Author Archive for lawrence-cunningham
posted by Lawrence Cunningham
My friend Warren Buffett on fiscal policy in an NYT op-ed. (LAC)
August 15, 2011 at 6:51 am
Posted in: Asides
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Law & Religion Call for Papers
posted by Lawrence Cunningham
On February 23-25, Pepperdine will host the third Religious Legal Theory conference. It will deal with: “The Competing Claims of Law & Religion: Who Should Influence Whom?” Some speakers will address the topic as a matter of constitutional law, some as a matter of “good citizenship,” some as a matter of religious faith. The speakers who have already agreed to speak at the conference include those listed down below this post. Details are here.
Those interested in speaking at the conference or organizing a panel are welcome to submit proposals on any law and religion topic, by September 15, 2011 to: lauren.hartley@pepperdine.edu.
The conference will be the basis of a spring 2012 Pepperdine Law Review symposium edition. Papers submitted by January 7, 2012 will be considered by the law review for publication. Submission of presentations is optional and publication is not guaranteed. Read the rest of this post »
August 13, 2011 at 9:22 am
Posted in: Uncategorized
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Top Law Schools for Making Partner
posted by Lawrence Cunningham
A fascinating new study by Theodore Seto is required reading for prospective law students choosing between schools and hiring partners at large law firms allocating recruiting resources.
The most important implication is that hiring is a local thing, so that you have a much better chance of becoming a partner at a large L.A. firm if you go to Loyola Los Angeles rather than Vanderbilt.
Another important thing: throw your U.S. News magazine away if you care about which law schools graduate the people who become big-law partners.
Spoiler alert, here is an excerpt from Table 1, showing the Top Feeder Partners in the National Law Journal 100 :
1. Harvard
2. Georgetown
3. NYU
4. U. Va.
5. Columbia
6. GW
7. Michigan
8. Chicago
9. Texas
10. Northwestern
August 11, 2011 at 6:59 pm
Posted in: Uncategorized
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GW’s 2nd Annual Jr. Faculty B-Law Workshop
posted by Lawrence Cunningham
The Center for Law, Economics and Finance at George Washington University Law School (C-LEAF) has formally announced its second annual Junior Faculty Business and Financial Law Workshop and Junior Faculty Scholarship Prizes. The Workshop will be held and Prizes awarded on February 10-11, 2012, at GW Law School in Washington, DC.
A dozen papers will be chosen from those submitted for presentation at the Workshop (last year’s finalists are listed and pictured here). At the Workshop, one or more senior scholars will comment on each paper, followed by general discussion of each paper among all participants. The Workshop audience will include invited junior scholars, faculty from GW’s Law School and Business School, faculty from other institutions, and invited guests.
At the conclusion of the Workshop, up to three papers will be awarded Junior Faculty Scholarship Prizes, of $3,000, $2,000, and $1,000, respectively. Chosen papers will be featured on C-LEAF’s website as part of its Working Paper Series. In addition to participating in the Workshop, all scholars selected to present at the Workshop will be invited to become Fellows of C-LEAF.
Scholars who have held a full-time academic appointment for less than seven years as of the submission date are eligible. Subject matters encompass accounting, banking, bankruptcy, corporations, economics, finance, and securities.
Interested scholars should submit a summary or draft, preferably by e-mail, before October 7, 2011. Submissions, along with any inquiries related to the Workshop, should be directed to: Professor Lisa M. Fairfax, Leroy Sorenson Merrifield Research Professor of Law, George Washington University Law School, Washington, DC 20052. Email: lfairfax@law.gwu.edu
Papers and Junior Faculty Scholarship Prizes will be selected after a blind review by a committee of C-LEAF’s Executive Board. Authors of accepted papers will be notified by November 15, 2011.
The Workshops and Prizes are made possible by generous sponsorship of Schulte Roth & Zabel LLP, one of the leading law firms serving the financial services industry and known for its premier practice in the area of private investment funds and private equity M&A.
August 11, 2011 at 12:12 pm
Posted in: Uncategorized
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S&P Kerfuffle Raises Free Speech Concern
posted by Lawrence Cunningham
Just when you think the ineptness of Congress and the President has reached its depth, they act in yet more confounding ways. We now see that official Washington intends to open up hearings and conduct formal investigations into the rating agency Standard & Poor’s.
This is obviously a childish retaliation for S&P’s decision to downgrade the U.S. Treasury’s debt rating from AAA to AA+. The politicians now tread on dangerous territory: the First Amendment.
