Friday, December 10, 2010

Fear of Foreclosure

The prominence of foreclosure in economic news and the skimpy coverage of the breakdown of foreclosure process in the popular press shows the literary force of the word: "foreclosure." It has the visceral impact of a word like "rape," connoting a violent, destructive, faceless goon that comes out of the darkness to destroy the weak and helpless. People are getting "foreclosed on," foreclosure is destroying neighborhoods and cities, and the nation is in a foreclosure crisis. Foreclosure is Voldemort.

Legally, foreclosure is tame and boring. It's a mopping-up operation that has for centuries been relegated to the losers bracket among lawyers, and the museum of antiquities in law. It's no wonder that the reporters don't explain the residential real property foreclosure process, or why law professors roll their eyes when I start to say that joblessness, default, unchecked speculation, arrogance and bad judgment are far scarier than foreclosure. Who wants to think about dirty socks and dust bunnies under the bed when the alternative is to imagine a scary monster?

What do you think? What explains the fear of foreclosure?

Thursday, October 7, 2010


Last Monday, the Supreme Court heard argument in In re Ransom. A colleague on the law faculty whose forte is not bankruptcy asked me about the case in advance. He was showing an Australian law professor the sights in D.C. on the First Monday in October and Ransom was on the docket. My colleague expressed disappointment that the First Monday docket was clogged with an unexciting bankruptcy case. I told him that Ransom is exciting to me.

The case is about the meaning of a hideously drawn provision that appeared in the Bankruptcy Code as part of the 2005 Reform Act-- the so-called "means test" that governs a debtor's eligibility for discharge of debt under chapter 7 and chapter 13. In simple terms, a consumer debtor is eligible for debt forgiveness if her income is less than the Census Bureau-reported median income for her state. If her income is greater than the median income, then she is eligible for relief in a chapter 7 liquidation case, only if she doesn't have the "means" to pay down her debts over time while paying her current living expenses. If she wants to keep her property and pay down her debts over time, she is eligible for debt forgiveness in a chapter 13 case only if she pays creditors from her income each month the amount she has the "means" to pay. In both settings, "means" means the difference between the debtor's "current monthly income" and her expenses.

The Code provides a staggeringly unreadable list of the expenses that are to be considered for purposes of this comparison. Rather than relegate to the bankruptcy judge the role of determining which expenses that the debtor actually incurs are "reasonable and necessary" as was the judge's role before the 2005 Reform Act, the Code now describes the expenses that the debtor may deduct by reference to IRS published guidelines for agents (the National and Local Standards) who are trying to settle tax delinquencies with taxpayers based on the amount the taxpayer can realistically pay each month and survive.

In Ransom, the dispute was over the amount the debtor could count as an expense of car ownership. Particularly, the question was whether the debtor should be able to count the amount referenced in the Local Standards for a loan or lease payment even if he owns his car free and clear and doesn't actually make any loan or lease payments. In short, does the Code mean that the debtor should be credited with expenses he doesn't actually have for the purpose of determining his "means?" The bankruptcy court held that a debtor has to have some actual car payment expenses before he can claim the IRS plug amount as an expense. The Ninth Circuit affirmed contributing to a split in the circuits on this issue.

I felt it was important to explain to my colleague why this case is so interesting. So I cut to the chase. The "plain meaning" reading in this case is not easy to see because the statute is so badly drawn. The debtor will benefit from a reading that gives her the largest expense total and the largest deduction from income in calculating her "means." The trustee for the benefit of unsecured creditors like MBNA, the unsecured creditor who paid lawyers to take this case all the way to the Supreme Court, will benefit from a reading that limits debtors to the smallest expense total.

So, my colleague, an afficionado of legislative process and statutory interpretation, watched the argument and concluded that the Justices seemed stumped. The interpretation of the statute offered by both sides led to at least two completely absurd scenarios each. The one indisputable fact is that the statute let everyone down and the Court got the dirty job of cleaning up the mess.

My colleague offered the idea of a post legislative, pre-judicial clean up team -- a panel of "special masters" with bankruptcy expertise who would take the legislation that extrudes out of the Congressional sausage maker, consult with the ALI, lenders, borrowers, practitioners and academics, and draft a recommendation for courts who are put to the task of interpreting and applying the legislation.

My reaction to this idea was not good. I am already footing the bill for Congress and I do not want to pay for another layer of government workers who would be subject to the same political pressures that render the officials we elect to make law obviously and completely incapable of doing it. I think that the time for consultation with interest groups, academics, etc. is before the statute is enacted by Congress.

The problem I see is that legislators are hopelessly unmotivated and unable to understand the legislation they enact. The Supreme Court is now the cleanup operation of last resort for all sorts of badly drawn, ill conceived, utterly impractical and inscrutable legislation.

By way of history, as part of the 1994 amendments to the Bankruptcy Code, Congress ordered the creation of the National Bankruptcy Review Commission. This Commission undertook a complete review of the Code and held hearings at which bankruptcy scholars, practitioners and related industry experts had an opportunity to comment. It issued a comprehensive report and reform proposal with a vigorous dissent. Congress entirely ignored all of it. The bankruptcy bar picked to bits the consumer provisions in the legislation that ultimately became the 2005 Reform Act during the years it floated around Congress before it was enacted. Congress ignored it all. And it was easy, because congressmen and senators do not understand anything about the laws they enact. The voices of those who were advocating for technical amendments or otherwise pointing out absurdity in the proposed revisions to the Bankruptcy Code were no more than refrigerator hum. Bankruptcy, tax, administrative law, market regulation, environmental law, you name it -- it's all refrigerator hum.

The problem is easy to see but hard to fix. Bankruptcy policy is fundamental and richly complex. In a simple and broad sense, bankruptcy law describes whose debts may be forgiven. If you stop there, the politics are already hopeless. In debt as in life, sometimes you are the windshield and sometimes you are the bug. Nobody is always for more forgiveness or always for less. So the politics is really in the details. The problem is that as soon as you move past the core function of bankruptcy law into the practical and administrative issues,the core function becomes quickly lost and inaccessible to non-specialists. Instead of considering the basic contours of debt forgiveness directly, the Code provides for exemptions, avoidance powers, claims processes and, as in Ransom, eligibility for relief stated in nearly incomprehensible and arguably absurd terms. Legislators probably don't even think for a second about the macro implications of the law they are enacting: How does this law affect the question of who is forgiven? Rather, legislators tinker around the edges in response to special interest groups whose requests affect the measure of forgiveness in ways that would take at least a 14 week law school course to explain. In short, there are plenty of experts willing to teach members of Congress how changes in the law will or may affect the measure of forgiveness. The problem is the shortage of members of Congress who really want to make the investment necessary to acquire that information.

The second problem is related to the first. Negotiating legislation, like negotiating anything else is expensive. To reduce transaction costs, legislators translate complicated provisions into broad terms. For example, Republicans can sell to their base the idea that the cost of debt forgiveness is borne by people who find a way to live within their means, and thus, it should be harder to discharge debts in bankruptcy. Democrats can sell to their base (what Elizabeth Warren is selling) that the credit card companies are making oodles on consumer debt and they should bear a little pain to make life worth living for working people who hit hard times. The broad principles on which political bargaining occur are so broad that the actual legislation is left to non-legislator staffers and lobbyists who are primarily interested in getting the deal done rather than getting it done in a way that will not appear absurd to a court. The means test language before the Court in Ransom is a small part of a drafting exercise left to drafters who have no stake in the legislation post-enactment.

