Time Magazine’s “person of the year” is the “protestor.” Occupy Wall Street’s participants have generated discussion unprecedented in recent years about the role of corporations and their executives in society. The movement has influenced workers and unemployed alike around the world and has clearly shaped the political debate.

But how does a corporation really act? Doesn’t it act through its people? And do those people behave like the members of the homo economicus species acting rationally, selfishly for their greatest material advantage and without consideration about morality, ethics or other people? If so, can a corporation really have a conscience?

In her book Cultivating Conscience: How Good Laws Make Good People, Lynn Stout, a corporate and securities professor at UCLA School of Law argues that the homo economicus model does a poor job of predicting behavior within corporations. Stout takes aim at Oliver Wendell Holmes’ theory of the “bad man” (which forms the basis of homo economicus), Hobbes’ approach in Leviathan, John Stuart Mill’s theory of political economy, and those judges, law professors, regulators and policymakers who focus solely on the law and economics theory that material incentives are the only things that matter.

Citing hundreds of sociological studies that have been replicated around the world over the past fifty years, evolutionary biology, and experimental gaming theory, she concludes that  people do not generally behave like the “rational maximizers” that ecomonic theory would predict. In fact other than the 1-3% of the population who are psychopaths, people are “prosocial, ” meaning that they sacrifice to follow ethical rules, or to help or avoid harming others (although interestingly in student studies, economics majors tended to be less prosocial than others). 

She recommends a three-factor model for judges, regulators and legislators who want to shape human behavior:

 “Unselfish prosocial behavior toward strangers, including unselfish compliance with legal and ethical rules, is triggered by social context, including especially:

(1)         instructions from authority

(2)         beliefs about others’ prosocial behavior; and

(3)         the magnitude of the benefits to others.

Prosocial behavior declines, however, as the personal cost of acting prosocially increases.”

While she focuses on tort, contract and criminal law, her model and criticisms of the homo economicus model may be particularly helpful in the context of understanding corporate behavior. Corporations clearly influence how their people act. Professor Pamela Bucy, for example, argues that government should only be able to convict a corporation if it proves that the corporate ethos encouraged agents of the corporation to commit the criminal act. That corporate ethos results from individuals working together toward corporate goals.

Stout observes that an entire generation of business and political leaders has been taught that people only respond to material incentives, which leads to poor planning that can have devastating results by steering naturally prosocial people to toward unethical or illegal behavior. She warns against “rais[ing] the cost of conscience,” stating that “if we want people to be good, we must not tempt them to be bad.”

In her forthcoming article “Killing Conscience: The Unintended Behavioral Consequences of ‘Pay for Performance,’” she applies behavioral science to incentive based-pay. She points to the savings and loans crisis of the 80's, the recent teacher cheating scandals on standardized tests, Enron, Worldcom, the 2008 credit crisis, which stemmed in part from performance-based bonuses that tempted brokers to approve risky loans, and Bear Sterns and AIG executives who bet on risky derivatives. She disagrees with those who say that that those incentive plans were poorly designed, arguing instead that excessive reliance on even well designed ex-ante incentive plans can “snuff out” or suppress conscience and create “psycopathogenic” environments, and has done so as evidenced by “a disturbing outbreak of executive-driven corporate frauds, scandals and failures.” She further notes that the pay for performance movement has produced less than stellar improvement in the performance and profitability of most US companies.  

She advocates instead for trust-based” compensation arrangements, which take into account the parties’ capacity for prosocial behavior rather than leading employees to believe that the employer rewards selfish behavior. This is especially true if that reward tempts employees to engage in fraudulent or opportunistic behavior if that is the only way to realistically achieve the performance metric.

Applying her three factor model looks like this: Does the company’s messaging tell employees that it doesn’t care about ethics? Is it rewarding other people to act in the same way? And is it signaling that there is nothing wrong with unethical behavior or that there are no victims? This theory fits in nicely with the Bucy corporate ethos paradigm described above.

Stout proposes modest, nonmaterial rewards such as greater job responsibilities, public recognition, and more reasonable cash awards based upon subjective, ex post evaluations on the employee’s performance, and cites studies indicating that most employees thrive and are more creative in environments that don’t focus on ex ante monetary incentives. She yearns for the pre 162(m) days when the tax code didn’t require corporations to tie executive pay over one million dollars to performance metrics.

Stout’s application of these behavioral science theories provide guidance that lawmakers and others may want to consider as they look at legislation to prevent or at least mitigate the next corporate scandal. She also provides food for thought for those in corporate America who want to change the dynamics and trust factors within their organizations, and by extension their employee base, shareholders and the general population.

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I am honored to be a guest blogger, especially since I am brand new to the academy having worked in the private sector for nineteen years as a commercial litigator, HR executive, deputy general counsel and compliance/ethics officer for a Fortune 500 multinational corporation.  I will spend the next two years as a visiting assistant professor at the University of Missouri-Kansas City learning to teach (marrying theory and practice) and focusing on scholarship and coursework related to corporate governance, compliance, social responsibility and the future of the legal profession. 

Over the next two weeks I plan to write about two Dodd-Frank provisions- conflict minerals and whistleblower; my call for an affirmative defense for a redesigned “effective compliance program” under the Federal Sentencing Guidelines; the ongoing debate about the value of a law school education; in-house counsel as "gatekeepers"; and a book review of Cultivating Conscience: How Good Laws Make Good People by law professor Lynn Stout, which offers an alternative look at the homo economicus model. I look forward to receiving comments that can inform my research and thank Erik Gerding for the opportunity to share my thoughts. 

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In thinking about financial law reform, several questions must loom particularly large among legal scholars: Is legal reform a source of market risk and/or uncertainty? And what are the relationships among market stability, risk and uncertainty?

