Monthly Archives: February 2018

What Is the Payoff from Public R&D Investments?

Pierre Azoulay, Joshua S. Graff Zivin, Danielle Li & Bhaven N. Sampat, Public R&D Investments and Private-Sector Patenting: Evidence from NIH Funding Rules (revised 2017), available at NBER.

Intellectual property scholars have increasingly recognized that IP is only one of many legal tools for incentivizing innovation. In addition to facilitating transfers from consumers to innovators through a “shadow tax” on IP-protected goods, the U.S. government also directly rewards innovators with public funds through R&D tax incentives, innovation prizes, and—most significantly—well over $100 billion per year in direct federal and state R&D support. This direct public science funding, which primarily goes to grants and national laboratories, has long been viewed as important to U.S. economic growth. But federal R&D spending has been declining and is the subject of an increasingly partisan divide, making this a key moment to ask: What is the public’s return on this investment?

In an outstanding empirical analysis, corresponding author Danielle Li at MIT Sloan and her three coauthors—Pierre Azoulay at Sloan, Joshua Graff Zivin at UC San Diego Economics and Public Policy, and Bhaven Sampat at Columbia Public Health (collectively, “AGL&S”)—have tackled this question for grant funding by the U.S. National Institutes of Health (NIH). With a budget of over $30 billion per year for biomedical research, the NIH is the single largest research funder in the world. But assessing the causal impact of this investment is difficult, even when focusing only on its effect on private-sector patents. How can one measure information flows in fields full of serendipity and spillovers? Are grants merely correlated with private-sector advances? Does public funding “crowd out” private investment? AGL&S’s empirical design makes progress on each of these issues, and they conclude that each $10 million in NIH funding in fact generates 2.7 additional private-sector patents. Continue reading "What Is the Payoff from Public R&D Investments?"

Making Sense of the Fee-Splitting Rule

Anthony Sebok, Selling Attorney’s Fees, U. Ill. L. Rev. (forthcoming 2018), available at SSRN.

The humble fee-splitting rule—Rule 5.4(a) of the Model Rules of Professional Conduct and its substantial equivalents in various states—plays an outsized role in structuring the delivery of legal services in the United States. The rule provides that, with limited exceptions, “[a] lawyer or law firm shall not share legal fees with a nonlawyer.” The fee-splitting rule is substantially the same even in jurisdictions with quirky rules of professional conduct, such as California, New York, and Texas. The only exception is the District of Columbia. Historically the concern of the fee-splitting rule was mostly payments to nonlawyers for referrals of cases, or the use of “runners” or “cappers” to solicit personal-injury clients. It featured prominently, however, in the debate in the early 2000’s over the proposal to allow multidisciplinary practices (MDPs), such as partnerships between accountants and lawyers. The acrimonious MDP debate ended with lawyers doubling down on the claim that the practice of law is a profession, not a mere business, and that avoiding the sharing of fees with nonlawyers is an essential firewall protecting lawyer professionalism. (Insert snark here about how an industry with total revenues of $86.7 billion—the 2017 AmLaw 100—can claim with a straight face not to be a “business.”)

Tony Sebok’s article, Selling Attorneys’ Fees, begins on familiar ground. The inability of law firms to obtain equity investments from nonlawyers limits their sources of capital to firm revenues and debt financing. This leaves them strapped for the cash that might catalyze Silicon-Valley-style innovation in the delivery of legal services and makes them vulnerable to economic downturns. One of the motivations for the ABA’s Ethics 20/20 Commission was to consider whether regulatory innovations might enhance the delivery of affordable legal services. However, the proposal to permit certain types of alternative business structures, which would have required relaxing the fee-splitting rule, went down in flames. The Illinois Bar Association filed a formal resolution opposing changes to the fee-splitting rule, and the Ethics 20/20 Commission responded by tabling any consideration of alternative business structures.1 Continue reading "Making Sense of the Fee-Splitting Rule"

Justice for Equality

Constance Backhouse, Claire L’Heureux-Dubé: A Life (2017).

Claire L’Heureux-Dubé was Canada’s second woman to join our Supreme Court of Canada. She was famous for her strong personality, her charm, her directness, and eventually her willingness to dissent. She was loved by some, loathed by others.

My opening paragraph so dramatically understates the significance of Justice L’Heureux- Dubé. It pretends that the life of one woman – a woman who faced substantial personal and professional challenges – can be adequately captured in a few words.

Enter Constance Backhouse’s brilliant biography. Biography is an art. How to render a person visible? To be appropriately honest about her failings and reflective about her successes? To situate her life within its broad context – social, political, economic, and scientific? To reflect her social character – her relationships and the effects of those relationships on the path of her life?

Backhouse’s considerable work answers these questions. Continue reading "Justice for Equality"

The Empirical Truth About Qualified Immunity

Joanna C. Schwartz, How Qualified Immunity Fails, 127 Yale L.J. 2 (2017).

