Author: Sarah Waldeck

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Recent Financial Events and University Endowments

Accuse me of fiddling while Rome burns, but I’ve been thinking about what the current financial situation means for university endowments. Over the summer I blogged about how endowments are coming under increasing scrutiny from the Senate Finance Committee. The latest round was a panel discussion in early September that was sponsored by Senator Charles Grassley (Iowa Republican) and Representative Peter Welch (Vermont Democrat). Some of the discussion focused on the possibility of enacting mandatory spending requirements, such that institutions would be required to spend five (or more) percent of their endowment assets each year. (You can watch the discussion here.)

I suspect that recent economic events have made the possibility of mandatory spending requirements a non-starter, at least for now. Universities have long argued that they need the flexibility to save more during good times, so that they will have necessary resources on hand during bad times. The current financial crisis has given this argument a saliency that it lacked just six weeks ago. Moreover, it’s not difficult to shock the public conscience when universities sit on multi-billion endowments that grow by more than 20 % in a single year. But the politics will be a bit trickier if university endowment sheets bear any resemblance to my last TIAA-CREF statement.

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Attention All Estates and Trusts Professors (And Pet Lovers)

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Jeffrey Toobin has written a must-read article about a $12 million trust that Leona Helmsley established for the benefit of her dog, Trouble. I usually cover the topic of honorary trusts quite quickly, but this semester I’m going to slow down a bit. If nothing else, Trouble’s trust should force students to contemplate the extent to which they are committed to dead-hand control. Beyond the obvious concerns about spending millions on a single dog, as Toobin points out, Trouble herself probably would have been happiest if she had simply been adopted by a dog-loving family.

As an aside, we all know how prickly adult children can get when a step-parent receives the bulk of the decedent’s property. But imagine if the children are disinherited because of a dog . . . .

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Necessity and Emotion

A recent article in Newsweek reads like it was pulled straight from a Criminal Law lecture on the necessity doctrine:

Would you drive your boat faster to save the lives of five drowning people knowing that a person in your boat will fall off and drown? Would you fail to give a drug to a terminally ill patient knowing that he will die without it but his organs could be used to save three other patients? Would you suffocate your screaming baby if it would prevent enemy soldiers from finding and killing you both, along with the eight others hiding out with you?

Harvard psychologists are collecting answers to questions like these on the Moral Sense Test, which you can take on-line at moral.wjh.harvard.com. The answers are consistent with what one would expect from 1Ls:

[M]ost people say that it is acceptable to speed up the boat, but iffy to omit care to the patient. Although many people initially respond that it is unthinkable to suffocate the baby, they later often say that it is permissible in that situation.

Why these patterns? Cases 1 and 3 require actions, case 2 the omission of an action. All three cases result in a clear win in terms of lives saved: five, three and nine over one death. In cases 1 and 2, one person is made worse off, whereas in case 3, the baby dies no matter what choice is made. In case 1, the harm to the one arises as a side effect. The goal is to save five, not drop off and drown the one. In case 2, the goal is to end the life of the patient, as he is the means to saving three others.

The interesting part is what psychology is teaching us about why we tend to have similar reactions to the questions posed in the Moral Sense Test:

What is remarkable is that people with different backgrounds, including atheists and those of faith, respond in the same way. Moreover, when asked why they make their decisions, most people are clueless, but confident in their choices. . . . Surprisingly, our emotions do not appear to have much effect on our judgments about right and wrong in these moral dilemmas. A study of individuals with damage to an area of the brain that links decision-making and emotion found that when faced with a series of moral dilemmas, these patients generally made the same moral judgments as most people. This suggests that emotions are not necessary for such judgments.

The Newsweek article also discusses new studies of psychopaths that shed light on the role that emotion has on their actions. At least one conclusion is relevant for formulations of the insanity defense:

New, preliminary studies suggest that clinically diagnosed psychopaths do recognize right from wrong, as evidenced by their responses to moral dilemmas. What is different is their behavior. While all of us can become angry and have violent thoughts, our emotions typically restrain our violent tendencies. In contrast, psychopaths are free of such emotional restraints. They act violently even though they know it is wrong because they are without remorse, guilt or shame.

