Monthly Archives: May 2010

Bill Patry’s War on Copyright Rhetoric

William Patry, Moral Panics and the Copyright Wars (Oxford University Press, 2009)  (summary at OUP; related blog).

Bill Patry’s “Moral Panics and the Copyright Wars” is the latest word on the way in which copyright law has responded to technological change. In eclectic and humorous prose, drawing on history, linguistics, philosophy, behavioral economics and the Bible, among other sources, Patry provides harsh criticism of the ways in which Congress and the copyright system have responded to disruptive technologies such as the VCR and file-sharing networks – and by “responded”, Party means did whatever the content industries demanded.

The book sets out the well-formed perspective of an important figure within the copyright cognoscenti. For almost three decades now, Patry has engaged with the copyright system in various roles, including a practitioner in private practice, full-time academic, author of a multi-volume copyright law treatise, copyright law blogger, copyright advisor to the House of Representatives and policy advisor to the Copyright Office. His intimate familiarity with the copyright system makes the pessimistic tone of his book especially notable. Continue reading "Bill Patry’s War on Copyright Rhetoric"

Deconstructing Stock Options

In “The Non-Option,” David Walker expertly dissects one of the puzzles of employee stock option compensation: why stock options are always granted at the then-current market price for the stock, resulting in “at-the-money” options.  If parties could tailor their compensation packages to individual needs and desires, one would expect that at least some firms would agree to give their employees stock options that had an exercise price lower than market price (known as “in-the money” options).  Indeed, the desire for in-the-money options was so strong that hundreds of companies essentially created them through illegal option backdating.  Recent changes to accounting rules were thought to have dampened the disparity in regulatory treatment between at-the-money and in-the-money options.  Walker’s article, however, explains how tax law has stepped in to continue this familiar bifurcation in treatment.

The narrative of the rise and fall of stock options begins in the early 1990s.  In order to encourage shareholder primacy and efficient corporate management, scholars and policymakers set upon a course of promoting incentive-based executive compensation.  This programme found its instantiation in IRC § 162(m), which allowed companies to take unlimited tax deductions for compensation earned “solely on account of the attainment of one or more performance goals.”  Since the deduction for other pay (such as salary) was limited to $1 million, this gave substantial corporate tax savings to performance-based pay.  Stock options became a natural way to provide this kind of pay.  Longstanding accounting rules took a “face-value” approach to the valuation of options because of the difficulty in calculating their value.  Under these rules, a company incurred no expense (for accounting purposes) when issuing at-the-money options; the options only needed to be expensed when the employee exercised them.  As a result, “costless” and deductible stock options fueled the Internet boom and the late-1990s stock surge.  However, increasing pressure to account for the real value of options led the Financial Accounting Standards Board (FASB) to change its rules in 2005.  FASB now requires that at-the-money options be expensed.  This change, along with the stock market bust in the early 2000s, cooled companies on options and led to more of a mix between options and restricted stock (as Walker describes in this article). Continue reading "Deconstructing Stock Options"

The Return of Banishment: Punishment and Policing

Katherine Beckett & Steve Herbert, Penal Boundaries: Banishment and the Expansion of Punishment, 35 Law & Social Inquiry 1 (2010).

Hear the word “banishment,” and the image that comes to mind will likely hail from an earlier time.  Think Anne Hutchinson’s expulsion from the Massachusetts Bay Colony in the seventeenth century, or the transportation of British and Irish convicts to Australia in the nineteenth century.  Banishment went the way of the rack and screw, so the thinking goes.  Instead, the predominant form of modern punishment is a form of confinement: incarceration.  If modern punishment is incarceration, and the criminal justice system its primary source, then anyone interested in modern punishment need look no further.

One of the chief virtues of a sociological analysis of law is that it loosens the grip of rigid thinking like this, particularly with respect to emerging developments that don’t fit into existing categories of scholarly attention.  This is the goal of Katherine Beckett and Steve Herbert’s Penal Boundaries, Banishment and the Expansion of Punishment, and they’ve achieved it in such a way that makes it a compelling read for scholars and teachers of criminal law. Continue reading "The Return of Banishment: Punishment and Policing"

Armageddon for the Legal Profession?

Richard Susskind, The End of Lawyers? Rethinking the Nature of Legal Services (Oxford University Press, 2008) (summaries at OUP and Susskind.com).

Legal professionalism is prophesied an apocalypse with increasing frequency. The territory covered by The End of Lawyers? is the threat posed by IT.