S&P and other rating agencies have long resisted regulation of their businesses on the grounds that what they do and say are matters of freedom of speech under the First Amendment.
However laughable that may have seemed to some, even the staunchest critics must see its poignancy now. S&P attributes its opinion about the U.S. position to political weaknesses that the Congress and the President have displayed. It is difficult to deny that what S&P said and did was an exercise of free speech.
The case simply strengthens when official Washington not merely rebukes the agency but threatens it. At minimum, this complicates the task Congress and the President gave federal agencies last year to rewrite regulations applicable to rating agencies and how their ratings are used.
Thus do Congress and the President make even worse the consequences of their political gamesmanship. As my GW colleague Jeff Manns wrote in today’s NY Times, the rating agencies are a clever crowd engaged in their own kind of game. But official Washington must get over that and somehow gain a modicum of sophistication instead of acting like a bunch of boobs.
August 10, 2011 at 4:49 pm
Posted in: Current Events
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posted by Lawrence Cunningham
Susan Antilla on failure of the News Corp. board of directors. (LAC)
August 5, 2011 at 5:59 am
Posted in: Asides
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posted by Lawrence Cunningham
Political parties out of public favor these days, natch, reports Nate Silver in the NYT based on a CNN poll. (LAC)
July 24, 2011 at 10:19 am
Posted in: Asides
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Popular Misconceptions About Contracts
posted by Lawrence Cunningham
My new book (set for March 2012 release), called Contracts in the Real World: Stories of Popular Contracts and Why They Matter, has three aims:
* to reveal contract law’s pragmatic, common sense beauty;
* to show the relevance of longstanding principles and famous cases to contemporary problems and disputes in the news; and
* to correct dozens of popular misconceptions about contracts.
In the latter spirit, following is a list of popular misconceptions about contracts. Most are very general while a few are quite specific.
The list is numbered 1-20 but I’ve left 18-20 blank, hoping that you will add at least that many in the responses. I’d also be happy to have any of these stricken or revised. Thanks! Read the rest of this post »
July 22, 2011 at 11:52 am
Posted in: Uncategorized
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Murdoch’s Illegal Contracts
posted by Lawrence Cunningham
Can you sell your silence, under English (or American) law? Rupert and James Murdoch’s News Corp. tried to buy the silence of victims of their phone hacking ring. To insulate their tabloid newspapers from reputational harm, the company signed what James calls “out of court settlements.”
Hush contracts were made with the English acttress, Sienna Miller, for £100,000 ($161,000) , and with the soccer union leader Gordon Taylor for £725,000 ($1.1 million). There are likely many such others , in which the paper paid cash in exchange for a victim promising to stay quiet. But are these contracts legal?
English (and American) law give a broad space for freedom of contract, and both give wide latitude for people to buy and sell silence. Confidentiality clauses are common in settlement agreements as well as a wide range of settings, from employment contracts and prenups to severance and separation agreements. Bill Gates even put one in his home builder’s contract! There is nothing about silence as such that makes them invalid.
But the law classifies some bargains as illegal and therefore invalid. In the case of contracts for silence, it draws the line at promises to hush up problems that threaten the public interest. In the United States, the law is quite clear that contracts to conceal criminal behavior are illegal and invalid. Read the rest of this post »
July 20, 2011 at 7:59 am
Posted in: Contract Law & Beyond
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Outside Reviewers Stay Anonymous!
posted by Lawrence Cunningham
Outside reviews of manuscripts are important to many publishing enterprises, from scholarly books and articles to general interest works of nonfiction. Honest, objective and impersonal assessments are vital.
That is best promoted when the identity of the reviewers is held strictly confidential, by editors and reviewers alike, with editors sharing only the substance of reviews to enable improving a manuscript.
Contrary to this normative ideal, reviewers often seem to feel free to identify themselves, and even editors are sometimes sloppy in leaking identifiying data. In just the past year, I have personally had several different unfortunate examples. The upshot is the same: outside reviewers must stay anonymous.
July 16, 2011 at 6:22 am
Posted in: Anonymity, Law School (Scholarship)
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Losing the Wall St. Journal
posted by Lawrence Cunningham
My friend Rob Cox of Breaking News offers an interesting perspective in today’s New York Times on the Rupert/James Murdoch scandal. It addresses The Wall Street Journal and an integrity clause in an agreement governing it.