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My $140 Textbook

A recent article in the New York Times prompted me to make an inquiry at my law school bookstore: How much do the textbooks I’m using this semester actually cost? Now I have the answer: $139 for Dukeminier’s Wills, Trusts, and Estates and $142 for Dukeminier’s Property. A student who buys them used will save about $35 on each book.

It’s more than a little disturbing that I’ve never asked this question before, but perfectly consistent with what economists might predict:

Squint hard, and textbook publishers can look a lot like drug makers. They both make money from doing obvious good — healing, educating — and they both have customers who may be willing to sacrifice their last pennies to buy what these companies are selling.

It is that fact that can suddenly turn the good guys into bad guys, especially when the prices they charge are compared with generic drugs or ordinary books. A final similarity, in the words of R. Preston McAfee, an economics professor at Cal Tech, is that both textbook publishers and drug makers benefit from the problem of “moral hazards” — that is, the doctor who prescribes medication and the professor who requires a textbook don’t have to bear the cost and thus usually don’t think twice about it.

“The person who pays for the book, the parent or the student, doesn’t choose it,” he said. “There is this sort of creep. It’s always O.K. to add $5.”

Professor McAfee has published his introductory economics textbook on-line, where students can freely download it. Professor McAfee also is allowing two companies to sell printed copies of the book, with prices ranging from $11 – $60.

I have never written a textbook, so I cannot speak from first-hand experience. But whenever I talk with people who have, they say that they expect or have received an inconsequential financial return. Perhaps they have all been lying, because Professor McAfee reports he most likely would have received a $100,000 advance for his textbook. But let’s assume the authors I know are truthful, and that most economics texts are more lucrative than legal texts.

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Eager Heirs

Today’s New York Times has an excellent article about how important it is that parents share their estate plan with their adult children, particularly if the plan runs counter to expectations:

The day will come, or may have already, when your children think of your money as theirs.

In uncertain economic times like these, with the stock and housing markets down, credit markets tightening and widespread anxiety about the economic future taking hold, the subject of inheritance can be even more fraught for a family: parents may worry over the fate of their fortune, and children may feel the need to dip into it.

A parent’s instinct under such stress — to put off discussion until far in the future — can have its own set of costs. . . .

Succession is a natural progression, as old as the concept of private property, yet many parents never bother to tell their children about plans for their estate. . . .

Grown children who know their parents have assets typically expect the money to be left to them in equal shares, say lawyers, wealth advisers and psychologists with long experience in the legal, practical and emotional aspects of inheritance.

Parents, though, often have different plans, deciding that Morgan has enough; that Jack the spendthrift should receive an annuity; that Judy’s special needs after an accident require extra consideration; or even that the best gift is to leave the children little or nothing material.

Mitchell Gans, a law professor at Hofstra University in Hempstead, N.Y., who has helped develop some of the most complex estate plans in the country, recommends that in such cases you should prepare the will and then notify “the kids that you are cutting out — or who are getting less than the others.”

“If you have the courage to do that,” Professor Gans said, “you cut down significantly the chance of litigation after death.”

As an Estates and Trusts professor, I could make good use of a phrase that neatly sums up the unfortunate tendency to start thinking of your parents’ money as your own, even when said parents are still very much alive and kicking. Heirticipation is the best I’ve been able to come up with, but I hope some of you chime in with more inspired suggestions.

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An Under-Theorized Component of Law School Hiring

It’s great to be back at Concurring Opinions, especially as a permanent contributor.

As several recent posts have already noted, the faculty hiring process is underway. My first reminder was last week, when I walked past a conference room and saw the Appointments Committee studying sheets from the FAR. Concurring Opinions has always been a great resource for job-seekers; you can find some of our advice here.

But back to the Appointments Committee. They are going to be busy in the upcoming weeks and some of that busyness will occur at the expense of other projects that are related to scholarship, teaching, or both. But most appointments committees don’t talk much about administrative work, and neither will the candidates they interview. This is true despite the lengthy list of potential administrative tasks: serving on the admissions or library or [you fill in the blank] committee, advising a law journal or the Woman’s Law Forum, directing a speciality institute, pitching in when a skills program needs an enhanced faculty presence, supervising externships, stepping up when an Associate Dean’s office is suddenly vacant. And so on. And so forth. And on. And on. Etc.

