Wake Forest Law Review

Friday, March 27th

Worrell Professional Center, Room 1312

CLE Credits:  4.5 Hours General Approved

View the Brochure

Please REGISTER today to help us accommodate all of our guests for parking and CLE credit.

Directions to the Worrell Professional Center can be found here.

A campus parking map can be found here.

Please direct any questions to Kenny Cushing at cushka12@wfu.edu.

Description

The Wake Forest Law Review will host its Spring 2015 symposium, “The Future of Financial Intermediation,” on Friday, March 27th at the Worrell Professional Center at Wake Forest University.  The symposium is co-sponsored by the BB&T Center for the Study of Capitalism.

Just as disintermediation is remaking the way goods and services are sold (think eBay, Craigslist, Airbnb), we seem to be heading toward greater disintermediation in financial markets.

In capital formation, newcomers such as crowdfunding and peer-to-peer lending are obvious examples. In corporate structures, conglomerates and combined firms have increasingly displaced intermediated equity markets. But there are counter-currents:  financial intermediaries (like mutual funds, hedge funds, and sovereign wealth funds) continue to grow and dig in.

This Symposium will explore the future of financial intermediation. What role does (and can) law play in shaping and responding to that future?  What adaptations are appropriate for traditional securities disclosure and oversight regimes?  How do decentralized structures affect rules on internal controls or the laws governing corporate groups? How do these changes affect the long-term versus short-term thinking of investors and managers?

Hosts

Alan Palmiter Associate Dean of Graduate Programs, Howard L. Oleck Professor of Business Law, Wake Forest University
Andrew Verstein Assistant Professor of Law, Wake Forest University

Schedule

 8:30 Continental Breakfast
 9:00 Introductory Remarks
 9:10 Peer-to-Peer Disintermediation
Moderator: Andrew Verstein
Michael B. Abramowicz Professor of Law, George Washington University Peer-to-Peer Insurance
Kathryn Judge Associate Professor of Law, Milton Handler Fellow, Columbia University Capital is Fungible: The Diverging Paths of Peer-to-Peer Lending and Kickstarter
 10:00 Short Break
 10:10 Degrees of Intermediation
Moderator: Andrew Verstein
Patricia A. McCoy Liberty Mutual Insurance Professor of Law, Boston College Evaluating Degrees of Disintermediation from a Consumer Protection Point of View
Tom C. W. Lin Associate Professor of Law, Temple University Infinite Financial Intermediation
 11:00 Morning Break (Refreshments Provided)
 11:15 New Directions in Financial Intermediation
Moderator: Alan Palmiter
Onnig H. Dombalagian George Denégre Professor of Law, Tulane University Exchanges, Listless?: The Future of Listing
Dale A. Oesterle J. Gilbert Reese Chair in Contract Law, Ohio State University Investing in the Internet Age: Crowdfunding Has Moved into the Intermediary Market
 12:05 Lunch (click here to see on-campus dining options)
 1:15 Berkshire’s Disintermediation
Introduction: Alan Palmiter
 Lawrence A. Cunningham Henry St. George Tucker III Research Professor of Law
Director, C-LEAF in New York, George Washington University
Berkshire’s Disintermediation
 2:00 Afternoon Break (Refreshments Provided)
 2:15 Disintermediated Corporate Governance
Moderator: Usha Rodrigues – Associate Dean for Falculty Development, M.E. Kilpatrick Chair of Corporate Finance and Securities Law, University of Georgia
Francisco Reyes Villamizar Superintendent of Companies in Colombia Foundations and Evolution of the Colombian Simplified Corporation
Erik P.M. Vermeulen Professor of Business & Financial Law, Tilburg University Corporate Governance in a Networked Age
 3:05 Adjourn

Abstracts

Peer-to-Peer Insurance
Michael Abramowicz

Peer-to-peer lending has begun to make small tentative inroads in the banking industry, but no comparable movement has emerged in the insurance industry. This Article will assess the potential for and obstacles to peer-to-peer insurance. With peer-to-peer insurance, individuals might collectively insurance risks of their acquaintances. A partial version of peer-to-peer insurance would involve individuals underwriting a small percentage of the insurable risk, so that insurance companies could use information about willingness of acquaintances’ to underwrite to improve their own actuarial ratings. A more developed version could allow for full underwriting through social networks, with more distant acquaintances taking on at least some of the function of reinsurers. Underwriters might also serve an adjudicatory function, providing information about whether insureds’ claims are valid. Peer-to-peer insurance is in some sense reminiscent of mutual associations, which were well positioned to take advantage of local information but did not enjoy the economies of scale of larger businesses. Perhaps the most significant obstacles to the emergence of peer-to-peer insurance, as with other forms of disintermediation but perhaps more severely, are regulatory. But cryptocurrencies, which so far have eluded effective regulation, could facilitate the development of peer-to-peer insurance. An offshore insurance company could use cryptocurrencies to sell insurance in the United States or elsewhere without regulatory approval, particularly if local underwriters are effective in limiting fraud. An insurance fund could also serve as a potential application of a self-governing cryptocurrency. Whether or not peer-to-peer insurance can evade regulation, this Article argues for a relaxed regulatory approach to such insurance, particularly in early stages of development, so that information can develop about whether it has advantages in some contexts over more traditional insurance products. Back to Top

