Wednesday, May 28, 2008

Loan Lawyers for the Public Good

The New York City Bar in cooperation with the New York Federal Reserve Bank has launched a pro bono program to match up lawyers with New York homeowners facing foreclosure. The program, known as the Lawyers' Foreclosure Intervention Network, is a pilot in New York City. Participating lawyers will negotiate with homeowners' creditors and where necessary represent homeowners in bankruptcy and other litigation.

The New York Fed asked the New York Bar to help lawyers navigate through conflict of interest problems that face New York firms who represent mortgage issuers or servicers. The New York City Bar has issued a special ethics opinion, and the New York Fed is "encouraging financial institutions to waive, to the extent possible, conflicts of interest that might arise in the representation of a distressed homeowner."

Tuesday, May 27, 2008

"The system is totally safe. There is nothing to fear."

Very cool physics experiment reported here. However, in the movies, don't scientist always say that the system is "safe" before some disastrous experiment? I am sure the engineers said the same thing about HAL before he was booted up.

Friday, May 23, 2008

Silent Tents of Green

In the foothills of the Alleghenies, about six miles from my desk, lies Boalsburg, PA. This town tells a story few outside these parts know. On a cold Sunday morning in October 1864, three women knelt in the town burial ground by the graves of two fallen Union soldiers. The three women came together in grief that morning by coincidence. They agreed to meet on that same day the next year and each year thereafter to kneel by the graves of their loved ones and the others, who may have no one to remember them. In October 1865, the whole town of Boalsburg assembled to honor the fallen with flowers and flags on every grave.

Decoration Day
Henry Wadsworth Longfellow (1807-1882)

Sleep, comrades, sleep and rest
On this Field of the Grounded Arms,
Where foes no more molest,
Nor sentry's shot alarms!

Ye have slept on the ground before,
And started to your feet
At the cannon's sudden roar,
Or the drum's redoubling beat.

But in this camp of Death
No sound your slumber breaks;
Here is no fevered breath,
No wound that bleeds and aches.

All is repose and peace,
Untrampled lies the sod;
The shouts of battle cease,
It is the Truce of God!

Rest, comrades, rest and sleep!
The thoughts of men shall be
As sentinels to keep
Your rest from danger free.

Your silent tents of green
We deck with fragrant flowers;
Yours has the suffering been,
The memory shall be ours.

Thursday, May 22, 2008

Loaded Questions

On April 2, the Institute for Legal Reform released the results of a consumer survey that indicated consumers oppose legislation regulating the use of binding arbitration in consumer disputes (the proposed Arbitration Fairness Act). The telephone poll found that 71 percent of likely voters oppose efforts by Congress to ban arbitration agreements from consumer contracts. 82 percent actually prefer arbitration to litigation as a means to settle a serious dispute with a company. The American Association for Justice says its survey shows the opposite. 81 percent of Americans express disapproval of mandatory binding arbitration. 64 percent of voters favor the legislation, 26 percent oppose it. How can this be?

Here's one of the statements made as part of the American Association for Justice poll:

"As you may know, consumers are sometimes required to sign a contract with a company when they buy certain services or products such as automobiles, cell phones, or nursing home care. Today, these contracts often include a binding arbitration provision, which says that the consumer agrees to have any dispute with the company decided by an independent arbitrator in binding arbitration, rather than by a judge or jury in a civil legal proceeding. Do you approve or disapprove of these binding arbitration provisions in consumer contracts?"

Now here's one from the Institute for Legal Reform poll:

"Now suppose for a moment you had to sign a contract with a company when you purchased their goods or services. If you could choose the method by which any serious dispute would be settled between you and the company, which would you choose? Arbitration, which does not require going to court ...or... Litigation, which does require a lawsuit and going to court. "

Hat tip to Consumer Law and Policy Blog.

Neither statement provides an intelligent person with the information necessary to answer the question. If I ever get a call from a poll taker, I'd want to know what my "right to go to court" costs me in terms of the price I pay for consumer goods and services. I'd ask about the odds for consumers in arbitration vs. judicial resolution of their disputes. I'd want to know what was in it for me-- apart from empty rhetoric about my right to "go to court" or vague inferences about the relative "fairness" of arbitration vs. adjudication. And, in the extremely unlikely event that I did not hang up on the poll taker within seconds after he mispronounces my name, I'd resent being used as a tool for others whose stake in the controversy dwarfs that of the average consumer.

