. P. Morgan. This was a hostile takeover before hostile takeovers were cool (and before tender offers even existed, so the fight was pursued solely through market and off-market purchases).

The book does have a couple of shortcomings. One is a polemic at the end of the book against the antitrust prosecution. The antitrust case was clearly a political play by Theodore Roosevelt, and Haeg may be right that the railroads’ actions were economically defensible, but his discussion is a little too one-sided for my taste. Haeg also has a tendency to put thoughts into the characters’ minds (Hill might have been thinking . . .), but he only uses the device to add factual background, so it isn’t terribly offensive. Finally, Haeg occasionally gets the legal terminology wrong. For example, he refers to the railroad holding company “that the U.S. Supreme Court narrowly declared unconstitutional,” when what he means is that the court upheld the law outlawing the holding company. He only makes legal misstatements like that a couple of times, but those errors are very grating on a lawyer reading the book.

Still, in spite of those minor flaws, this is a very good book and I highly recommend it.

A while back @FrankPasquale tweeted a link to a blog post by Eric Schwitzgebel that begins with the lines, “A central question of moral epistemology is, or should be: Am I a jerk? Until you figure that one out, you probably ought to be cautious in morally assessing others.”

This post has kept popping into my mind since then, and so I thought I’d pass it on to BLPB readers.  Personally, I believe part of living a healthy, balanced life includes trying to minimize the extent to which I am a jerk, and I have found the remainder of Schwitzgebel’s post to be helpful in advancing that goal.  Here’s a bit more (but you should really go read the whole thing):

But how to know if you’re a jerk? It’s not obvious. Some jerks seem aware of their jerkitude, but most seem to lack self-knowledge. So can you rule out the possibility that you’re one of those self-ignorant jerks? Maybe a general theory of jerks will help!

I’m inclined to think of the jerk as someone who fails to appropriately respect the individual perspectives of the people around him, treating them as tools or objects to be manipulated, or idiots to be dealt with, rather than as moral and epistemic peers with a variety of potentially valuable perspectives. The characteristic phenomenology of the jerk is “I’m important, and I’m surrounded by idiots!” However, the jerk needn’t explicitly think that way, as long as his behavior and reactions fit the mold. Also, the jerk might regard other high-status people as important and regard people with manifestly superior knowledge as non-idiots.

To the jerk, the line of people in the post office is a mass of unimportant fools; it’s a felt injustice that he must wait while they bumble around with their requests. To the jerk, the flight attendant is not an individual doing her best in a difficult job, but the most available face of the corporation he berates for trying to force him to hang up his phone. To the jerk, the people waiting to board the train are not a latticework of equals with interesting lives and valuable projects but rather stupid schmoes to be nudged and edged out and cut off. Students and employees are lazy complainers. Low-level staff are people who failed to achieve meaningful careers through their own incompetence who ought to take the scut work and clean up the messes. (If he is in a low-level position, it’s a just a rung on the way up or a result of crimes against him.)

Inconveniencing others tends not to register in the jerk’s mind….

 

On Wednesday, the Supreme Court decided 7-2 that the victims of Allen Stanford’s Ponzi scheme could pursue state law class action claims against those who allegedly aided and abetted him (.pdf) – most notably, the law firms of Chadbourne & Park and Proskauer Rose.  But the opinion still leaves several questions unanswered, and it’s impossible not to read Troice without trying to tea leaf the Justices’ inclinations in Halliburton.

[Read more after the jump]

Continue Reading The Troice Cases – Questions Answered and Unanswered

From Gail Lasprogata (Seattle University):

Nowhere explodes with new life and color in the spring like the Pacific Northwest.This refreshment and inspiration is always matched by the supportive and fun atmosphere of the Pacific Northwest ALSB regional conference.

 

This year’s conference will be held on April 24-26, 2014 in Vancouver BC [pictured below].  We will start with a reception on Thursday evening, April 24th and end shortly after lunch on Saturday, April 26th.  We promise the same low cost and friendly high value in what has deservedly become a favorite among ALSB regional academic meetings.

 

If you have any questions, please contact our program chair, Gail Lasprogata of Seattle University at lasprogg@seattleu.edu.  Registration forms should be requested from, and submitted to, Gail.

 

We hope you will join us!

The previous posts for two other 2014 regional ALSB conferences:

The previous post for the 2014 national ALSB conference:

These conferences are the top regional and national conferences for legal studies professors in business schools, but I believe most are open to others as well.  

Vancouver

 

The business schools of Georgia Institute of Technology, University of Louisiana (Lafayette), and Indiana University (South Bend) have posted openings for legal studies positions. 