Berkshire’s Disintermediation
Lawrence A. Cunningham (based on his book Berkshire Beyond Buffett)

Berkshire Hathaway, a 50-year old company that is now America’s fourth-largest, never uses intermediaries. Despite a market cap exceeding $350 billion, it has never borrowed money; despite being built by scores of acquisitions, it has never hired a business broker. Berkshire’s subsidiaries include several consumer finance companies whose business models dispense with intermediaries; the largest car insurer in the US, which has always sold direct without using intermediaries; and numerous commercial insurance companies, which often likewise skip the broker market. Exploring why Berkshire and its subsidiaries have shunned intermediaries–with answers ranging from thrift to loyalty and paternalism–should shed light on the history and current state of financial intermediation and perhaps on broader questions of business culture, consumer protection, and the role of technology. Back to Top

Exchanges, Listless?: The Future of Listing
Onnig Dombalagian

As the traditional intermediary for secondary market trading in most jurisdictions, securities and derivatives exchanges have historically exercised self-regulatory authority in three interrelated spheres:  regulation of trading practices, regulation of the business conduct of their broker-dealer members, and regulation of listed companies. Within the past decade, competition among demutualized, for-profit exchanges and other trading venues has triggered a series of regulatory reforms that has eroded this self-regulatory authority in the first two spheres. Exchanges, however, have managed to retain their formal authority over admission to listing under both U.S. and EU capital markets legislation, even as such legislation increasingly uses listing as a factor in calibrating the costs and benefits of public company regulation and in assuring the integrity of benchmark derivatives. This contribution will speculate about the future of listing as a commercial intermediary function, in light of developments such as the fall of the credit rating agencies, the rise of FINRA and PCAOB, and the globalization of trading and surveillance. Back to Top

Capital is Fungible: The Diverging Paths of Peer-to-Peer Lending and Kickstarter
Kathryn Judge

The paper explores why the technologies that have so transformed intermediation in other industries (as reflected in the rapid growth of Groupon, Airbnb, and Uber, among others) have not had similar effects on banking and other modes of financial intermediation.  Just a few years ago, peer-to-peer lending appeared positioned to bring similarly radical changes to financial intermediation.  It promised to make credit available to a broader pool of borrowers, to enable retail investors to make unsecured loans, traditionally the exclusive province of banks, and to create a direct relationship between these borrowers and lenders.  It now seems unlikely to fulfill any of these promises.  Peer-to-peer lending platforms increasingly screen eligible borrowers using metrics largely akin to those used by banks and increasingly focus on prime borrowers who get credit elsewhere.  The lender base, while in flux, increasingly consists of sophisticated financial firms who seem likely to cherry pick the best loans, eventually crowding out retail investors.  And, regulatory concerns have resulted in these chains becoming intermediated, with the lending platform now remaining as a node between the suppliers and recipients of the capital.  By exploring the dynamics driving these changes, and the areas where crowdfunding appears to have established a more lasting foothold, this piece sheds new light on how different forms of financial intermediation create value. Back to Top

Infinite Financial Intermediation
Tom Lin

No one is a financial island entire of itself. Intermediation is a fundamental fact of modern finance. Investment banks underwrite stock offerings for companies.  Commercial banks safeguard the savings of workers.  Fund managers invest the pensions of retirees.  Exchanges match orders of buyers and sellers. Brokers facilitate trades of investors.  Credit card companies advance funds to consumers. Collectively, these and other intermediaries form the fabric of modern finance. Yet despite all these existential financial links, entrepreneurs and innovators continue to endeavor towards the possibilities of fundamentally disrupting and disintermediating these financial ties, breaking apart from the financial main, and building new financial islands.

This Article is about those financial links and those disengaging endeavors, the ties that thread the fabric of modern finance and the efforts to tear those threads asunder to create anew, the truths about financial intermediation and the mirages of financial disintermediation.  It presents an examination of the functional evolution of financial intermediation, explains the difficulties of true financial disintermediation by revealing the less obvious links that remain, and highlights potential implications and recommendations arising from such a revelation. Back to Top

Investing in the Internet Age: Crowd Funding has Moved Into the Intermediary Market
Dale Oesterle

As the SEC struggles to amend its rules and procedures to adapt to the Internet Age, Internet investment continues to evolve.  With the Securities and Exchange Commission late on rules for individual, direct investments under the JumpStart Our Business Startups Act of 2012, the Internet is racing forward into the creation of internet investment funds.  AngelList is perhaps the best example.  Small investors use AngelList to form investment syndicates that invest in portfolio companies offering on the Internet.  The practice is yet another example of the need for a complete overhaul of SEC rules on capital offerings in the United States.  The agency needs to put all its offering rules on the table, face the advantages of the internet age, and draft a new system of capital offering regulations. Back to Top

