When Adam Liptak wrote about the willingness of judges to play the role of charitable donors with left over class action settlement proceeds, it was news to me.  The schmancy new poli sci blog The Monkey Cage recommended that charities ramp up their "take a judge to lunch" program.  Heh.  But the whole "judges doing something different" concept is not an outlier, it's a meme.  Judges are by no means inevitably activist, but they're not just neutral arbiters either - sometimes, they revel in the opportunity to run an agency.  Other times, they prefer comedy.  And now they're doing charity.  Breaks up the workday at least.

Bonus: I like the Monkey Cage's quick hit take on favorite Serbian political aphorisms too.

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Sox has turned out to be a continuing cost item (bonanza), and not the one-off expense that listed companies (accounting firms) had hoped (feared).  Year on year audit fees for US-listed companies continue to rise, according to a report by Foley & Lardner, as described by the Financial Times.  The finding gives lie to the conventional expectation that SOX costs would largely be borne in the early years following enactment, as companies scrambled for 404 compliance.  As a result of rising audit fees, SOX restrictions on non-audit services have not harmed accounting firms as was feared.  Instead, total fees have risen since 2001, the year before SOX was enacted. 

The report also confirms the disproportionate impact of SOX on small firms that many, including my colleague Bill Carney, have previously detailed.  Fees paid to auditors nearly doubled on average between 2001 and 2005, and last year audit fees paid by small companies rose 22 percent.  For the biggest companies, by contrast, total fees climbed by only a percentage point.

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Heather MacDonald wrote a scathing indictment of law school clinics, which appears in today's W$J. Using the Alito hearings as a springboard to discuss "mainstream" views of law, MacDonald offers clinics as Exhibit A for the notion that law schools are incubators of left-wing political activism:

Today's clinical landscape is a perfect place to evaluate what happens when lawyers decide that they are chosen to save society. The law school clinics don't just take clients with obvious legal issues, such as criminal defendants or tenants facing eviction. They take social problems--unruly students in school, for example--and turn them into legal ones. Florence Roisman, a housing rights activist at the Indiana University School of Law, has inspired clinicians nationwide with her supremely self-confident call to arms: "If it offends your sense of justice, there's a cause of action."

The original rationale for many clinics disappears under their political agenda, even though schools still invoke it. Harvard, for instance, explains why law students should enroll in a clinic by emphasizing craft training: "Practical learning . . . should not be deferred until after law school graduation," the faculty declare. But what "skills of legal representation," in the faculty's words, will students in the Gender Violence, Law and Social Justice clinic pick up in researching "gay, lesbian, bisexual and transgendered awareness" for the Massachusetts trial courts, or in helping with the "development of a new self-defense program" to prevent acquaintance rape?

New York University's Brennan Center Public Advocacy Clinic explicitly disavows advancing a student's lawyering knowledge: It is simply a vehicle for every type of left-wing political advocacy. The center spearheaded one of New York's most powerful welfare-rights groups, and, to make sure that the supply of left-wing agitators remains high, it also developed a "community advocacy" curriculum for high schools. Nor does another NYU clinic, this one on immigrant rights, limit itself to law matters. Students help lead protests and then rustle up media coverage for those protests--part of what the clinic calls "explor[ing] . . . ways of being a social justice lawyer." Students in Georgetown's State Policy Clinic work on "building a new economy that is inclusive, participatory and environmentally sustainable." Yale's Legislative Advocacy Clinic aims to move Connecticut toward "a more progressive agenda in taxing and spending revenue."

MacDonald also touches briefly on the subject of business clinics:

Ask why more clinics don't represent small-business men and you'll hear: We are "people's lawyers," representing clients who cannot afford attorneys. Oh, really? Georgetown University's Institute for Public Representation represents the American Cancer Society, the American Heart Association and the American Lung Association in tobacco litigation. The idea that these charitable behemoths could not pay for lawyers is silly.

...

If law schools were really serious about preparing students for their legal careers, every one would have a transactional clinic for small businesses. The vast majority of lawyers advise clients on business deals -- negotiating contracts, setting up corporations and partnerships, trying to avoid legal and tax liabilities, and arranging securities offerings and registrations. Struggling businesses, including those run by minority entrepreneurs, are hurting for lack of such counsel.

When I was working at Skadden in Wilmington, Delaware, I was encouraged to participate in the firm's pro bono efforts. Being a corporate transactional lawyer, I felt more than a bit shy about taking on a death-row inmate as a client, so I suggested to the firm's pro bono coordinator that I might spend my time working with various economic development groups in Wilmington. These groups provide services and financing to low income entrepreneurs, often focusing on women and minorities. The pro bono coordinator (in the New York office) scoffed at my proposal: "There is no such thing as an indigent entrepreneur!"

Despite his unwillingness to back my efforts, I received local support from the partners in Wilmington and eventually assisted the First State Community Loan Fund in making some of its first micro-loans. These loans paid for a sewing machine, a computer and tax-preparation software, and inventory for a small hardware store. The repayment rate was outstanding, and I daresay that a few lives were changed, including mine.

Since entering academe in 1994, I have been a cheerleader for business law clinics. Although I cannot take credit for its realization, I participated in the early discussions that lead to the creation of the Business Law Practicum: Community Development Law Project at Lewis & Clark Law School. We have had similar discussions at Wisconsin, though we are a long ways from launching a business law clinic. Nevertheless, business law clinics already are fairly common and they are proliferating. (Just Google "business law clinic" and you will find plenty of examples.) In my travels, I have not sensed any of the hostility that I experienced in my foray into pro bono work at Skadden, and my sense is that the attitude referred to by MacDonald is receding.

