Author: Jeffrey Lipshaw


“From Enron to Refco” Podcast Available

A few days ago, I mentioned the program held here at Suffolk, “From Enron to Refco,” in which the keynote speaker was Joshua Hochberg, the former head of the Fraud Division of the U.S. Department of Justice, and supervisor of the DOJ teams that assisted in the prosecution of a number of the well-known corporate scandals. Also on the panel were James Rehnquist, a white-collar defense partner at Goodwin Procter in Boston, and John O’Connor, the former Vice-Chairman of PriceWaterhouseCoopers.

A podcast of that program is now available.


Realism and Idealism in Business Ethics: A Post-Bear Reflection

I suppose that I should start with a disclaimer that this isn’t really about Bear, but continues a theme (some called it unduly pointillistic) I started a week or so ago while thinking about Bear. (By the way, for a surprisingly counter-intuitive take on responsibility and victimhood in the sub-prime crisis from a liberal commentator, see Michael Kinsley’s endpaper essay in Time last week.)

This past week, we had a successful program at Suffolk, jointly sponsored by the law and business school, entitled “From Enron to Refco” dealing with the criminal liability of service providers to corporations involved in nefarious activities. (Several of the people in the audience reflected an unfortunate aspect of the politics of all of this, which was a confusion between criminal fraud, say like WorldCom, and business judgments that go badly wrong, like Bear, but that’s a subject for another discussion.) The keynote speaker was Joshua Hochberg, now a partner at McKenna Long & Aldridge, and formerly the head of the US Department of Justice’s Fraud Division, where he supervised some of the major bubble-bursting cases of the last ten years – Enron, Arthur Andersen, etc. Also on the panel were Jim Rehnquist, a partner specializing in white-collar criminal defense at Goodwin Procter here in Boston, as well as John O’Connor, a retired vice-chairman of PriceWaterhouseCoopers (and a Suffolk alum to boot). My role was to be the “audience moderator” which means that I flitted around in the audience with a wireless microphone, doing my Jay Leno thing. I asked a question myself, which failed completely in its purpose of raising the concern expressed below.

The morning after, I had the following reflections on the program (after congratulating all the organizers for its success and somewhat edited for this purpose).

If you listened to a combination of Josh Hochberg, the corporate fraud prosecutor, and Jim Rehnquist, the white-collar defender, it sounded like being co-opted into corruption and fraud was something that happened inexorably in the business world, and there was almost nothing you could do about it – sort of like being a passenger on an airplane and hoping this isn’t your unlucky day. I think that’s a view steeped in a pessimistic ultra-realism, shaped by careers in which what you do is either prosecute or defend people after the problem has already occurred. It wouldn’t surprise me if prison guards also had a generally downcast view of human nature. I’m agnostic on the question – I think there’s equally as much evidence that we are innately good as innately bad, and the issue is not capable of resolution.

Yes, it is a reality of the world that all of us can be co-opted by our commitment to ends that begin to blur the edges of our reservations about inappropriate means. That can affect CEOs, prosecutors, police, Secretaries of Defense, university presidents, and law school deans. There’s really no cure to that other than trying to reach an honest reflective equilibrium of idealism (what ought to be) and realism (what has to get done) through whatever means are available. But it was troubling to me that the only discussion of values came right at the end, and not from the lawyers, but from John O’Connor, the accountant.

Especially troubling was JIm Rehnquist’s not untypical litigator’s view of the lawyer’s role as advocate. Trust me, when you are sitting in the corporate board room, and there’s a difficult decision to make, and it has moral or ethical overtones, the last thing you want to be is an advocate. Your job at that point is to be a counselor, and, if you are effective, to be a counselor that understands the limits of the law and its relationship to other normative rules, whether they be social norms, moral duties, or utilitarian calculations.

Of course, none of the lawyers sitting on the panel had ever been in a corporate management suite or a boardroom except after the crap has hit the fan.

As I said, I was troubled by the message to the students in the audience. It was that the corporate world is corrupting and essentially random and beyond your control, and there’s not a whole lot you can do about it, except hope that your figurative airplane doesn’t crash. I acknowledge my views on individual freedom and autonomy may not be everybody’s, and this is a statement reflecting my strange position of Kantian corporate governance, but there’s not much hope if we don’t even discuss it.