I raise these questions because, as my previous post explored, the dominant judicial decision-making paradigm in finance and lending asserts that stable financial markets require an environment of legal certainty. This so-called "Certainty Imperative" ultimately constrains legal reform efforts by limiting the role of courts in shaping financial law and policy. What is more, the existing legal construct essentially assumes away these important questions, declaring legal reform as a source of uncertainty and a threat to market stability.

However, a recent book, Pandora's Risk: Uncertainty at the Core of Finance, published in July 2011 by economist Kent Osband, offers new insights as to the relationships among market stability, legal reform and certainty. These insights contradict foundational assumptions of the dominant legal paradigm.

In particular, Osband argues that markets are intrinsically uncertain environments. As Frank Knight articulated almost a century ago, risk is generally quantifiable, while uncertainty is randomness that cannot be measured. Challenging the Efficient Market Hypothesis, Osband asserts that changes in price are not caused by constantly updated (and thus highly certain) risk computations, but rather they reflect constantly shifting (and thus highly uncertain) perceptions of risk. Some perceptions of risk prove to be more accurate than other perceptions of risk, but all are inherently uncertain. Indeed, Osband alleges that our fixation with eradicating risk leads to greater market instability.

This book has caused me to further question the dominant paradigm in lending and finance. If it's true that markets are intrinsically uncertain environments, then is it appropriate to fear legal reform because it may introduce further uncertainty? And is the pervasive "Certainty Imperative" rhetoric even accurate? In other words, does the dominant paradigm simply use "legal certainty" as an umbrella term to loosely convey the absence of legal uncertainty and legal risk, or does it in fact distinguish unquantifiable "legal uncertainty" from quantifiable "legal risk"? If so, this distinction may explain why the Certainty Imperative primarily targets the judicial branch. Legal reforms that derive from the legislative and executive branches may be viewed as a lesser evil because they pose quantifiable risk to financial markets, whereas judicial reforms may be believed to introduce unquantifiable legal uncertainty.

Of course, if this is indeed the case, then the questions raised in this post are only the tip of the financial reform iceberg, and a host of normative implications also lurk below the surface. These questions and hypotheses deserve additional consideration, particularly from an interdisciplinary perspective. I welcome your insights.

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Alas, this is the last post of my guest blogging stint here at the Glom. Thanks again for an informative and transformative 2-week set of experiences and memories. 

I second Erik's post about law schools fostering humility. Eric poses these 2 fundamental questions:

1. Can one be both ambitious and humble?  

2. Can law schools both inspire to dream large dreams -- personal and social -- while still warning about our own fallibility and the limitations of law? 

I believe and hope that the answer to both of Eric's questions is yes.

1) Ambition is a great motivator for action, but unless ambition is accompanied with humility ambition often leads to arrogance, conceit, and hubris. A consequence of ambition often is great power and as is often quoted, "with great power comes great responsibility." 

2) Not only law schools, but also such other professional schools as those for business, medicine, and public policy can and should  "both inspire to dream large dreams -- personal and social -- while still warning about our own fallibility and the limitations of" the profession for which they are preparing their students to enter.

I will be teaching Legal Ethics and Professionalism for the first time next semester and have decided after detailed consideration of the many books and supplements from Aspen, Foundation, and Lexis to adopt these 3 books:

a) Nancy Levit and Douglas O. Linder, The Happy Lawyer: Making A Good Life in the Law (2010), ISBN: 978-0195392326. This book is just a wonderful source for law students and lawyers about recent scholarship about happiness and how to balance professional work and personal life. More generally, the book helps readers think about and find meaning in their quest for a satisfying career in the law.

b) Scott L. Rogers, Mindfulness for Law Students: Using the Power of Mindfulness to Achieve Balance and Success in Law School (2009), ISBN: 978-0977345519. This little paperback is another great resource for law students to help them integrate mindfulness into their busy and stressful lives.

Leonard Riskin, the Chesterfield Smith Professor of Law at the University of Florida, who currently is visiting at Northwestern law school, has been a long-time pioneer in championing the benefits of practicing mindfulness to law and mediation:

3) Michael C. Ross, Ethics and Integrity in Law and Business: Avoiding "Club Fed" (2011), ISBN: 978-1422479704. This paperback textbook succeeds at being a delightfully engaging, fresh, funny, and practical take on the professional responsibility course, which is often required in law school. This book contains many relevant quotes from authors, economists, humorists, judges, philosophers, and scientists. It also has wonderfully on point cartoons and comics from the Wall Street Journal and P. C. Vey, among others. 

This book imparts much pragmatic wisdom about how to choose ethical behavior during tough economic times.

Not surprisingly to readers of Glom who have read my posts about business movies, I also plan to show film and television show clips in class to provoke discussion about violations of ethical rules and what sort of lawyers and values are possible and which of those possibilities are likely to lead to personal happiness and professional satisfaction. For example, three recent television programs that raise issues related to professional ethics and personal values are these:

I close this post and my guest blogging by providing the opening two paragraphs from a just completed manuscript, Tiger Cub Strikes Back: Memoirs of an Ex-Child Prodigy About Parenting and Legal Education. This working paper is related to many of the issues and themes I've raised in the 10 posts during this 2-week guest blogging opportunity. And yes, the first paragraph may seem to be immodest and ironic after discussing the importance of humility. The reason to include that paragraph in this post is that everything in that paragraph is true and verifiably so. Also, this post advocates true humility and not false humility. It would be an exercise in false humility to hide or deprecate my own past for the mere sake of appearing humble.