After the oral argument before the Court in Ransom, who on the Hill is red-faced about the unmissable disrespect for their work? That's right. Nobody. It's a sad indictment of democracy when citizens accept that legislators of all political persuasions are not personally or politically embarrassed by the shoddy quality legislation they impose on the citizens who elect them.

Friday, September 17, 2010

The Appoinment that Isn't

President Obama appointed Harvard bankruptcy law professor Elizabeth Warren to serve as special assistant to the president, presumably to avoid a tough confirmation battle in the Senate if he gave her the job he really wants her to do: Director of the newly created Bureau of Consumer Financial Protection.

Professor Warren is without question a very smart, hard hitting champion for the middle class. The whole thrust of her consumer protection vision is that the working guy can’t be expected to read the small print and that it’s time government started “looking out for the folks.” On the merits of her ideas, I can see why the banks are nervous. And I can see why turf-protecting administrators in DC are nervous. But apart from partisan knee-jerkism (and maybe there is nothing happening in DC apart from that), I don’t see a valid objection to her appointment as bureau director. Although I don’t agree with the way she proposes to protect the folks, I greatly admire that she has staked her career on what I see as a noble and selfless project. If we are going to have a new $500 million federal agency to pile more regulation on the consumer credit industry that will have no effect on consumers’ appetite for crack, she’s as qualified as anyone. At least I have a pretty good feeling that her hand will not be in the till.

I also have the feeling that nobody can afford crack and the crack dealers are packing up their tents anyway.

Saturday, September 11, 2010

In Re: Eddie Richardson, Penn State Dickinson School of Law, Class of 2009.

The State College contingent of the Penn State Dickinson School of Law, Class of 2009, showed up on campus in August of 2006- a new thing under the sun. We will be forever bound together, however tenuously as the years march on, by our membership in that class. For now, though, we are tightly bound together by the sad and unexpected news that our classmate and colleague, Eddie Richardson, has died. Two days shy of his twenty seventh birthday.

A light, as they say, has gone out in the world. Yet we may expect that the sky will be a little brighter from now on. Eddie, a luminescent figure in life, has ascended. Perhaps from his new and sky-bound home he will continue to do for us now what he did for us in life: shine his light upon us, and thereby, in the words of that Spanish poem, "...hacer mas claro y luminoso el dia." But now, from up there, he will reach us all at once and always, rather than, as he did in life, shine upon us separately and episodically, through his personal interactions with us.

Many members of our class knew Eddie better than I did. They no doubt can offer meaningful testimony to his life, and they are certainly invited and encouraged to do so here. But I think it says something very positive about Eddie that someone like me, who knew him, but not especially well, remembers him so fondly. He looms large in my memories of law school, and principally for this reason: He was the first person I met at the first orientation event that was held for our class, back in August of 2006. As an older student, and having just left professional life behind, I was nervous walking into the room that day; nervous about fitting in, about being accepted by my new classmates. It was a sort of discomfort I had not felt in years, back to the day I walked, as a stranger in a strange land, into the cafeteria of my new high school. I was all grown-up in 2006 when I walked into the law school orientation event, but in my mind I was right back in my high school cafeteria, embarrassingly desperate for the consolation of a friendly face.

And then there was Eddie. He was sitting at the table I arrived to- maybe he was the reason I arrived at that particular table- already popular with the people there and smiling genuinely back at me. He put me at ease. My nervousness was gone, never to return. That is the sort of kindness a person doesn't forget in life; I haven't and won't. Even if, in Eddie's case, it wasn't so much a kindness done to me as it was an expression of who he was; which was and remains a kindness done to everyone he knew.

I sat next to Eddie in our Administrative Law class during our last semester of law school. He regularly said the best things, most of which betrayed a rare wit and a high intelligence. One of those best things, which however did not tax either his wit or intelligence to conjure, was an occasional and appropriate, "This sucks." And he pronounced the word "sucks" in such a way that anyone unfamiliar with the word or its connotations would nevertheless have known what he meant by it; had he been made to write out his pronunciation, between the 's' and the 'cks' would have been about fourteen pregnant u's.

But then he would smile and go on. Which- in law school and in life- is the thing to do. It's the thing to do not because it's a grand invention, but because it stands well among a limited troupe of truly unpalatable alternatives.

Farewell, gentle-souled Eddie. Shine on down.

Thursday, September 2, 2010

Light in August (or September)

End of Summer

by Stanley Kurtz

An agitation of the air,
A perturbation of the light
Admonished me the unloved year
Would turn on its hinge that night.

I stood in the disenchanted field
Amid the stubble and the stones
Amaded, while a small worm lisped to me
The song of my marrow-bones.

Blue poured into summer blue,
A hawk broke from his cloudless tower,
The roof of the silo blazed, and I knew
That part of my life was forever over.

Already the iron door of the North
Clangs open: birds,leaves,snows
Order their populations forth,
And a cruel wind blows.

Wednesday, August 11, 2010

Double or Nothing

This is the year you are going to really study. No more Super Mario Brothers or in class. Goodbye Facebook, Twitter and fantasy football. The weekend shrinks back down to two days, maybe one. It's all going to be different this year, and your grade point average is finally going to show your true potential.

Wanna bet?

Ultrinsic will take that action. This new company, in its beta phase, invites college students to bet that they will beat their statistically predicted grade in a particular course. A student who wants to bet provides information about how he's done in college so far, available data regarding applicable grading curves for various departments, professors, and courses. Ultrinsic runs the data through a formula that predicts how he'll do in a particular course and offers a wager that the student can't beat it. If the student beats the predicted grade, Ultrinsic pays off according to the predicted handicap. If the student doesn't, he pays. The house makes money the old fashioned way, the predictive formula stacks the odds for the house. It wins more than it loses.

During the pilot last year, 600 or so students at NYU and Penn took the bet. This year, Ultrinsic plans to expand to 34 campuses.

Wednesday, August 4, 2010

How to Get to the Corner Office

Randy Schrum speaks his mind about social media on MyCorporateMedia. He's a CEO who wants to confess, really explain how blogging, twittering and status updating plays out in the corner office, the boardroom and in the market.

The essence of social media activity is social-- and that's the problem. He says:

"The premise and value of the "social media" movement is the power of the collective in the production, distribution, and ownership of goods, and the reasons executives resist this model is that it flies in the face of their existing worldview which, quite frankly, has been pretty successful to date. . . . Most of us have a pretty big chip on our shoulders, attributing our career success to the years of diligence, education, ambition, delayed gratification and sacrifices we've made to reach the leadership levels we've achieved. Therefore, the anti-capitalistic notion that my work and contributions would be homogenized with the uninspired masses, and that ultimately my value would be determined by the randomness of the collective is a jarring and unplatable departure."