Smith on Bear Shareholders Litigation

Over at Conglomerate, Gordon Smith has a quick and dirty analysis of the just-filed lawsuit in which pension fund shareholders (Wayne County, Michigan and the Detroit Police and Fire Retirement Funds) seek to enjoin the proposed (and amended) Bear Stearns – J.P. Morgan Chase deal. As does Larry Ribstein at Ideoblog. One of Larry’s points is that companies can avoid this kind of mess by selecting an organization form that simply excises the kinds of the duties that are the basis for the litigation. The prime example of this is Blackstone’s publicly-traded partnership, in which the disclosures are belt-and-suspenders clear that the unit holders have waived just about anything it’s possible to waive.

These latter investments are, in some respects, beyond the law. You buy them because you believe the managers’ interests are completely aligned with the equity owners, or because you believe, in a consequentialist way, that managers will do the right thing because they can’t afford not to. Indeed, the WSJ has an article this morning about the unchecked ability of Blackstone’s managers to set their own compensation, something with which this unit holder has no problem, according to the WSJ:

“I don’t have any problem with their compensation system,” says Robert Olstein, head of Olstein Capital Management, which owns 1.4 million Blackstone units. “These guys are the crème de la crème. If they make money, I make money.”


“That’s Why I’m Up Here in the Booth”

Corporate law pundits were abuzz yesterday with the possibility that – oh my god – Wachtell might have had what we used to call a “bust” – just a good old-fashioned mistake in contract drafting. This had to do with what would trigger the end or cancellation of J.P. Morgan’s guarantee of Bear Stearns’ liabilities. The gist of the buzz was the fact that the guarantee would go on for a year if the BS shareholders voted the deal down, as long as the Bear board did not back down from its recommendation of the deal to the shareholders.

This is all moot now, because there has been a revised deal, and I was too busy trying to get ready for class yesterday to follow it in real time. But without undue contortion to slap myself on the back, I did send this e-mail (just slightly edited to get a term correct) to a number of the pundits last night:

The effect of this is to get a guarantee on one year’s worth of covered liabilities. It’s not forever.

I don’t know much about the securities being guaranteed. Is this a “floating” guarantee under which liabilities are created and discharged on a rolling basis? If so, for how much would JPM be on the hook at any one time?

I could see an argument the Bear board could have made in support of the lockup for one year: in exchange we got a one-year guarantee as long as we didn’t change our recommendation, and we could control that. So while we may have blocked other bidders, we may have also insured the survival of the business.

It’s possible this was a Wachtell mistake. But I thought I’d take a shot at Larry Solum’s principle of charitable interpretation.

This morning other views have surfaced – see Gordon Smith over at Conglomerate and the quotes from Larry Cunningham in the Wall Street Journal this morning that seem to accord with my more “charitable” interpretation of last night. Here’s a quote from the article with Larry’s comment:

The measure “seems rational,” given the circumstances at the time, when J.P. Morgan was trying to signal to the market that it would stand by Bear’s obligations, says Lawrence Cunningham, a law professor at George Washington University. “Bear was fighting for its life and a handful of forces were at play and it makes sense that J.P. Morgan would want to add credibility to the deal by giving a big guarantee.” Observers add that J.P. Morgan might not have anticipated the shareholder resistance that surfaced to the original deal.

In any event, it does demonstrate, as the ex-football coaches who do color commentary observe from time to time, it’s a lot easier to be up in the booth providing analysis than down on the field making the decisions!


Exuberant Bulls, Rueful Bears, and Rational Frogs

Yesterday, James Dimon, the CEO of JPMorgan Chase, visited the Bear Stearns headquarters, and met with 400 Bear executives, described in the New York Times this morning as “seething, fearful and to their dismay, far poorer than they were a week ago.” What struck me was the emotional and personal language of the dialogue, something I’m not surprised to hear, but which may take some reconciling for theoretical observers. As this is a blog post, I’ll again offer some not-quite-random thoughts.

1. One of my favorite lines in all of academic writing is Richard Posner’s allusion to the rational actor in neo-classical economic theory. In this variant of consequentialism, reason does not determine ends; the end for any actor is always happiness, measured in units of utility. Reason is instrument and practical – it is a slave to this particular passion. Hence, we assume all actors choose rationally those actions calculated to be most likely to maximize utility. Judge Posner says, therefore, it would not be solecism to speak of a rational frog. We don’t need to dissect it [the frog, get it?] because we can assume it to be a black box whose actions demonstrate, overall, an internal utility calculation consistent with the theory. The model, of course, is simple and useful as a tool, but it has significant limitations as a theory of everything; hence, the rise of behavioral economics to try to explain all choices, even when the frog seems to be acting irrationally. For more on this, see the debate between Judge Posner and Cass Sunstein, et al., in the Stanford Law Review a few years back.