Tuesday, May 20, 2008

The Love Song of Corporate Law

On the subject of literary parallels, see Harvard '09 student David Kessler's ode, The Love Song of the Delaware Chancery Court with apologies to T.S. Eliot (The Love Song of J. Alfred Prufrock (1919)).

Truth, Beauty and the Double Helix

Jim Chen wonders about a parallel between scientific discovery and law in Law's Double Helix on MoneyLaw and Jurisdynamics. He pauses to consider John Keats's poem, Ode to a Grecian Urn and writes:

"Two intertwined strands run through all law. One strand represents the cold mathematical logic that the LSAT purports to measure, the austere beauty of legal reason deduced without regard to the social circumstances in which law must be made, enforced, and lived. The other strand speaks in historical, even literary or lyrical terms. That manifestation of truth in law, as Holmes explained, "embodies the story of a nation's development through many centuries, and it cannot be dealt with as if it contained only the axioms and corollaries of a book of mathematics." That is all you know in law and all you need to know. "

Thou, silent form, dost tease us out of thought
As doth eternity: Cold pastoral!
When old age shall this generation waste,
Thou shalt remain, in midst of other woe
Than ours, a friend to man, to whom thou sayst,
"Beauty is truth, truth beauty," -that is all
Ye know on earth, and all ye need to know.

Phishing in International Waters: The New Phace of Organized Crime

The U.S. Justice Department and Romanian authorities announced two federal indictments (C.D. Cal. and D. Conn.) against 38 people who allegedly participated in two international phishing operations with ties to organized crime. The charges include conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, and a host of hacker crimes such as conspiracy in connection with account access devices (credit or debit cards), unauthorized access to a protected computer, bank fraud and aggravated identity theft. U.S. Attorney for C.D. Cal., Thomas O'Brien said experts estimate losses at more than $3 million.

Romanian based "suppliers" phished for and obtained credit and debit card account data and personal information from cardholders by baiting more than 1.3 million e-mails. The "suppliers" sent the data to U.S. based "cashiers" who did the tech work, encoding the account data onto magnetic strips on access devices (including hotel key cards that work nicely for this purpose). "Runners" tested the cards and used the ones that worked to draw cash. U.S. participants took a cut and transferred the balance to the Romanian suppliers.

International organized crime is deep into the world payment system and just about everything else. Last month, U.S. Attorney General Michal Mukasey announced the Justice Department's Law Enforcement Strategy to Combat International Organized Crime . He said that mafia-style organized crime as Attorney General Robert Kennedy saw it in 1961 is a thing of the past. Organized crime is international, but that's not all. "They are more sophisticated, they are richer, they have greater influence over government and political institutions worldwide, and they are savvier about using the latest technology, first to perpetrate and then to cover up their crimes. . . . They touch all sectors of our economy, dealing in everything from cigarettes to oil; clothing to pharmaceuticals. These criminals invest some of the millions they make from illegal activities in the same publicly traded companies as we hold in our pension plans and 401(k)s. They exploit the internet and peddle their scams on eBay, and they're responsible for a significant chunk of the spam email we get."

Leave the gun. Take the cannoli. (Clemenza to Rocco)

Friday, May 16, 2008

In re Marriage Cases: "Marriage" By Any Other Name Not as Sweet

Yesterday the California Supreme Court decided whether the Legislature's failure to designate the official relationship of same-sex couples as marriage violates the California Constitution. California has domestic partnership legislation that, unlike many other states' domestic partnership and civil union laws, ostensibly provides a same-sex couple the same rights and responsibilities as married heterosexual couples. The issue before the court was whether California law limiting the designation "marriage" to a union between a man and a woman unconstitutionally denied that designation to a domestic partnership.

Here's an excerpt from the 160-page opinion:

[U]pon review of the numerous California decisions that have examined the underlying bases and significance of the constitutional right to marry (and that illuminate why this right has been recognized as one of the basic, inalienable civil rights guaranteed to an individual by the California Constitution), we conclude that, under this state's Constitution, the constitutionally based right to marry properly must be understood to encompass the core set of basic substantive legal rights and attributes traditionally associated with marriage that are so integral to an individual's liberty and personal autonomy that they may not be eliminated or abrogated by the Legislature or by the electorate through the statutory initiative process. These core substantive rights include, most fundamentally, the opporunity of an individual to establish -- with whom the individual has chosen to share his or her life -- an officially recoginzed and protected family posessing mutual rights and responsibilities and entitled to the same respect and dignity accorded a union traditionally desginated as marriage. . . .