The once-venerable Journal, long privately owned by the Bancroft family’s Dow Jones & Co., was revered for excellent reporting and astute coverage of business and world affairs. In 2007, the Bancrofts sold Dow Jones and the paper to the Murdoch tabloid empire, News Corporation, for $5 billion.
The sale was controversial among readers, journalists and editors of the Wall Street Journal. Murdoch’s raunchy and pugnacious style did not mix well with the high standards at the Journal of integrity in reporting and general refinement in opinion making.
To ease the concern, the merger agreement between Dow Jones and News Corporation required execution of an Editorial Agreement. It created a watchdog committee to uphold the Journal’s traditional “principles of integrity” and maintain its longstanding Code of Conduct.
Cox wonders whether that committee has contractual powers to address any violations at the paper and other Dow entities committed by the Murdochs, News Corporation, current managers of Dow, or editors or writers at the Journal. Cox says the phone-hacking crimes the News Corporation papers committed in the U.K. “arguably violate” those principles. If so, the committee ought to get cracking.
But I’m not sure that criminal violations of the phone-hacking sort are what the provisions of the Editorial Agreement were intended to address. Rather, they seem to address journalistic valor of the sort the Journal has gradually and steadily been sacrificing since 2007.
The committee has had clear authority to assert itself in those matters but has not corrected the slide. It is not obvious why it would rise now when its authority to act is far less certain. Put another way, it may be too late to save the Wall Street Journal from the effects of Murdoch ownership. Read the rest of this post »
July 15, 2011 at 10:34 am
Posted in: Contract Law & Beyond, Culture, Current Events
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Modern Directors Still Anachronistic
posted by Lawrence Cunningham
A new McKinsey study of corporate directors of international companies shows that today’s boards remain exemplars of the modern era’s so-called monitoring board, swinging into action occasionally when needed, rather than the old-fashioned managerial board, actually overseeing and directing the corporation.
The findings reflect sharp differences between law on the books in most countries, where directors command plenary authority over a corporation and are accountable to shareholders, and business in practice, where they delegate power to managers, who really call all the shots. They also reflect no change in practice in the three years since the financial crisis, which many blame, in part, on weak boards.
Some highlights from the report:
* 44% of respondents say their boards simply review and approve management’s proposed strategies;
* only 1/4 characterize their boards’ overall performance as excellent or very good;
* directors report that their boards have not increased the time spent on company strategy since the previous survey of February 2008—seven months before the collapse of Lehman Brothers;
* the share of boards that formally evaluate their directors has dropped over the past three years;
* only 21% of directors claim a complete understanding of their companies’ current strategy;
* boards in the financial sector indicate that directors’ knowledge is below average on industry dynamics (just 6% claim complete understanding);
* directors on average spend 28 days’ worth of work annually, but think they should ideally spend 38 to do the job well. Read the rest of this post »
July 15, 2011 at 6:00 am
Posted in: Corporate Law
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Kevin Costner’s Bison
posted by Lawrence Cunningham
The movie star, Kevin Costner, who is also a hospitality entrepreneur, won a round last week in a lawsuit disputing what’s to be done with an elaborate ensemble of sculptures he commissioned years ago for a luxury resort he has fantasized about but never built. The court made the issue sound simpler than the parties thought it was and the opposing lawyer promises an appeal.
Costner’s fantasy, inspired by his heroic 1990 film “Dances With Wolves,” in which he starred as Lt. John J. Dunbar, imagined a 5-star hotel in the Black Mountains near Deadwood, South Dakota. For the centerpiece of the resort, to be called The Dunbar, Costner commissioned 17 massive bronze sculptures, assembled as the “Lakota Bison Jump,” from the noted local artist Peggy Detmers.
They depict 14 bison and three Native Americans hunting them on horseback, at 125% of life-scale. Costner initially commissioned the sculptures in 1994 under an oral agreement, paying Detmers $250,000. The two agreed to share royalties from sales of reproductions of the sculptures, which they expected would generate millions more.
By 2000, however, the Dunbar resort was not yet underway, and Detmers became anxious about whether her sculptures would be displayed and royalties on sales begin to flow. Costner reassured her in a two-page letter of May 2000, which included the following language whose meaning the parties have been disputing:
Although I do not anticipate this will ever arise, if the Dunbar is not built [by 2010] or the sculptures are not agreeably displayed elsewhere, I will give you 50% of the profits from the sale of the sculptures. Read the rest of this post »
July 10, 2011 at 9:46 am
Posted in: Contract Law & Beyond, Current Events
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posted by Lawrence Cunningham
Charlie Munger pens a witty parody of the Great Recession over at Slate, lol. (LAC)
July 9, 2011 at 5:58 am
Posted in: Asides
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More Secret Money Went to Goldman
posted by Lawrence Cunningham
Kept secret by the U.S. government until today, Goldman Sachs borrowed $15 billion from the U.S. Federal Reserve on December 9, 2008 to stay afloat.