2. So here we have Jamie Dimon (he can’t be James in this context) telling the Bear executives “I don’t think Bear did anything to deserve this. Our hearts go out to you.” Does he really mean that? Do their hearts really go out? Do they have hearts?

3. In response, according to the Times, a Bear executive “with anger in his voice” asks, “In this room are people who have built this firm and lost a lot, our fortunes. What will you do to make us whole?” To which Dimon “gingerly” replies, “You’re acting like it’s our fault, and it’s not. If you stay we will make you happy.”

4. In the Boston Globe this morning, Barney Frank, one of our locals, talks about greater regulation of investment banks. Steven Syre, the Globe business columnist observes there is a gap between conservative banking regulation administered by the Fed and the “heightened risk and reward” environment of Wall Street bankers who underwrite and trade securities. Says Syre, “They made huge fortunes in good times and had every incentive to take big risks, usually by betting with lots of borrowed money.” What he is describing is leverage (or “gearing” for our British readers), and leverage is not strictly a Wall Street phenomenon. Anybody who buys a house with 20% down (i.e. equity) and an 80% mortgage is engaged in financial leverage (and if you buy the house with a subprime mortgage, putting 5% down, you just leverage up more). All companies seek an optimum level of leverage in their capital structure – they are always balancing financial risk with financial reward.

5. Now let’s talk about foresight and hindsight, and particularly what the behavioralists call “hindsight bias.” When you engage in business and take significant risk, and it doesn’t pan out, and you look at the whole mess in retrospect, it may be that you are affected by hindsight bias, which means that the bad result, which may have been a 40-60 shot ex ante, is now 100% certain, and doesn’t feel like a 40-60 shot any more.

6. I spent five years of my career, from 1992 to 1997, at a company called AlliedSignal. It merged with, and took the name, Honeywell. Those were the boom years in the stock market. The level of the ocean was rising, and if you kept your boat from leaking, much less turbocharging it, you tended to rise with the rest of the boats. We did okay (well, maybe more than okay) in stock compensation, but most of us were significantly (by virtue of the stock plan limitations or by unwise lack of diversification) tied to the fortune of the company’s stock as a measure of our personal net worth. We were just like the Bear executives, except we were luckier. We didn’t have to deal with hindsight bias except in this regard, which was just the opposite: if you exercised your options or sold your stock, and then watched the company outperform the market, you had exactly the OPPOSITE hindsight bias.

Larry Bossidy, long-time second in command to Jack Welch at GE, was the CEO of AlliedSignal in those years. I can’t recall how many times, at employee meetings, the rank-and-file white and blue collars would ask why they couldn’t get stock options (they could get stock in their 401(k) plans, and the company’s match was in stock). Bossidy’s response was always the same: you’ll like the stock if it keeps going up, but it’s a risk-reward proposition, and my experience is that rank-and-file like the reward, but don’t like the risk.

6. Finally, there is the quote from Alan Schwartz, Bear’s CEO: “We are a collective victim of violence. It’s natural to be angry, and you’re not sure who to be angry at. But we have to put it behind us.” This is a very interesting statement, because it gets to the heart of a philosophical dilemma that in some areas was resolved 250 years ago, but pops up whenever we again encounter any kind of disaster. Since Rousseau, we have separated the concepts of natural evil and moral evil. We may attribute blame to people for their response, or preparation, or negligence about the safeguards against hurricane damage, but we don’t connect (I suppose except in the global warming sense) natural disaster to human agency anymore. People aren’t to blame for Hurricane Katrina, or the Tsunami, or the Lisbon Earthquake of 1755.

But we have, and this is part of what Kant brought to the table, a natural inclination, by virtue of our reason, to want to link what is with what ought to be. My simplest illustration of the process by which most of us immediately separate ourselves from random bad consequence by virtue of our agency is how I always wonder, when I hear about a traffic death, whether the people had their seat belts fastened. My friend Susan Neiman uses the example of criminals in the Nazi concentration camps. There is some evidence that they fared better than most because at least they understood why they were there.