    I believe that Amy Chua, tiger mom and Yale law professor, would see my life as exemplifying successful tiger parenting.  I am an American born Chinese, who at age 14 enrolled as a freshman at Princeton University and 3 years later at age 17 after being a University Scholar there graduated Phi Beta Kappa earning an A.B. in mathematics. I also earned a Ph.D. in applied mathematics from Harvard University and a J.D. from Stanford University (after having been a 1L at the University of Chicago). My Ph.D. thesis advisor was 1972 economics Nobel Laureate and mathematical economic theorist, Kenneth Joseph Arrow. After serving as an economist in the Division of Consumer Protection in the Bureau of Economics of the Federal Trade Commission, I taught in economics departments from coast to coast, including at Stanford University, the University of California Berkeley, and the University of California Los Angeles; in the finance department of the A.B. Freeman business school at Tulane University; and in law schools at Yale University, University of Chicago, University of Pennsylvania, University of Virginia, University of Minnesota, and University of Southern California. I co-authored a law school course book about law and popular culture, while a member of the Institute for Advanced Study School of Social Science, during its psychology and economics thematic focus academic year. I am currently a professor and the inaugural DeMuth Chair at the University of Colorado School of Law after having been a professor and the inaugural Kohn Chair at Temple University law school.

    This Essay reflects upon the desirability, efficacy, and motivational consequences of having a tiger mom such as Professor Chua or my own immigrant mother, who is a New York University medical school biochemistry professor. This Essay also points out many similarities between mainstream modern American legal education and tiger parenting, including their common hierarchical, top-down learning environments that entail authority, compliance, extrinsic incentives, fear, memorization, obedience, paternalism, precedent, and respect for one’s elders. The educational methodologies and philosophies of tiger parenting and the prevailing orthodoxy of United States legal instruction, especially the substantive content of the standard first year law school curriculum, explicitly and implicitly privilege a type of information processing known as system two over a type of information processing known as system one. System two reasoning is analytical, cognitive, conscious, controlled, deliberative, effortful, logical, rule-based, and slow; while system one is affective, associative, automatic, fast, habitual, heuristic-based, holistic, intuitive, and unconscious. Ironically, the Socratic method of legal instruction often places a premium on answering a professor’s questions aggressively, quickly, or superficially instead of deeply, mindfully, or thoughtfully.

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I highlight some additional benefits to lawyers from paying attention to and learning more about emotions by recommending these five items to read.

First, the weekly faculty colloquium here yesterday was an intriguing talk by University of Wyoming College of Law Professor Michael R. Smith, who presented his work-in-progress titled, The Sociological and Cognitive Dimensions of Policy-Based Persuasion. Here is his summary of it:

Arguments based on public policy are critical to legal advocates, especially when they are arguing to a court on an issue of first impression.  Interestingly, however, very little serious literature has been produced about the nature of policy arguments and how legal advocates can use them to best effect. This presentation, based on a work-in-progress, will explore the nature of policy-based persuasion in terms of sociology theory and cognitive psychology theory.  Based on principles borrowed from these disciplines, the presentation will identify different types of policy arguments and will explore strategies for maximizing the persuasive impact of policy arguments in legal advocacy. 

One of his main points was the difference between emotional narratives versus emotional policy arguments. For more related work, see his thoughtful book Advanced Legal Writing: Theories and Strategies in Persuasive Writing:

Second, see this article by Jules Lobel and George Loewenstein titled, Emote Control: The Substitution of Symbol for Substance in Foreign Policy and International Law. As they describe their article in this abstract:

Historical perspectives, as well as recent work in psychology, converge on the conclusion that human behavior is the product of two or more qualitatively different neural processes that operate according to different principles and often clash with one another. We describe a specific 'dual process' perspective that distinguishes between deliberative and emote control of behavior. We use this framework to shed light on a wide range of legal issues involving foreign policy, terrorism, and international law that are difficult to make sense of in terms of the traditional rational choice perspective. We argue that in these areas, the powerful influence of emotions not only on the general public, but on politicians and judicial decision makers, leads to a substitution of symbol for substance that can be seen at two different levels: (1) in the types of situations and stimuli that drive people to action (namely vivid symbols rather than rational arguments), and (2) in the types of actions that people take - specifically symbolic actions that are superficially satisfying as opposed to more substantive actions that are less immediately satisfying but actually more likely to produce desired long-term results.

Third, see this article by Deborah A. Small and Jennifer Lerner titled, Emotional Policy: Personal Sadness and Anger Shape Judgments about a Welfare Case. Here is their abstract of their article:

When making decisions about a welfare case, it is reasonable for one’s thoughts and feelings about the potential welfare recipient to influence the decision. It is less reasonable for one’s “incidental” feelings (e.g., sadness or anger arising from an event in one’s personal life) to influence such decisions. In two studies, however, data reveal that incidental anger and sadness do in fact carry over, shaping welfare policy preferences. Study 1 found that incidental anger decreased the amount of welfare assistance participants recommended providing relative to neutral emotion, whereas sadness increased the amount recommended. Study 2 replicated the results and found that limiting participants’ cognitive resources eliminated the difference between sadness and anger, thus implying that differences in depth-of-thought drove the effects. In sum, the results reveal ways in which: (a) personal emotions carry over to shape preferences for public policies, (b) emotions of the same valence have opposing effects, and (c) differential depth-of-cognitive-processing contributes to such effects.

Fourth, check out an article by Todd D. Peterson and Elizabeth Waters Peterson titled Stemming the Tide of Law Student Depression: What Law Schools Need to Learn from the Science of Positive Psychology explains how to effectively inoculate law students from learned depression by helping them utilize their signature character strengths.

Fifth, there is no better definitive single book about why happiness matters to law students, lawyers, and law firms than one by Nancy Levit and Douglas O. Linder titled The Happy Lawyer: Making a Good Life in the Law.