Schrum offers an interesting insight into the psyche of executives. The term "executive" isn't so much a title as a mindset that manifests in childhood. People with executive tendencies spent high school taking AP classes, and working a couple of part time jobs. They spend their college years running student organizations, doing internships and taking an overload of classes to finish early. Executives are compulsive high achievers but they tend to shrink from public recognition of their achievements. Schrum notes that "executives are non-narcissistic in a You-Tube world." "In a society that brags, blogs and Tweets about the tiniest personal minutia, [executives] couldn't care less because, frankly we expect success. . . . It's like Vince Lombardi's admonition to his running back after an overly exuberant display. "Next time you make a touchdown, act like you've been there before."

Executives hate social networking because they hate "networking." They dread the roomful of strangers, the awkward chit chat, never enough food. Executives are introverts who value their privacy and consider the ROI (return on investment) for each moment of time.

Schrum's rant puts a name to a reaction I've observed in myself. I'm not so sure that social networking is or can be a business tool, or that the act of sharing half-baked ideas should substitute for the hard and lonely work of baking them.

Monday, August 2, 2010

Oh, Puleeeeze

The eye roll is in peril as a form of political speech. In Elmhurst, Illinois, the eye roll may be criminal disorderly conduct. The City Council Chairman ejected a citizen who dared to show her disgust with committee proceedings with a roll/sigh combo. Backpeddling after some backlash, the Chair has sent the City Attorney to the library to do a memo on what exactly constitutes criminal disorderly conduct in Elmhurst. (This is my nominee for worst legal research assignment of the summer-- What's yours?)

The Chicago Tribue editors have this to say:

"Where do you draw that line? (Eyes uplifted, palms outstretched, as if beseeching the heavens.) Menacing others, throwing objects and setting fire to the dais are clearly out of line. But is it disorderly to yawn, fidget, smirk or scowl? To circle an ear with an index finger to signify "cuckoo"? To feign a self-induced upchuck, as we're doing now?

Funny thing about public meetings: They tend to expose disparate viewpoints, especially if the discussion is about something like whether it's a smart idea for one government body to spend taxpayer dollars to lobby another government body for more taxpayer dollars. (Ahem.) Reasonable people can disagree, and before you know it, they're raising their voices and (eyes wide in mock horror) making faces.

Our advice to public servants who think citizen discourse is somehow disrespectful to the democratic process: Get over yourselves. Your job is to heed those opinions, like them or not. If a pair of arched eyebrows can bring the legislative process to a halt, then it's time to throw out the aldermen, not the citizens. And we say that with a completely straight face."

Bundles of Joy

If you've ever wondered whether practicing law is more interesting and fulfilling than driving kids to the orthodontist, take a look at Moms Who Won't Quit on The Careerist.

My kids asked me once why I wasn't a "real mom." I answered that if I stayed home all day, I'd vacuum holes in the rugs, alphabetize all their books, and stack their toys by color and size. I kept my day job and we all got by.

Thursday, July 29, 2010

A Fascinating Subject

Anyone who is still looking for an interesting Fall course should consider Insurance Law. Of course, I may be biased in saying so, but the subject is not only timely, it is a perfect "capstone" course. Insurance law can be thought of as advanced contracts, advanced torts, as well as a course on policy and complex financial regulations. Insurance touches on all areas of the law, and is sure to raise some thought-provoking issues. For example, Bloomberg just released this story on secret profits in life insurance death benefit payouts. What's not to love?!

Wednesday, July 28, 2010

Reflecting on the Bar Exam

For thousands of recent law school graduates, today is day two of the bar exam. The elation of graduating has faded and the reality of the test is upon them. I feel vicarious anxiety for all examinees. I doubt any attorney can think of someone sitting a bar exam without feeling a pang of sympathy. The bar is a rite of passage, and the experience of it is not likely to fade from memory any time soon.

For me, day two of the bar exam was a blur. I sat the exam in California, a three-day state. I couldn’t share in the excitement of my peers in Pennsylvania who were anticipating the glorious feeling of finishing the exam, and my own energy was waning. Day two is the multi-state day, and it was all I could do to stay focused on each question as it was hurled in front of my attention. It was hard to set aside the feelings about my performance on day one, and equally challenging to realize that I had another full day of testing yet to go. Friends and professors had encouraged us all to think of the exam as a “test of minimum competence,” but could we? In retrospect, that is exactly what it was, but that is certainly not how one approaches studying for such an important endeavor.

I would guess hundreds of thousands of dollars are spent on bar preparation each year between the costs of professional bar review courses, hours invested in studying and sitting the test, and lost wages, etc. The period leading up to the bar exam can be a black hole of expense. Expense alone is a strong motivation to pass the thing on the first try. Unfortunately, however, after today (or tomorrow), the takers will have a long time to wait before hearing the results.

For me, the results came out Thanksgiving week – a full four months after I left the San Diego Convention Center. I wish I could say that I left the results in God’s hands and ceased thinking about the test. Sadly, I can still tell you the subjects of each essay and the order in which I wrote them. I replayed the test and my answers in my mind ad nauseam. This exercise in futility did little to ease my stress, though it did occupy my mind.

I can’t honestly encourage examinees to put the test out of their mind completely, because I don’t believe it is feasible or even wise. I think there is something to be gained from reflection. What I wished I would have done, though, is to give myself a time constraint in my own reliving of the experience. And so I will encourage the July 2010 batch of examinees. Give yourself a week or two (at the most) to reflect on the test itself. Talk about the questions with others, look up the “right” answers, if you desire, and then at the end of your set time, let it go. Write down all of your fears and concerns on a piece of paper and then shred it. The die has been cast, and the results will be revealed in time.

For now, sip a sangria and enjoy a much-deserved break. By taking the test, you have joined a fraternity of professionals who are eager to welcome your skills. Be proud of what you have achieved, and look forward to great things.



Tuesday, June 22, 2010

Making the Grades

The New York Times reports that at least ten law schools have raised their grade curves in the last two years. The new rationale for this timeworn response is that students need a competitive edge in a tight job market and higher gpa, however contrived, is just the thing. Ironically, by outing the culprit law schools, the New York Times has probably reversed any advantage their students might have reaped from the sudden lift in gpas.

The premise that a law school can give its graduates the edge in the job market simply by raising their gpas across the board is offensive. Rank in class and rank of law school provide much more useful comparative data than gpa, so the premise that higher gpas, all other things equal, will translate into more job opportunities is dubious. Even assuming that raising the grade curve for all students yields a benefit among a segment of the market (gpa fetishists), the benefit to students at a particular school is at best a wash. Students with otherwise lackluster gpas benefit at the expense of the top of the class who find it increasingly difficult and pointless to distinguish themselves from their peers. If everybody is special as a matter of law school policy, why bother with the time consuming ritual of studying?

Raising the grade curve may make a law faculty feel compassionate in the short run. But all it really accomplishes is to make the faculty less relevant to the market as an evaluator of relative quality. Expert faculty differentiation among students (via competitively awarded grades) is a huge part of what makes a JD valuable. If the market doesn’t perceive any meaningful differentiation among students on the basis of the grades we assign, we’ll be out of business in the blink of an eye. At the very least, we won’t be worth our current salaries.

Two things remain true regardless of the winds of grade inflation. I’d hire someone with a C+ in Corporate Tax over another with an A in (fluff of your choice) any day of the week. And, all students want A’s until the day everybody gets them.