Schwartz’s comment suggests that what occurred at Bear was a kind of evil – a violence in the form of a bank run – that might be moral (did somebody trigger it purposely?) or natural (panics are a part, for better or worse, of economic cycles).

7. So the dialogue, Dimon’s comments, the executives’ anger, Schwartz’s shaken explanation of what happened, are indeed typical human reactions to great disaster, and they are attempts, as always, to reconcile what did happen with our ideals of what should have happened. This, it seems to me, is the great challenge of mature and reasoned discussion about economic life, and the balancing of our desire to be happy (materially) with our desire to be fair. When I was just getting started at being an academic, and still flush with the perspective of a corporate executive, I wrote this in a footnote at the end of an article about how lawyers used contracts as one very limited way of dealing with contingency:

I am willing to concede the simultaneous operation of economic laws and moral laws. They are, respectively, the embodiments of the critical distinction in Kant between the nature of instrumentality and the nature of free will or autonomy. Our needs in everyday life are fulfilled by instrumental relationships all the time. Physical and economic laws are discernible that govern the satisfaction of what Kant calls our inclinations (our tangible and intangible needs). The principle of microeconomics that a rational firm shuts down the plant when the marginal cost exceeds the marginal revenue is morally neutral (at least it is to me, but I recognize others, socialist or critical legal theorists, for example, may disagree). The moral question, on the other hand, is: are they people or things to you morally at the time the real world makes you do that? How do you handle the layoffs? Do you provide outplacement? Is the severance sufficient? Have you developed your employees so they have transferable marketable skills?

I’m no “progressive” (in part because I don’t know what it means), but sight unseen, I’ll recommend a piece just recently up on SSRN by Kent Greenfield that seems to want to encourage this kind of discussion. The abstract follows the fold.

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Bear Stearns – Is the World Coming to an End?

David Hoffman graciously invited me back to comment on the Bear Stearns meltdown. As I mentioned to him, I’m no expert in financial institutions, but I was a deal lawyer, and I spent a lot of time with boards of directors, so the dynamics of the deal process are very, very interesting to me. (I’m also an investor in the market generally, thankfully diversified, but probably reflect the mood of the country generally – even though it makes no difference in the short or long run, yesterday I deferred the purchase of a new Apple MacBook.)

The usual pundits are commenting – Steve Davidoff of M&A Prof Blog and the New York Times Dealbook did us all a service by posting the Bear Stearns – J.P. Morgan merger agreement, and got into a nice little debate with Larry Ribstein. I have posted a few observations in various spots around the blogosphere, and I thought I’d consolidate and update them here.

1. When the deal was first announced, I didn’t realize from the newspaper accounts that it was not a cash deal at $2.00 a share. It’s a stock-for-stock deal that pegged $2.00 to the J.P. Morgan stock on an exchange ratio of just over .054 shares of JPM for each share of Bear. The market, at least on Tuesday, was not persuaded that this was a done deal – indeed, the stock price for Bear tripled or quadrupled during the day on arbitrage activity. Once the deal is viewed as done, the Bear shareholders will continue to ride up or down depending on the markets’ reactions generally, but tied to what JPM does.

2. The fairness opinion on the price will come from Lazard Freres. That should be an interesting read.

3. The hot issue among experts in Delaware law on takeover matters is the fact that the agreement locks out an alternative proposal for a year. Let me put this in context for non-corporate types. What the buyer in a friendly deal tries to do is lock up the deal to the limits permitted by Delaware case law with respect to the directors’ obligation to obtain the highest price for the company once it is “in play.” So the merger agreement, as here, always has a “fiduciary out” (although that may not be necessary if the agreement follows a full auction for the company). Indeed, the fiduciary out is a way of ameliorating the effect of a non-auction deal. The trick is in putting in as many roadblocks to an alternative proposal without crossing the line after which the Delaware Chancery Courts think that the board of the target company has breached its duty to get the best price. One such tactic is for the buyer to demand the ability to force a shareholder vote even over a “Change in Recommendation” if there is an “Alternative Proposal.” Not surprisingly, a “force the vote” is a win for the acquiring company, as you’d expect here. This agreement takes one step further, giving JPM another bite at the apple, and gives JPM one year to complete a deal to the exclusion of other suitors who pop up. Gordon Smith at Conglomerate has commentary on this.

