Monthly Archives: November 2013

A Decedent’s Digital After-Life

Jamie Patrick Hopkins, Afterlife in the Cloud: Managing a Digital Estate, 5 Hastings Sci. & Tech. L.J. 210 (2013), available at SSRN.

A decedent might have gone to join his digital property in the clouds, but for the estate lawyer here on earth, these digital assets may require more novel and not (as of yet) widely embraced estate planning techniques.

In his recent article, Professor Jamie P. Hopkins identifies the digital assets that increasingly are property interests of a decedent’s estate. The mechanics for establishing joint ownership of digital assets is less than clear; the importance of including digital assets in the estate plan for their post-death transfer is highlighted. Continue reading "A Decedent’s Digital After-Life"

Does My Digital Estate Belong to Me? Estate Planning for Digital Assets

Jamie Patrick Hopkins, Afterlife in the Cloud: Managing a Digital Estate, 5 Hastings Sci. & Tech. L.J. 210 (2013), available at SSRN.

In the article, Afterlife in the Cloud: Managing a Digital Estate, Professor Jamie Hopkins steps into the tangled web of estate planning for digital assets. Professor Hopkins’s article is timely and allows us to begin a much needed discussion about a new and important area of estate planning. He begins to answer the question of what happens to digital assets when an individual dies. Can an individual dispose of his or her digital assets in a will or trust? How should issues of security and privacy be addressed? Hopkins reminds us that digital assets are vast and complex and traditional estate planning tools do not adequately address the issues that are involved with transferring such assets at an individual’s death. He suggests a combination of federal legislation and better service agreements between service providers and users as a solution to the digital dilemma.

Although, I am not convinced that federal legislation is the appropriate mechanism, I agree that uniformity is in order. Since only a handful of states have addressed the issue, many individuals are not aware of whether they may transfer certain assets when they die. For example, in my will, I devise my real and personal property to my designated beneficiaries. When I executed my will several years ago, I used a 35mm camera to take pictures. I used a day planner to keep my schedule, I kept paper copies of bank statements and other financial documents, and I used a Rolodex to store information from professional contacts. Today, my digital photographs are stored on a hard drive or in a cloud. I use an online scheduler to keep my appointments, I use online banking for most of my investments, I share photographs and videos via Facebook, I download my music and books from ITunes, and I use Twitter for professional connections. I have numerous passwords to these accounts, and I have checked “I agree” to several online service agreements. Will my beneficiaries have access to my digital assets? Professor Hopkins’s article is a wake-up call for people like me. Continue reading "Does My Digital Estate Belong to Me? Estate Planning for Digital Assets"

Tort as Backstop to Regulation in the Face of Uncertainty

Thomas Merrill & David Schizer, The Shale Oil and Gas Revolution, Hydraulic Fracturing, and Water Contamination: A Regulatory Strategy, Columbia Law and Economics Working Paper No. 440 (2013).

Thomas Merril and David Schizer—a property law theorist and tax law expert— deliver an ostensibly new framework for analyzing tort liability-regulation tradeoffs, standing on the shoulders of the pioneer in this area in the 1980s, Steven Shavell.  In The Shale Oil and Gas Revolution, Hydraulic Fracturing, and Water Contamination: A Regulatory Strategy,  Merrill and Schizer offer a fairly modest strategy for regulating water contamination from hydraulic fracturing (also commonly known as “fracking”), a practice that is “transforming the energy landscape of the United States.”  But their proposals lay the groundwork for a more ambitious project: to reassess the balance between tort liability and regulation in areas that pose emerging, and incompletely understood, health and safety risks.  Fracking exemplifies the widespread trend of new, controversial practices with highly uncertain risks.  Tort law emerges as a backstop to best practices regulation: tort liability rules provide “a form of protection for those injured by technological innovations, while information gradually accumulates that may eventually lead to more protective ex ante regulation.”

Hydraulic fracturing is a controversial process whereby energy companies pump fluid into shale formations at high pressure to crack the rock and release the gas and oil trapped inside.  Merrill and Schizer are not shy about their overall support for the “fracturing boom,” which holds the potential to “increase the competiveness of the United States in the global economy, reduce our reliance on energy imports and enhance our energy security.”  At the same time, they acknowledge the potentially high price of fracking: increased air pollution, traffic and congestion (all risks associated with conventional oil and gas drilling) and, most significantly, potential contamination of groundwater (a unique risk associated with fracturing). Continue reading "Tort as Backstop to Regulation in the Face of Uncertainty"

Once a U.S. Corporation, Always a U.S. Corporation…

Omri Marian, Jurisdiction to Tax Corporations, 54 B.C. L. Rev. 1613 (2013).

Imagine a 19 year old college student in Texas stumbles upon a new business idea to sell built-to-order computers shipped directly to customers out of his dorm room.  The idea proves revolutionary, and the student is inundated with orders.  To grow the business the student forms a corporation, naturally in Texas.  Eventually the corporation grows into the largest personal computer maker in the world, with over 90% of its sales outside the United States.