The critical scholarly narrative surrounding civil rights litigation is that the Supreme Court in the past decade has expanded the defense of qualified immunity, particularly through a series of per curiam reversals of qualified-immunity denials, with the Justices impatiently demanding that lower courts properly (and expansively) approach immunity. The effect has been to slam the courthouse doors on injured plaintiffs. Expansive qualified immunity insulates all but the “plainly incompetent” and those who knowingly violate the law. It shields officers against liability except for the rare case in which the officer violated a constitutional right that was “clearly established” by binding precedent finding a constitutional violation on factually similar conduct in factually similar circumstances, or the rarer case in which the violation was so obvious in light of general constitutional principles (such as tying a prisoner to a hitching post in the sun for seven hours). And the Court moved the doctrine in this direction for unabashed policy reasons—to insulate law-enforcement and other public officials from the cost, burden, distraction, and expense of litigation, discovery, and trial, by raising the bar for liability and requiring resolution of immunity early in litigation.

In How Qualified Immunity Fails, Joanna Schwartz’s empirical study shows both the critical narrative and the Court’s purported goals to be empirically unsupportable. Continue reading "The Empirical Truth About Qualified Immunity"

When Reading the Fine Print is Actually Worse for Consumers: The Case of Unenforceable Terms

While disclosure has been the preferred regulatory tool to ameliorate problems arising from imperfect information, it often fails. In particular, everyone is familiar with the problems associated with not reading fine print: some blissfully uninformed consumers later regret a transaction once they discover hidden charges or attributes described in the unread contract. Formal research confirms that few consumers pay attention to fine print and that disclosures are poorly designed and too abundant to be effective.1

The promise of mandatory rules is to avoid these problems. If sensibly drafted, they can rescue consumers from the perils of their own inattention or laziness. Take landlord-tenant laws. In most states, the warranty of habitability and other rules afford tenants a host of legal rights, such as the right to retain payment of rent if the landlord does not deliver the property in livable conditions or fails to keep appliances functional. Continue reading "When Reading the Fine Print is Actually Worse for Consumers: The Case of Unenforceable Terms"

Making Sense of Causation in Mixed Motives Cases

Andrew Verstein, The Jurisprudence of Mixed Motives, 127 Yale L.J. (forthcoming), available at SSRN.

To say that the law of causation in mixed motives cases is a mess would be an understatement, as Andrew Verstein highlights in his article, The Jurisprudence of Mixed Motives. Most antidiscrimination laws require causation. That is, these laws proscribe adverse employment actions when they occur “because of” a protected characteristic, such as race or sex. The problem is that there are several types of causation, particularly where multiple motives are involved – which is almost always. Yet, few of those statutes specify what type of causation is required. Other statutes specify what type of causation is required, but with no clear definition (e.g., “motivating factor” causation, referenced in the Civil Rights Act of 1991). To make matters worse, courts and commentators often throw other undefined or ill-defined terms into the mix. And if we were inclined to look at other legal fields, such as tort law or constitutional law, in order to make sense of causation in employment discrimination law, we tend to encounter yet more ill-defined terms.

One might think – or at least hope – that it would be possible to (1) identify the universe of potentially applicable causal standards; (2) clearly define each of those standards (and their relationship to one another); and (3) attach a universally applicable and accepted label to each causal standard. That is, we might imagine a Rosetta Stone that would allow us to clear up the confusion that reigns in the Babel of causation. Such a tool would allow us to describe the law with precision and engage in meaningful (and perhaps even cross-substantive) discussions about the normative merits of any particular causal requirement. Continue reading "Making Sense of Causation in Mixed Motives Cases"

Expressivism, Corrective Justice, and Civil Recourse

Scott Hershovitz, Treating Wrongs as Wrongs: An Expressive Argument for Tort Law, 10 J. Tort L. 1 (2017), available at SSRN.

With clear examples, incisive and sweeping philosophical argumentation, and an engaging prosaic lilt, Scott Hershovitz writes about tort law the way his mentor Ronald Dworkin wrote about constitutional law. If this sounds like high praise, it is. Hershovitz’s Treating Wrongs as Wrongs: An Expressive Argument for Tort Law, 10 J. Tort L. 1 (2017) is a pleasure to read. Indeed, I regard Treating Wrongs as Wrongs as one of the most important torts articles published in many years. Its excellence of course motivates me to push hard against its central themes to see whether they stand up.

Hershovitz’s principal claim in this article is that “tort law is very much an expressive institution.” He explains what it means to say that an area of law is an expressive institution, why this is correctly said about tort law, what messages tort law expresses – “this person is entitled to be treated with dignity” and “the defendant wronged the plaintiff” – and why it is an important fact about tort law that it sends these messages. Continue reading "Expressivism, Corrective Justice, and Civil Recourse"

What Don’t You Know and How Will You Learn It?