Obviously, the “asset option” to buy the headquarters, which would survive even an alternative deal is another way to lock down the deal.

4. The deal was reported as being “locked down” in terms of J.P. Morgan’s ability to get out. That appears to be true. There is no MAC (“material adverse change”) provision as a condition of closing. The representations and warranties are made only as of the date of signing and not as of the closing. The “bring down” certificate as to the continued accuracy of the representations and warranties in the closing conditions applies only to the bare minimum: that JPM is getting pretty much all of the stock, that the deal is authorized, that nobody other than Lazard Freres is a broker, and that Lazard Freres will issue a fairness opinion. It just goes to show how little you need to make a deal when you gotta make a deal!

5. One commentator mentioned to me in an e-mail that the purpose of doing this as a stock deal was to be able to eliminate dissenters’ rights under Delaware corporation law (i.e. if you vote against the merger, you get to invoke an appraisal of the value of your shares). This is because there is an exception to the appraisal right provision if the consideration in the merger is the stock of a company traded on a national exchange. The comment ended sarcastically “nice guys!” I’m less cynical, I guess. The only significant closing condition here is getting all the Bear shares. If you do a deal for cash with appraisal rights, a buyer can reasonably ask for a condition of closing that it be able to get out of the deal if more than X% of the shares exercise their appraisal rights. I can’t believe either the Fed or Bear wanted that to occur.

6. There has been some discussion of the impact on employees. The WSJ reports this morning that Bear senior management will get very little out of this deal because so much of their compensation was in stock, and they don’t have much in the way of golden parachutes. My level of sympathy is inversely related to the employee’s rank in the company, and Paul Secunda has already commented here about the problem of employee non-diversification.

There’s two different issues, one evoking more sympathy than the other. I’m speculating on the facts here, so take this with a grain of salt. I don’t know how it broke down at Bear, but there’s usually a dividing line in most big companies between those employees who are incentive compensation eligible and those who are not. If you are granted stock options or restricted stock, moreover, it has a vesting schedule. Holding the stock once you have vested is an employee diversification issue.

One feels for the executives who may have lost the value in their restricted stock, although chances are the plan has a change in control provision so they’ll end up with JPM stock at the exchange ration. I realize that’s cold comfort, but they are executives and have, I think, less claim on our sympathy than the employees in the other category, which is those (assuming Bear did it) either got their 401(k) match in Bear stock, or worse, actually selected Bear stock as a place to put their own money, again a diversification error, and one I think employees make a lot.

7. The Bear directors have the standard continuation of D&O insurance. Again, I have to admit some sympathy for them. I’m convinced that great success is generally serendipitous, as is great disaster. You can always dissect it looking backwards, but predicting it is radically uncertain. I can only imagine what it was like for an outside director of Bear, operating in good faith and appropriate diligence over the last week (assuming they have been so operating up to this point, which I do). There is, in that light, something to be said for thinking this case lies somewhere between the deference given to boards by the business judgment rule and the more exacting standards of Revlon and progeny, in which the directors’ action are held to a higher level of scrutiny.

Finally, as long as I’m here on a limited brief I’m going to use the opportunity to link up my observations on the art of the elevator speech and the oral arguments in District of Columbia v. Heller!


Encore – I Couldn’t Resist Saying Something About the Interdisciplinarity Debate

I mentioned to Dan Solove (in praise of his post) that I am giving a talk to the Suffolk Business Law Association with the title “How to Be a Great Business Lawyer Even if You Majored in Philosophy,” and he invited me back for an encore post. The connection here is that “law” and “philosophy” are in the same sentence, so it must have something to do with interdisciplinarity in the legal academy, which has, by virtue of Brian Tamanaha’s post, become a matter of widespread discussion in the blogosphere. I’m not going to try to link up to all or even most of them – Dan did it recently, and, as I mentioned to Larry Solum in an e-mail yesterday on one’s ability to predict, his “post” on the subject ten, and maybe even two, years ago would have been an unread essay in the Journal of Legal Education; today it is read by thousands of people within hours of his writing it.

I feel like I ought to say something on this issue not because I was in practice for so long, but because of what I was doing in practice for so long, which was managing, as much as doing, legal work, and hiring lawyers. Hiring lawyers, both those who will work in-house, and firms to do work at varying levels of sophistication, is an endeavor at the polar extreme from most of what lawyers learn and do. You can use all sorts of rules of thumb (for the practitioner audience) or heuristics (for the professorial audience), but making a commitment to a person by which one entrusts the myriad judgment of a deal or a case or a business has more judgment and less analysis than almost anything one studies in theory or doctrine in law school (and it’s part of my thesis for the talk).