That was the largest sum taken that day by a coterie of 19 favored Wall Street and foreign banks in a furtive $80 billion capital infusion to the banks that created the crisis.
Today’s astonishing disclosure, and the strenuous efforts of officials to keep it quiet for nearly three years, raises still more questions about the integrity of the government kingpins who called the shots during the financial crisis of 2008.
Especially compromised are Henry Paulson, Goldman’s former CEO who ran the U.S. Treasury at the time, and his chief lieutenant, Tim Geithner, who has run the U.S. Treasury since. Read the rest of this post »
July 6, 2011 at 2:43 pm
Posted in: Corruption, Current Events
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Geithner Wistful for Goldman Sachs
posted by Lawrence Cunningham
Treasury Secretary Tim Geithner is eyeing the exits from his wonky Washington post. Rumors about what he’ll do next swirl on Wall Street.
Heavy betting is on Goldman Sachs, though taking a job there would cut very close to the bone of revolving door piracy in the Washington-New York corridor. After all, Goldman owes its existence to Geithner.
In late 2008, when Geithner was President of the New York Federal Reserve Bank, he co-engineered, along with his Treasury predecessor and former Goldman CEO, Henry Paulson, the clandestine bailout of Goldman that rescued the investment bank from oblivion.
Earlier that year, Paulson and Geithner provided billions of government money to rescue Goldman’s peer, Bear Stearns, but took enormous heat for doing so; late in that year, the duo capitulated to the pressure by allowing Lehman Brothers, another Goldman peer, to disintegrate in bankruptcy. They promptly took heat for that too.
To avoid both fates in the case of Goldman Sachs, Paulson and Geithner decided to nationalize American International General. They bought 80% of that company with $85 billion in government money.
They then furtively transferred nearly $20 billion of that money to Goldman, and other banks, to prop them up. The transfers settled financial contracts between AIG and Goldman the two companies had been renegotiating for months.
Rather than complete those negotiations, in which both sides would have taken losses, the government-appointed leadership at AIG paid them out one-hundred cents on the dollar. That injected badly-needed liquidity into Goldman in a way that did not hurt its balance sheet. Of course, it killed AIG.
Geithner and Paulson hid these details from the public for months, until the press and Congressional committees unearthed the truth.
Geithner might love to land a job at Goldman, and senior folks there may welcome this chance to repay their man in Washington. But given this background, it may be too shocking even for a man who did such things to take such a job.
July 1, 2011 at 3:56 pm
Posted in: Corruption, Current Events
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F.M. LaGuardia and Lawyers In the Way
posted by Lawrence Cunningham
As a law professor and lawyer, I like law and lawyering. But I hate as much as the next guy when lawyers get in the way of people trying to do business.
In the past year, lawyers have poisoned three separate personal deals of mine, over matters neither I nor the other side needed to care about. The lawyers were hurting not helping their clients.
Lawyers need to know, and as a law professor I try to teach, the difference between legal matters and business issues. Lawyers must know the difference and stay out of the way of business matters.
All this prompts me to reprint below a wonderful letter from the inimitable Mayor of New York, Fiorella La Guardia. The letter, dated January 29, 1944, is addressed to the heads of various airlines, including American, Eastern, PanAm, and United.
The letter’s ultimate paragraph and final words speak volumes to my point, and the letter as a whole is vintage piece of written communication. Read the rest of this post »
June 29, 2011 at 5:12 pm
Posted in: Law Practice, Law School (Teaching), Teaching
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Divorce Law Beats Fraud, Maybe Contract
posted by Lawrence Cunningham
We’ve debated whether mutual mistake is a ground to rescind divorce settlements dividing marital property based on an account held with Madoff. The New York Court of Appeals will soon decide in the case of Simkin v. Blank.
As a matter of contract law, in my opinion, they should be rescindable, when people cannot reasonably be supposed to have allocated the risk that an account was fraudulent.
As I noted in Peter Lattman’s N.Y. Times story on the pending Simkin case, the real policy debate pits principles of contract law, about protecting party risk allocation, against principles of domestic relations law, where the finality of divorce settlements might warrant upholding even such mutually mistaken contracts.