I have ties to two of the schools.  Wade Chumney (Georgia Tech) was in my position at Belmont University before I arrived and he provided me with great advice.  Wade seems like he would be a wonderful legal studies colleague.  University of Louisiana (Lafayette) was one of the (very few) schools to make me a tenure track offer when I was first on the market.  The faculty at UL-L were wonderfully hospitable, and I was a big fan of the Cajun food, music, and culture.  Plus, how many schools have a lake/swamp with (small) alligators in the middle of campus?  Proximity to family was the deciding factor in my decision, and I highly recommend the school. 

I don’t have any personal information about Indiana University (South Bend), but I think there is a lot of be said for the public education system.

All three of these positions are solid opportunities that our readers on the market may be interested in pursuing.  Given the well-publicized challenges facing many law schools, it would not be surprising if many current law professors were among those looking at legal studies positions in business schools.

The information on these positions is after the break.  Business school legal studies positions tend to be more poorly publicized than law school professor positions, and while I will try to post good positions to this website, if you are interested in teaching law in a business school, it might be worth the $30 (new member price) to join the Academy of Legal Studies in Business, view their job postings, and receive the e-mails.

Previously, I wrote about some of the differences I see in teaching at a business school and teaching at a law school.     

[Position Details After the Break]

Continue Reading Law Professor Jobs in Business Schools: Georgia Tech, University of Louisiana (Lafayette), and Indiana University (South Bend)

From Michelle Meyer over at the Faculty Lounge.  Sounds like an interesting position:

In connection with our work on a sponsored research project with the National Football League Players Association, the Petrie-Flom Center seeks to hire a Senior Law and Ethics Associate immediately. (Please note that this is a distinct position from the one we recently advertised working with Harvard Catalyst on clinical and translational research.)

 

We are seeking a full-time doctoral-level hire (J.D., M.D., Ph.D., etc. in law, ethics, public health, social science, or other relevant discipline) with extensive knowledge of and interest in legal and ethical issues related to the health and welfare of professional athletes.  The position will be funded for at least two years, with renewal likely for an additional year or more.

 

View the full job description and apply here. 

 

For questions, contact petrie-flom@law.harvard.edu or 617-496-4662.

As previously noted on this blog, 44 law professors filed an amicus brief in Sebelius v. Hobby Lobby Stores, Inc., outlining several corporate law issues in the arts-and-craft store chain’s request for a religious exemption from complying with contraceptive requirements in the Affordable Care Act.  That brief prompted several responses and sparked a corporate law debate, which is being recapped and weighed in on at Business Law Prof Blog (see earlier thoughtful posts: here, here, and here by Stefan Padfield and Haskell Murray).   

So what is at stake in this case? Religious exemptions for corporations. The role of benefit corporations and other hybrid, triple bottom line entities.  The classic entity theory vs. aggregate theory debate of how do we treat the legal fiction of individuals acting through businesses and businesses acting, in part, on behalf of people.  The role and future of Corporate Social Responsibility generally. Corporate personhood.  Corporate constitutional rights. And existential questions like can corporations pray? You know, easy stuff. 

CSR. Our laws set the floor; they establish the minimum that social actors must do and that other members in our society can expect to receive.  Corporate social responsibility asks companies to do more than their minimum legal obligations and to do so for a host of reasons, some of which may be religious.  The owners of Hobby Lobby can elect a corporate board that will authorize the company to donate to religious charities, to reimburse employees for religious expenses, to provide paid leave for a mission trip, or to not operate on Sundays. (Who here hasn’t craved a chicken biscuit on a road trip only to realize that Chick-Fil-A is closed on Sunday? Just us in the south?). Under what I will call the standard state corporate law regime, corporations can take actions like increasing their use of renewable energy sources, implementing diversity programs for women and minorities, refusing to support tobacco products and other actions that are in line with CSR.  Whether for religious or environmental or other conscience-driven reasons, a corporation may take these actions and the directors of the corporation (under whose governance the acts took place) are protected by the business judgment rule in the event that any shareholder challenges the program or expenditure as a form of waste or conflict of interest. 

Benefit Corporations & Hybrid Entities.  For companies incorporated in states with benefit corporate statutes or laws that recognize hybrid entities interested in seeking (but not always maximizing) profits and other goals, there is even greater protection.  These entities contain provisions in their charters identifying their “other” purpose, the shareholders are on notice of the dual pursuit and the corporate actions are protected by statutes recognizing this charter-based exception to profit maximization.  In the event a shareholder sues for waste or conflicts of interest, not only is the business judgment rule available to protect the corporate actors, but the validity of the corporate action is strengthened by the special legislation. [This in no way captures the full scope of benefit corporation and hybrid entity legislation, but this post is about religious exemptions for corporations, so please excuse the over simplification here.]