Thursday, June 10, 2010

Beyond Understanding

Ironic, isn't it, that proponents of federal overhaul of financial services industry regulation criticize structured finance transactions, derivatives trading and the interconnectedness of national and global financial systems on grounds of complexity. The implication is that mortgage backed securities and other collateralized debt obligation deals were so complicated that even the most sophisticated investors couldn't understand the risks they were incurring.

The bill before the conference committee, Restoring Financial Stability Act of 2010 (H.R. 4173), is over 1600 pages long.

Friday, June 4, 2010

You Not Only Have The Right To Remain Silent, But, If That's Your Choice, Then The Responsibility, Too

The recent Supreme Court opinion handed down, as they say, in the case of Berghuis v. Thompkins, allows law enforcement to continue questioning a suspect, and to use what that suspect says against him in court, in the absence of an express declaration, either in writing or orally, that the suspect is invoking his right to remain silent.
As with other issues of its kind, this one managed to split nine identically educated lawyers five to four.

Mr. Thompkins, who refused to sign a declaration acknowledging he had been read his Miranda rights, was going along fine maintaining his silence in the face of questioning, until he was done in by the God wheeze:
Detective: "Do you pray to God to forgive you for shooting that boy down?"
Thompkins: "Yes."

The jury at trial was presented with this dialog and, inter alia, finding praying for forgiveness for an act evidence of having committed the act, convicted Mr. Thompkins.

Justice Sotomayor dissented in grand fashion, offering a document longer than the opinion. In it, she at least avoided the tired phrase that the majority had stood (Miranda here, but substitute any statute/rule/doctrine) Miranda on its head. In its place, she offered this equally prosaic but less hackneyed synonym: "Today's decision turns Miranda upside down." Justice Sotomayor, seizing on an apparent contradiction flowing from the ruling, writes, "Criminal suspects must now unambiguously invoke their right to remain silent- which, counterintuitively, requires them to speak."

Of course, criminal suspects could say nothing at all. The guilty ones could add that restraint to their tool kit, already containing, for example, guns and knives and such. Mr. Thompkins, perhaps and poetically, was done in by the same lack of impulse control (his own) that did in his victim.

Now we'll find out if the new principle, universally applied, is on balance salutary or not.

Wednesday, April 7, 2010

On Property Tax Appeals

Here is a story concerning the growing trend, in many jurisdictions, of property tax appeals among homeowners. In my own state of New Jersey, property taxes are big potatoes. Here, as elsewhere, property taxes are a significant part of how localities within the state finance their governments. And New Jersey has the highest property taxes in the nation. In many property tax-setting jurisdictions across the state, property tax assessments are yet pegged to home values that were assessed at or near the high-point of the real estate boom. Because many jurisdictions have not conducted new assessments since that time, many homeowners may be paying significantly more in property taxes than they should be paying. Of course, one governmental incentive is to delay any reassessment for as long as legally possible, the better to keep the money coming in to finance local governments; this is especially true at a time when Trenton, under a new governor, is poised to reduce state aid to localities. Nevertheless, more home owners and some businesses in the state are pressing forward with appeals to have their property taxes lowered. As an attorney in the state, I've had occasion to become familiar with the appeal process in the County of Mercer.

Homeowners may bring appeals on their own before the county assessment board, and, generally speaking, they will be opposed at the hearing by the relevant township assessor's office. Chances for homeowners of prevailing are not great. For one thing, state law allows a 15% margin of error to the township assessor, which diminishes not just the number of appeals, but can also affect any write-down. Moreover, townships are likely to aggressively contend any appeal, because revenue is scarce. And if you are a corporation and want to appeal your property tax assessment, you are required to have a lawyer licensed in the state prosecute your appeal. For small corporations without a counsel's office, that means the cost of representation must be considered alongside the uncertainty of prevailing, and the magnitude of any savings coming from prevailing, in arriving at a decision whether to appeal your current property tax assessment.

New Jersey is in bad fiscal shape. And local governments in the state, long on current and legacy promises to highly compensated public employees, now find themselves between the rock of a new governor intent on lowering their state aid and the hard place of corporate and private citizens looking to reduce their property tax bills, many of which are based on inflated property values.

Comes the bill due.

Saturday, March 13, 2010

Required Reading for Lawyers (and Everyone Else)

The group Keep America Safe recently ran an ad pressuring the Obama Administration to reveal the names of seven Justice Department lawyers (appointed under this Administration) who in the past volunteered to represent Guantanamo detainees. In this weekend's Wall Street Journal, in the Weekend Journal section, are two essays on the subject.

One essay is written by Stephen Jones, the lawyer who represented, upon judicial request,Timothy McVeigh. Mr. Jones' essay is in line with the published opinions of many other lawyers regarding the propriety of the Keep America Safe ad. But his essay also includes harrowing details of Mr. Jones' life during and after his representation of McVeigh.

The other essay is written by Andrew C. McCarthy, who as an A.U.S.A. in the Southern District of New York prosecuted Omar Abdel-Rahman, known as the Blind Sheikh, and his co-conspirators, for the so-called Bridges and Tunnels terrorism plot. Whatever its prescriptive merit, McCarthy's essay is certainly courageous, as he stakes out a position strikingly at odds with the near-universal opinion (shared by lawyers on both sides of what may loosely be called the national security debate) that the Keep America Safe ad was out-of-bounds. McCarthy does a service at least to this extent: he points out a number of relevant legal distinctions between the circumstances of the detainees and the so-called "al Qaeda Seven" on the one hand, and prior defendants and their attorneys on the other hand, that lawyers like Mr. Jones, for example, have used to substantiate the out-of-bounds nature of the Keep America Safe ad. McCarthy writes more extensively on his views here.

The best and most balanced thing I have read on the subject was written by former Attorney General Michael B. Mukasey. That essay calls foul both the demonization of the likes of John Yoo and Jay Bybee, and of the so-called "al Qaeda Seven." And for the same reason.

Friday, March 5, 2010

An Easily Understandable Explanation of Derivative Markets

Perhaps one of the clearest explanations I have seen.


Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed in a ledger (thereby granting the customers loans).

Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit.

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.

A young and dynamic Vice President at the local bank recognizes that these customer debts constitute valuable future assets, and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations, she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with not only having to write off her bad debt but also with losing over 90% of the presumed value of the bonds. Her wine supplier claims bankruptcy, closing the doors on a family business that had endured for three generations, and her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar, no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.

Thursday, March 4, 2010

Viva the Privileges or Immunities Clause of the Fourteenth Amendment?

Randy E. Barnett, professor of constitutional law at Georgetown, and author of "Restoring the Lost Constitution: The Presumption of Liberty", has written an opinion piece in Wednesday's Wall Street Journal that is essential reading for anyone interested, either by inclination or by compulsion, in constitutional law.

The professor deals with the issues covered in the piece more competently than I am able, but here is a preview. The upcoming decision in McDonald v. Chicago is likely to explicitly find the Second Amendment to the U.S. Constitution applicable to the states. And that means Heller will be applicable to the states. Professor Barnett wants, should that happen, that it happen via the Fourteenth Amendment's Privileges or Immunities Clause, not the Due Process Clause, which, the professor seems to believe, does not have a substantive aspect. We last saw the Privileges orImmunities Clause of the Fourteenth Amendment just before the Slaughter-House cases, which did to it what On Deadly Ground (you should thank me for not linking to it) did to Steven Segal's movie career: it continued to exist but without effect. The Privileges or Immunities Clause reads:

"No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States."