Corporate Governance in a Networked Age
Erik P.M. Vermeulen

Corporate governance research is typically predicated on solving how we design the best way for managers, financial intermediaries, investors and other stakeholders to interact and better yet, do business. Based on this research, policymakers and regulators have introduced agency-based rules and regulations to ensure that self-interested managers will not act in ways that conflict with shareholder value creation. This all sounds great in theory. However, people nowadays are increasingly debating how well corporate governance frameworks truly prevent managerial misbehavior. Speaking from personal experience, when you are on the ground working in a listed company, you immediately recognize that there are other overriding considerations that should take precedence. Indeed, when you conceptualize the relationship between managers and investors as one of hierarchy, you create a short-term mentality that usually leads to stricter control mechanisms on corporate executives, corporate reorganizations, and demands for increased dividends and stock buybacks, making it extremely difficult for companies to recapture the focus on innovation, growth and wealth. It is this disconnect that is slowly but surely causing a shift in corporate governance thinking. This paper covers innovative companies that create wealth and growth and more specifically what we see happening within them. What is it that causes these companies to thrive and stay ahead of their competitors? As we start to think about this “dark matter” in the universe of corporate governance and ask ourselves how to architect and design these type of companies, we come across certain common themes, such as the protection of founder-CEOs, controlling ownership, investor relations that focus on non-financial metrics and a more fruitful interaction between the company’s managers and financial intermediaries. After analyzing the world’s most innovative companies, we come to the conclusion that it is better to view corporate governance as the interface between what a company is today and what it attempts to achieve in the future. Back to Top

Friday, October 24th

Z. Smith Reynolds Library Auditorium

CLE Credits:

5.5 hours General

View the Brochure

Please REGISTER today to help us accommodate all of our guests for parking and CLE credit.

Directions to the Z. Smith Reynolds Library Auditorium can be found here.  For the most convenient parking, please use Lot S and Lot E, as designated on the parking map.

Please direct any questions to Kenny Cushing at cushka12@wfu.edu.

Description

The Wake Forest Law Review will host its Fall 2014 symposium, “Relationship-Centered Health Care: Implications for Law and Ethics,” on Friday, October 24th at the Z. Smith Reynolds Library Auditorium.  The symposium is co-sponsored by the Wake Forest Center for Bioethics, Health and Society.

Viewing health care delivery as fundamentally relational—rather than as a series of discrete transactions between provider and patient—provides a psychological and sociological lens to evaluate its contemporary legal and ethical dimensions. Larry Churchill, the co-author of two acclaimed books on this emerging topic—Healers: Extraordinary Clinicians at Work (2011) and What Patients Teach: The Everyday Ethics of Health Care (2013)—will be the featured keynote speaker, along with co-authors David Schenck and Joseph Fanning.

In their first book, Healers, the authors use empirical observation, as well as philosophical, anthropological and psychological perspectives, to analyze the ritual structure and spiritual meaning of healing skills. In What Patients Teach, the authors examine the dynamic of “doubled-agency” between doctors and patients, which is based in patients’ vulnerabilities and gives rise to a set of special responsibilities.

A distinguished group of legal, medical, and ethics scholars will respond to the ideas raised by these authors and explore their own work as it relates to the web of critical relationships within health care delivery.

Schedule

 8:30 Continental Breakfast
 9:00 Patient-Centered Health Care (Keynote Speaker)
Larry Churchill, Ph.D. Professor of Medicine, Ann Geddes Stahlman Chair in Medical Ethics, Vanderbilt University Toward an Ethic of Patient-Centered Health Care
Joseph Fanning Assistant Professor of Medicine, Vanderbilt University
David Schenck Assistant Professor of Medicine, Vanderbilt University
 10:30 The Phenomenology of Being a Patient, Physician, or Research Subject
Mary Catherine Beach, M.D., MPH Associate Professor, Department of Medicine, John Hopkins University Clinician Emotions and Values: Risks and Benefits of Relationship-Centered,Care
Lois Shepherd, J.D. Peter A. Wallenborn, Jr. and Dolly F. Wallenborn Professor of Biomedical Ethics, Professor Public Health Sciences, Professor of Law, University of Virginia Welcome, Responsibility and Healing Skills
Mark Hall, J.D. Fred D. & Elizabeth L. Turnage Professor of Law, Wake Forest University Physicians as Placebos: The Law and Ethics of Healing Relationships
Rebecca Dresser, M.S., J.D. Daniel Noyes Kirby Professor of Law, Professor of Ethics in Medicine, Washington University What Subjects Teach: The Everyday Ethics of Human Research
 12:00 Lunch (click here to see on-campus dining options)
 1:30 Computers and Physical Space: The Architecture of Clinical Encounters
Pat Ober, M.D. Professor, Wake Forest University The Electronic Medical Record: Treating Our
Fellow Creature as Corn and Coal
Christine Coughlin, J.D. Director, Legal Analysis, Research & Writing, Professor of Legal Writing, Wake Forest University iConsent: The Doctrine of Informed Consent in the Electronic Age
Elizabeth Pendo, J.D. Vice Dean, Professor of Law, St. Louis University Caring for Patients with Disabilities
 2:45 How Doctors and Patients Communicate
Arthur R. Derse, M.D., J.D. Julia and David Uihlein Professor of Medical Humanities and Professor of Bioethics and Emergency Medicine, Medical College of Wisconsin Three Generations of the Objective Patient
Standard is Enough!: The Evolution of Informed
Consent in Wisconsin and its Implications for the Physician-Patient Relationship
Nancy King, J.D. Professor, Wake Forest University The Reasonable Patient and the Healer
Chris Robertson, J.D., Ph.D., M.A. Associate Professor of Law, University of Arizona Should Patient Responsibility for Costs Change the Doctor-Patient Relationship?
 3:45 Adjourn