Thanks to Danny Sokol for the tip.

UPDATE: I just caught up with Larry Ribstein's post on this from earlier today. Larry contends that few law schools have business law clinics, and though I think there are more than he knows (I am on a listserv for business law clinicians, and they seem pretty numerous to me!), his core point is sound:

This is important training for the real world of law practice that is not being done either at law firms (now focused on squeezing as much profit-per-associate as possible) or in law school classrooms.

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In his kind introduction, Vic described my summer employers, The Institute For Justice, as "protect(ing) widows and orphans from large corporations. Or maybe it's the other way around." The discussion in the comments of my last post counsel me to point out that IJ does indeed protect widows and orphans, quite literally.

The discussion in those comments has focused on the 6th Circuit case of Craigmiles v. Jiles, (UPDATE: A more readable HTML version is here) which some people suggest raises the specter or promise of Lochnerism. In Craigmiles, the 6th Circuit struck down part of the Tennessee casket monopoly, which forced people to undergo two years of special education before they could sell caskets. The ulterior motive, as with the bar exam, teaching certifications, and the Louisiana florists' license, is to raise a barrier to entry, keeping supply artificially low and therefore keeping prices artificially high. Further background, from IJ, is here [For what it is worth, this same challenge was laughed out of the 10th Circuit].

Christine's reaction is typical of what I tend to hear from those who ponder the economic merits. Who could be in favor of letting funeral directors use the power of the state to rook extra money out of widows and orphans? The skeptics tend to be those who still don't support this particular piece of protectionist legislation, but worry that some day, some future piece of protectionist legislation that they do like will fall to the same scythe.

Of course, I am being a bit unfair to Craigmiles's critics in the paragraph above-- there are also those who simply think that nothing in the text (or history?) of the 14th Amendment justifies even vaguely serious review of legislation that injures only widows, orphans, and entrepreneurs. This is fair enough, I suppose, but it is nice to be clear about who the victims are.

[This post is also the perfect occasion for a disclaimer-- nothing I post here should be attributed to anybody other than me, especially, for example, The Institute for Justice, The Yale Law School, or other bloggers back at Crescat.]

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When I was searching for judicial opinions to include in my casebook, I was shocked to see how many cases involved family businesses. Children versus parents, brothers versus sisters, cousins, cousins, cousins. When conflicts erupt in a family business, the issues of a lifetime often are laid on the table. And the focus of these disputes is always the same: control. In many instances, this is the genesis of the problem:

The most significant problem which will prevent family businesses from successful transition into the next generation is not estate taxes, not competition from the Wal-Marts of the world, not the lack of reasonably sound financial planning, and not the lack of industriousness or work ethic of successor generations. It’s the epidemic behavior exhibited by senior generation or founding generation business family members who refuse to let go of their companies!

When students approach with concerns about working in a family business, I advise them to be extremely cautious. Being a cohesive family can be tough enough without adding the stress of a business. And do you really want to be under your parents' thumbs until they die?

Hat tip to Law & Entrepreneurship News.

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Anita at Small Business Trends posted a link to a story from the Kiplinger Letter about college graduates moving to "small towns." Among the "small towns" on the list: Provo, Utah, home to my alma mater, Brigham Young University. Since I am not a Kiplinger subscriber, I am not sure how they define "small town," but let me provide some assistance to the DC-based company: this -- my home town, population 1,500 -- is a small town. Provo is a small city, which (along with its sister city, Orem, and other surrounding communities) has long been quite an attractive spot for technology companies. WordPerfect and Novell were anchors of the 1980s economy, and many new technology companies are still operating in the region.

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The Soup Factory in Middleton, Wisconsin -- described by The Isthmus as a brothateria -- has consistently great soup. Perhaps the best I have ever eaten, though I have never eaten soup at the Soup Kitchen International (apparently the basis for the "Soup Nazi" on Seinfeld). Last time I was at the Soup Factory, I had curry beef, but everything they serve is great.

This small restaurant was established last year by a couple with an entrepreneurial dream. The wife makes the soup. The husband, whom I have seen only once, fills in when his wife is otherwise occupied. They have a few employees. In addition to soup, they serve simple sandwiches and salads, but the soup is clearly the star of this show.

Things are not going so well for the Soup Factory. Two days ago, I was eating some soup for dinner with my daughter, who shares my enthusiasm for the place. (Cheeseburger soup is her favorite.) It was 6:00 pm and we were the only people in the restaurant. One or two other people stopped for takeout, but it was grim. The owner once told me that business had not been as brisk as she had hoped, but she was optimistic. This last visit, I saw her sneak into the business office. She was working on a spreadsheet, and I suspect that I know what that was about.

I took the opportunity to explain to my daughter some of the fundamentals of small business. We looked at the equipment, the space, the products, etc. and discussed the costs of running the business. Then we talked about revenues: our soups and drinks were $11. The margins are probably pretty good, if you ignore the fixed costs. But how to pay those fixed costs? Only one way to do it. If you are in the Madison area, haul over to the Soup Factory and get some of the best soup you have ever tasted. It's just off University in Middleton, across the street from Griglia Tuscany (here's a map).

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