October 09, 2014
Teaching corporate legal strategy
Posted by David Orozco

For our last guest post, Robert and I would like to share our experiences using the five pathways in the classroom to teach legal strategy to business students. Overall, applying this research in the classroom has been a rewarding experience that has challenged us to improve the framework’s conceptual foundation and demonstrate its relevance in the business world.

When we first experimented using the five pathways in our respective graduate business courses three years ago, we were unsure about how well it might be received. To our relief, the framework was well received from the start. In a recent end of year survey that I give to my MBA students, several of them mentioned that the framework was one of the learning highlights in their required business law course. Various students mentioned that the framework allowed them to view the law in a different way and also helped them appreciate the opportunities and benefits of engaging attorneys to help solve business problems. This is in contrast to the viewpoint, held by some managers, that law is an external, dense and static force that constrains business behavior as opposed to enabling value creation.

Robert and I introduce the framework early in our courses, and then apply it to examples and cases throughout the term. To drive home the framework’s applicability, we created a specific team-based homework assignment (Download HW 1) that asks students to choose a recent news story involving a business law issue that follows the prevention, value or transformation pathway, and to analyze the issue from a law and strategy perspective. The articles that students recently have chosen to analyze include stories about NFL contract negotiations, the FCC’s review of the Comcast Time Warner merger, and Airbnb’s legal fight against the New York Attorney General. These cases provide plenty of material for discussion in class, and serve as potential research topics.

Although the framework has yet to be applied in the context of a law course, we think it could potentially engage law students and attorneys who seek to understand how the law strategically relates to their clients’ business.

Ultimately, we’d like to see the framework applied in diverse learning environments, so we encourage you to make use of the framework and contact us if you have any questions or ideas about how to apply it. If you decide to use the five pathways in your classroom or company, we’d love to hear about your experiences.

We’d like to conclude by extending a warm thanks to The Conglomerate and its readers for allowing us this opportunity to share our ideas related to law and strategy. We’ve greatly enjoyed participating as guest bloggers in such a distinguished collaborative space.


David and Robert

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May 09, 2013
Abercrombie CEO: Only "Cool Kids" Need Browse Here
Posted by Christine Hurt
I seem to get most of my current news from seeing what my FB friends rant about, and today it is definitely some 2006 remarks by Mike Jeffries, CEO and Chairman of Abercrombie & Fitch Co., which have been repeated recently by Robin Lewis, author of a 2010 book The New Rules of Retail.  Lewis quotes Jeffries to explain why A&F doesn't have women's clothing in size "XL" or larger.  The full 2006 Salon piece is here; the following money-quote has gone viral:
"That’s why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don’t market to anyone other than that. In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either."

Ok. Let's acknowledge that the "membership has its privileges" marketing model has been successful.  But there are a lot more average kids than "cool and popular kids," so your model has to be to sell to a larger bubble of people who wish they were the "cool and popular kids."  "Wear our clothes and be popular" is a pretty good model.  Now, A&F seems successful, so they probably sell plenty of clothes without my advice.  (Here we can see it's stock price has done well this year, though the past 5 seem to have been tough.)  Will these viral comments create a backlash for the store (which seems to have weathered other uproars in the past)?

A lot of the comments I see on FB start with "I've never been in an Abercrombie, but now I never will."  Hmmm.  That doesn't seem like a death knell.  There is no Abercrombie in Champaign, so my teenager has no A&F clothes, but we do have a Hollister, which is a division of A&F.  I think this may be a teachable moment in our house, anyway.

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February 05, 2012
Super Bowl Commercials
Posted by Gordon Smith

No need to wait for the game.  Here and here are nice collections. Matthew Broderick's update of Ferris Bueller's Day Off was nice, but my favorite was "The Bark Side":


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April 17, 2011
What's in your wallet (or is your alma mater in the credit card industry's pocket)?
Posted by Erik Gerding

In October of last year, the Federal Reserve issued a report on agreements between credit card issuers and colleges and college alumni organizations.  The Credit CARD Act of 2009, credit card issuers were required to submit to the Fed reports on their agreements with colleges, universities and affiliated organizations.  These agreements allow issuers to create "affinity" cards, that is credit cards branded for a particular university (Go Heels!) and marketed towards the students and alumni of that university.  It is a familiar business model: if you want to get students hooked on debt, start dealing at the playground.

To get inside the schoolyard, cut the principal in on the action.  Universities can earn over a million each year with these deals.  Check out how much your alma mater has made from deals with credit card issuers at this nifty searchable database.