Abstracts

Churchill

Despite the profound changes in medical ethics over the past 50 years, medicine’s codes, oaths, and principles remain steadfastly centered on the professional. This Article explores how pervasive this professional orientation is and the shortcoming and distortions that result. By adopting and incorporating many of the bioethical formulations for good doctoring, medicine has largely substituted norms inspired by political ideals and an economic model of consumer rights to replace the defunct paternalistic norms. A genuinely patient-centered ethic begins with patients, with patients’ understanding of the moral features of clinical encounters, and a reworking of the moral tools essential to practice effectively.   Read PDF of article online.

Coughlin

The recent introduction of electronics within the doctor-patient relationship—specifically the use of computers and tablets—will affect the quality of that relationship, as well as the patient’s understanding of the clinical encounter. This presentation and Article looks at that effect by examining the use of computers and tablets in the informed consent process.

Many physicians and health care entities use general informed consent forms to document a patient’s consent. Indeed, various state laws provide physicians some protections from litigation if an informed consent form is used. In reality, many of these informed consent forms, while arguably consistent with the law, are inconsistent with the goals of informed consent because they are not focused on the patient as an individual and they are written above the recommended grade level reading target. Recent research, moreover, regarding reading comprehension on computers and tablets versus hard copies suggests that reading on tablets and other types of computers promotes “skimming” and likely decreases reading comprehension overall.

The advent of electronics used to obtain informed consent and other information, while efficient, may decrease the understanding and comprehension of the risks and benefits of the proposed treatment. Appropriate precautions must be instilled not only to obtain meaningful informed consent but also to preserve trust in the doctor-patient relationship. As electronics become an integral part of patients’ clinical experience, best practices should be implemented so the focus is not only avoiding possible litigation. Rather, best practices should be implemented in a manner consistent with Dr. Churchill’s and his colleagues’ focus on the patients’ understanding of the various dimensions of clinical encounters.  Read PDF of article online.

Derse

The Wisconsin Supreme Court in 1975 adopted the objective patient standard for material information that must be disclosed to a patient by a physician for adequate informed consent. The court significantly expanded the standard’s reach by including these elements as material to an objective patient 1) information about the health care facility’s level of expertise, 2) the experience of the physician, if substantially different from an average practitioner, 3) all viable alternative options for treatment including means of diagnostic measures and followup and 4) a duty to disclose all viable alternative diagnoses considered before arriving at a final diagnosis, as well as the diagnostic tests that would rule out those alternate diagnoses. In response to claims of judicial overreach, the Wisconsin legislature amended the state’s informed consent statute to return the state to a professional standard of material information and excluded the requirement to disclose alternative modes of treatment for other diagnoses considered. The saga of the establishment and expansion of the standard, as well as the recent legislation, will be reviewed, and implications for physician-patient communication will be discussed.

Dresser

In What Patients Teach: The Everyday Ethics of Health Care, Dr. Larry Churchill, Joseph Fanning, and David Schenck offer a critique of conventional medical ethics. They contend that ethical codes and principles neglect patients’ experiences and rely too heavily on what professionals, rather than patients, see as ethical care. I believe that many of the points Churchill and his colleagues make about medical ethics apply equally to research ethics.

For the most part, research ethics has developed without serious attention to the views of people who know what it is like to be a research subject. Rather than relying on speculation about the research participant experience, research ethics and oversight ought to rely on what actual participants say about their experiences. Research ethics, as well as regulations intended to promote ethical conduct, should be based on evidence. Ethical and regulatory decisions should take into account participants’ knowledge, as well as their positions on ethical issues in research.  Read PDF of article online.

Hall

Placebos are often denigrated as spurious effects in research, or psychosomatic clinical aberrations, but generations of careful study and reflection reveal that “nonspecific healing” effects are pervasive in medical encounters.  In part, this is because good clinicians, knowingly or subliminally, are able to activate or enhance the body’s own self-healing powers.  Viewed this way, physicians do not so much administer placebos as they themselves are (or can be) a placebo agent—by dealing with patients in ways that make bioactive treatment modalities more effective than if they were administered, say, by a machine.  This is a large part of what we mean when we refer to health care workers as healers and when we emphasize the importance of healing relationships.

            This Article will explain and develop these ideas, drawing on both empirical and conceptual literature.  The Article will then explore whether or not various elements of health care law and ethics are compatible with optimizing the healing aspects of treatment relationships.  Key points of focus will include informed consent doctrine, the ethics of administering placebos, the malpractice standard of care, and managed care patient rights.  Read PDF of article online.

King

This Article’s focus is (1) an examination of the “reasonable person” concept as it applies to disclosure and causation in informed consent, and (2) the application of the reasonable person to the physician-patient relationship, using Alice Trillin’s New Yorker essay “Betting Your Life.” The Article then uses these concepts to discuss healing relationships as described by Dr. Churchill and his colleagues.  Read PDF of article online.