Susskind’s big idea is that technology will create a future where lawyers are not the dominant interface between citizens and the law. Acting as a consultant to law firms on IT has confirmed his view that they suffer from conservatism, hostility to innovation and resistance to information technology. He chaired the UK Advisory Panel on Public Sector Information, currently sponsored by the Ministry of Justice, and remains the IT adviser to the Lord Chief Justice of England and Wales. His ideas are glimpsed in the directions that the UK government has taken since Susskind’s 1996 bestseller, The Future of Law. One of his   predictions, online legal communities–cross between Facebook and Wikipedia–sponsored by government surfaced in the Community Legal Service. His ideas have more traction in the UK, but are as transportable as the technology around which they are woven. Continue reading "Armageddon for the Legal Profession?"

Methodology in Jurisprudence

Joseph Raz, Can There Be a Theory of Law?, available at Googlepages; also available in Joseph Raz, Between Theory and Interpretation (Oxford, 2009), pp. 17-46; and in Martin P. Golding & William A. Edmundson (eds.), The Blackwell Guide to the Philosophy of Law and Legal Theory (Blackwell, 2004), pp. 324-342.

For decades, if not centuries, discussions in Jurisprudence classes often start with the question, “What is Law?”  What then ensues is usually the bandying about of various conventional or off-the-wall definitions (depending on the tastes and inclinations of the teacher or coursebook editor), followed by a predictable reading and discussion of the 1958 Harvard Law Review debate between H. L. A. Hart and Lon Fuller, perhaps with some reference thrown in to Ronald Dworkin, or a natural law theorist (either very old, Thomas Aquinas, or more recent, say, John Finnis).  By then, it is considered safe to abandon discussions of the nature of law and go on to the next topic.

The problem with these discussions is that they skim across the surface of jurisprudential debates without ever reaching the core.  Courses may include debates about whether the Nazis had law or not, or whether we have a moral obligation to obey the law, but still there is little attention to all that is being assumed by any discussion of theorizing about (the nature of) law.  However, one should not be too quick to blame the teachers (or coursebook editors).  Even the theorists who wrote the canonical articles were not always clear, or helpful, about what is going on when theoretical claims are made. Continue reading "Methodology in Jurisprudence"

Conceptualizing Disability Discrimination

Samuel Bagenstos, Law & the Contradictions of the Disability Rights Movement (Yale University Press, 2009).
Michael C. Harper

Michael C. Harper

In a series of law review articles written over the past decade, Professor Bagenstos has established himself as the preeminent academic voice on disability discrimination law. Indeed, the transferable utility of the conceptual insights developed and applied in these articles, in my view, warrants a claim for Bagenstos as the most important scholar of the decade in the general field of employment discrimination law. Anyone with a serious intellectual interest in discrimination law who has not read Bagenstos’s articles should take the occasion of the publication of this pithy and trenchant little volume to familiarize themselves with Bagenstos’s analysis of the political and intellectual assumptions underlying disability law. Those who have read Bagenstos’s work will find the book not redundant, but rather a rewarding reminder and synthesis of his developing view.

The book’s principal project is to highlight how the highly pluralistic disability rights movement’s sometimes divergent contradictory goals and assumptions have been reflected in discrimination law.  In my view, the most important tension within the movement highlighted by Bagenstos derives from a disagreement about the meaning of the social model of disability. Bagenstos notes the general agreement among disability rights advocates that disability is socially rather than medically or physically defined. There is a broad, and appropriate, understanding among these advocates that no physical or mental traits can be defined as abnormal without reference to standards dependent upon social values. These values and accompanying attitudes and the physical environment they create or at least tolerate are what pose special difficulties for some disfavored individuals. The critical intellectual divergence in the movement is over the meaning of this social model for social policy. For some, Bagenstos notes, the model supports a universalism recognizing that all of us are different in ways that warrant legal protection from discrimination. Others, however, use the model to stress the importance of special interventions to create equal opportunities for the stigmatized minority disfavored by social assumptions about what is normal. Such interventions at least in part find support from policy makers wanting to avoid what might otherwise be the social dependency of a part of the population. Continue reading "Conceptualizing Disability Discrimination"

New Jotwell Section: Worklaw

Today we inaugurate a new Jotwell section on Work Law (Labor and Employment Law), edited by Professor Samuel Estreicher of New York University School of Law and Professor Jeffrey Hirsch of the University of Tennessee College of Law. Together they have recruited a great team of Contributing Editors.