Professor Barnett finds the clause's historical marginalization unwarranted, given the plain import of its language. And for reasons of jurisprudential hygiene wants it to be the vehicle by which the Second Amendment is made applicable to the states. However, some of the questions and comments made by the Justices at oral argument on Tuesday suggest to the professor that the Court may pull the well-used lever of the Due Process Clause instead. We'll soon know.

Wednesday, March 3, 2010

An Afternoon in the Law

Today I attended the 2010 John Marshall Harlan '20 Lecture in Constitutional Adjudication at the Woodrow Wilson School for Public and International Affairs on Princeton University's inspiring campus. The speaker was the Chief Justice of the Supreme Court of New Jersey, the Honorable Stuart Rabner. Chief Justice Rabner, like Justice Harlan before him, graduated from Princeton.

Ten minutes before the program was to begin, I involuntarily networked with a man who crossed several seats to get the business going. He was good at the networking wheeze, and before long I had volunteered nearly everything I knew about myself except my social security number. I am proud of the fact that I am uncomfortable networking. Like Bacon's Nature, I do not reveal my secrets, but rather only respond to a line of questioning. Alas, my guy was up to the task, and extracted secrets. Presently and mercifully we were brought to order.

The Chief Justice was introduced to the capacity crowd in Dodds Auditorium by a professor from the Woodrow Wilson school, who recited, apparently without omission, the Chief Justice's embarrassingly long list of absurdly impressive academic achievements. The audience learned too that the Chief Justice's father survived a Soviet work camp. And that the Chief Justice was a Princeton University tour guide while making his way through the institution, trailing clouds of glory. The Chief Justice is a remarkably amiable and intelligent man, and spoke extemporaneously for close to a half hour about New Jersey's constitutional history. He spoke too of the structure of the state's court system, which was overhauled in 1947 and which was used as the model for both the Alaskan and Hawaiian court systems.

The Chief Justice spoke at some length and specificity about a few of the programs the New Jersey courts have initiated. For example, the courts have a program whereby lawyers in the state volunteer to mediate between mortgagees and mortgagors, in an effort to avoid foreclosure proceedings. The courts have also instituted a program (now operating in four counties; soon to be five) where returning veterans who end up in criminal court, in appropriate cases, are diverted onto a counseling track and are assigned a military mentor. This program was inspired by the notion that returning veterans sometimes have trouble assimilating back into society, and that, in those cases, society should make an extra effort to aid that assimilation.

The Chief Justice ended his remarks by stressing how important he considers it that the state's courts extend to all parties procedural due process. Pointing out that because there is always at least one party unhappy with a court's decision, it is imperative that the judicial process be viewed as fair and impartial.

After the Chief Justice's main remarks, he joined the Provost of Princeton University, Christopher L. Eisberger, in those giant leather chairs such people always repair to when the question and answer session begins. The Provost, a graduate of Princeton and the University of Chicago's Law School, and an author of a book on the appointment process of Supreme Court Justices, asked the Chief Justice several of his own questions before eventually asking for questions from the audience. The mundane questions asked by the Provost yielded more interesting answers, mainly because the Provost understood that asking interesting questions to a sitting Chief Justice, who after all must remain circumspect with an eye toward future cases, means you get anodyne answers back. The Princeton students who asked questions of this sort, and who must have been unaccustomed to not getting interesting answers back, stood fast at the microphone after the Chief Justice stopped his devitalizing answers, retreating to their seats only after the Chief Justice blinked at them several times.

Here are some interesting differences between New Jersey constitutional rights and federal constitutional rights, which the Chief Justice cited in the course of his answers. Remember of course that the federal rights set a floor which state constitutional text and interpretation are free to exceed in the direction of greater individual rights:

1) Folks in New Jersey have a reasonable expectation of privacy in the trash they put out on the curb. Under the federal Constitution, that's not so.

2) With respect to a search of a house, for example, a consent must be knowing and voluntary under the federal Constitution. In New Jersey, homeowners/dwellers have the additional protection that the police must inform them they have a right to refuse such a search

3) In New Jersey, a passenger in a car that is stopped and searched, and who is found during that search to possess a gun, for example, has standing to challenge the grounds for the search. Under the federal Constitution, the passenger would not normally have sufficient possessory interest (i.e. does not own the car) to have standing to challenge such a search.

One question elicited the Chief Justice's advice to the students in the audience who are headed to law school. The Chief Justice did not mention that the legal job market is poor, much less suggest an alternate career path on that account. He was talking to Princeton students, after all, who, it was clear from the unspoken assumptions implicit in both the question and answer, were headed to top law schools. The Chief Justice advised the future law students to use their summers to try out firms both big and small, and not to go to law school with too certain an idea of what you want to do. This last bit of advice, in retrospect, and for reasons not contemplated by the Chief Justice, is comically relevant to me.

The questions from the audience exhausted, the Provost reserved for himself the last question of the afternoon. And, apparently unable to help himself, asked the Chief Justice a manifestly interesting question: Does the Chief Justice have a view on trying terrorist suspects in the civilian court system. The Chief Justice declined to offer a view on prospective cases, saying only that such trials have yielded results in the past. Then the Provost offered his own view on the question, which, whether or not correct, was entirely unsurprising.

It was a good afternoon in the law.

Monday, March 1, 2010

Should Everyone Be “Special”?

One of my favorite films in recent years is Disney Pixar’s The Incredibles. The movie tells the story of a family of “Supers” (heroes), who have gone into hiding to escape public scrutiny for tort claims arising out of saving people who “did not want to be saved.” (An interesting thought itself.)

My particular interest in the film centers on the antagonist of the story. A self-declared/self-made “Super” named Syndrome. Syndrome was born without super powers, yet he was driven to become a Super anyway. As a child, his obsession with the Supers led him to attempt to help the protagonist, Mr. Incredible, catch a villain. The results were disastrous. The young Syndrome appeared on the scene as “Incredi-boy,” complete with his own outfit and technology that made up for his lack of innate super powers. Because of his interference, the villain they were after got away, and Mr. Incredible sent the young would-be helper packing. Years later, this child grew to be a bitter and determined man who was driven to perfect his technological aids with one purpose. His aspiration was to destroy all true Supers and sell his products to the masses, “so that when everyone is special, no one is.”

This scene, to me, is a key moment in the film. Syndrome is proclaiming his indictment of outcome-based measures of performance. He fails to recognize his own unique talent and giftedness with technology, and instead focuses only on what he is not – innately “Super.” His desire to strip the world of all who have such gifting and replace it with his form of power is problematic for an obvious reason. People who do have such a unique set of talents should not be punished. A theme throughout the film is the depression the Supers experience as a result of suppressing who they truly are. Less obvious, though, is the somewhat ironic problem brought about by Syndrome's plan. His desire to equalize the population (everyone will be Super, therefore no one will be) actually works to diminish his own gifting. He is, in effect, saying that there is only one way to be special. Being Super, whether by nature or machine, is his only metric for success.