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As promised this post will be about recent proposals advocating that governments adopt various measures of aggregate happiness to complement such traditional measures of economic well-being as Gross Domestic Product (GDP) or Gross National Product (GNP). The basic premise for these proposals can be found in the first major campaign speech that Senator Robert F. Kennedy gave on March 18, 1968 at the University of Kansas. That speech challenged the prevailing orthodoxy of how governments measure progress and well-being.

Not surprisingly, the speech is right in that many items that are part of GNP do not reflect genuine social progress. To be clear and for the record, most economists themselves have long understood that GDP is an imperfect proxy for social welfare. Such proposed refinements as the idea of Net Economic Welfare (NEW) attempt to improve GDP by placing values upon and subtracting the costs on such negative externalities as crime, congestion, and environmental pollution from GDP. The last paragraph of the speech is what proposed social measures of subjective well-being intend to capture:

"Yet the Gross National Product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans."

Of course, the claim that GNP "measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans" is a bit overstated. Nonetheless, GNP can be improved to better measure what governments and societies value. There is currently a lively debate over whether and if so, how governments can pragmatically measure aggregate happiness. One reason that such a debate is and will be contested is that once an item is measured and recorded, that item becomes harder to ignore and is likely to become a part of policy discussions. As Kenneth Arrow pointed out on pages 47-48 of his book, The Limits of Organization,

"The Full Employment Act of 1946 amounted to nothing more than a statement that full employment was at last on the Federal agenda, and many felt that this was a hollow victory indeed. But those who opposed it so violently were not deceived; in the long run, this recognition was decisive, though the process of implementing the responsibility was slow indeed. Once an item has arrived on the agenda, it is difficult not to treat it in a somewhat rational manner, if that is at all possible, and almost any considered solution may be better than neglect."

Professors Kahneman and Sugden introduce a methodology of policy evaluation based on experienced utility to environmental economics that avoids well-known problems of preference anomalies for contingent valuation studies. French President Nicolas Sarkozy recently created a Commission on the Measurement of Economic Performance and Social Progress, chaired by 2001 Nobel Laureate in economics, Joseph E. Stiglitz. The report by this commission makes a number of recommendations, including “Recommendation 10: Measures of both objective and subjective well-being provide key information about people’s quality of life. Statistical offices should incorporate questions to capture people’s life evaluations, hedonic experiences and priorities in their own survey." In a discussion paper titled Beyond GDP and Back: What is the Value-Added by Additional Components of Welfare Measurement, economists Sonja C. Kassenboehmer and Christoph M. Schmidt analyze quality-of-life indicators that are suggested in the Stiglitz Report to find that much of the variation in many well-being measures is already well-captured by such traditional economic indicators as GDP and the unemployment rate, but because the correlation of alternative indicators with monetary measures is far from perfect, there is room to augment traditional statistical reporting by non-standard indicators.

British Prime Minister David Cameron recently announced similar plans to collect national well-being measures that incorporate life satisfaction. In an article titled Emotional Prosperity and the Stiglitz Commission, British economist Andrew Oswald argues that countries are capable of and should measure their emotional prosperity and focus on mental well-being. In that article, Oswald summarizes seven studies that suggest emotional prosperity and broad measures of psychological well-being have recently been declining over time. In a National Bureau of Economic Research working paper titled, Beyond GDP? Welfare across Countries and Time, American economists Charles I. Jones and Peter J. Klenow propose a simple summary statistic for a country’s flow of well-being that combines data about consumption, inequality, leisure, and mortality.

In an article titled Happiness and Public Choice, European economists Bruno S. Frey and Alois Stutzer caution that a policy of maximizing aggregate happiness faces a number of difficulties including that it reduces people to being merely happiness metric stations in addition to discounts problems with political institutions and incentive distortion. In their article, they instead propose two practical ways to utilize happiness research for policy: (1) facilitate identification of those institutions that assist people in best achieving their personal goals and in so doing contributing maximally to individual happiness, and (2) provide crucial information as inputs to political discussion process. 

Instead of maximizing a measure of aggregate happiness, it might be more politically feasible to minimize a measure of aggregate misery, stress, or unhappiness, such as the U-index, which in their article titled Recent Developments in the Measurement of Subjective Well-Being, Daniel Kahneman and labor economist Alan Krueger proposed and defined to measure the fraction of time that people spend experiencing unpleasant emotions. The U-index provides empirical information about negative emotional experiences that society may care about.

Another way to incorporate happiness data into policy analysis is to introduce maximum levels of a measure of unhappiness or minimum levels of a measure of happiness as constraints that government policies must satisfy while optimizing some objective function or goal besides happiness or unhappiness. This approach is analogous to philosopher Robert Nozick’s approach in his book titled Anarchy, State, and Utopia to incorporating rights as constraints that are not to be violated as opposed to rights as part of a policy goal to be optimized.

In her article titled Happiness on the Political Agenda? PROS and CONS, philosopher Valérie De Prycker argues that actual incorporation of happiness research into policy implicates a number of value-loaded ethical, ideological, and moral issues. But, in his article titled Greater Happiness for a Greater Number Is that Possible and Desirable?, sociologist Ruut Veenhoven believes that empirical research about life satisfaction refutes all theoretical philosophical objections against the greatest happiness principle. In yet a third article titled Greater Happiness for a Greater Number: Some Non-controversial Options for Governments, social scientist Jan C. Ott believes that governments can increase average happiness, eventually reduce happiness inequalities, and realize both purposively by non-controversial means. In another article titled Good Governance and Happiness in Nations: Technical Quality Precedes Democracy and Quality Beats Size, Professor Ott examines how quality of governance and in particular technical as opposed to democratic quality is correlated with average happiness of a country's citizens and finds that technically good governance appears to be a universal condition for happiness independent of culture. Once technical quality of governance reaches a minimum level, democratic quality of governance adds substantially to the positive effects of technical quality of governance upon average happiness.