Having said that, I agree with another blogo-pundit that Brian has intertwined two issues – the fate of non-elite law schools and their graduates, on one hand, and the rising (and, from a practice standpoint, arguably irrelevant) inter- or multi-disciplinarity of the law school professoriat. Here, for what it’s worth, are four observations:

1. There’s something to be said for the Luhmann-Teubner theory of social systems in law – that is that law is a closed system that has points of interconnection with the rest of society, but is “autopoietic” in that it self-generates its own principles, standards, processes, results, etc. I would posit that legal academia is autopoietic even within law. To put it more bluntly, practicing lawyers don’t care what the law professors are thinking or writing about, as long as the professors are churning out law grads with the basic doctrinal training (that training that Larry Solum aptly says fits like a glove). Or to put it another way, Larry Solum and I are almost the same age, so his essay describing what it was like to be a legal academic from the late 70s until now is fascinating; I was a hard-nosed practitioner over the same period, had no concept or even awareness whatsoever of anything Larry described, and, trust me, was absolutely no worse for the wear as a lawyer!

2. With everything that can or should be done to improve legal pedagogy, in fact, you do learn a lot in law school about the law. It’s a sad statement that the worst irrelevancy offender is the course I have taught – contracts – because rarely do you ever litigate or worry about the issues taught – offer and acceptance, consideration, etc. But even having said that, there’s something about the history, tradition, thinking process, whatever, of the closed system that one does learn. And I can testify that some or all of the following courses I took in law school were not a waste of time when I got into practice (and I’m sure there were others I can’t recall offhand): torts, civil procedure, constitutional law, property, trusts and estates, securities regulation, tax, evidence, real estate transactions, business associations.

3. I’d be careful about painting the non-elite school with too broad a proletarian brush. I don’t know if my school, Suffolk, turns out policy-oriented lawyers on a national scale, but I do think we have a significant relationship with state and local government in Massachusetts, and a role to play in that arena. On the subject of the cost-benefit, and without minimizing the plight of today’s young lawyers saddled with debt, it’s hard to believe the market won’t sort this one out. If there’s no real or perceived return on the degree, are students really that gullible that they would incur $100,000 of debt just because law schools would like the revenue? I’m familiar enough with the behavioral economics of this (over-optimism, etc.), and this is awfully rational choice of me, but if you amortize $100,000 of debt over a forty-year career, the debt service is $5,000 a year. So you only have to improve your earning capacity by that much a year to make it a rational decision. Right?

4. The history Larry Solum traces of the trade school/professional school/social science model is fascinating and rich and deserves more attention than I will give it here. Personally, I think Larry is onto something with the Ph.D. in law, because the fact of the J.D. as terminal degree for academics and practitioners has two effects: (1) it fosters the practice-academy divide because academics feel an even greater need to close their system to highlight their differences from mere practitioners, and (2) it is something less than “real” scholars in sister disciplines would expect. Larry mentions political science as an area to which one might compare this dilemma; I think there are even more: business administration, public administration, medicine, dentistry, journalism, to name a few. At least looking at those areas would tell us how much of legal academic angst is unique to legal academia.

Well, I’ve probably overstayed my welcome as it is, but if the talk with the students turns up any other insights, I’ll be back for one more encore.


Traveling Hopefully

This will be my last post in this guest-blogging stint, and I want to express effusive thanks to Dan Solove, Frank Pasquale, Dave Hoffman, and the other proprietors of this space for their hospitality and encouragement. I also appreciate the fact that they, and not I, created a forum with several thousand discrete hits a day. It’s quite an incentive to a blogger (or any other writer).

Joy is not the kind of thing that lends itself to either critical or even interesting analysis, but that has been my experience of this particular stint on Concurring Opinions. I remember discussing Milton’s Paradise Lost in high school, and we all agreed that Satan was by far the most interesting character. Unhappiness or dissatisfaction is (ironically) so much more satisfying, and we indulge in it, whether it’s why law professors are so unhappy, or why the law review system doesn’t work, or why legal scholarship isn’t really scholarship, or why lawyers think law professors are irrelevant, and so on. There’s even a mystical explanation for this. In the Lurianic myths of the Kabbalah, the physical universe, as we know it, came about as the result of God’s withdrawal (tzimtzum), which resulted in the shattering of the perfect glass “vessel” of the heavens. The shards of that shattered vessel are what we experience as the physical world. The repairing of the world, or Tikkun Olam, is the endless process of returning those shards to their perfect state. And how are we to do that without first identifying the miseries of the world?