Ober

“The practice of medicine is not a business and can never be one …Our fellow creatures cannot be dealt with as a man deals in corn and coal; the human heart by which we live must control our professional relations.”

[Sir William Osler]

             The introduction of the electronic medical record [EMR] in recent years brought a promise of great potential advantages, especially in the realms of communication, health monitoring, and patient safety. This great potential has fallen by the wayside as the EMR has been subverted for the purpose of business-oriented goals such as more efficient [and, possibly, inflated] billing. Recognition of the ideals of patient individuality and patient-centered healthcare is discouraged by the EMR in its current format. The patient’s unique story is devalued. Patients have become commodities, clinics have become cheerless assembly lines, and the advice of Sir William Osler has been disregarded as the EMR is replacing the traditional patient-oriented focus of medical practice with a business-oriented model.

Pendo

People with disabilities face multiple barriers to adequate health care and report poorer health status than people without disabilities.  The Institute of Medicine and others suggest that lack of physician education and professional training on disability competency issues is one of the most significant barriers to appropriate and effective care.  A related but less-studied barrier is the physical environment of health care, including facilities, examination rooms, and medical and diagnostic equipment.  This presentation will explore the model of relational ethics as illustrated by Dr. Larry Churchill, Joseph Fanning and David Schenck in Healers: Extraordinary Clinicians at Work and What Patients Teach: The Everyday Ethics of Health Care as a framework to acknowledge and address these barriers, and to improve the health and health care experiences of patients with disabilities.  Read PDF of article online.

Robertson

Decades of health policy reforms have caused patients to pay-out-of-pocket greater portions of the cost of their own healthcare.  We know from prior research that some patients are left “underinsured,” which means that the costs of care can undermine adherence, can cause stress, and can cause other risks such as bankruptcy and foreclosure—all of which may worsen the patient’s health. Only recently have scholars begun to ask whether and how physicians should respond.  Do they have a duty to tell their patients about costs of each treatment alternative?  Should they sometimes recommend cheaper healthcare, even if it is inferior?  Do physicians have a more fundamental duty to investigate the real costs of healthcare that will be imposed on patients?  Or, alternatively, are these financial duties better handled by other professionals—such as social workers?   One might cogently argue that treating the whole person includes attention to her pocketbook as well.  These questions are many and difficult, but analysis suggests some paths forward.  Read PDF of article online.

Shepherd

To be successful, all methods of bioethical analysis—whether Principlism or approaches that emphasize care, community, solidarity, or professionalism—rely on the presence of individuals who are radically open to the presence of all others and who are ready, willing, and able to take responsibility for what is going on.  This presentation will explore ideas of welcome and responsibility in the clinical encounter.  In their book Healers, Extraordinary Clinicians at Work, David Schenck and Larry Churchill write that “healing…always has to do with the quality of relationships.”  We often judge clinicians by how responsibly they care for vulnerable patients.  But if relationships are what we seek, then patients must also have responsibilities and physicians must also be vulnerable.  Read PDF of article online.

 Click Here to Register

Overview

The Wake Forest Law Review’s 2011 Business Law Symposium brought together legal scholars and policy leaders who offer a range of perspectives on “The Sustainable Corporation.” How do business firms contribute to – or undermine – the ability of social, ecological and environmental systems to endure? The question raises issues concerning community development, corporate governance, energy policy, environmental law, institutional shareholders, labor relations, business transparency, nonprofits, and securities markets. The business community is actively engaged in understanding the practical challenges of sustainability. This Symposium seeks to create greater awareness of the legal challenges to the corporation becoming an instrument of sustainability.

Speakers


OPENING REMARKS

Professor Alan Palmiter – Wake Forest University School of Law

“Opening Remarks”

Presentation

Charts

ARTICLES

Professor Dana Brakman Reiser – Brooklyn Law School

“Benefit Corporations? Evaluating Another Hybrid Model for Social Enterprise”

The paper will discuss the new “benefit corporation” concept being pioneered in Maryland and Vermont, and on which several other states are likely to take action in the coming year. This “benefit corporation” is another new hybrid form of organization, created to house socially-minded businesses. Unlike the L3C model, which works on a limited liability company framework, benefit corporations are corporate models. Distinct from traditional business corporations, however, benefit corporations must pursue “a general public benefit” and must require directors to consider constituencies other than shareholders in making decisions. Intriguingly, all of this vetted by independent, third party standard-setting organizations rather than by state government officials. This article will explain the benefit corporation form, compare it with other traditional and hybrid forms available to social enterprises, and evaluate the advantages and disadvantages of privatizing inquiries into public benefit.

Professor Wendy Wagner – University of Texas School of Law

“Viewing Corporate Sustainability Disclosures as a Public Good rather than a Corporate Bad”

Virtually all of the efforts to coax corporations on a more sustainable path, including the growing use of sustainability disclosures, are understood as efforts to redress negative externalities. Firms must produce disclosures and analyses of the sustainability of their production life cycle, it is believed, because the firms are the ones generating the pollution and other unsustainable practices.