In his chapter titled That Which Makes Life Worthwhile in the book Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being, behavioral economist George Lowenstein proposes that time-use surveys ask people not just about how much positive and negative affect is felt during a particular activity, but also if people believed that a particular activity was a valuable or worthwhile use of their time or instead a waste of their time. In their article titled Accounting for the Richness of Daily Activities, psychologist Mathew P. White and economist Paul Dolan ask people not just about how they felt during a particular activity, but also six additional questions about such non-hedonic aspects of experience as being engaged, focused, and finding meaning. These fundamental insights about how people care about not just positive affect, but also meaning in their lives raise questions about whether law and policy should care more about positive affect versus meaning in people’s lives.

In the article titled The Metrics of Subjective Wellbeing: Cardinality, Neutrality and Additivity, Australian economist Ingebjørg Kristoffersen provides a legitimate source of uneasiness about basing social policies upon aggregation of empirical happiness data via his quantitative analysis of certain mathematical properties of empirical happiness data that continue to remain contentious among economists, namely additivity, cardinality, and neutrality of such data, even though psychologists have to some degree already been able to address how to make international, interpersonal, and intertemporal comparisons of happiness data. This mathematical analysis also serves to provide a cautionary, persuasive critique of recent proposals by law professors for governments to eschew cost-benefit analysis and instead to determine and evaluate policy based upon aggregation of happiness, defined simply as experienced positive feeling.

Finally, a concern with experienced subjective well-being captured by self-reports of happiness is what economist Carol Graham terms a paradox of happy peasants and miserable millionaires, due to differences in anticipations or expectations between poor and rich people. As Graham notes, optimism among poor individuals can be a tool for their survival and parents who are poor may revise their own personal expectations downward but maintain hopeful expectations for their children. If peasants report being happy due to lowered expectations and (perhaps some) hedonic adaptation, while millionaires report misery due to envy towards even richer people and (perhaps unrealistic) expectations, should law and policy be more concerned over self-reported unhappiness of rich people, or about increasing self-reported happiness of poor folks, even if that means encouraging or nudging poor individuals to expect more of their future? 

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Harbach's book is both a good sports yarn and a campus comedy that rang true, way truer than I Am Charlotte Simmons, which was also about the intertwining of sport and education, but was shot through with a bourgeious anxiety about the wild kids of today.  

Harbach, who is in his 30s, isn't exactly a spring chicken (though he's half a century younger than Tom Wolfe), but he is warmly sympathetic to both the life of the mind and to the esprit of the team that you maybe get at a college that is both pretty good and vaguely sporty.  The story's about an all star Division III college shortstop who forgets how to throw, and the way that forgetting affects him and everyone around him.  Harbach's better at a scene and a mood - he captures pretty-good college life really well - than he is at rounding out his characters.  There is a magic girl and a magic boy in the cast, with whom everyone is besotted.  But I still finished the thing in a couple of days, and promptly downloaded the Vanity Fair ebook on the making of.  Both are totally recommended.

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I drove nine hours yesterday, and one of the brighter spots in my midwestern trek was a spot on NPR about why adults whould read (or re-read) Moby Dick.  (Yes, I had enough time and crossed enough time zones to hear it twice!)  Apparently, there are several themes besides revenge tucked into the timeless classic.  In addition to reflecting historical movements (the path to the American Civil War) and incorporating Shakespearean themes, author Nathaniel Philbrick points out that the book expounds plenty on aspects of the human condition that may not resonate generally with high school and college students.

So this got me pondering on English literature education and how we guarantee that students won't certain important works by making them read these books basically as children.  Having four years of high school English followed by majoring in English Lit, I read a lot of books that would certainly mean more to me now than then.  But I would feel almost childish breaking these books out now.  Not only do I think of Moby Dick as a children's book, I also put The Scarlet Letter, The Great Gatsby, Grapes of Wrath, Paradise Lost, The Canterbury Tales and anything by Shakespeare in this category.  These were obviously not written with an audience of 15-18 year-olds in mind, but the bulk of those who read these books every year must be in that age category.

This post has nothing to do with corporate law.  I can't find any sort of segue or connection.  Except that I read Only Yesterday in high school also, and it's not a children's book, either.  Maybe they teach Liar's Poker in high school economics now.

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We'll leave it to others to decide whether the various disclosures required to become a federal judge are too onerous.  But they are interesting.  One tidbit from a disclosure roundup that caught my eye from the Blog of the Legal Times was Wisconsin professor Victoria Nourse's reported royalty income (she's been nominated to the 7th Circuit).  Nourse has published a well-received book on Skinner v. Oklahoma, with a trade press.  And she's a co-author on Mary Becker's Feminist Jurisprudence casebook.  

Two books - that's a lot of work!  Are the rewards commensurate?  The psychic renumeration may be great, but if Nourse is like many other law professors, the hourly rate of compensation is less so.  In 2009, Nourse reported royalty income of $809.  Which is only slightly more than I paid for my first car, a 1986 Chevy Nova with no a/c and AM radio.  One the other hand, it could probably allow Nourse to spring for 180 of Tim Geithner's 50th birthday cakes.

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I love the idea of novels set in the world of business, and this one, by a name brand writer, with a positive review in the Times, looked like it might be an interesting look at the world of venture capital, fancy writer perspective division.  The good news is that I both finished the book and rather did enjoy the stuff involving desperate founders and conniving VCs.  The bad news is that the rest of the novel is a much more mincing slog.  Edgarian has an ear for internal dialogue that reaches the beating heart of precious, and then keeps on going.  Here's the founder taking leave of his wife to go on a business trip:

All right, guy, he cautioned himself.  Buck up.