Susan Nevelow Mart, The Algorithm as a Human Artifact: Implications for Legal [Re]Search, 109 Law Libr. J. 387 (2017).

For those of us who are not engineers or programmers, magical results appear when we run searches in legal databases. However, we have little understanding of the machinations behind the ever-present e-wall. What kind of confidence can we have when the underlying structure of legal databases are hardwired with human biases? We must ask ourselves the question posed to then-Senator Obama and Senator McCain at a Town Hall Debate in 2008, “What don’t you know and how will you learn it?”

When I teach legal research, my students compare the same searches in different databases. One goal is to demonstrate that there are different results. But a more nuanced goal is to examine the results closely enough to provide insights into which databases might be more useful for updating, for case searching, for browsing statutes, and other research tasks. Susan Nevelow Mart’s study will elevate these discussions because of her focus on human-engineered algorithms and the inherent biases in the databases used for legal research. This study will also guide researchers to think more about search strategy and will help set more realistic expectations about search results. Continue reading "What Don’t You Know and How Will You Learn It?"

Using an Interesting Conversation to Teach Testamentary Capacity

Stephen R. Alton, The Strange Case of Dr. Jekyll’s Will: A Tale of Testamentary Capacity, 52 Tulsa L. Rev. 263 (2017).

The Strange Case of Dr. Jekyll and Mr. Hyde is a popular novella that was published by Robert Louis Stevenson in 1886. In the novella, Gabriel Utterson, a lawyer, investigates strange events involving Dr. Henry Jekyll and Edward Hyde. Dr. Jekyll is a respected man and Mr. Hyde is suspected of killing several people. Mr. Utterson becomes upset when Dr. Jekyll produces a holographic will that leaves the bulk of his estate to Mr. Hyde. He believes that Dr. Jekyll’s actions are a result of blackmail on the part of Mr. Hyde. After Dr. Jekyll commits suicide, Mr. Utterson finds a letter in which Dr. Jekyll confesses that he used a potion to transform himself into Mr. Hyde. Because he is unable to prevent himself from turning into Mr. Hyde Dr. Jekyll kills himself. In his entertaining and well-written article, Professor Alton presents an imagined conversation that he has with Mr. Utterson.

Their imagined conversation focuses on Dr. Jekyll’s testamentary capacity at the time he wrote the will leaving his property to Mr. Hyde. The article starts with a discussion of Dr. Jekyll’s general mental capacity. Professor Alton asserts that, on several occasions, Mr. Utterson indicated that he thought that Dr. Jekyll was of unsound mind. Professor Alton explains the standard courts apply to determine testamentary capacity. Because he teaches in Texas Professor Alton relies on Texas law. Under Texas law, the soundness of mind requirement is satisfied if the testator can understand (1) the activity in which he or she is engaging; (2) the nature and extent of his or her property; (3) the intended beneficiaries; (4) his or her dependents; and (5) the manner of distribution that he or she is making. The testator must also be able to form a reasonable judgment with regards to the four enumerated factors. Both Professor Alton and Mr. Utterson agree that the first four elements of the test were satisfied. Nonetheless, Mr. Utterson states that he believes that Dr. Jekyll “was so deranged in his mind that he could not form a reasonable judgment as to the other elements.” Therefore, Mr. Utterson thinks that Dr. Jekyll lacked the testamentary capacity to make a valid will. However, Professor Alton is not willing to concede that point because the capacity necessary for a person to make a will is so low compared to what is required for a person to execute a contract. Continue reading "Using an Interesting Conversation to Teach Testamentary Capacity"

Yes, There is Such a Thing as Too Much Transparency

Ashley Deeks, A (Qualified) Defense of Secret Agreements, 49 Ariz. St. L.J. 713 (2017).

In a world where secret meetings and resulting agreements seem particularly suspect, it might be tempting to think that the growing norm of transparency might keep the world a more harmonious place. Woodrow Wilson famously extolled the virtues of “open covenants of peace, openly arrived at….” Ashley Deeks, in her recent article, A (Qualified) Defense of Secret Agreements, asks us to think again of this norm and dictum. Her article is one I like a lot, and I hope others active in the study and shaping of international law and international relations do as well.

To be sure, secret agreements, Deeks reminds us, have done much to undermine international stability. The exposure of the Sykes-Picot Agreement—carving the Ottoman Empire into British and French spheres of influence with certain gains for Russia—remains good evidence among many in the Middle East that all past, current, and future interventions by US or European countries are driven by ulterior, territorial motives. Agreements between the Obama administration and regimes not particularly well-known for their strong human rights records have expanded the practice of extrajudicial killing through drones and other technologies. Additional contemporary examples might be the “Trump Tower meeting,” the “secret” US-Israeli agreement to broadly destabilize Iran, a covert agreement giving Russia free hand in Syria. Continue reading "Yes, There is Such a Thing as Too Much Transparency"