In this paper I argue that this conventional framing of corporate sustainability disclosures as needed to redress negative externalities may have the problem backwards, at least with respect to the creation of rigorous sustainability analyses, like life cycle analyses. Instead, disclosures and internal analyses related to corporate sustainability may be much closer to a public good as opposed to part of a firm’s responsibility to redress a negative externality, or a corporate bad. Since life cycle analyses are done to allow cross-comparisons between firms, identify areas for possible productive synergies with other firms, and highlight areas of corporate activities in need of greater regulatory oversight and direction, for example, there are clear public good qualities associated with them. Moreover and in contrast to other information disclosures (like TRI or SEC requirements), life cycle analysis in particular can be quite costly for an individual firm to collect and analyze. Firms also enjoy fewer advantages in producing these analyses since sustainability analyses such as life cycle analysis involve less internally held information (as contrasted to emissions inventories) and demand a higher level of engineering expertise than is the case for other environmental disclosures. While the resulting life cycle analyses may reveal ways that firms are adversely impacting the environment, the cutting edge nature of the analyses, coupled with the synergies across firms from the resulting information cause the public good characteristics of these disclosures to rival and even exceed the corporate bad qualities.

Perhaps more important, the primary payoff from conceptualizing of corporate sustainability disclosures, like life cycle analyses, as public goods rather than as corporate bads cause primary responsibility for their development to shift from individual firms to the government. In fact, when these life cycle analyses are produced in the first instance by expert regulators, many of the problems that have thwarted their success (e.g., rigor, reliability, accessibility) are largely bypassed. Consumers, investors, insurers, regulators, and the firm itself will have a more reliable and timely basis for assessing firm sustainability. This rigorous, agency-prepared baseline can then help jumpstart both market and regulatory solutions to advance corporate sustainability in the future.


Professor Matthew T. Bodie – Saint Louis University School of Law

“NASCAR Green: A Case Study of Sustainability and the Nature of the Firm”

What is the role of the firm in the sustainability literature? This symposium contribution seeks to explore the issue by looking at the sustainability efforts of NASCAR and its affiliated firms. NASCAR has undertaken significant environmental sustainability initiatives, particularly the promotion of alternative fuels. These sustainability efforts are facilitated, in part, by the unusual structure of NASCAR and the sport of stock-car racing. By focusing on the corporate structure of NASCAR and its affiliated entities, this article seeks to complicate the traditional sustainability narrative. Because both supporters and critics of sustainability theory assume a publicly held corporation in a wide-open industry, they have missed opportunities to explore why a “firm” should or should not care about sustainability efforts within its own internal culture or within its industry as a whole.


Professor Steve Ferrey – Suffolk University Law School

“Sustainable Corporations and Energy”

“Sustainable” corporations are now the buzz of the new corporate ethic. However, this term is poorly defined, and even less well understood. What is a sustainable corporation in terms of its energy use? This article will examine different U.S. and European definitions of the ‘sustainable’ corporation, and definitions of government and private entities. We will focus on the new 21st century era of climate control pressure on corporate emissions, and the meta-value of carbon. How is this new carbon and energy use metric being evaluated? What is the transcendent importance of energy? To get at this question, this article will examine the role of renewable energy in the corporation’s future. It will look in detail at incentives and impediments. This will include an examination of the federal scheme of federal tax credits, stimulus funding, and special capital depreciation rules. The article will also look at the legal impediments and incentives surrounding a variety of state incentives, now that federal energy legislation is stalled:

  • Renewable Portfolio Standards
  • Net metering of corporate power
  • Feed-in Tariffs
  • Discriminatory state incentives
  • Distributed, on-site generation
  • Energy efficiency
  • Demand-side management of power
  • Building efficiency requirements and opportunities

The article will then shift to transportation energy use by corporations, highlighting several innovations options undertaken by corporations to be sustainable. In this sense, it will look at both direct on-site use of energy by the corporation, as well as more indirect use in terms of transportation.


Professor Brett McDonnell – University of Minnesota Law School

“Strategies for an Employee Role in Corporate Governance”

One way to make U.S. corporations more sustainable is to broaden the group of stakeholders whose interests are considered in making decisions. One of the most important groups of stakeholders is corporate employees, both because their own stake is critical to their well-being and because employees may often be more likely to value the interests of other stakeholders more than corporate shareholders or managers do. Yet, U.S. corporate law does little or nothing to encourage any role for employees in corporate governance. U.S. law focuses on just two or three groups within the corporation: shareholders, directors, and managers (to the extent that the last two groups are separate). This essay evaluates a number of possible strategies for creating a role for employees in corporate governance. The strategies include:

  • Use other areas of the law to protect employees;
  • Encourage managerial or director power, on the theory that managers and/or directors will side with employees and other interests more than shareholders;
  • Encourage shareholder power, on the theory that employees agree on the need to keep managers accountable;
  • Support unions as a source of countervailing power;
  • Promote means for directly giving employees a voice within corporations, e.g. through employee representation on the board, employee councils, non-binding employee votes on particular matters, employee surveys, or similar means; and
  • Promote other legal forms of business associations in which employees can play a greater role.