"I'll call you," he shouted.

Doors opening and baning closed, Lena, of the fairies and the witches, waved.  Charlie's heart was quite certain that she waved.

Golly.  His heart was "quite certain" - not, just "he thought she waved."  I'm simply not sure I'm capable of the kinds of degrees of emotive inner thought that characterizes every one of Edgarian's characters.  It's a jarring juxtaposition with a novel that in large part is about the business of start-ups.  Recommended only if you have an inner life rich with fairies, witches, and champagne dreams.

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The second-most well known book by Scott Turow, Presumed Innocent, was published in 1987.  I read it the summer of 1990, before I went to law school.  My friend had suggested the book and willfully refused to answer me whenever I asked "Did he do it?  He did it, didn't he?"  The book struck me then as brilliant for being able to conceal whether the accused, Rusty Sabich, was the actual killer of Carolyn Polhemus, even though Sabich was the narrator, and also for an ending that surprised at least everyone I knew who was reading it at the time.  I still put the book in the same category as movies like The Crying Game and Sixth Sense, in which "I really didn't see that coming."

This summer, I was in an airport and decided to purchase an actual physical book for my flight home.  I noticed Innocent, the sequel to Presumed Innocent.  Yes, Turow had followed Presumed Innocent fairly closely with Burden of Proof, a related novel surrounding the death of the wife of Sabich's defense attorney.  In a nutshell, Presumed Innocent was made into a movie; Burden of Proof was made into a miniseries.  But Innocent actually focuses on Sabich, twenty-five years later, who calls his grown son one day to tell him that his mother died in her sleep.  Tommy Molto is back, prosecuting Sabich, now an appellate judge, for yet another murder.

As I was reading, I had to stop, download Presumed Innocent and, as they say, refresh my recollection.  In the sequel, Molto considers recovering the physical evidence from the Polhemus case twenty-five years ago and running DNA tests.  Well, surely this was covered in the first book?  No.  In the first book, the bodily fluids were blood typed, and no mention of DNA.  So, Wikipedia tells me that DNA evidence was not used in a U.S. trial until 1987, the year the book was published.  This may have been what spurred Turow to write a sequel:  Presumed Innocent is fairly dated now and doesn't hold up at all to scrutiny under today's scientific testing.  (There may be no true CSI Effect on jurors, but it sure has made this book seem dated.)  If Carolyn Polhemus had been murdered in 2011, the "gotcha" ending would have come in the middle of the book!

One last note for any other Presumed Innocent readers out there.  All three books place Sabich in "Kindle County."  To me, Kindle County is obviously Cook County, Sabich's village of Nearing is obviously one of the northern suburbs of Chicago, and the crime-infested housing project mentioned is Cabrini Green.  Other internet sites seem to agree.  However, Wikipedia says its the Quad Cities, which makes no sense whatsoever to me, if only for the reason that jurisdiction never comes up in these books, even though the Quad Cities straddle two states.  I say "wrong."

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You have to appreciate an effort to tell the story of an international financial institution, in this case the World Bank, through the lens of a biography of its 1994-2004-or-so president, James Wolfensohn. Bank presidents, after all, even when their bank is more of a development agency than a financial intermediary, don't spend their days doing the most interesting things.  Wolfensohn, who was a notable investment banker before he became a World Banker, and who took up the cello at age 40 and got good enough to persuade fantastic musicians to play with him, admittedly comes close.  But it's still a tall ask.

So in that sense, kudos to this aging book; the IFIs need more such treatments.  Mallaby is pretty deregulatory - he just wrote a book on hedge funds arguing that they were wonderful and stable, and this book makes a point of decrying the NGO busybodies whom, he thinks, are slowing the World Bank, and the course of poverty alleviation more generally, down.

It's something the post-Deng Chinese government, the greatest poverty alleviation institution of all time, would probably agree with.  But much of The World's Banker is a now dated tick-tock.  You want to read the parts of the first chapter that don't focus on Wolfensohn.  They describe how the bank moved away from its original mission of European reconstruction via government loans at almost market rates, to the mostly-development-focused institution that it is today largely as if they were policy decisions by the prior presidents of the institutions.  There's no question that the World Bank could have closed up shop long ago if it had limited its focus to war reconstruction, which was its original purpose.  Its pivot to become a global development agency made it a handy cold warrior, and a useful participant in the post cold war as well.

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Like a lot of us, I've been traveling a lot this summer and have not been blogging the past few weeks.  My apologies. 

At the beginning of the summer, I read a book I had been wanting to read for a long time:  Me, Myself & Bob:  A True Story About Dreams, God, and Talking Vegetables.  The book tells the story of Phil Vischer, the creator of VeggieTales and Bob, the talking, singing, dancing tomato.  If you had children in the late 1990s, early 2000s, then you probably know of VeggieTales.  In these videos, vegetables appeared in stories that paralleled Old Testament stories or more general morality tales.  I knew that for awhile the videotapes and DVDs of these animated shows were ubiquitous, but I didn't know that in 1998, Big Idea (Vischer's privately-held corporation) sold 7 million VeggieTales videos or that Big Idea made the first 30-minute 3-D animated film.  I also didn't know until this year that Vischer lost Big Idea in bankruptcy, and the business (including Bob the tomato) was bought by Classic Media.  Here is an abbreviated version of the story; the book tells the whole thing.  One could chalk it up to the dot-com boom, but the story has a lot more to it.