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May 11, 2010
Commercial speech and tobacco: The Commonwealth case
Posted by Tamara Piety

As I mentioned earlier several tobacco companies, including Commonwealth Brands, Lorillard and RJ Reynolds, brought a lawsuit in the Western District of Kentucky challenging the constitutionality of many aspects of the Family Smoking Prevention and Tobacco Control Act of 2009 which brought the regulation of tobacco under the aegis of the FDA.  Plaintiffs had a veritable cornucopia of claims about the ways in which the Act violated their rights under the First Amendment (my favorite might be that the prohibition on  free samples was a First Amendment issue).

The district court issued an opinion in January of 2010, granting in part and denying in part the plaintiff companies' motion for summary judgment. Opinion. Most of the First Amendment arguments the plaintiffs raised were rejected except for two: the ban on color and graphics in advertising and the ban on implying that a tobacco product is safer because of FDA regulation. [The last issue illustrates one of the thorny problems with giving over the regulation of tobacco to the FDA because there does not appear to be any safe use of tobacco and this is in some tension with the FDA's consumer safety mission.] This latter  involved concerns about vagueness and overbreadth and since it is possible the Act could be amended to overcome this problem, it is the first issue, involving the use of color and brand symbols, that I think is the more interesting one.

The district court wrote "[The plaintiffs] are clearly right when they say that images of packages of their products, simple brand symbols, and some uses of color communicate important commercial information about their products, i.e., what the product is and who makes it.  The government's contrary suggestion -- that all uses of images in tobacco labels and advertising create noninformative associations of the sort likely to encourage minors to use a tobacco product -- is plainly wrong." (Opinion at 14).

The court may have felt that the attempt to link these associations to the use by minors was the "plainly wrong" part.  And it could be the weakness in the argument.  But consider that the "important commercial information" is the brand information and that branding is inextricably linked with all of the  advertising and marketing efforts which attempt to make emotional associations with the brand. Doesn't this argument raise questions about what it means for something to be "informational"?

In any event, I think what we are really talking about here are the property interests in the brand, not the informational aspects of the brand; which is part of why the First Amendment is not a good fit (in my view) for the interests which plaintiffs seek to protect.  And it is worth walking their claims in this case back a bit to consider the interests which led the Supreme Court to create the commercial speech doctrine in the first place and whether the tobacco companies' arguments further those interests or obstruct them. Virginia Pharmacy created a new category of protected speech labeled "commercial speech" on the grounds that commercial speech was important to listeners. It was the interests of the consumers that both justified the protection and which dictated that protection be reserved for truthful speech. The case did not focus on the speakers' right to engage in promotional speech. This makes sense if you are concerned about regulating false or misleading commercial speech. Nevertheless, the Virginia Pharmacy Court apparently thought that truthful commercial speech might be subject to regulation given a governmental interest that was sufficiently compelling to outweigh the speech interests involved.

If we look at the marketing of cigarettes it seems like there are at least three interests that might be called speech interests: (1) the interest of the speaker (here the tobacco companies) in marketing a legal product; (2) the interest of consumers in receiving truthful information about the health consequences of smoking (and perhaps even their interest in being shielded from attempts to manipulate their interest in smoking); and (3) consumer interest in receiving brand information about the product.

The consumers' interest in receiving the promotional information really looks like the least compelling of the possible speech interests. And when weighed against the legitimate governmental interest in promoting public health, it seems particularly puny; especially when you consider that the government's interest in  public health converges with the consumers' purported First Amendment interest in receiving truthful information about the health consequences and dangers of smoking. The interest in consumers receiving the "information" involves in the brand associations seems to me to be far less about the consumers' interests and more about the property interests of the manufacturers.

Of course, at the end of the day these interests can't be neatly or clearly unraveled. But I think protecting branding as a First Amendment issue in this context is not really about speech but about protecting the economic value in the brand. And that does look a lot like Lochner all over again.

Only time will tell whether the courts will continue down this path of converting property interests into speech interests. For the time being I suspect they will. But I predict that at some point this movement will begin to reverse. In terms of tobacco the First Amendment argument seems to be the last best hope for keeping the industry on life support, given that public acceptance of smoking appears to continue to decline.

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May 10, 2010
BP's Image Problem
Posted by Tamara Piety

As oil continues to pour out of the BP managed rig in the Gulf of Mexico, the discussion in marketing circles is (of course) what this will mean for BP's image. See Advertising Age. About a decade ago BP launched an intensive effort to brand itself as the "responsible" and "green" oil company with its "Beyond Petroleum" campaign and a logo change to a green and yellow stylized sunburst. (This campaign apparently included some pretty weird, but entertaining, viral videos. See this  I say "apparently" because although the production values of the video are very high, it almost seems like a spoof with its inclusion of things like breast implants ["beyond pain, joy"] and a guy running out of toilet paper ["beyond fear, courage"]).