The essay suggests a variety of criteria that should be used in evaluating these strategies. One must balance the probability of success of a strategy (i.e. its political feasibility) with the net benefits it would achieve if successful. The benefits and costs of each strategy must include effects both on the internal efficiency of corporations, the fairness of resulting outcomes, and implications for the balance of political power. One must also balance short-term and long-term effects of the differing strategies. The essay concludes by applying these criteria to the six listed strategies, and suggesting a mix of strategies that appears most attractive at this point. In that mix, a leading short-run strategy is siding with shareholders over managers and directors in current power struggles (since union and public employee pension funds are leading shareholder activists), while for the long-run developing alternative legal forms should be a leading strategy.


Professor David Millon – Washington & Lee University School of Law

“Two Models of Corporate Social Responsibility”

This paper presents two ways of thinking about corporate social responsibility (CSR), one familiar, the other less so. The first model conceives of CSR in latitudinal terms, emphasizing the broad range of interests that corporate activity is supposed to serve and the diverse considerations that ought to motivate corporate management. According to this view, corporations should be operated with due regard for all of their various stakeholders, not just shareholders but also employees, consumers, creditors, and members of the general public affected by corporate activity. One example of this approach is the so-called constituency statutes adopted by over 30 states. These statutes typically authorize decisionmaking that takes into consideration the interests of a wide range of enumerated corporate constituencies. As such, this model rejects the shareholder primacy view that corporations should be managed primarily for the benefit of their shareholders.

The second model is longitudinal in orientation and focuses on the corporation’s sustainability. Here the emphasis is not necessarily on mediating the conflicting interests of particular constituencies but instead on the long-term success of the corporation as a whole. This requires cultivation of viable relationships with those who contribute to production, attention to the effects of the corporation’s activities on society, including management of environmental and social costs, and a long-term conception of shareholder value. The longitudinal perspective thus has the potential to address many of the concerns that motivate CSR advocates.

This paper will illuminate the contrasts between these models and assess their prospects in light of law, economics, and business practice.


Professor David Yosifon – Santa Clara Law

“Towards a Firm Based Theory of Consumption”

In his groundbreaking 1937 essay “The Theory of the Firm,” Ronald Coase explained that production is sometimes organized through arms-length contractual exchange “in the market” and at other times is organized through command and control “in the firm.” Coase showed that production is based within the firm where the costs of determining prices for various inputs exceeds the gains that are witnessed when markets, rather than fiat, determines the allocation of resources. Coase’s theory has had tremendous influence in economics generally and in corporate law scholarship in particular. What is missing in Coase’s theory of the firm, however, is any conceptualization of consumption activity.

Contemporary “nexus of contracts” models of the corporation presuppose, typically without elaboration, that consumers are part of the “nexus,” along with investors, workers, and communities. This article will begin to integrate “consumption” into Coase’s theory of the firm by showing that much like with production, consumption sometimes is organized through spot arms-lengths transactions “in the market,” where prices are easily obtained, but that consumption also is sometimes organized at least in-part “in the firm,” when prices are difficult to obtain, or where fiat can substantially lower the transactions cost involved in consumption. A quintessential example of firm-based consumption would be employee “fringe” benefits, but there are many such forms of consumption that are entirely divorced from the employee relationship.

The present article will focus in particular on the ways in which consumer preferences for “sustainable” consumption are sometimes managed “in-house,” within the firm, rather than through spot transactions in the market. This work will build on my recent scholarship which has endeavored to flesh out a more sophisticated conception of the consumer as part of the “corporate nexus” than is otherwise available in corporate law scholarship.


Professor Judd Sneirson – Hofstra University School of Law

“The Sustainable Corporation and Shareholder Profits”

What is a sustainable corporation and why aren’t there more of them? This paper argues that corporate law’s traditional focus on shareholder profits stifles sustainability efforts inasmuch as sustainable corporations take a broader view of the firm and its goals. The paper also weighs alternatives for increasing sustainable corporations’ numbers and encouraging corporations of all stripes to act more sustainably. These include imposing sustainability on corporations, requiring sustainability disclosures, and raising awareness that sustainable business practices fully comport with corporate laws and even typically enhance long-term firm value for all of a corporation’s stakeholders.


Professor José Gabilondo – Florida International University College of Law

“Understanding Corporate Leverage Cycles: Can the Dodd-Frank Act Reduce Financial Instability?”

In response to the financial crisis that began in August 2007, Congress recently enacted the Dodd-Frank Act (‘Act’), an ambitious set of financial market reforms that changes the landscape for corporate funding. The Act aspires to reduce financial instability by reducing and managing the risks of excessive borrowing by companies, including financial firms. I apply economist Hyman Minsky’s axioms about leverage markets to analyze whether the Act can meaningfully mitigate the patterns of financial instability that led to the last credit market break.