The book touches on at least 3 themes, all of which are interesting to me:  (1) how does a company go from being a great small company to a great bigger company; (2) how does a company with a social goal avoid mission drift; and (3) how to discern what God wants you to dow with your professional life.  I'll leave #3 to some time when you catch me in person, but I'll touch on #1 and #2.

So VeggieTales was an amazingly successful small company, but tried to grow to be a bigger company.  Yes, we've all heard the stories of companies growing too big, too fast, but what does that mean?  For Big Idea, it meant that the cost-center parts of its budget grew a lot faster than the profit-centers.  HR went up, payroll went up, marketing went up, production values went up, expenses went up, but sales couldn't grow at the same rate.  Vischer talks about "Things I Learned #1:  Never Lose Sight of the Numbers" and "Things I Learned #2:  Ignore the Voice That Says "I Deserve It."  Vischer characterizes himself as a creative person and acknowledges that he lost sight of the numbers.  In his words, he was a Walt Disney who didn't have a Roy:  someone who could tell him when ideas were too expensive, too unrealistic.  He says good ventures have a Walt and a Roy.  If you read the book, you see the train going off the cliff (new fancy building, plans to have the first full-length 3-D animation movie), and you want to yell "Stop!"

The second point is one that my students and I talk alot about in my seminar Law and Microfinance.  How do pro-social firms maintain profits and even go public without losing sight of its mission or can they?  Vischer created VeggieTales because he wanted to provide children with Biblical entertainment that had one message:  God loves you.  During the rise of Nickelodeon and the Disney channel, Vischer felt called to counter what he saw as disturbing media influences on the youth.  As someone who had been obsessed with filmmaking, puppetry and animation his whole life, he thought he was in a position to change the world.  But, as the company grew and hired employees, he struggled with how to maintain this mission.  Some hires were in tune with the religious mission, but others were merely talented animators who wanted to live in Chicago rather than L.A.  Vischer wanted to keep everyone happy, so eventually none were and the watered-down mission that was left didn't inspire any of them.  Eventually, all of the top executives were against Vischer's original mission.

I recommend the book to anyone interested in animation, entrepreneurship or finding one's calling.  It reads very quickly.  Vischer is very funny.  After all, he did create talking vegetables.  One amusing tidbit:  I had always thought that VeggieTales stuck to the Old Testament to have a wider religious audience.  However, the real truth came from Vischer's mom, who told him that he couldn't do anything from the New Testament.  Jesus could not be a vegetable!

In case you're wondering what became of Phil Vischer, he now owns JellyTelly, which produces the fabulous and hilarious What's in the Bible.

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Contracts is the least political course in the first year of law school, perhaps all of law school.  I say keep it that way, and share that with students, despite how visionaries on the far left and far right may wish otherwise.   I also think the course and its content should be made as clear and straightforward as possible for the students, not bogging down in every exception within the exception.  

I agree that tailoring the contracts course to suit is no harder than any other professional task lawyers appointed to the job have handled. Start with getting samples of syllabi from senior colleagues, at your own school or from around the internet. Most books are packed with a combination of cases, notes, problems, drafting excecises, and so on.  There are separate dedicated books chock full of drafting problems. 

Review all these.  Evaluate them with your specific situation in mind: your strengths and weaknesses as a teacher, your student's backgrounds and prospects, your school's needs and expectations for you given its standing and curriculum. 

Rank them from best to worst and, then, as Ohio State's Doug Whaley once quipped, assign the second-best one and keep the best one for yourself. Assign small bits at a time and discuss everything that is assigned.

Concerning eschewing the political, each chapter in my book, Contracts in the Real World, ends with a short synthesis contending how contract doctrine occupies what I call the "sensible center" in law. Following is that from Chapter 2, entitled "Facing Limits: Unenforceable Bargains."

As a matter of policy to promote freedom of contract, courts usually enforce contracts as written, without specific review of the terms. If terms show a contract was formed, courts enforce them. Fairness is not a court’s concern in contract cases. Some deals, however, are struck on surprisingly lopsided terms, like a simultaneous exchange of different amounts of money or as the product of extortionate threats.

Courts struggle with whether to enforce bargains that appear in unconventional settings, such as parenting, or romance, where bargains are unlikely; or involve activities that are illegal, like gambling or prostitution, or unsavory, like adultery. Deals suggesting lack of true bargain or verging on illegality provoke judicial attention—and are often ruled unenforceable, sometimes by declaring they lack consideration.

Visionaries on the left and right alike object to this balanced approach. Devotees of a greater formalism rebuke any judicial second-guessing of the bargains people make. It should be irrelevant whether a trade is made of different amounts of money or for nominal consideration like $1. People should be free to strike bargains on any subjects they wish with equal dignity—whether deals about paternity, parenting, palimony, adultery or gambling.

Promoters of a greater contextualism would give judges broader license to police not only bargains signaled to be suspect by the form or amount of consideration but a wider range of terms deemed objectionable. That could include authorizing a more probing evaluation, on the grounds of public policy, of contracts not only that may be the product of extortion but about babies, among paramours or between adulterers or sisters playing slots.

These stances are problematic in opposite ways. Greater formalism has the virtue of promoting freedom of contract and increasing the security of exchanges. But expand that freedom infinitely and lose any space for social control. It is difficult to deny that there is at least some utility in some avenues of social control—almost certainly for anti-extortion laws but probably for the regulation of other activities strongly affecting the public interest.

In contrast, excessive zeal for social control constricts a desirable space for freedom of contract. By inviting judicial second-guessing of all bargains, such zealotry would destroy certainty about the security of exchanges. Reasonable people may differ about where to draw the line between freedom of contract and social control.