The fact is that we are all uniquely gifted in some way. His own talents are evident when one considers the vast island kingdom he has managed to establish through his ingenuity. Instead of seeing himself as uniquely talented, he only sees what he is not. Comparing ourselves to others and wondering why we aren’t this or that doesn’t help us become our best, it only discourages us that we are not like another. I suppose my thought-kernel for the afternoon is to focus less on what I am not and more on what I am.

Sunday, February 28, 2010

Balancing on the Edge of the Merits

I have posted a draft of my newest article - Striking an Efficient Balance: Making Sense of Antitrust Standing in Class Action Certification Motions - on SSRN.

My thesis is that a district court judge considering a motion for class certification in an antitrust class must preserve the bargaining relationship of both the putative plaintiff class and the defendant(s) through an analysis of both the Article III and antitrust standing doctrines. In the article, I demonstrate the adverse impact an imprudently certified class will have on the consuming public as a whole. I propose that by considering the antitrust standing (and thus antitrust injury) of a putative plaintiff class at the certification stage of the litigation, efficient conduct – and thereby consumer welfare – will be achieved.

The trouble is that ascertaining antitrust standing can be quite complicated, almost always invoking issues typically reserved for the merits of a case. This is problematic, because a district court judge is bound by the Supreme Court's admonishment to avoid "inquiry into the merits of a suit in order to determine whether it may be maintained as a class action." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974).

I welcome any comments on the piece.

Tuesday, February 23, 2010

Hardball in the Preparation Market

It's a cage match. Behemoth Barbri and wiry newcomer Themis are mano a mano in the market for Pennsylvania bar review courses. Earlier this week, I saw an e-mail from a Themis rep calling out Barbri's rep for talking trash. I do love competition.

The price for the Themis course is $1395. Would you like New Jersey with that? Themis will throw in New Jersey prep for $100. You may want to add a state essay review for $795 for a total cost of $2280. Compare Barbri's price at $2850. It took some clicking around to even find the price on BarBri's site.

I confess I'm not over my own bar exam prep experience. I resented Barbri's monopoly. Even more, I was horrified by my own perfectly inelastic demand for its product.

Wednesday, February 17, 2010

Big Soup

Another child of the capitalist system has grown up to darken the horizon. It's Big Soup.

The Campbell Soup Company is serious about causing you to buy soup. And 'causing' seems to be the right word. Ilan Brat, in a piece titled The Emotional Quotient of Soup Shopping, published in the Marketplace section of today's Wall Street Journal, tells the story of the Campbell Soup Company's two-year-long project to cause you to buy more soup.

It turns out that there are squads of folks dedicated to finding out how you feel about soup. And it turns out that they can't simply rely on the method that suggests itself: asking you how you feel about soup. How come? Campbell CEO Doug Conant notes, ruefully one suspects, that when folks are asked why they eat soup or why they don't, they "say they don't think of it." That seems to be good news. It's unclear what exactly a world would look like in which all of us had sound and articulable reasons for why we do or don't eat soup, but it seems like it would be worse than this one.

There are other challenges for the soup investigators. For example, they can't get reliable information from folks about which soup labels are memorable, which are effective, and which aren't. Not that they haven't tried. But when they conducted interviews for the purpose, the interviews "didn't fully capture their [the interviewees] unconscious responses." That also seems to be good news for those of us not in the Campbell Soup Company's executive suites. If there is one thing we can yet have a reasonable expectation of privacy about, it would be impressions we don't know we have, but do.

What's a soup company to do? Apparently, use neuromarketing techniques to ferret out consumers' hidden impressions. Neuromarketing techniques have their limitations (more good news). For example, researchers can measure emotional responses in subjects, but not what the underlying emotions are. Also, the generally small sample sizes convenient for neuromarketing testing means oulier data can be mistaken for the norm. Be that as it may, here's how Campbell has used neuromarketing techniques:

"Researchers interviewed about 40 people at their homes and later in grocery stores. The team [of researchers] also clipped small video cameras to the testers [the folks corralled for the interviews and the study] at eye level and had them later watch tape of themselves shopping for soup. Special vests captured skin-moisture levels, heart rate, depth and pace of breathing, and posture [while the testers faced the grocery shelves filled with soup cans]. Sensors tracked eye movements and pupil width."

The upshot of this research? The Campbell folks think they can "boost sales by triggering more emotional responses in stores and prompting more people to focus on more soups."

And they came up with this: aside from the three iconic labels, rendered that way by Andy Warhol (chicken noodle; tomato; and cream of mushroom), new labels will feature steam rising from the "larger, more vibrant pictures of soup", which now will be contained in "modern, white bowls." Also, the spoon that heretofore held up the soup in the foreground of the labels, having been condemned as "unemotional", will go away.

I suppose this is all all right, or in any case, the way things are. But I confess a hope that at least some of the testers faced up to the shelves while hooked up to the electronics and got amorous thoughts about past lovers. That way, and mindful of the inability of the technology to detect particular emotions, researchers may have attributed really strong emotional responses, erroneously, to a bisque label or some such.

Sunday, February 7, 2010

With Friends Like These...

This weekend's Wall Street Journal features a story on the state of assisted suicide in Switzerland. Specifically, the story discusses a particular player in the assisted suicide tourism market in that country, Dignitas, and dilates on the possiblity that its founder, Ludwig A. Minelli, may, by his relative extremism, cause a backlash among the generally tolerant Swiss against following the logic of free choice over ending one's life all the way to where it natually goes.

It seems that many causes and movements come to grief for the exertions of their most radical advocates. William F. Buckley, Jr., who wrote a sympathetic historical novel on the life of Joe McCarthy, was of the opinion that McCarthy, by seeing a communist nearly every place but the mirror, undermined the legitimate effort of discovering and turning out the actual communists history has shown were in place throughout the government in the 1950's.

And then there is Global Warming. The East Anglia emails (featuring Penn State professor Michael Mann; Go State!) and the unfounded prediction for the geologically imminent melting of the Himilayan ice sheets, has gone a long way toward establishing the American public's contemptuous serenity in the face of unrelenting doom talk. There have been protestations that the core science that establishes the fact of anthropogenic Global Warming (sometime recently reflagged as Climate Change; presumably as a hedge in case the practicioners of the science get the overall direction wrong) is an uncontroversial thing. We are told that the alarmist predictions and the ethically questionable behavior have been in the service of bringing us round to the realities of our peril. The end, that is, justified those means. But an unsurprising thing happened on the way to the success of that program: the architects of it failed to fool all of the people all of the time. And lost trust and legitimacy is not regained by chastising the folks from whom it is needed by telling us there would be no need to lie to us if we weren't so stupid and foolishly unconcerned.

The sort of folks who devote themselves entirely to a cause are not well suited to reminding themselves that incremental advances are a better outcome than risking the utter rejection of their cause that often comes with appearing unhinged. This is unsurprising. If, to take the example of Global Warming, a person really believes the earth will soon suffer cataclysmic damage if radical changes are not immediately adopted, it surely would seem foolish to that person that he should observe ethical guidelines not drafted with an existential threat in mind.

But surely that person would object to another adopting her own existential cause and so turning her pre-justified methods loose on him (think Torquemada, et. al. or Al Qaeda, with existential here taking on its most profound meaning). So the defense of one's methods comes down to an assertion of the correctness of one's cause. And with respect to that, history bows its weary head.

