Commercial Law has been nominated a top business law blog

The LexisNexis Business Law Community has nominated Commercial Law as one of its top 25 business law blogs for 2011. Commercial Law very much appreciates the nomination and hopes that its readers will post a comment in support of this honor.

Train wreck

Train wreck at Montparnasse Station, Paris, France, 1895.

From Daphne Merkin, If Looks Could Steal, N.Y. Times (March 22, 2009):

[T]o call Mr. Madoff a sociopath isn’t really to explain him so much as to explain our failure to pick up on his scam. “Everything that deceives,” decreed Plato, “can be said to enchant.” Enter the sorcerer, the ganef, the man without qualities but with steady returns — and, I might add, a family man to the end. . . .

Enter us, the believers, the ones who signed on for the ride until it went off the rails, leaving wreckage as far as the eye could see.

Let's repeat that Platonic formula: “Everything that deceives can be said to enchant.” These are words worth remembering. Et encore, cette fois en français:

Le Renard s'en saisit, et dit :"Mon bon Monsieur,
Apprenez que tout flatteur
Vit aux dépens de celui qui l'écoute:
Cette leçon vaut bien un fromage sans doute."

Clawback

"Should executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke?" A growing, grumbling chorus says "yes":

With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.

Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005 . . . Almost half of that consisted of cash compensation.

Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.

Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.

“There is a line that separates fair compensation from stealing from shareholders,” said Frederick E. Rowe, a money manager in Dallas and a founder of Investors for Director Accountability, a nonprofit group. “When managements ignore that line or can’t see it, then hell, yes, they should be required to give the money back.”

Corporate boards that awarded lush executive pay packages almost always justified them by saying they encouraged superior performance and were directly tied to benchmarks like profitability.

But now, with a public backlash against excessive pay and taxpayer lifelines extended to crippled companies, the idea of recouping compensation, known as “clawback,” is gaining traction.

Currently there is no legal mechanism for forcing the regurgitation of past pay, so such efforts would need to be bolstered by new legislation. Clawbacks also promise to be a hot-button issue at shareholder meetings in coming months.

2009 AALS conference on transactional law

Transactional law in Long Beach, California

To: Faculty Members interested in Transactional Law

From: Planning Committee on 2009 AALS Conference on Transactional Law

• Lisa Fairfax, University of Maryland, Chair
• Victor Fleischer, University of Illinois
• Peter Pitegoff, University of Maine
• D. Gordon Smith, Brigham Young University
• Alfred Chueh-Chin Yen, Boston College

Subject: Requests for Proposals on Transactional Law Scholarship and Innovative Methods of Teaching Transactional Law

We are planning the AALS 2009 Mid-year Program on Transactional Law, which will be held on June 10-12, 2009 in Long Beach, California. "Transactional law" refers to the substantive legal rules that influence or constrain planning, negotiating, and document drafting in connection with business transactions, as well as the "law of the deal" (i.e., the negotiated contracts) produced by the parties to those transactions. We are seeking proposals from (1) faculty members interested in presenting on innovative methods of teaching transactional law, and (2) faculty members interested in presenting new scholarship that relates to transactional law.

About the Program

In 1994, the AALS held a Workshop on Transactional Approaches to Law which inspired significant innovation and experimentation in transactional teaching and scholarship. This Program provides a unique opportunity to take stock of developments in this area since that influential workshop. One important goal of the Program is to bring together faculty from different doctrinal areas of law to exchange ideas and information on teaching and scholarly innovations in the area of transactional law. Toward this end, we encourage proposals from faculty members with an interest in transactional law in any discipline including such specialties as bankruptcy, business associations, clinical law, contracts, commercial law, intellectual property, international business, labor and employment law, real estate transactions, securities regulation, and taxation.

Please note that the AALS 2009 Mid-Year Meeting will include three programs: A Program on Business Associations: Taking Stock of the Field, followed by Concurrent Programs on Transactional Law and Work Law. As a result, you may have received, or be receiving, Request for Proposals in connection with these other Programs. We would encourage you to submit proposals to any or all of the programs in which you have an interest in participating. We also encourage submissions from junior faculty.

Request for Proposals on Transactional Law Scholarship

In keeping with the conference theme, the Program will host a series of concurrent works-in-progress sessions designed to give interested faculty members an opportunity to present new scholarship related to transactional law. We are seeking works-in-progress proposals on transactional law scholarship broadly understood. Thus, we are seeking proposals on scholarship that focuses on the legal, financial, and practical implications of business transactions in a variety of different settings. In addition, we welcome proposals on the transactional side of the legal profession and the role of lawyers in consummating such transactions. We do not mean to limit the range of proposals in this area, and would welcome proposals on transactional scholarship of all types.

Request for Proposals on Innovative Methods of Teaching Transactional Law

We are planning a 75 minute plenary session on innovative methods of teaching transactional law, and are seeking proposals for faculty members interested in presenting in the session. Many law professors teach transactional skills in a variety of contexts, from stand-alone "Deals" or Business Planning courses to in-class exercises as part of doctrinal classes. A number of law schools have developed innovative courses or programs in transactional law. We are interested in hearing discussion of the various approaches with an eye towards discovering what works and what doesn't. To anchor the discussion, participants may wish to explore how they use (or choose not to use) case studies as a method for teaching transactional law. We welcome proposals from faculty members who wish to share their insights on using case studies and other innovative techniques and the manner in which those techniques enhance student development of transactional skills. As with the request for works-in-progress, we do not mean to limit the range of proposals in this area.