Absent some significant tax planning, however, the company would pay US tax on all of its worldwide income, including the income from foreign sales.  This is because the United States taxes the worldwide income of all U.S. taxpayers regardless of the source of the income. On the other hand, an identical “foreign” company with identical sales would only be subject to U.S. tax on the income from sales made inside the United States..  The reason for this disparity is that, under U.S. law, a corporation is treated as a U.S. taxpayer if it is legally organized under the laws of the United States, any State thereof or the District of Columbia and foreign if it is not, regardless of business model or source of income. Continue reading "Once a U.S. Corporation, Always a U.S. Corporation…"

It’s the System, Stupid?

Mitu Gulati and Robert E. Scott’s new book, The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design examines the pari passu clause, a clause designed to ensure a debtor’s creditors rank against each other equally. It asks why a standard clause in cross-border financial contracts remained in sovereign debt contracts after a well-known but minor judgment in a Belgian court suggested that the clause should be amended or removed. The book reveals that the majority of practitioners designing and drafting these contracts did not have a coherent and consistent explanation of the origin, purpose, or meaning of the term in sovereign debt contracts. How can it be that sophisticated legal practitioners can put forward contracts, worth millions or even billions of dollars, where they do not understand a term common to, and prominent in, the contract? And once a court decision, albeit an ‘unreliable’ ex parte Belgian decision, threatens to undermine received wisdom on the overall effect of those sovereign debt contracts, posing not insignificant risk that the clauses will be litigated, how is it that these terms remain largely unaltered? Moreover, why is the clause not removed if, as many seem to think, it performs no discernible and certainly no predictable function in the sovereign debt arrangements?

These are some of the fascinating questions explored in Gulati and Scott’s excellent book, The Three and a Half Minute Transaction. Part empirical project, part theoretical exposition of securities law, and part detective novel reaching back to Bolivia in 1870, it is a highly readable and nuanced account of how elite lawyers approach the drafting of sovereign debt contracts. The account is theoretically and empirically rich. Its conclusion is that modern legal practice poses significant challenges to the evolution of professional practice. It also raises questions about whether and how systemisation works. Systemisation is the idea that legal practice can be disaggregated into component parts and automated through processes (checklists, software and the like). As a favourite theme of innovators keen on developing legal practice beyond the inefficient artisan model— the book serves as a reminder as to how systemisation needs to cope with the complexity and stickiness of clients and markets. Continue reading "It’s the System, Stupid?"

Substance, Procedure, and the Interdependence of Gatekeeping Standards Across Multiple Stages of Litigation

Louis Kaplow, Multistage Adjudication, 126 Harv. L. Rev. 1179 (2013).

Legal reasoning is often a reductive enterprise that enables lawyers to address a difficult question by positing a series of constitutive questions.  Dissecting vexing problems into more manageable components fosters analytical precision.  But precision comes with a risk of overlooking connections between seemingly discrete issues.  Each isolated inquiry may develop a life of its own that obscures their collective interdependence.

This phenomenon of distorting problems by isolating them is evident in the legal academy’s approach to the study of procedure and the judiciary’s approach to resolving disputes.  Law schools generally do not offer courses in “procedure,” focusing instead on subsidiary fields such as criminal procedure, administrative procedure, and civil procedure.  Within each field, coverage further dissolves into distinct topics.  Students may occasionally explore “civil procedure” in the abstract, but more often will study narrower subjects such as pleading, discovery, and summary judgment.  Scholarship often mirrors these divisions, coalescing into distinct literatures analyzing discrete aspects of litigation.  Judicial opinions likewise rarely consider procedure as an undifferentiated whole.  Instead, decisions address motions tailored to particular phases of litigation. Continue reading "Substance, Procedure, and the Interdependence of Gatekeeping Standards Across Multiple Stages of Litigation"

A Legal History That’s Really About the Place of Law in History

As the title suggests, Someday All This Will Be Yours is a legal history about inheritance and old age. The legal conflicts that form the core of the book make for compelling reading. Even so, the title does not capture the book’s most compelling elements, which challenge conventional assumptions about legal history and the place of law in the past.

Someday All This Will Be Yours is a legal history in which the law is not really the focus. To be sure, Hartog bases the book on two hundred New Jersey cases from 1840 to 1950. All these cases involved conflicts over inheritance, in which older people promised property in return for care from younger people—often, but not always their children or other relatives. Hartog calls it a “primordial transaction found perhaps anywhere and everywhere and in any time and every time”: “Work and care for property. You do this (take care of me), and I promise to do that (give you property at my death).” (P. 3.) In law, such promises resulted in an enforceable contract, and legal cases ensued when older people did not follow through with their end of the bargain. As Hartog argues, the cases did form a distinct legal pattern, in which the wishes of the older people writing the wills took precedence over those of the younger people to whom promises had been made. But, as he also points out, the legal implications are not really the point. In fact, the cases have been largely forgotten in law. Continue reading "A Legal History That’s Really About the Place of Law in History"

Trademark As Promise

Jeremy N. Sheff, Marks, Morals, and Markets, 65 Stan. L. Rev. 761 (2013).