The New York Court of Appeals today issued an opinion, CFTC v. Walsh, with clues about this balance. Today’s divorce settlement case involves an innocent spouse who received millions of dollars from an ex who allegedly committed a spectacular securities fraud (amounting to some $550 million).
Federal agencies want to recover the property from the innocent spouse. The defense: the millions counted as marital property and the settlement agreement makes it hers, even if fraudulently obtained and once belonging to innocent victims.
The Court thus weighed whether to privilege the public policy intended to restore stolen property to rightful owners or the one favoring finality of divorce settlement agreements. Read the rest of this post »
June 23, 2011 at 6:12 pm
Posted in: Contract Law & Beyond, Family Law
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Treasury’s AIG Gag Order
posted by Lawrence Cunningham
Top business executives in the United States regularly contact Members of Congress to lobby on legislation and other matters of public policy. But since the September 2008 government takeover of AIG, executives of that company have been forbidden to do so, unless they first get the Treasury Department’s permission, and the Treasury Department refuses to grant it.
Since AIG executives are afraid to speak out, disclosure of this un-American provision was left to Maurice (“Hank”) Greenberg, former chair and until 2008 the largest shareholder of AIG. He disclosed it yesterday on CNBC.
This is yet another example of the dubious tactics used in Sept. 2008 by Hank Paulson and Tim Geithner when they wrested control of AIG for the U.S. government. Besides having scant legal authority for their takeover actions, the successive Treasury Secretaries tried to keep from the public how the government funds injected into AIG did not support it or its shareholders or employees but were funneled as a backdoor bailout of Goldman Sachs and other Wall Street firms.
It is thus par for the course—but equally outrageous—that we now learn that when Paulson and Geithner imposed this straightjacket on AIG, they also made the company (a) adopt a policy suspending all lobbying and then (b) sign a loan agreement prohibiting it from changing that policy without Treasury’s consent—which apparently may be withheld for any reason or no reason. Read the rest of this post »
June 21, 2011 at 2:37 pm
Posted in: Administrative Law, Civil Rights, Contract Law & Beyond, Corporate Finance, Corruption, Current Events, Politics
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Call for Papers: Dodd-Frank
posted by Lawrence Cunningham
Call for Papers:
Financial Institutions and Consumer Financial Services Section
AALS Annual Meeting – January 2012
Rubber Hits Road: Implementing Dodd-Frank amid Reform Fatigue
This program will take place one and a half years after the Dodd-Frank Act was signed into law. The law left many of the details of financial reform to be filled in by regulators, raising the risk of capture. Some of the most important rule makings have begun in earnest; others have stalled as reform fatigue sets in. Meanwhile, reform efforts in Europe and international regulatory initiatives remain works-in-progress.
What lessons can we draw from the implementation of Dodd-Frank so far? What have been the greatest achievements and the greatest disappointments as the legislative process has given way to the administrative? What devils have lain hidden in the details of the Federal Register? What aspects of reform have been largely forgotten? What does the path of financial reform say about legislative and regulatory process? What lessons can be drawn from the reform efforts in Europe and elsewhere? Does the focus on regulating institutions detract from a focus on regulating financial instruments, markets or economic functions and risks?
More ominously, is the crisis truly over? Are we at grave risk of fighting the last war? Has reform missed the mark altogether? This meeting is part of a project to engage the legal academy in sustained theoretical and policy contributions to financial regulation. It also presents an opportunity to look at specific rulemakings in detail, as well as to address larger questions about the course of reform after laws are made.
Call for papers:
Law teachers and other scholars are invited to submit manuscripts or abstracts dealing with any aspect of the foregoing topics. Junior faculty members are particularly encouraged to submit manuscripts or abstracts. A review committee consisting of Section officers will select one or more papers or proposals and will invite the author(s) of each selected submission to present their work at the program session in Washington, D.C. in January 2012.
Abstracts should be comprehensive enough to allow the review committee to meaningfully evaluate the aims and likely content of papers they propose. Please send manuscripts or abstracts to the Program Chair (Erik Gerding, University of Colorado) at profgerding@gmail.com no later than August 30, 2010. Please place the name and contact information of authors only on the cover page of submissions.
Please forward this Call for Papers to anyone who might be interested.
June 15, 2011 at 7:54 am
Posted in: Administrative Announcements, Conferences, Corporate Finance, Corporate Law, Current Events, Securities, Securities Regulation
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