Hobby Lobby.  The owners of Hobby Lobby are not asking to do more, rather they are asking to do less.  Hobby Lobby want to provide less than the standards established in the Affordable Care Act, and less than their competitors will be required to provide.  Who would complain if Hobby Lobby failed to comply with the ACA?  The employees without access to contraceptive medicine, and the federal government.  This isn’t about the business judgment rule and whether owners, acting through boards of directors, can run companies in line with their view of religious or social or environmental consciousness.  This case asks can the religious beliefs of owners of a corporation entitle that corporation to do less under the law and as compared to their competitors.  On these grounds, deciding against a religious based exemption for Hobby Lobby does no harm to CSR or benefit corporations. 

The Hypothetical.  If the privately held religious belief of owners can change legal obligations for corporate actors, this could pose a threat to the stability, reliability and uniformity of the floor that the law sets. Poking a hole in the floor for religious exemptions based upon the owners’ religious beliefs may seem like a small concession in the Hobby Lobby case.  If religion is a means to opt-out of regulations and requirements, and if doing so could lower costs, shortcut compliance obligations and otherwise provide a competitive edge there will be robust incentives for businesses to claim such an exception in a likely wide array of issues. 

The Horrible.  The sacred ground of religion has long been an unhappy refuge for arguments in support of racial, gender, religious and sexual-orientation discrimination.  Every major social movement that I can think of has met resistance shrouded in religious beliefs.  The right for women to vote (and the continuing progress towards equality), desegregating schools, the Civil Rights Acts, and our most modern example:  gay rights.  Consider the law that the Arizona Legislature passed last week that would exempt businesses refusing to serve same-sex couples from civil liability on the grounds of a religious exemption.  Substantially similar legislation is pending in Georgia.

Religion, if we have it, should call us to do more and to be better.  As individuals, we may disagree about what “more” and “better” means.  I have no doubt that the owners of Hobby Lobby believe that their stance on birth control is consistent with their view of “more” and “better”.  As individuals, they can express that value in many ways.  As owners of a corporation they can express those values by electing directors that will govern the company and possibly pursue corporate donations to abstinence charities, promote natural family planning among employees via posters in the break room, and other avenues.  The individual values of the owners should not be used to excuse the corporation from compliance with the legal standard.  Individual religious views should not lower the minimum standards for corporate actions in this context, or others.

 

 -Anne Tucker

Yesterday, Carl Icahn sent a letter to eBay shareholders, which starts like this:

Dear Fellow eBay Stockholders,

We have recently accumulated a significant position in eBay’s common stock because we believe there is great long-term value in the business. However, after diligently researching this company we have discovered multiple lapses in corporate governance. These include certain material conflicts of interest, which we believe could put the future of our company in peril. We have found ourselves in many troubling situations over the years, but the complete disregard for accountability at eBay is the most blatant we have ever seen. Indeed, for the first time in our long history, we have encountered a situation where we believe we should not even have to run a proxy fight to change the board composition. Rather, we believe that in any sane business environment these directors would simply resign immediately from the eBay Board, either out of pure decency or sheer embarrassment at the public exposure of the extent of their self-serving activities.

Wow. You could almost drop the mic there.  Icahn does not, though. He goes on to outline a series of transactions from board members and the CEO that raise reasonable questions about the independence of certain board members.  (click below for more)

Continue Reading Corporate Opportunity Allegations at eBay, The Sequel

I have been working on a project involving liability for securities fraud under the Securities Act and the Securities Exchange Act. I’m addressing the possible liability of one particular defendant in one limited context–selling securities pursuant to the crowdfunding exemption in section 4(a)(6) of the Securities Act.

A defendant in that context faces possible civil liability under at least five different antifraud provisions—sections 4(a)(6), 12(a)(2), and 17(a) of the Exchange Act; Rule 10b-5; and section 9 of the Exchange Act. You could actually count that as seven if you counted scheme liability under Rule 10b-5 and section 17(a) separately. And that’s not counting the aiding and abetting provision in section 20(e) of the Exchange Act or possible state law liability.

Those antifraud provisions differ in many ways: the standard of care; the burden of proof; reliance requirements; who may sue; who’s liable as a defendant. Does it really make sense to have a potpourri of antifraud rules applicable to a single defendant in a single transaction?

I can understand why we might want to apply different rules when the SEC is a plaintiff than when a private party is the plaintiff. And I can understand why we might want to apply different liability rules to different types of defendants or different types of transactions. Policy considerations vary from defendant to defendant and from transaction to transaction. We might want to apply stronger liability rules to brokers, for instance, or in registered public offerings.

What I don’t understand is why a multitude of antifraud rules should apply to a single type of defendant in a single type of transaction. Wouldn’t it make more sense to decide what the requirements for liability should be for fraud in that type of transaction and, based on those policy choices, choose one liability rule to apply exclusively to that type of transaction? If a plaintiff didn’t meet the requirements of the applicable rule, the plaintiff couldn’t turn to any other liability provision for that transaction.

This would require Congressional action, and that’s never going to happen, of course. Absent a political tsunami of some sort, Congress could never pass a coherent set of securities liability rules. But I can dream, can’t I?