Some observers think the campaign was never anything more than greenwashing; that is, it was an attempt to manipulate public perception without any significant commitment to alternative energy exploration. For example see this criticism in 2000 and this in 2010.

But reading the article in Advertising Age, which dissects what PR observers appear to think is a less than stellar response to the accident on the part of BP, is instructive about what everyone in the business thinks is going on with these campaigns. A problem they say is that BP's campaign was so successful it underscored the disconnect between the campaign claims and the reality in the Gulf. (Ironically, BP was actually on the verge of winning an award for its safety record, an award the article implies, but does not say, may have been more attributable to the campaign than to the actual record.) This disconnect is a problem. But you'd think it is one that could have been avoided by making a commitment to these issues that was more than rhetorical. Too often though the commitment stops at the marketing.

On the blow out, management at BP has apparently been slow to control "the message" and has actually been doing things that might make a bad situation worse; like "offering $5,000 settlements to residents if they waived their rights to sue for any damages." As one PR pro put it:

"That's a profoundly disturbing message to have resonating as one of your first public messages ... When the public sees the company leading with a legal protection agenda trying to limit legal exposure, it's not a good thing. The next shoe to drop is usually the attorney general intervening to remind the company of its obligations. Perception-wise, this is out of control."

Uh, yeah.  Although perhaps it isn't just the perception. 

This is a perennial problem with PR - the temptation to believe that the response stops with managing the public perception and that changing the perception is the solution to any problem. That can work pretty well until reality collides with promotion. And then promotion may not help much. As the article notes:

"Of course, all the social media in the world won't do much if millions of gallons of oil wash ashore, crippling the fishing industry in Louisiana and Mississippi or destroying the white-sand beaches (and tourism trade) in Alabama and Florida."

It will be interesting to see if BP does manage to get its arms around a better PR strategy, in addition to actually fixing the problem.  But I'm betting it does the first before it does the second.

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May 06, 2010
Up in the Air about "Up in the Air"
Posted by Tamara Piety
I know the movie "Up in the Air" is now a little bit old news; but this is one movie I've been wanting to comment on that I thought a Glom audience might be interested in. In the movie George Clooney plays a guy named Ryan Bingham who works for a company that is hired to do the termination interviews when a company has to do a lot of lay-offs. Bingham lives to travel and believe relationships "weigh you down," that the secret to life is to keep moving.

    Was it just me, or did others find what was essentially a feature-length, product placement for American Airlines and Hilton Honors a little less than thrilling?  Don't get me wrong, George Clooney is always great. And full disclosure, I'm an Advantage member and a Hilton Honors member and like racking up points with the best of them. But I really am not so thrilled about forking out $8.50 for a sales pitch, and a slightly snarky one at that.

    Critics seem to love the movie though. Anthony Lane for one over at the New Yorker had this to say.  Director Jason Reitman got lots of praise for using real people who had actually been laid off in the opening vignettes. And he says  he made this films because it was about "connections" and important things in life. See this. But the way he films the so-called important things (Bingham's sister's microscopic diamond ring, the cheesy looking hotel in which the wedding takes place, his sister's underwhelming betrothed, Bingham's own home in Omaha, etc. ) makes all those things suffer in comparison to the pristine framing of the shots involving the sponsors and ultimately appears to convey a rather different message; that only chumps believe in love or family. (Lane calls it "hokeyness" for a reason; Reitman made it look hokey.) 

    This is especially true when you consider how all the relationships turn out. Not well. (And the movie broadly hints that things don't look so good for his sister either.) You might conclude from the film that giving up anything for a relationship is for chumps; except that Bingham's job illustrates that maybe giving up relationships for jobs isn't such a great idea either. I won't spoil it for you if you want to watch the movie; but don't say you weren't warned.

    Seen in this light, his use of people who had really been laid off makes it look a little like Reitman is trading on their pain and authenticity while sniggering behind their backs at how foolish they were to have invested so much of themselves into their jobs.That is certainly Bingham's attitude in the film. He admits his severance speech is mostly intended to ease people out of the room calmly. 