Tuesday, January 19, 2010

Sorting in the Academy

A recently released study of academics asserts that certain characteristics of professors may explain the higher proportion of liberal academics relative to the population at large. The study concludes that 43 percent of the political gap between academics and a random population sample can be attributed to four factors more common among academics: 1)high levels of educational attainment; 2) disparity between levels of educational attainment and income; 3) self-identification as Jewish, non-religious, or a member of a faith that is not theologically conservative Protestant; and 4) high tolerance for controversial ideas.

The authors of the study, Neil Gross and Ethan Fosse, note that their findings confirm the theories of French sociologist, Pierre Bourdieu. Like Bordieu, Gross and Fosse see intellectuals as defined by "possession of high levels of cultural capital and moderate levels of economic capital." Bordieu asserts that this structure shapes intellectuals' political views. ".... Deprived of economic success relative to those in the world of commerce, intellectuals are less likely to be invested in preserving the socioeconomic order, may turn toward redistributionist policies in hopes of reducing perceived status inconsistency, and may embrace unconventional social or political views in order to distinguish themselves culturally from the business classes."

The four factors account for only some of the difference. The authors theorize that young adults are sorted into the professoriate based on their political views. "[T]he professoriate, along with a number of other knowledge work fields, has been 'politically typed' as appropriate and welcoming of people with broadly liberal sensibilities, and as inappropriate for conservatives." The reputation of the academy for 'political type' "leads many more liberal than conservative students to aspire for the advanced educational credentials that make entry into knowledge work fields possible, and to put in the work necessary to translate those aspirations into reality."

Although students may not be aware of its effect on their career choices, political typing likely affects them: "Because these identities involve cognitive schemas and habitual patterns of thinking that filter experience ... most young adults who are committed liberals would never end up entertaining the idea that they might become police or correctional officers, just as it would never cross the minds of most who are committed conservatives that they might become professors, precisely because of the political reputations of these fields."

Monday, January 18, 2010

In Remembrance

Should the United States go to Pot? Si no, Por Que

Dr. David Nathan, a Princeton based psychiatrist who treats patients suffering from substance abuse, has come out on the opinion page of the Wall Street Journal for the decriminalization of marijuana.

Dr. Nathan is admirably candid about the potential baleful effects of the drug, and about the fact that those effects would be visited on some folks under a decriminalized regime. But he believes the costs of the status quo are greater than the benefits derived, and that the benefits of the change would be greater than the costs realized.

He may be right. One interesting piece of speculation in the article concerns the 'gateway drug' argument that usually accompanies discussions of whether or not to legalize (note the change from decriminalize to legalize; there is a difference, discussed below) marijuana. The gateway drug argument holds that marijuana use, not so dangerous in itself, leads to the use (which here is synonymous with abuse) of truly dangerous substances. Dr. Nathan says however that the gateway properties of marijuana may be attributable to nothing more than the fact that users who go to a dealer for marijuana may be upsold to other substances by the dealer. If he is right about that, then, as he states, legalization, insofar as it obviates the trip to the illicit dealer, removes the gateway effect.

All right. But what about those like Bill Bennett, who say things like this: Drug use is wrong because it enslaves the mind and imprisons the soul. And that on that account the state should not be in the business of serving the stuff up, or of making money by taxing the stuff if the market is private. The usual debating point to raise for folks on the other side from Bennett is to point to alcohol and say, "What about that?". Then Bennett's side says we can't let the perfect be the enemy of the good. And anyway, if you don't like the effects of alcohol on society it is odd to take the position that it should take on a partner, even if we consider marijuana the lesser evil.

It is not clear which way the nation will go, but it is instructive to note that the choices we make will have some serious externalities, principally for Mexico.

Consider part of what is likely to happen if the United States legalizes marijuana: Mexico's ultra-violent drug cartels (the level of violence is a reflection of the level of money involved and of the reinforcing thrill uninstructed packs of young men are liable to take in perverse violence) will be devitalized to this extent: they currently get about half of their revenue from home-grown marijuana. Should that revenue disappear with the advent of a legal market, the gangs will be less able to intimidate, less able to name their price for cocaine shipments from Colombia, and more susceptible to ruin at the hands of law enforcement. By the way, the tragic rise to inordinate national prominence of the Mexican drug gang follows the U.S. sea-route interdiction efforts of cocaine originating from South America, which increased the cost of getting cocaine to the United States via that route and made the land route through Mexico economic.

Now consider what happens if the United States decriminalizes marijuana. That is to say, what if we decide that end users cannot be prosecuted but that the sale of the drug is still illegal. It might seem both large souled and practical to go this route. It may actually be those things. For us. But it is a nightmare scenario for Mexico. Demand will rise among Americans immune from prosecution, and the black market will get that much blacker, and Mexico will bleed itself white.

Thus does the future of marijuana's status in the United States serve as a reminder that this Leviathan can seldom commit itself to anything without also committing other nations to something else.

Sunday, January 17, 2010

L'Amour Est un Oiseau Rebelle

The Metropolitan Opera's live HD telecast of Bizet's Carmen to movie theatres set a record with 240,000 viewers. (Carmen blew away the record set by Puccini's Madama Butterfly last March with 197,000 viewers.) I saw and heard it in the sold out State Theatre right here in State College.

Ah, Habanera

The bird you thought you had caught
beat its wings and flew away ...
love stays away, you wait and wait;
when least expected, there it is!
All around you, swift, swift,
it comes, goes, then it returns ...
you think you hold it fast, it flees
you think you're free, it holds you fast.
Love! Love! Love! Love!
Love is a gypsy child,
it has never, ever, known law;
if you love me not, then I love you;
if I love you, you'd best beware!

I cannot understand how her dress stayed on.

Tuesday, January 12, 2010

Finding Comfort in Casebooks

There is something familiar and comfortable about a law school casebook. For starters, I know how to read them and get what I need from them. After spending three years in law school, the casebook-learning method becomes routine. Second, they are a contained universe. The casebook poses the question and usually presents the answer, or at least the key to discovering the answer. Third, similar to being a contained universe, the casebook is finite. I know that once I have read and digested all of the information in the book, I am prepared to handle any question covered by said book. Until another case comes along and overrules the law, of course. But even subsequent laws don't seem as daunting once the framework for learning the particular subject material is established. The point is that I know that after X-number of pages, and the requisite diligence, I will have gained understanding. Finally, given a good author, the casebook can actually be diverting to read. Whether it is a sassy bankruptcy scholar or a witty property professor, casebook-learning can be a source of entertainment. For me, the process of learning and digesting the law via a casebook feels natural and safe.

Life as a lawyer outside of the law school environment, whether practice or "real life," is not nearly so comfortable. There are decisions to make and there is not always a safety-net of scholarship upon which to rely. While others may have encountered similar anxieties and issues, I find a lack of scholarly consensus with respect to a situation to be a bit unnerving. There are problems without solutions, and as a sometimes overly-analytical mind, the "paralysis of analysis" can set in and be debilitating. Personally, I like to know that there are others - far wiser than I - who have worked through a problem and arrived at the "right" solution. I find that I often lack the confidence to determine my conclusions are fair, let alone right.