You can really get into the repair of the world if you are out in the trenches on the front lines of life, whether you are fixing gutters (I just got an estimate for ours), litigating public or private disputes, or figuring out whether the universe is expanding or contracting (I figure we are going to have to understand the cosmological constant if we are going to reconstruct the shards at some point). The other day I referred to one of the tomes identifying some of what is wrong with the [academic] world, Julius Getman’s In the Company of Scholars. In turn, Mike Madison pointed me to his Lewis & Clark Law Review piece quoting Getman to the effect that “research serves as a ‘dress suit for academic elitism.'” Mike applies the concept of the “economy of prestige” to the question why law reviews don’t seem to go away in the face of so-called “open access.” If I may interpret, Mike’s point is that scholarship, and particularly legal scholarship, is a self-contained, self-validating, self-referential economy, in which the payoff is in utils measured by prestige. And open access simply does not generate sufficient wealth as so measured. According to Mike, “The theory of the economy of prestige holds that we see a grumpily mutually-reinforcing symbolic economy of law professors, lawyers, law students, law schools and their universities processing professional prestige through the unusual institution known as the law review.”

It’s a dreary prospect, and not one that inspires joy. But there’s some joy after the fold.

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Call for Papers: CILS Conference on Civil Society and the Governance of Multimodal Communication

My colleague, Michael Rustad, asked me to announce a conference on The Internet: Governance and the Law, “Civil Society and the Governance of Multimodal Communication,” to be held at McGill University, MONTRÉAL, Canada, October 26-29, 2008. Here is the call for paper abstracts:

The Center for International Legal Studies in cooperation with McGill University and the Suffolk School of Law invites abstracts for papers on the role of civil society in the formulation, adoption and implementation of policies, regulations and laws affecting multimodal communication by governments and international organizations. At the conclusion of the Geneva phase of the World Summit on the Information Society (WSIS), civil society was called upon to play an active role in the development and implementation of national strategies affecting multimodal communication. This post-Tunis Internet governance conference invites papers broadly addressing the topic of civil society and the Internet. The name of the presenter/s and his/her/their affiliation/s as well as the thematic focus of the proposal should appear on the top right-hand corner of the abstract. Send abstracts of 500 words or less and requests for further information to:

Manuela Ines Wedam

Law Conference Coordinator


PO Box 19



Fax: +43 662 83539922 or +1 509 3560077

Deadline for the receipt of abstracts is 14 April 2008. Each abstract must be accompanied by the author’s curriculum vitae and a biographical sketch of 300 words or less.

Advisory program committee:

James Archibald, Department of Translation Studies, McGill University

Dennis Campbell, Center for International Legal Studies

Richard Gold, Centre for Intellectual Property Policy, McGill University

Michael L. Rustad, Intellectual Property Law Program, Suffolk University School of Law


New Orleans and Mardi Gras

My blogging partner over at Legal Profession Blog, Alan Childress, has a post puncturing two myths about Mardi Gras. I spent a year at Tulane, and one of the highlights was Mardi Gras precisely as Alan describes it. Everyone should experience it.

I was trying to figure out how to connect this up to my stint here, and I realized it’s simple: I concur in Alan’s opinion. I’ll add three items in support:

(1) Pictures of the parades and other events that occur before Mardi Day itself (I have yet to use this one in the manner suggested by my comment).

(2) Pictures from Mardi Gras day itself, most of which are, as Alan points out, G-rated. We did take a walk through the French Quarter, and the epicenter of raunch is Bourbon Street, but my pictures are PG and not G-string rated.

(3) Alan mentions the gathering of loot in the form of “throws” from the floats. The most treasured of these are the hand-decorated coconuts in the Zulu parade. A city ordinance now bans these from being thrown like the beads or stuffed toys, and I suppose here is a legal connection: people were getting hurt. So the way you get one is to sidle up to the side of the float and beg for one. This is a self-satisfied reveler clutching his prized possession (now sitting in a prominent spot in his Suffolk University Law School office.)