Contract law’s exact division may not always be clear and can be contested on any given issue. But it seems pragmatic and prudent to enable a wide scope for freedom of contract accompanied by a modicum of oversight to thwart extremes and police gray areas. That, in any event, is the best description of prevailing contract law. And these are not the only tools available to mediate between the extremes. Just because people make a valid contract does not mean it must be performed come hell or high water, as the next chapter shows.

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Experienced teachers know that drawing on current events stimulates student interest, yet our contracts course does not make this easy. To make it easier, my latest book, Contracts in the Real World: Stories of Popular Contracts and Why They Matter, tells 45 stories intended to bring this subject alive for a modern audience.     

I love old contracts cases as much as the next professor, and judging by their regular appearance in all standard casebooks, we profs love them quite a bit. But students hate them and have a hard time appreciating how cases like the following are relevant to their lives:  

* payments for itinerant farming circa 1834 New England

* a delayed rail transport for a mill’s crank shaft circa 1854 England

* musty gambling loans circa 1859 Buffalo

* the destruction by fire of a London theater circa 1863

* sailing ships lacking radio call letters plying for Liverpool circa 1864

* mistakes about bovine reproductive attributes circa 1887

* ₤100 rewards to those catching the flu despite using screwball medicine circa 1893 England

* damages for delay delivering marble for a mausoleum circa 1885

* salmon fishermen using nets off Alaska circa 1902

* an exclusive marketing license for fashions circa 1917

* experimental skin grafting surgery on a young boy’s hand circa 1929

* a bridge to nowhere circa 1929

This list could be doubled or tripled in length, but you get the idea.  Students are not often stimulated by such musty, dusty tales, most of which were chosen for our classroom lessons by people like C.C. Langdell, Sam Williston, or Arthur Corbin—all born in the 19^th century and dead for generations! 

Freshen it up, I say, and I’ve developed a systematic effort to do so—not eliminating these relics, which do remain valuable, but showing starkly, fully, and entertainingly, how they relate precisely to today’s world. This brings modernity into the contracts texts and classroom.  How about these:

 * poet Maya Angelou’s Hallmark greeting card contract (formation in exclusive license deal)

* a lawyer’s boasts on “Dateline NBC” (offers)

* whether corporate internet privacy policies are contracts (mutual assent)

* effects of construction surprises in demolition of building damaged on 9/11 (duress/pre-existing duty rule)

* Kevin Costner’s pending fight about sculptures for his Dunbar ranch (conditions)

*Donald Trump’s effort to delay loan repayments due to financial crisis (impossibility)

* Bernie Madoff’s Ponzi scheme’s effect on divorce settlements (mutual mistake)

 * Sandra Bullock’s recent fight over construction of her Texas mansion (restitution)

* fan breaches of Washington Redskins season ticket contracts (damages)

* Paris Hilton’s recent dispute about hair product endorsement deal (consequential damages)

* whether cell phone service early termination fees are valid (liquidated damages)

* Wal-Mart’s recent defense against employees of foreign suppliers (third-party beneficiaries)

These stories, mostly culled from the recent news, all pivot on the dusty/musty cases, but are much more interesting, accessible and relevant to students.  Also appearing in the collection of 45 stories are those involving the following additional characters or topics:

* novelist Clive Cussler (good faith)

* rapper 50 Cent (palimony contract)

* child actor from “Malcolm in the Middle” (infancy doctrine)

* AIG’s employee bonuses (excuses)

* Citigroup’s naming of the N.Y. Mets baseball field (termination)

* the rapper Eminem (interpretation concerning digital music)

* Golden Globes (parol evidence rule concerning telecast rights)

* ownership of the L.A. Dodgers (scrivener’s error)

* pop superrstar Lady Gaga (accord and satisfaction)

* Charlie Sheen / Warner Brothers (conditions, performance, waiver)

* “The Sopranos” (novel ideas and restitution)

* Rod Stewart (restitution after cessation)

* Conan O’Brien / “The Tonight Show” (various)

Four stories in the book will be more familiar to veteran contracts teachers, as they already appear in several leadings books:

* MLK and BU (bargain or gift, reliance)

* Pepsi and the Harriet jet (offers, jests)

* Michael Jordan paternity case (formation, consideration, fraud)

* Michael Jordan product endorsement case (lost volume seller)

* Baby M

My narrative reflects and develops an understanding of how today’s contract law bears on today’s problems—showing how yesterday’s contract law and yesterday’s problems recur in new guises. These stories identify the real world, contemporary social and business settings where ancient problems recur. 

These stories are about context, argument, possibilities, limits, alternatives, and deal with things people generally know about today—personalities, electronic transactions, internet exchange, cell phones—and dwell less on the archaic materials necessary to break through the ancient cases (transport and milling at the dawn of the industrial revolution, 19^th century navigation technology). 

Many of my stories did not result in litigation or judicial opinions. This enables teachers to stress how most contracts are not litigated. It facilitates engaging skills of negotiation and problem-solving and the “transactional” perspective.  It’s easy to find the actual contract underlying many of these deals too, for those wishing to walk through such things.   My stories are stories, just like judicial opinions are, enabling those with a literary bent to challenge my telling or at least stress the influence of the viewpoints I adopt.

Students like and get all this. Pedagogy is much more effective.  And it is much more fun.  Of course, all of us have known that current events help learning and are more enjoyable. But it takes a lot of time to incorporate them into a teaching program in a systemic way. 

My book is an effort to do that.  Notably, I began writing most of the stories as blog posts that I’d use in daily teaching.  Now harnessed to the doctrinal terrain and linked to seminal cases, the book brings this course to life like no other device I’ve seen in 20 years of teaching this stuff.  To be published by Cambridge University Press in early 2012, I’m excited about this and I hope my fellow teachers of contracts will be too!

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