Yearly Archives: 2021
Mar 22, 2021 Christopher M. BrunerCorporate Law
Michal Barzuza, Quinn Curtis & David H. Webber,
Shareholder Value(s): Index Fund ESG Activism and the New Millennial Corporate Governance, 93
S. Cal. L. Rev. __ (forthcoming, 2020), available at
SSRN.
Index funds have become a subject of intense scrutiny, first and foremost, because they are enormous. BlackRock, Vanguard, and State Street – the “big three,” with several trillion dollars in assets under management collectively – control around one-quarter of the stock of the S&P 500 companies. Accordingly, there is keen interest in understanding how they exercise the rights associated with that mountain of stock. As a threshold matter, why exert themselves at all, when their passive management model thrives on low fees, and therefore low costs? And why, despite these incentives, have they become increasingly vocal on sustainability-related matters, sometimes described as “environmental, social, and governance” (ESG) issues? As Michal Barzuza, Quinn Curtis, and David Webber argue in the paper cited above, the answer may relate to an overlooked dimension of the competition among these major institutions – the urgent effort to attract Millennial assets.
Whereas actively managed funds aim to beat the market, and accordingly compete on performance, index funds simply aim to match the market, and accordingly compete on price. Index funds cannot sell underperforming stocks because, by definition, they track a particular index, and they would seem to lack any straightforward incentive to engage in activism because this drives up costs and correlatively diminishes the competitiveness of their fees. As the authors acknowledge, this view of the matter is consistent with evidence showing that “index funds vote their proxies, but rarely initiate shareholder action, and have small – but growing – corporate governance operations.” Continue reading "Index Funds and Millennial Assets"
Mar 19, 2021 Nancy KimContracts
John Linarelli,
Advanced Artificial Intelligence and Contract, 24
UNIF. L. REV. 330 (2019), available at
SSRN.
Contracts and contracting have changed dramatically in the past fifty years. We have moved from negotiated paper contracts to standard form contracts to digital contracts presented in various ways. The next fifty years promises even more dramatic changes, and not just to the form of contracts. Technological innovation and marketplace needs will undoubtedly disrupt contracting in ways that don’t exist today. John Linarelli’s article Advanced Artificial Intelligence and Contract addresses one of the biggest anticipated disruptions – a not-quite human contracting party. In this article, Linarelli asks the provocative question, “How might contract law adapt to a situation in which at least one of the contract parties could, from the standpoint of a capacity to engage in promising and exchange, be an AGI?”
Linarelli states that artificial intelligence will bring about transformational changes in the law. He uses the term “artificial general intelligence” or “AGI” to refer to an advanced form of artificial intelligence which has a cognitive architecture of its own, unlike the artificial intelligence that currently exists. He invites us to consider the “feasibility of investing an AGI, from a legal point of view, with the power to enter into contracts, either with humans or other AGIs.” Continue reading "Bargaining with an AI"
Mar 18, 2021 Mark KendeConstitutional Law
David L. Sloss,
Information Warfare and Democratic Decay,
in Tyrants on Twitter: Protecting Democracies from Chinese and Russian Information Warfare (forthcoming 2021), available on
SSRN.
During the rise of big tech like Facebook, Twitter, and YouTube, there has been an increase in autocratic governments. Political leaders in Hungary and Poland have used democratic constitutions to curb democracy. They have ignored the European Union’s complaints about their actions. But perhaps the most dangerous development is the information warfare carried out by Russia, China, Iran, and others with the intention of interfering with democratic elections. Some experts argue that Russia’s “organized social media manipulation” was the reason for Trump’s victory over Clinton. These countries used U.S. First Amendment values against the U.S.
Professor David Sloss is authoring a book detailing how “Chinese and Russian cybertroops” accomplish their goals, as well as the weak efforts by the U.S. social media companies to respond. These platforms have profit incentives that conflict with the need to block information warfare or disinformation campaigns. This review briefly examines the newly released first chapter of the book. What makes the book significant is that Sloss proposes a multi-national alliance and registration identification system to deter this cyber-espionage and perhaps slow the corresponding democratic erosion. The solution, however, raises serious First Amendment issues even though it may promote democracy. Continue reading "A Democratic Solution to Social Media Election Warfare, and the First Amendment"
Mar 17, 2021 Michael Z. GreenWork Law
- Jason R. Bent, Is Algorithmic Affirmative Action Legal?, 108 Georgetown L. J. 803 (2020).
- Ifeoma Ajunwa, Race, Labor, and the Future of Work, The Oxford Handbook of Race and Law, (Emily S. Houh, Khiara M. Bridges, Devon W. Carbado, eds., December 12, 2020), available at SSRN.