Perhaps part of my own transition from law student to lawyer involves trusting my instincts. In both the law and in my personal life, maybe I do have the skills I need to either: a) reach a reasonable conclusion, or b) know when and where to seek input on a particular matter. Maybe . . . For now, I find the ability to retreat into a casebook provides a measure of solace. For this, I am grateful.

Monday, January 11, 2010

And We're Back!

Anyone who watches SNL may appreciate the reference to Jimmy Fallon's Z105 "Morning Madhouse" skit. The skit has little, if anything, to do with the law, but it does make me laugh. As we begin the Spring 2010 term, which feels less "springy" and more "wintry," a bit of light-hearted humor would do us all well.

The Spring term is the final lap for our 3Ls, and the beginning of the bar preparation season. I wouldn't say the Fall semester is necessarily easier than the Spring, but for me, the pressure mounted each Spring. To help keep school in perspective, and my mood elevated during the remainder of winter, I found things that made me laugh to be the best medicine. Perspective, after all, is a key to avoiding burn-out and insanity in law school!

So, good luck to everyone this term, especially the 3Ls!

Friday, January 8, 2010

The Year of Living Dangerously

The unholy crucible of Washington compromise has worked this oddity into tax law: there is no estate tax in 2010. And there promises to be a large one in 2011. Stephen Moore, writing in the Wall Street Journal about 2010 tax issues more generally, spends some time on the estate tax.

Moore of course would prefer to remove the oddity mentioned above by avoiding a resumption of the estate tax in 2011. Not so Sen. Max Baucus, who, apparently and tragically undiminshed from his health care labors, aspires to "raise the estate tax back to between 35% and 55% this year, and to make that change retroactive to Jan. 1." The better to pay for that other thing, I suppose.

But can that be done? Here's Moore: "Can Congress impose a new estate tax, say in April, on someone who was already dead and buried in February? Let's hope not." Moore has been around long enough (which requires only a month or so) to know hope is all we can do.

But let's hope Baucus fails in his ambition, and, for entertainment purposes, that Moore does, too. In that case, we can behold the pageant of moral hazard that will reign among heirs apparent this year.

Early on the pressure will likely manifest itself in elliptical ways. For example, encouraging the old tycoon to take up rock climbing. Should he prove surprisingly competent at that, late summer might see more direct efforts. For example, "Surprise!" yell the descendants as they spring from behind the matriarch's bedroom curtains (when she first wakes and on a day not her birthday).

And the closing window that will be New Year's Eve could well loose the inner Utilitarian of anyone standing vigil by the bedside of an old and infirm moneybags. And there may be many such folks standing vigil. Hospitals, more likely than Times Square, may set attendance records that night for visitors.

Without the intention of causing the outcome, the muti-motived authors of this mess are encouraging, in this limited context, the sort of inter-generational suspicions regnant in Orwell's 1984.

Thursday, January 7, 2010

Best Jobs

The Wall Street Journal has published a list of the 200 best jobs for 2010 based on environment, income, employment outlook, and physical demands and stress. The list reflects a study by, an employment site.

Selected data:

1. Actuary
22. Court reporter
62. Musical instrument repairer
63. Federal judge
80. Attorney
179. Roofer
200. Roustabout

Wednesday, January 6, 2010

Saab RIP

It's over. Ja.

The acting CEO of GM says there's no hope a bidder will appear with the kind of krona that can get the pistons pumping again at Saab.

Tuesday, January 5, 2010

UCC Article 2 Sale of Goods

I am reassured and horrified that the Article 2 scope disorder I've observed among my Contracts students is not just my problem. Thom Lambert at University of Missouri Law encountered a severe strain while grading his Contracts final exams and wrote about it on Truth on the Market.

UCC Article 2 governs contracts for the sale of goods. Apart from some interesting cases involving North Sea oil platforms, electricity, and software which push the envelope of 'goods,' it really couldn't be simpler. Yet, students every year write in the the final exam answer that Article 2 does or does not apply to a particular transaction because one or both of the parties is or is not a merchant.

Yes, some sections of Article 2 regulate the rights of certain professional sellers or buyers who participate in a sale of goods. But the scope of Article 2 is not merchant dependent. UCC Article 2 governs contracts for the sale of goods and it does not matter for purposes of its scope whether the parties are Exxon or rank amateurs picking up a broken leaf blower at a neighborhood garage sale.

Professor Lambert laments that every year his Contracts students screw this up on the exam, and the next year he increases the number of times he tells the class that UCC Article 2 governs all contracts for the sale of goods without regard to whether one of the parties is a merchant. Ad nauseum. I do the same. In every class session in which Article 2 is pertinent I say it: Goods -- not real estate, not services. Goods. Merchant schmerchant, I say. Goods. Do not take your eye off the goods. Where they are, Article 2 (or 2A if the deal is a lease) will be. Merchants come and go. Goods remain.

Let's review. UCC Article 2 applies to all contracts for the sale of goods. Any questions?

Professor Lambert speculates that this mistake may root in students' fixation with UCC 2-207 -- the "battle of the forms" which in part applies only "between merchants." 2-207 is the first foray into statutory interpretation for most students. Perhaps the battle of the forms triggers in some students a form of PTSD. When a simple scope question appears on the exam, students traumatized by 2-207 lose their grip and can see only merchant Viet Cong snaking through the rice. It's only a contract for the sale of goods, but in the heat and the darkness it looks like the enemy. Ah, the smell of merchants in the morning.

My friend and colleague Keith Elkin works with law students preparing for the bar exam. He told me that students make this mistake on practice bar exams even after watching the bar prep video heads say it over and over: UCC Article 2 applies to contracts for the sale of goods.

Next time I teach Contracts, I may give peace a chance and omit coverage of 2-207. If Lambert is right, the price of a really good immersion in a really badly drawn statute is too high.

American Needle Next Week

Professor Stephen Ross hosted a moot argument of the American Needle v. NFL case last month at Penn State Law. The Supreme Court will hear the argument for real Wednesday, January 13. If you missed the moot, you can view it online.

Monday, January 4, 2010

32% More

American people and their businesses filed 32% more bankruptcy cases in 2009 than in 2008. Last year was the seventh worse on record with about 1.43 million cases filed.

The spike in filings was sharpest in Arizona where the number of cases filed in 2009 rose 77% over last year. Wyoming cases rose 60%, Nevada 59% and California 58%. Pennsylvania is near the bottom of the list with a 14% increase. sports a cool map of the US showing percentage increases by state.

Sunday, January 3, 2010

Cold and Gray, Exceedingly Cold and Gray

The sound of the wind howling in the woods outside made me think of the coldest my imagination has ever been: Jack London, To Build a Fire.

"When it is seventy-five below zero, a man must not fail in his first attempt to build a fire --that is, if his feet are wet. If his feet are dry and he fails, he can run along the trail for half a mile and restore his circulation. But the circulation of wet and freezing feet cannot be restored by running when it is seventy-five below. No matter how fast he runs, the wet feet will freeze the harder."

Target Puts a Bulls Eye on Costco and Sam's

Target Corporation has launched The Great Save. It's packing up the holiday doodads and stocking the shelves with super-sized packages of toilet paper, bottled water, ketchup and other useful items. The Great Save will give a part of Target stores the look of a warehouse club.

Smart move? On December 31, Target stock closed down .7%. The Great Save runs through February 21. I'll be watching. NYSE: TGT.