Submission Guidelines

Interested faculty should submit a 300-500 word written proposal of the proposed work-in-progress or proposed presentation not later than July 15, 2008. Faculty may submit proposals for both the work-in-progress and the presentation. In addition, as noted above, faculty who has submitted proposals in connection with the Business Association's Request for Proposals also may submit to the Program on Transactional Law. Please submit the description by email to transactional@aals.org. The presentations will not be published.

Chosen presenters must register for the Workshop and will be responsible for their own travel and other expenses. Any questions should be directed to Professor Lisa M. Fairfax, University of Maryland School of Law, Lisa M. Fairfax.

Teaching (commercial) law

Shortly after I started MoneyLaw, I wrote a post called Beyond ratings: Actually doing our jobs. Commercial law figured prominently in that post, and I thought I'd revisit the topic on the occasion of this weblog's founding.

A year and a half ago, The Conglomerate rightfully devoted careful attention to Larry Gavin's recent SSRN post, The Strange Death of Academic Commercial Law. Christine Hurt and Vic Fleischer each posted thoughtful proposals for reconfiguring the law school curriculum to bring this venerable and valuable subject back to legal academia.

After reviewing what I wrote in response to these proposals, I will add a few thoughts about commercial law and its centrality to legal education.

Read the rest of this post . . . .In August 2006, I wrote this in response to The Strange Death of Academic Commercial Law and The Conglomerate's discussion of that paper:

There is something to be said for reconfiguring the law school curriculum, especially in a third year that is as widely wasted as it is dreaded, according to the functional needs of new lawyers rather than the intellectual predilections of sinecured professors or, even worse, those professors' personal convenience.

Short of a comprehensive restructuring of the upper-level law school curriculum — which after all is the sort of proposal that sinks tenure petitions, ends deanships, and generally withers otherwise promising academic careers — perhaps we can consider a more modest intermediate step. Every law school student should complete a six-credit, two-semester "capstone" sequence as part of her or his third-year experience. Relying strictly on my personal arsenal of curricular weapons, I could conceivably offer full-year sequences in economic regulation (from antitrust to full-blown, command-and-control regulation of entry and rates), agricultural law and agribusiness law, the law of disasters, or natural resource and public lands management, among other possibilities. These are not offerings that lend themselves to a single 2-, 3-, or 4-credit course. In the tradition of, say, sports and entertainment law, they undertake to explain an entire way of doing business and to integrate such bodies of law as may be pertinent — all from a prospective client's perspective rather than the professor's idiosyncratic view of the field. Team teaching, skills training, and clinical experience can all be incorporated into this capstone sequence.

I still embrace the notion of building the entire third-year law school curriculum around capstone courses and practice-oriented exercises such as clinics, moot courts, and externships. I am now less sanguine, however, at the prospect that the legal academy as a whole would ever embrace something this radical. Even in August 2006, I feared that "an academy that is paralyzed by fear of The Ratings will be loath to try something different, no matter how sensible or how useful the alternative might be." Mark Osler has since identified serious and systemic institutional barriers to curricular innovation. Only partly in jest, I've suggested that those barriers dictate a single approach to faculty appointments: Hire no one.

As a compromise, therefore, I modestly propose this intermediate step: Law schools should actively encourage all students, and not just those who contemplate a future in business law, to complete at least one course in commercial law. Better yet, all students — especially those who expect to work in areas they may not characterize as commercial or economic — should complete a core business law curriculum, including commercial law, the law of business associations, and basic income taxation. This may be an obvious point to the contributors to this blog, but a shocking number of students (and even professors) indicate a contrary belief through their curricular choices. Marie Reilly has already extolled the utility law teacher. I now praise the utility law course.

The virtues of teaching commercial law are many, but the principal ones merit quick mention here:

• Commercial law, throughout its manifestations, is primarily a product of statutory law. In an academy where few schools undertake to teach legislation and statutory interpretation and few students encounter the chief tool of contemporary lawmakers and courts, courses in commercial law (and, for that matter, in tax) may represent most students' only systematic introduction to statutes and codes.


• Commercial law covers the sort of substantive legal knowledge for which clients are most likely to be willing to pay. We must never forget that the vast majority of law students are not going to school for fun or mere intellectual stimulation. Every law students should take at least one upper-level course that will enable them, quite simply, to get a job.


• Commercial law outperforms most other law school offerings in its integration of legal doctrine with real-world problem-solving techniques. That potential, at any rate, means a great deal in the hands of a skillful teacher of commercial law.

For these reasons and more, I have expressed my belief that a start-up law school should hire a Reilly-style utility law teacher as the first member of its new faculty. I would hire a broad-gauged business law generalist ahead of, say, an intellectual property or environmental law specialist, and far, far ahead of an interdisciplinary scholar whose devotion to teaching law students might stem entirely from the relative heft of a law teaching salary vis-à-vis paychecks offered elsewhere on a university campus. Commercial law may lack the glamor attributed to other fields in today's legal academy, but it is the bedrock of a legal education that works for its students — both in the sense of serving those students prudently, and in the sense of committing law schools to devoting labor, time, and resources toward those students and their future.