The primary theory of trademark law in the academic literature is an economic one. Trademarks are a shorthand, the theory goes, for a number of observable and unobservable qualities of products. The trademark PEPSI, to take one example, is an easy way for a consumer to identify the cola that she enjoys without having to investigate other types of information, such as the location or corporate identity of the manufacturer. Indeed, some types of investigation in this regard—tasting the cola before purchase to confirm that it is the preferred drink—are frowned upon, to say the least. So the law regulates the use of trademarks in order to reduce search costs for consumers and, relatedly, to encourage producer investment in goodwill. When an unauthorized producer uses another’s trademark, the consumer is deceived into purchasing an unwanted product or forced to engage in additional efforts to find the product that she desires, both of which are inefficient. Although economic theory may not map neatly onto all areas into which trademark law extends (dilution law being one such example), it appears to be fairly well accepted in the scholarly literature that economic theory provides the predominant justification for trademark law’s existence.

But consumers obviously do not always act in ways consistent with economic theory. The relationships that some consumers have with some brands transcend a mere economic transaction; they involve identity construction and signaling motivated not by a product’s objective qualities but by intangible, emotional responses to the brand. The fact that some consumers are willing to pay many hundreds of dollars for a designer handbag or watch beyond the price that could be justified by the item’s materials or workmanship are a testament to the limits of economic theory. Continue reading "Trademark As Promise"

A Big Picture View of What Could Be Done About the Institutional Corruption of Medicine

Marc A. Rodwin, Conflicts of Interest, Institutional Corruption, and Pharma: An Agenda for Reform, 40 J.L. Med. & Ethics 511 (2012), Suffolk Univ. Law School Research Paper No. 12-40, available at SSRN.

Since long before his 2011 Oxford University Press book that takes a comparative approach to the problem, Marc Rodwin has been a leading voice in the debate around the pharmaceutical-healthcare industrial complex, and the conflicts of interest that it perpetuates. In his latest contribution in the Journal of Law, Medicine, and Ethics (JLME), Rodwin wisely moves from the language of ethics—which finger-waggingly suggests an individualism of bad guys and good guys—to the language of “institutional corruption.” Rodwin writes that, “in the past, physicians and scholars typically conceived of conflicts of interest as an ethical issue to be resolved according to individual judgment or professional and organizational norms. However, society can mitigate or eliminate conflicts of interest by changing financial and organizational arrangements in medicine.” Larry Lessig has encouraged this sort of move from individuals to institutions in his own work, and in his leadership of the Institutional Corruption Lab at the Edmond J. Safra Center for Ethics at Harvard, where Rodwin is a lab fellow. (Disclosure: I receive support from the Lab too).

Institutional corruption is useful as a lens to understand these problems because it directs us to examine the two-way economy of dependence. To the extent that incentives matter in our world of rational actors, an economy of dependence is an economy of influence. Rodwin notes that the pharmaceutical industry depends on public support in the form of tax subsidies, patent law rules, and other incentives. It is a strange exchange relationship, one where our government gives tax breaks for research and marketing, and even enforce a monopoly, for any new chemical compound invented by a drug company. It does so to the same extent, regardless of whether the new chemical is a cure for cancer or a “me too” drug, which makes no real improvement to clinical care. On the other hand, Rodwin identifies several ways in which the public, physicians, and patients now rely on drug companies. Pharma—not the Food and Drug Administration—sets its own priorities for drug development; designs and conducts the clinical trials that demonstrate safety and efficacy; monitors adverse drug reactions; and finances continuing medical education (CME), medical societies, and journals. Continue reading "A Big Picture View of What Could Be Done About the Institutional Corruption of Medicine"

Domestic Partnership Before Same-Sex Marriage

Douglas NeJaime, Before Marriage: The Unexplored History of Nonmarital Recognition and Its Impact on Marriage, 102 Cal. L. Rev. (forthcoming 2014), available at SSRN.

The left critique of the marriage equality movement has raised important questions about the privileging of marriage in our society and whether the push for same-sex marriage reinforces the second-class status of nonmarital (and nonintimate) relationships. This critique is invaluable because it presses us to focus on what should be the ultimate objective behind the current push to gain marital rights for same-sex couples: The end goal should be to encourage society and the state to recognize, support, and value many different types of familial and personal relationships. I view same-sex marriage not as an end in-and-of-itself, but as a means for having broader (and more important) debates over the role of gender, biology, and marital status in legally recognizing and supporting relationships between adults and between adults and children.

There is much to the left critique of same-sex marriage, therefore, that I value and respect. However, there is one aspect of that critique, related to the push for the legal recognition of relationships before the age of same-sex marriage, about which I have always been skeptical. Some critics have claimed that at the time marriage equality became the LGBT rights movement’s most important goal starting around the mid-1990s, there were well-organized efforts under way in different parts of the country aimed at reducing the importance of marriage, primarily by demanding the enactment of domestic partnership laws. These critics have claimed that if it had not been for the marriage equality movement, the early efforts to promote alternatives to marriage would have borne fruit, to the point where marriage today would be less central to the distribution of rights and benefits. Continue reading "Domestic Partnership Before Same-Sex Marriage"