Expect other new sections in the Fall. Please get in touch if you have suggestions for a new section, or if you have a review you would like to contribute to Jotwell.

Banking on Bailouts

Jeffrey N. Gordon and Christopher Muller, Avoiding Eight-Alarm Fires in the Political Economy of Systemic Risk Management, Columbia Center for Law and Economic Studies Working Paper No. 369, available at SSRN;  Adam Levitin, In Defense of Bailouts, 99 Geo. L.J. (forthcoming 2011), available at SSRN.

The Goldman Sachs circus currently playing Washington certainly is energizing.  And it’s a relief to see some life in the legislative process looking to financial reform.  But the policy posturing is starting to get to me.  Are you, like me, tired of all the claptrap?  For a restorative, take out Jeffrey N. Gordon and Christopher Muller, Avoiding Eight-Alarm Fires in the Political Economy of Systemic Risk Management.

Gordon and Muller offer a learned, yet quite readable review of the financial crisis.  I particularly recommend their treatment of the role played by credit default swaps and their recounting of the steps that ended in the TARP and the role played by Federal Reserve Act section 13(3) in the sequence of events.  The authors know their economics, but in this paper the legal perspective dominates to the reader’s great benefit.  There is also a clear-eyed and reasonable analysis of the policy choices.  Here Gordon and Muller clear up much of the murkiness that surrounds discussions of “resolution authority.” That accomplished, they suggest that we get used to the prospect of future bailouts.  Where a $50 billion fund raises hackles on the Hill, they think $1 trillion is more like it. Continue reading "Banking on Bailouts"

The End of Probate

John Martin, Reconfiguring Estate Settlement, 94 Minn. L. Rev. 42 (2009).

In the nearly 50 years since Norman Dacey’s How to Avoid Probate first hit the best seller list, law reformers have responded by making probate easier, faster, and less expensive – especially for families with modest means and modest needs.   These legal reforms, however, have barely made a dent in the use, and growth of probate avoidance devices.  In a recent article, Reconfiguring Estate Settlement, 94 Minn. L. Rev. 42 (2009), John Martin suggests replacing the probate system with a non-judicial registration system.  Although his proposal builds on the UPC and other reform statutes, Professor Martin contributes some new insights – not the least of which is that any reform effort may be doomed if it retains the “probate” label.

Professor Martin describes the UPC’s flexible system for administration of estates, which allows interested parties to calibrate their contact with the judicial system to match their need for judicial protection, and also catalogs the small estate procedures enacted in states that have not adopted the UPC.  Despite the availability of these modern probate systems, lawyers and their clients continue to seek out non-probate alternatives.  Why is this a problem?  Because, as Professor Martin points out, probate avoidance generates unnecessary expenditures on bypass devices and encourages unscrupulous peddling by “trust mills” that prey on fear of the probate process.  In addition, the proliferation of probate avoidance devices requires co-ordination, and creates unexpected difficulties when the co-ordination is less than perfect. Continue reading "The End of Probate"

“Probabilistic Injury”: The Odds Aren’t Good

Bradford Mank, Summers v. Earth Island Institute Rejects Probabilistic Standing, But a “Realistic Threat” of Harm is a Better Standing Test, 40 Env. L. 89 (2010), available at SSRN.

The case of Summers v. Earth Island Institute, 129 S.Ct. 1142 (2009), is notable from several administrative law perspectives, but potentially its major impact is one that many commentators have missed – its rejection of “probabilistic standing.”  In Summers, Justice Scalia, writing for the Court, rejected out of hand Justice Breyer’s suggestion that the plaintiff environmental groups had satisfied the “injury” prong of standing by showing “a realistic likelihood” of injury to one or more of their members.  Characterizing this suggestion as “a hitherto unheard-of test for organizational standing,” Justice Scalia wrote that to accept as “injury” the fact that “there is a statistical probability that some of those members are threatened with concrete injury” would “make a mockery of our prior cases, which have required plaintiff-organizations to make specific allegations establishing that at least one identified member had suffered or would suffer harm.”