We need not decide in this case whether the name "marriage" is invariably a core elementof the state constitutional right to marry so that the state would violate a couple's consitutional right even if -- perhaps in order to emphasize and clarify that this civil institution is distinct from the religious institution of marriage -- the state were to assign a name other than marriage as the official designation of the formal family relationship for all couples. . . . One of the core elements of the right to establish an officially recognized family that is embodied in the California constitutional right to marry is a couple's right to have their family relationship accorded dignity and respect equal to that accorded other officially recognized families, and assigning a different designation for the family relatinship of same-sex couples while reserving the historic designation of "marriage" exclusively for opposite-sex couples poses at least a serious risk of denying the family relationship of same-sex couples such equal dignity and respect. We therefore conclude that although the provisions of the current domestic partnership legislation afford same-sex couples most of the substantive elements embodied in the constitutional right to marry, the current California statutes nonetheless must be viewed as potentially impinging upon a same-sex couple's consitutional right to marry under the California Constitution."

Wednesday, May 14, 2008

Loving v. Virginia

I distinctly remember reading Loving v. Virginia when I was in law school. I thought to myself that it must have been an ancient case as I couldn't believe that kind of law could be in effect anywhere in the recent past. Then, I remember being shocked when I looked back at the heading of the case and realized that the decision came out in 1967. That moment has always stayed with me.

Unfortunately, Mildred Loving passed away this month. Today, the New York Times has an interesting article on background of the community involved in the case.

Tuesday, May 13, 2008

Dazed and Confused

Five researchers asked: Do Citizens Know Whether Their State Has Decriminalized Marijuana? They published their results in a paper with that title on SSRN. They note that evidence of the connection between decriminalization of and non-compliance with marijuana laws offers only "fragmentary support" for the prediction that decrease in sanction will increase non-compliance (and vice versa). Based on national survey data of people's perceptions about their state's marijuana laws, the authors conclude that the rates of people who believe they could be jailed for marijuana possession don't change much, even where the actual sanction for marijuana possession varies widely.

Political Liberals Need Not Apply

Yesterday the Wall Street Journal ran a story about the University of Colorado at Boulder's search for the right professor to fill its newly established endowed chair of Conservative Thought and Policy. University Chancellor G.P. "Bud" Peterson explained that the goal of diversity means more than courses in gay, Chicano and feminist theory. "We should also talk about intellectual diversity." To that end, the university is raising $9 million for a chaired professorship that will pay the right rightie $200,000 per year.

Columnist George Will's name has been floating over Boulder as a possible candidate. Will's reaction: "Like Margaret Mead among the Samoans, they're planning to study conservatives. That's hilarious."

Friday, May 2, 2008

Red Lion Reports Study Break

As you study for exams, here are two little gifts:

1. For a classic satirical critique of the fetish of Restatement, see Gretchen Craft Rubin & Jamie G. Heller, The Restatement of Love, 104 Yale L. J. 707 (1994)("The Restatement of Love, however, is premised on the view that love, like all other aspects of human interaction, can be subjected profitably to legal analysis.").

2. Prayer for a Busy Day (St. John Henry Newman, 1801-1890)

May He support us all the day long
till the shades lengthen, and the evening comes,
and the busy world is hushed,
and the fever of life is over
and our work is done!
Then in His mercy may He give us a safe lodging,
and a holy rest,
and peace at the last.

Rate the Profs

Finals are here again, and as I spend time in preparation for exams, I am forced to reflect on what my experience this semester has been. My feelings about my preparedness for exams directly correlate to my in-class experience, and I suspect it is the same for many of us. As the profs prepare to dole out our grades, I thought I would do a bit of assessment myself!

Here are five telltale signs, in my opinion, that the professor was great:

1. You “hear” the professor’s voice speaking to you when you are studying the material. This is an easy one. It has been my experience that the tone and style of the professor becomes linked with the material itself. The truly great ones continue to impact your thinking beyond their class. They model the difference between knowing material and knowing how to teach material.

2. When you ask a bone-head question, the best professors hear not only the bone-headedness of your question, but also where you are sticking. These professors are able to re-direct your thoughts to enable you to see the issue in the proper way. To top it off, they are gracious.

3. Questions are thoroughly answered. Let’s get real, we are not here simply to pass a class! We are training to be lawyers, and lawyers need to know and understand concepts that are learned in law school. When you ask a question that is either tangentially related or even directly related and get a full response and maybe even a recommendation for a law review article to look at, you know you have an amazing professor – be grateful!

4. Class climate. A great professor gauges the unique class dynamics in light of the material s/he intends to cover. Great professors are able to adjust and adapt to the pace of the class easily. They push the class forward without running over us in the process.