I want to make clear before the jump that I am NOT suggesting that talking about administrative work is a means of getting an offer. For that, follow the advice in the link above: appear to be an insightful and thoughtful person who will write and teach well. But you should nonetheless give some thought to administrative tasks, both to figure out where you would prefer to work and what you might want to do after you start there.

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What Men Will Do To Win

Christopher Wilson, a neurobiologist at Cornell, has recently offered an evolutionary explanation for why certain cultures developed the norm of male circumcision. In an article in Evolution and Human Behavior, Wilson describes circumcision as an “evolutionary challenge” because it “involves a dangerous and costly surgery.” Enter sperm competition theory, which predicts competition between males to fertilize a woman’s egg. Wilson points out that some cultures practice male genital cutting that is far more drastic than circumcision, and that undoubtedly decreases male fertility. As a review of Wilson’s article in The Economist describes:

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Antiques Roadshow

If you are looking for something in addition to the Supreme Court news, check out this New York Times article about an under-theorized aspect of estates and trust law: the pesky personal property that people would have preferred not to inherit, but still can’t quite bring themselves to throw away. The comments (195 as of this writing) are particularly rich, with all sorts of vignettes about the objects with which people find themselves stuck, painful conversations between siblings, and (of course) the wrongdoings of stepparents and half-siblings.

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Northwestern’s Third Year

As reported at Above the Law and TaxProf, Northwestern has announced a program that allows its students to complete their legal degrees in two years instead of the usual three. Upon inspection, the two-year program is less revolutionary than it initially sounds. As described by Inside Higher Ed, the two-year program is an accelerated version of the usual fare, with students taking the same courses and credit hours as those in the three-year program.

The two-year option may have stolen the headlines, but what Northwestern announced about its third year is at least as interesting. Northwestern will allow students to spend a semester in full-time experiential programs, such as legal clinics and law firm apprenticeships. The move comes on the heels of the Carnegie Report, which urged law schools to incorporate a practical skills component wherever possible and to think creatively about the third year. Last March Washington and Lee responded by making all third-year courses experiential. While Northwestern has not gone this far, its experiential semester is likely to make its competitors follow suit. (Fear not, aspiring professors. Northwestern will have “research opportunities” available for you.)

P.S. The talk of practical skills reminded me of “reading the law,” or becoming a lawyer through apprenticeship, without ever going to law school. I had thought that reading the law was only of historical interest. But a little surfing revealed what many readers probably already know: four states still allow people to become lawyers after extended apprenticeships (provided they pass the bar exam). You can get the overview here.

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Class Action Challenging Wisconsin’s Diploma Privilege

As every law school graduate from UW-Madison or Marquette knows, Wisconsin is the last state in the nation to still extend a diploma privilege. Simply put, if students at these schools take certain courses and attain a particular minimum grade in those courses, they can be admitted to practice law in Wisconsin without taking a bar exam.

The Associated Press is reporting that a federal judge in the Western District of Wisconsin has certified a class action challenging the diploma privilege. Anyone who applies to the Wisconsin bar within 30 days of graduating from law school can join the suit, which alleges that the diploma privilege is unconstitutional because it discriminates against out-of-state graduates.

I haven’t thought much about the constitutionality of the diploma privilege, but I have pondered the wisdom of Wisconsin’s policy. As a Madison grad, the issue for me has always been whether it is too easy to gain automatic admission; in other words, should the required minimum grades be higher than they are? I perceive bar exams as performing an important, albeit imperfect (and perhaps too lenient), screening function. Put succinctly, if a graduate can’t pass the bar in the maximum number of times that they are allowed to take it, the public would be better served by having that graduate in a different profession. But I don’t have any empirical data about whether the Wisconsin diploma privilege provides the same sort of screening as a bar exam. (For example, how many graduates in other jurisdictions never pass that jurisdiction’s exam? How many graduates of Madison and Marquette do not qualify for automatic admission?) I do, however, think that a student’s performance in a semester-long class is a more accurate measure of whether she is qualified to be a lawyer, provided that Wisconsin’s bar is set high enough. (Bad pun absolutely intended.)

I’d be interested in relevant data, if anyone knows it. And I’m sure those who are currently sitting in a bar review course have their own opinions about Wisconsin’s system.