    Reitman may be sincere in his desire to convey a message about the importance of human connections over material things, but if so, I think his message got hijacked by his sponsors. Advertising Age reported that American Airlines and Hilton didn't actually have a traditional product placement deal with Reitman. It had something even better. It provided access in exchange for some control of the portrayal. How Up in the Air Got a Free Ride It was a good deal for Reitman because the use of the planes and properties otherwise would have cost a lot of money. And it was a great deal for American Airlines and Hilton because this kind of advertising you just can't buy. But does it make for good films?

    I don't know. It is gotten to the point that whenever I see a brand name in a movie I wonder hope much they paid for that exposure. So far, I have never been wrong when I thought that there was a deal in the background. Next I want to know if BMW paid for a product placement in Roman Polanski's "The Ghostwriter." Hmmm.

NOTE: This was supposed to post on the 28th but I somehow failed to set it up properly to do so and so I am re-posting it today. Sorry for the duplication.

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April 28, 2010
Citizens United ....Something different Part II
Posted by Tamara Piety
    I promised yesterday I would prove that my concerns about how Citizens United would be used were not hypothetical. Today I will talk about where it is showing up, US v. Philip Morris USA, Inc., et.al., See DCCA opinion

    This was a civil RICO case filed by the United States in 1999 against several tobacco companies and two of their non-profit organizations, the Council for Tobacco Research and the Tobacco Institute. The lawsuit accused these entities of engaging in a conspiracy, taking place over a period of approximately 50 years, to mislead the public about a number of issues related to smoking including: the potential health consequences of smoking; the dangers of environmental smoke (second-hand smoke); whether nicotine was an addictive substance; whether the tobacco companies were manipulating nicotine content; whether the tobacco companies were intentionally targeting youth in their advertising and promotional efforts; whether they were intentionally marketing cigarettes as "light" or "low tar" to imply health benefits (or less detriment) the companies knew did not exist because of a phenomenon known as "compensation," and other claims.

The case went to trial in 2004 and lasted for about 9 months. In 2006 D.C. District Court Judge Kessler, issued an opinion with findings of fact and conclusions of law that ran about 1700 pages. The evidence buried in these pages is unequivocally damning.

Several years later, in 2009 the D.C. Circuit Court affirmed most of these findings in the per curiam opinion above. The defendants (and the government) filed petitions for cert. The petitions of the parties are available here. Whether the Supreme Court will agree to hear the case is unknown, but with the government seeking review as well it may do so. And issues of commercial speech and the First Amendment are raised through out the case. Indeed, the amicus brief filed by the Washington Legal Foundation and the National Association of Manufacturers explicitly says this case offers the Court the opportunity to answer the question that it left open in Nike v. Kasky, writing "This Court has recently reaffirmed that the speech of corporate actors may be entitled to full First Amendment Protection" (Page 19 of the brief which you can view here citing yes, Citizens United).

The 5th case down in the Table of Authorities is Citizens United and it is cited twice in the argument. The brief argues the lower court ignored that much of the misleading speech took place in the form of editorials, op-eds, press releases and the like and involved issues of "public concern" and thus was fully protected speech. Mind you these press releases, so-called informational pamphlets (some sent to school children purporting to educate them about the "debate"), came from a group of defendants who the record amply demonstrates did meet together with their public relations and law firms to come up with a strategy to manufacture a debate that really didn't exists since their problem was that there was scientific consensus on the basic facts about the health risks of smoking and that these facts would be very damaging to future business. Their strategy is succinctly captured in the phrase found in some internal documents and widely reported on since, "Doubt is our product." It is important to be clear on what they are asking for; they are asking for constitutional protection for the manufacture of a phony debate, to obfuscate rather than to clarify information about a product for which there is no safe level of use.

This seems an appropriate juncture to raise Justice Jackson's admonition that "the Constitution is not a suicide pact." It seems like the government ought to be able to regulate a potentially lethal product, and that regulation of advertising and marketing is a necessary part of such appropriate regulation in the public interest. Such a regulation has recently been passed in the form of the  Family Smoking Prevention and Tobacco Control Act, Pub. L. 111-31, 123 Stat. 1776 (2009). The Act permits the FDA to regulate tobacco products and includes very strict limitations on permissible forms of advertising and promotion.

    But a group of tobacco companies is attacking this statute in a District Court in Western Kentucky (much forum shopping there?) on the grounds (among others) that it violates the First Amendment. The companies even wanted to claim First Amendment protection for marketing practices like giving out free samples! The district court denied most these claims, but nevertheless found that some of the statute's regulation of color and trade dress did violate the First Amendment. The opinion is here It was issued before Citizens United came down. But taken together with the arguments raised by the Washington Legal Foundation in the Philip Morris RICO case, I think we can expect Citizens United may well be used in the future in this case as well. Only time will tell. I would worry about giving them ideas, but the connection between Citizens United and commercial speech protection claims is clearly already out there amongst firms litigating these issues. 