Professor Faith Stevelman – New York Law School

Ruggie 2010: New Mechanisms and “Remedies” for Corporate Human Rights Abuses

In the past decade, the United Nations has taken a more intensive interest in the relationship between multinationals and human rights. Traditionally, states have been the focus of such inquiries, but as multinationals have become adept at transcending national governments’ regulatory powers, and as multinationals often profit from projects in nations which have weak rule of law, the corporation itself is increasingly becoming a locus of international human rights expectations. The 2010 Report from John Ruggie (the Special Representative to the Secretary General on the Business and Human Rights) takes the “Protect-Respect-Remedy” framework outlined in conceptual detail in the 2008 Report, and seeks to “operationalize” it through an examination of potential sites of enforcement. This step is crucial, of course, because resort to traditional courts is often impractical for persons claiming rights abuses. Whether it’s a matter of private plaintiffs’ litigation and travel costs, or procedural hurdles like jurisdiction or forum non conveniens, or evidentiary problems, traditional civil litigation is a suboptimal structure for managing multinationals’ shortfalls in the human rights arena. After a brief look at the problems associated with traditional litigation, this paper surveys and critiques the 2010 Report’s proposals for expanding the forms and nature of remediation in the business and human rights area. It then examines issues of remedies and deterrence from the perspective of corporate governance. In particular, it argues that traditional corporate law makes it difficult to pinpoint responsibility for human rights compliance (on the part of individual corporate agents or the corporation as an entity). Such blurring of personal responsibility, as effectuated by traditional corporate law concepts, is itself a challenge to be addressed in the construction of remedial structures.

Professor Beate Sjåfjell – University of Oslo (Norway)

Regulating Companies as if the World Matters: Reflections from the ongoing Sustainable Companies project

Climate change is a case in point for the necessity of working towards a sustainable development, i.e. achieving economic development and social justice within the non-negotiable ecological limits of our planet. While we have little hope of achieving the overarching societal goal of a sustainable development without the contribution of companies, the contribution of companies is restricted by a number of barriers, notably that of shareholder primacy and the perceived overarching goal of maximising shareholder profit. Clearly, voluntary CSR is not sufficient. This paper therefore argues that the law is necessary to ensure the contribution of companies, to level the playing field for companies that wish to actively contribute to the mitigation of climate change, and to ensure that their contribution is not limited by the competitive advantage that today’s system tends to give irresponsible and short-sighted companies.

The question is: what area of the law? The limits of external regulation, notable environmental law, are well-documented and consist of a number of interlinked factors, of which the paper gives an overview. The paper makes the argument that company law is a necessary tool for achieving sustainable companies, both to make more effective the external regulation of companies and to realise the potential within each company to make its own independent, creative and active contribution to the mitigation of climate change.

The paper goes on to give the tentative results of a cross-jurisdictional analysis of the possibilities and barriers in company law in a number of jurisdictions, based on mapping papers from the project team of the research project Sustainable Companies. Based on these tentative results, the paper concludes with some reflections on possible company law reform as a way forward. As does the research project, this paper focuses on mitigation of climate change as a specific case. Climate change provides a powerful example to illustrate broader challenges in promoting corporate environmental responsibility through company law reform. In other words, if it is possible to induce a company to act more responsibly on climate change issues, then presumably it would extend its heightened environmental awareness and commitment to other environmental issues. Focusing on climate change can provide a catalyst for wider corporate engagement with the environment and also have a positive knock-on effect as regards the social dimension of sustainable development.


Professor Kent Greenfield – Boston College 

The Puzzle of Short-termism


Schedule

8:45 – 9:00 Opening Remarks
9:00 – 9:15 Overview
9:15 – 10:30 Morning Session 1
10:30 – 10:45 Break
10:45 – 12:00 Morning Session 2
12:00 – 1:15 Lunch (by invitation)
1:15 – 2:30 Afternoon Session 1
2:30 – 2:45 Break
2:45 – 4:00 Afternoon Session 2
4:00 – 4:05 Closing Remarks

*Participants will speak for 25 minutes each during their respective session. Each participant will present their paper for 15 minutes to be followed by 10 minutes of question and answer.

Overview

Twenty years after passage of the Civil Rights Act of 1991, we are once again at a crossroads of the future of civil rights.  The number of employment discrimination cases is declining, and the U.S. Supreme Court, in Ricci v. DeStefano, has called into question the continued viability of disparate impact claims.

The symposium focused on the 1991 Act’s ability – or perhaps its inability – to vindicate worker’s rights in employment discrimination cases and examine new approaches, both legal and non-legal, to redress employment discrimination.  The symposium addressed both the practical – where do plaintiffs do best – and the theoretical – do we need a Civil Rights Act of 2011?

Speakers

Professor Pat K. Chew (University of Pittsburgh School of Law)-Arbitral and Judicial Proceedings: Indistinguishable Justice or Justice Denied?

Professor Wendy Parker (Wake Forest University School of Law)-Juries, Race, and Gender: A Story of Today’s Inequality

Professor Roberto Corrada (University of Denver Sturm College of Law)-Ricci’s Dicta: Signaling a New Standard for Affirmative Action Under Title VII?

Professor Melissa Hart (University of Colorado School of Law)-From Wards Cove to Ricci: Struggling Against the “Built-In Headwinds” of a Skeptical Court

Professor Justin Driver (University of Texas School of Law)-Race as Color: Thoughts on Ricci v. DeStefano and Beyond

Professor Kimberly C. West-Faulcon (Loyola Law School (Los Angeles))-Fairness Feuds:  Potential Conflicts in Defining Discriminatory Test Use under the Civil Rights Act of 1991

Professor Katharine T. Bartlett (Duke University School of Law)-Acoustic Separation in Employment Discrimination Law: Saying What We Don’t Mean, and Doing What We Don’t Say