Jason Bent and Ifeoma Ajunwa have authored recent papers I like a lot as they help to uncover and prescribe some solutions to the potential racist treatment of workers through technology as we advance into 2021. Their suggestions on how to address this form of employment discrimination come at a crucial time for workers of color. The nature of racial discord in our society reached a crescendo in 2020 and raised many questions for workers of color. The Covid-19 pandemic placed unusual health and economic burdens on black and brown workers as the insidious nature of the virus afflicted communities of color more harshly. So-called essential workers, many of whom are vulnerable people of color, were forced to risk exposure to the virus in order to perform their work duties in-person as most other workers scurried off to their homes to perform their work duties in a virtual manner. Meanwhile, militia and white supremacist groups have taken a more active role in our society as a response to the national and international protests calling for racial justice after the senseless killing of George Floyd by a police officer in Minnesota.
With the racial consequences from Covid-19 and the George Floyd protests still looming, the country will attempt to recover from the events of 2020. As these recovery efforts proceed, we must not forget that workers of color also face another racial problem, the effects from increasing technological advances aimed at giving employers greater opportunities to capitalize on the use of big data. Both Bent and Ajunwa have authored papers that examine similar concerns related to racial problems caused by technological developments as employers attempt to use algorithms aimed at achieving greater operating efficiencies. Although their suggested resolutions to this problem offer different approaches, both authors, as discussed below, give their readers an interesting take on how workers of color may be subjected by their employers to racism through algorithms and how that form of workplace discrimination should be addressed. Continue reading "Confronting Workplace Discrimination from Automated Algorithms in Times of Racial Unrest"
Mar 16, 2021 Sergio ParejaTrusts & Estates
Carla Spivack,
The Dilemma of the Transgender Heir, 33
Quinn. Prob. L.J. 147 (2020), available at
HeinOnline.
A goal of professors is, or should be, to think about legal issues that have not yet arisen but that are likely to arise in the future. By thinking of the issues before they arise, we can work to change the law before courts are forced to deal with the issue with little guidance on a case-by-case basis.
In her thought-provoking article, Professor Carla Spivack identifies the issue of a transgender heir and a bequest that did not contemplate a gender change. Specifically, she identifies a situation in which an elderly relative leaves property to “my daughter” or to “my grandsons,” but the intended recipient no longer identifies as a female, in the case of the daughter, or a male, in the case of a grandson, at the time of the elderly testator’s death. The concern is that other beneficiaries may then seek to invalidate the gift by arguing that the testator did not have a daughter or a particular grandson at the time of death. Continue reading "A Proposal to Protect Transgender Beneficiaries"
Mar 15, 2021 Mireille HildebrandtTechnology Law
In her General Principles of the European Convention on Human Rights, Janneke Gerards demonstrates how one of Europe’s two highest Courts offers ‘practical and effective’ protection to a number of human rights. These rights are at stake when governments or other big players use data-driven measures to fight e.g. international terrorism, a global pandemic or social security fraud. For those who wish to understand how the General Data Protection Regulation (GDPR) is grounded in European constitutional law, this book is an excellent point of departure, because the GDPR explicitly aims to protect the fundamental rights and freedoms of natural persons. Rather than ‘merely’ protecting the right to privacy of data subjects, the GDPR does not mention privacy at all; it is pertinent for all human rights, including non-discrimination, fair trail, presumption of innocence, privacy and freedom of expression.
Those not versed in European law may frown upon calling the European Convention of Human Rights (ECHR, “the Convention”) European constitutional law, as they may conflate ‘Europe’ with the European Union (EU). The EU has 27 Member States who are all Contracting Parties to the Convention, and at the constitutional level the EU is grounded in the various Treaties of the EU and in the Charter of Fundamental Rights of the EU (CFREU, “the Charter”). The Convention is part of a larger European jurisdiction, namely that of the Council of Europe (CoE), which has 47 Contracting Parties. The CoE is an international organisation, whereas the EU is a supranational organisation (though not a federal state). To properly understand both the GDPR and the Charter, however, one must first immerse oneself in the ‘logic’ of the Convention, because the Charter stipulates that the meaning and scope of Charter rights that overlap with Convention rights are at least the same as those of Convention rights. The reader who finds all this complex and cumbersome, may want to consider that the overlap often enhances the protection of fundamental rights and freedoms, similar to how the interrelated systems of federal and state jurisdiction in the US may increase access to justice. It is for good reason that Montesquieu observed that the complexity of the law actually protects against arbitrary rule, providing an important countervailing power against the unilateral power of a smooth, efficient and streamlined administration of ‘justice’ (The Spirits of the Laws, VI, II). Continue reading "‘Practical and effective protection’ of human rights in the era of data-driven tech: Understanding European constitutional law"
Mar 12, 2021 Nora Freeman EngstromTorts
John Campbell et al.,
An Empirical Examination of Civil Voir Dire: Implications for Meeting Constitutional Guarantees and Suggested Best Practices (Apr. 27, 2020), available at
SSRN.