5. Interest in students’ learning is the most profound indicator, in my experience. A great professor is interested in teaching as much as research. The reason seems to be that a great professor thrives on the pursuit of understanding the law, and teaching students is another manifestation of this discovery process.

The Student Loan Bubble

Andrew Gillen of the Center for College Affordability and Productivity thinks the next US financial crisis will be the popping of the student loan bubble. In a recent report, Gillen draws parallels between the conditions leading up to the current housing crisis and those in the market for higher ed.

Here's his argument: To expand access to higher education, government has expanded students' access to financial aid, particularly through subsidized loans. Consumer subsidies expand demand. Profit maximizing suppliers normally expand production to respond to increased demand. In the case of higher ed, subsidies do not work that way.

Universities are not profit maximizers. Rather they maximize prestige. Expanding production and supply (adding more students) actually decreases prestige. Rather than add more students, universities hold enrollment constant, raise tuition, and use additional tuition revenue (care of federal subsidy) to build prestige. Consumers can benefit even if output does not increase if product quality increases. But, more prestige for a university is not necessarily coincident with a better education for students. Gillen asserts that universities are not using expanded revenue to improve the education they deliver to students. They can charge higher tuition without rendering a higher quality because students cannot analyze tuition cost against benefit. They tend to equate high tuition with high educational value, a correlation that is, according to Gillen, dubious.

The analogy to the housing bubble is compelling: Low interest rates and innovation in capital markets may have fueled increase in demand for housing, rising home prices, and the spread of subprime mortgage products. The federal government's tuition subsidy programs, seem to have spawned the "sub-prime" student loan extended to students whose want a "prestigious" education, but sport prospects for graduation and loan repayment as shaky as their sub-prime home mortgage counterparts. The market seems to be correcting for the student loan bubble. But, just as private lenders are closing their 'sub-prime' tuition loan shops, the federal government is considering legislation to take up the slack.

Perhaps government intervention is better directed at stimulating greater accountability for colleges and universities on the facts that matter to students' cost benefit analysis. Consumers armed with comparative information about the quality of education a university offers, including the impact of a particular degree on students' financial prospects, may provide the discipline universities currently lack. Critical Mass and Inside Higher Ed ran stories on this idea yesterday.

Thursday, May 1, 2008

Something in the Water in Latrobe, PA

Tammy Andreycak, 40, former Director of Accounting for Le-Nature's Inc., the bankrupt Latrobe, PA bottling company, plead guilty last Thursday to bank fraud, wire fraud, conspiracy and aiding in the preparation of false income tax returns. U.S. Attorney for the Western District of PA, Mary Beth Buchanan, said that Le-Nature's falsely portayed its financial condition to banks causing creditors' losses of more than $500 million. Le-Nature's lied big. According to Buchanan, it reported gross sales in 2005 of $287 million when its real sales were $40 million. Andreycak cooked up fake invoices and deposit records to pull off the scam.

Andreycak was released on a $100,000 bond. She faces a federal sentence of 58 years in prison, $1.75 million fine or both. Buchanan expects Andreycak to cooperate to reveal what lies beneath the tip of the iceberg. Former Le-Nature's CEO Gregory J. Podlucky remains under investigation for his alleged involvement.

Le-Nature's filed for bankruptcy in 2006. In September 2007, Pittsburgh-based Giant Eagle bought the bottling plant out of bankruptcy for $20 million. It renamed the operation Chestnut Ridge Beverage Co. (Sidebar: U.S. Bankruptcy Judge M. Bruce McCullough approved Giant Eagle's bid to acquire Le-Nature's a month after stopping the proposed sale, ruling that it had intimidated another bidder, Cadbury Schweppes, into revoking its bid for the plant by threatening to remove Cadbury's beverages from Giant Eagle stores.)

On Monday, a group of 74 investors including the California Public Employee's Retirement System (CalPERS) filed a suit in in Los Angeles County Superior Court alleging fraud and negligent misrepresentation against Wachovia Capital Markets, Wachovia Securities and two accounting firms, Ernst & Young and BDO Seidman. The complaint alleges that the Wachovias underwrote the $150 million bond issue for LeNature's and knew that that the books were cooked when it pitched Le-Nature's bonds to investors. The accounting firms served at different times as Le-Nature's auditors. The suit alleges that they "ignored numerous glaring red flags" and issued false reports on which they knew creditors would rely.

Now, who says nothing interesting happens in Central PA?