Later I will post some other aspects of the Philip Morris case which may be of interest to Glom readers, in particular whether a corporations can commit conspiracies or have specific intent.

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February 18, 2010
Pizza and Puffery in the Blogosphere
Posted by Lisa Fairfax

The blogosphere seems abuzz with talk about Domino's latest commercial calling out Papa John's "Better Pizza. Better Ingredients" slogan as puffery.  Indeed, Domino's even has a "Stop the Puffery" website.  I am guest blogging at Concurring Opinions this month, and here are some of my thoughts on the subject.

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December 05, 2009
Pricing by the Calorie
Posted by Gordon Smith

KFC's new promotion -- a 395 calorie meal for $3.95 -- is brilliant. (KGC?)

Dave at 5 Blogs Before Lunch wants KFC to expand the promotion to the whole menu.

Their Roasted Caesar Salad (w/o Dressing & croutons) would be priced at $2.20, while their Popcorn Chicken family pack would cost $12.10 for a 1210 calorie purchase. 

It would be a perfect way to hit consumers at their pocket books (the one true motivator) and encourage healthier eating. 

And, imagine if others joined in: 

A Double Quarter Pounder at McDonald's would cost $5.60. While Chicken McNuggets would only be $1.70. 

A Burger King Triple Whopper would be $11.30 while a TENDERGRILL™ Chicken Sandwich would only be $4.00

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October 19, 2009
Should New Media Buy Sources?
Posted by David Zaring

Gawker does, the Awl thinks it shouldn't, and has an economic argument as to why.

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September 09, 2009
My Own Consumer Empirical Project -- Catalogs
Posted by Christine Hurt

So, here's the deal.  For the past two years, I've been overwhelmed by the number of catalogs that I receive every Fall, building up to the holidays.  Some weeks, I would swear I got the same Pottery Barn catalog several times, but with different covers.  So, this year, I'm conducting an experiment.

Beginning yesterday, the day after Labor Day, I'm collecting all of the merchandise catalogs I receive until December 25.  I will report periodically on observations of the experiment, and will publish here the grand total after the holidays, with various types of statistics.

I think that I am an average catalog/internet/store shopper.  We order some things from the Internet, but I think we're fairly moderate.  I have not increased Internet spending recently to skew the findings.  In fact, I may have decreased spending "in these tough economic times."  I wish I had compared the last 2 years to this year, to see if stores trimmed down on mailings this year, but I'll add that to the list of things I wish I had done the last 2 years!  Stay tuned!

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July 21, 2009
Anita Van Buren Stopped Me in Walgreen's and Told Me to Buy a Uniball Pen for My Own Safety
Posted by Christine Hurt

OK, so this was weird.  I was in Walgreen's yesterday, stocking up on clear spray sunscreen (best invention ever) and nine-cent posterboard, when I heard the very familiar voice of Lt. Anita Van Buren (S. Epatha Merkerson) from Law and Order.  I thought for sure she was standing behind me and was going to send me back out on the street to get some more evidence, but instead she was a video recording and warned me about financial fraudsters.  Financial fraudsters who had special tools to erase my ink writings and to replace them!  On checks!  On anything!  But, if I always used a Uniball pen, then this couldn't happen because Uniball pen ink seeps into the very fabric of the paper.  Whew.  This was all from a video screen in the pen aisle.  So, of course I went to YouTube to look at it again.  Marketing genius strikes again.

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February 01, 2009
More eTrade Babies!
Posted by Gordon Smith

Last year, I picked the top five Super Bowl commercials, but this year I found only one worthy of posting: the eTrade babies ...

This year's ad continues to claim that eTrade gets "a thousand new accounts a day."

Seriously? People are still opening eTrade accounts?

Anyway, if you want to see more eTrade babies, check out the eTrade site.

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September 10, 2008
Posted by Gordon Smith

Yesterday I received a call from a reporter doing a story on trends in corporate governance. When reporters call, I react with some ambivalence. I don't mind helping reporters to understand the stories that they are pursuing, but I have no special desire to be quoted (or misquoted) in a news or magazine story. And the interviews inevitably take way more time than the final product implies. In short, I can think of many other ways that I would prefer to spend my time.

All of these thoughts passed through my mind when I read about Peter Shankman's service, "Help A Reporter Out." Of course, I signed up because I enjoy playing with new internet services, but this looks like a service that I may ditch rather quickly. So here's a little poll for our high-flying readership ...

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