An Empirical Examination of Civil Voir Dire: Implications for Meeting Constitutional Guarantees and Suggested Best Practices is a provocative new paper by an all-star cast of empirical legal scholars, including John Campbell, Jessica Salerno, Hannah Phalen, Samantha Bean, Valerie Hans, Less Ross, and Daphna Spivack. In the paper, the authors start with a set of key questions: “[I]f a fair jury is the real goal, how do we ensure we have one? Which jurors should be seated, and which excluded? And how do we achieve the goal of finding the biases that pervert the jury system?” (P. 2-3).
In tackling these key questions, the authors recognize that juries sit in the center of our civil justice system; the decisions they make cast shadows that affect myriad claims. And voir dire (the process whereby questions are asked of the venire panel to identify the prospective jurors who will be excluded by peremptory challenges or for cause) is the filter that determines which individuals serve on juries and which do not. Yet, despite the process’s importance and centrality, we know remarkably little about how voir dire is conducted in the United States and how good it is at achieving its stated aims. The authors’ much-needed investigation starts to answer both questions—and, as I explain below, might also have implications far beyond the paper’s four corners. Continue reading "Vetting Voir Dire"
Mar 11, 2021 Kathleen DeLaney ThomasTax Law
Ethan LaMothe & Donna Bobek,
Are Individuals More Willing to Lie to a Computer or a Human? Evidence from a Tax Compliance Setting, 167
J. Business Ethics 157 (2020), available at
ResearchGate.
Imagine your accountant asks you if you earned any income that wasn’t reported on a 1099 or W-2 this year, and you know that you have an extra $5000 of such income. Do you tell her? Probably. For starters, you might be worried that she is going to be suspicious if you lie to her. Something in your voice might give it away, or perhaps your income this year is lower than last year and she wants to know why. Further, you might have developed a rapport with your accountant, and lying to her might cause psychological discomfort.
Now imagine that you are debating whether to report the same income without an accountant’s help, using tax return preparation software. The software isn’t suspicious of your omission and doesn’t harbor any ill feelings about whether you are telling it the truth. In that case, you might be more likely to lie and not report the income. A fascinating new study by Ethan LaMothe and Donna Bobek confirms this intuition. In a survey of 211 participants, LaMothe and Bobek find that individuals may be more willing to lie to tax preparation software than they are to a human tax return preparer. Continue reading "Your Tax Software Doesn’t Know You’re Lying"
Mar 10, 2021 Gregory M. SteinProperty
Professor Gregory H. Shill’s recent article, Should Law Subsidize Driving?, reminds us of the hidden costs of driving that are borne, largely unrecognized, by the public.
When most people consider the costs of owning a car, they factor in typical expenses such as monthly loan or lease payments, insurance, maintenance, and gas. They probably do not consider other costs that are less directly related to their automobile ownership, including the construction and maintenance expense for public roadways, the negative effects their vehicles have on pedestrians and cyclists, and the health impacts of their tailpipe emissions. Continue reading "Did You Know That You’re Paying Part of the Cost of My Car?"
Mar 9, 2021 Veronica Root MartinezLegal Profession
James A. Fanto,
The Professionalization of Compliance: Its Progress, Impediments and Outcomes (Dec. 7, 2020), available on
SSRN.
James A. Fanto’s important new work, The Professionalization of Compliance: Its Progress, Impediments and Outcomes addresses a concern that I have been thinking about for quite some time: whether it is appropriate to consider people working in the field of compliance to be “professionals.” Within compliance circles, the phrase “compliance professional” is used constantly. Yet, as Fanto highlights in his excellent work, it is not at all clear that those engaged within the compliance industry meet the traditional hallmarks one finds associated with professional activities. Fanto’s article addresses this puzzle head-on in an interesting and thoughtful manner.
On the one hand, Fanto explains that those currently working in the field of compliance are aware that they “are engaged in a special activity,” and they have “formed organizations of compliance practitioners to share their specialized knowledge and practices.” The Society of Corporate Compliance and Ethics explains that the group “supports the compliance and ethics profession with educational opportunities, certification, networking, and other resources.” Indeed, their certificates send particular signals within the industry and are a way to demonstrate increasing knowledge and expertise in compliance. And yet, it is not at all clear what the boundaries of a compliance profession would be or who would count as “in the profession” as against those who work “in support of the profession.” Continue reading "The Compliance Professional? An Interesting Puzzle"