If Justice Scalia had not heard of probabilistic injury before, he has not been reading the numerous circuit court decisions addressing the probability of injury and when it is sufficient for standing.  But Professor Mank has, and even before Summers he authored an article, Standing and Statistical Persons: A Risk-Based Approach to Standing, 36 Ecology L.Q. 665 (2009), dealing with the subject.  In his most recent article, however, he takes it a step further, addressing Justice Scalia’s opinion for the majority in Summers and Justice Breyer’s for the dissent, relating them to some of the lower court opinions dealing with probabilistic injury, in particular two D.C. Circuit decisions, Public Citizen v. National Highway Traffic Safety Administration, 489 F.3d 1279 (2007), modified on rehearing, 513 F.3d 234 (D.C. Cir. 2008), and Natural Resources Defense Council v. EPA, 440 F.3d 476, withdrawn, 464 F.3d 1 (D.C. Cir. 2006).  In addition, Professor Mank explains how all these cases relate to the Supreme Court’s earlier decision in Friends of the Earth, Inc. v. Laidlaw Env. Services, Inc., 528 U.S. 167 (2000). Continue reading "“Probabilistic Injury”: The Odds Aren’t Good"

Recent Developments in Comparative Tax Theory

Omri Marian, The Discursive Failure in Comparative Tax Law, 58 Am. J. Comp. L. (forthcoming 2010), (available at SSRN), Carlo Garbarino, An Evolutionary Approach to Comparative Taxation: Theory, Methods and Agenda for Research, 12 Theoretical Inquiries in Law (forthcoming 2010), and Hugh Ault & Brian Arnold, Comparative Taxation, A Structural Analysis, 3d Ed. (available at Amazon.com)

Why isn’t there more work on comparative tax law, and why hasn’t a more sophisticated methodology developed to address comparative law tax issues?    A new book and two forthcoming articles deal with these questions.

The book is the third edition of Hugh Ault and Brian Arnold’s Comparative Income Taxation: A Structural Analysis, which appeared earlier this year.   One of the few comprehensive works on the subject—Victor Thuronyi’s 2003 volume also stands out in particular—the new Ault and Arnold reflects several changes, now covering nine (albeit primarily advanced) countries and including an additional section that covers individual, business, and international tax rules in topical as opposed to country-by-country fashion.  While the book remains primarily descriptive in nature, any comparativist will tell you that gathering information is half the battle, and much of what is needed, at least for the major OECD countries, is contained here. Continue reading "Recent Developments in Comparative Tax Theory"

Patent Utility Reduxit

Michael Risch, Reinventing Usefulness (forthcoming  2010 B.Y.U. L. Rev –), available at SSRN.

In academic scholarship, it sometimes happens that an entire field of inquiry becomes neglected year after year—to the point that nearly everyone believes the area incapable of yielding anything much of intellectual interest.   Such beliefs are almost always wrong, for it is the fallow fields of thought that are prime to be fruitful again.  An excellent example is patent utility doctrine, and specifically the issue whether inventions must be proven commercially useful as a prerequisite to patentability.  The conventional wisdom is that the law resolved this question against imposing such a requirement  more than a century and a half ago.  The issue is long dead; forgotten; abandoned.  Until now.

In his new article Reinventing Usefulness, Michael Risch reexamines patent utility doctrine and advances creative and insightful arguments for requiring that all inventions demonstrate “commercial utility” prior to patenting.  The highest compliment I can pay this article is not that I agree with it—I’m still somewhat doubtful—but that the article has forced me to think hard about an area I foolishly thought to be largely barren.  The article is memorable precisely because its thesis is unsettling; it demands rethinking of utility doctrine and other aspects of the patent law. Continue reading "Patent Utility Reduxit"

The Beautiful Struggle: A Prosecutor’s Redemption Story

Paul Butler’s new book Let’s Get Free is essential reading for those who care about American criminal justice, prosecutorial power, and doing justice from inside the system.  It is also a beautiful rarity for a book of big scholarly ideas: page-turning reading.  The writing hums with the rhythm, flow, and narrative of hip hop at its best—one of the inspirations for an intriguing chapter and the book’s subtitle: A Hip-Hop Theory of Justice.  The intimate portrait of the prosecutor and the criminal justice system that Paul presents is an important contribution to the literature penetrating the opacity of prosecutorial power, practices and pressures.1

It is a tribute to how successfully Paul liberates his scholarly ideas from the stilted prose that dooms legal scholarship to limited readership that one of my law students recommended this hot new book to me.  He was moved and inspired by the book enough to spread the word and seek to discuss it.  This is the power of great ideas, set in beautiful prose, made compelling through narrative.  And narrative is the thread that binds this book of many big ideas. Continue reading "The Beautiful Struggle: A Prosecutor’s Redemption Story"