Law Commons^™

Bankruptcy Fiduciary Duties In The World Of Claims Trading, John A.E. Pottow

Articles

In earlier work, I explored the role of fiduciary duties in the bankruptcy trustee's administration of a debtor's estate, noting the absence of any explicit demarcation of those duties in the Bankruptcy Code. In this piece, I report the highlights of that analysis and see to what extent (if any) fiduciary duties can inform policy prescriptions for the issue of bankruptcy claims trading, colorfully referred to by some as the world of "bankruptcy M&A." My initial take is pessimistic. Fiduciary duties, at least as traditionally conceived in bankruptcy, are unlikely to provide much help. But there is still a source …

Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan

University of Michigan Journal of Law Reform

With the rise of institutional activist investors in recent decades—including a purported 495 activist campaigns against U.S. corporations in 2016 alone—the role that third-party institutional proxy advisors play in corporate governance has greatly increased. The United States Office of Government Accountability estimates that clients of the top five proxy advisory firms account for about $41.5 trillion in equity throughout the world. For several years, discussions have developed regarding conflicts of interest faced by proxy advisors. For example, Institutional Shareholder Services, the top proxy advisory firm in the world, frequently provides advice to institutional investors on how to vote proxies while …

Astroturf Campaigns: Transparency In Telecom Merger Review, Victoria Peng

University of Michigan Journal of Law Reform

Large telecommunications companies looking to merge spend millions of dollars in their lobbying efforts to clear regulatory hurdles and obtain approval for their proposed mergers. Corporations such as AT&T, Comcast, and Time Warner use public participation processes as vehicles to influence regulatory decision-making. In the Federal Communications Commission (FCC) merger review context, the notice- and-comment process and public hearings have become fertile breeding grounds for hidden corporate influence. Corporations spend millions on corporate social responsibility programs and call upon nonprofit organizations that receive their largesse to represent their corporate interests as grassroots interests when the FCC seeks public comment. This …

Fraud Is Already Illegal: Section 621 Of The Dodd-Frank Act In The Context Of The Securities Laws, Nathan R. Schuur

University of Michigan Journal of Law Reform

In the aftermath of the financial crisis, lawmakers and the public focused on abuses in the securitization industry. Abacus, a Synthetic CDO created by Goldman Sachs & Co., became a symbol of what many felt was a corrupt system when it became known that Goldman and Fabrice Tourre, a Vice President at its Correlation Trading Desk, had assisted a hedge fund in designing the security to fail. Perceived failings of the securities laws to prevent transactions like Abacus spurred Congress to enact Section 621 of the Dodd-Frank Act, which prohibits conflicts of interest in asset-backed securitizations. But the law is …

Comparative Effectiveness Research As Choice Architecture: The Behavioral Law And Economics Solution To The Health Care Cost Crisis, Russell Korobkin

Michigan Law Review

With the Patient Protection and Affordable Care Act (“ACA”) set to dramatically increase access to medical care, the problem of rising costs will move center stage in health law and policy discussions. “Consumer directed health care” proposals, which provide patients with financial incentives to equate marginal costs and benefits of care at the point of treatment, demand more decisionmaking ability from consumers than is plausible due to bounded rationality. Proposals that seek to change the incentives of health care providers threaten to create conflicts of interest between doctors and patients. New approaches are desperately needed. This Article proposes a government-facilitated …

Too Libor, Too Late: Time To Move To A Market Rate, Michael S. Barr

Articles

Barclays has been fined, the British have issued their report, and now the market is anxious for everything to go on as usual with the London Interbank Offer Rate (“LIBOR”). I think that would be a serious mistake. The U.S. and British investigations into rate-fixing by Barclays revealed a widespread culture of pervasive, deceitful conduct in the setting of the most important private sector benchmark for over $300 trillion in derivative contracts and $10 trillion in adjustable-rate loans. It is highly unlikely that Barclays was the only major bank engaging in this conduct, and public investigations and private lawsuits against …

Why Governance Might Work In Mutual Funds, Michael C. Schouten

Michigan Law Review First Impressions

The Supreme Court's recent decision in Jones v. Harris Associates L.P. has highlighted the potential for agency conflicts in mutual funds, whose advisors have the de facto power to award themselves high fees. While the surrounding debate has focused on the extent to which market competition replaces the need for fee litigation, there appears to be a growing consensus that fund governance, through the use of voice, is unlikely to be effective. The use of voice is commonly said to be hampered by collective action problems. More recently, scholars have argued that it is further weakened by the easy availability …

The Tort Of Betrayal Of Trust, Caroline Forell, Anna Sortun

University of Michigan Journal of Law Reform

Fiduciary betrayal is a serious harm. When the fiduciary is a doctor or a lawyer, and the entrustor is a patient or client, this harm frequently goes unremedied. Betrayals arise out of disloyalty and conflicts of interest where the lawyer or doctor puts his or her interest above that of his or her client or patient. They cause dignitary harm that is different from the harm flowing from negligent malpractice. Nevertheless, courts, concerned with overdeterrence, have for the most part refused to allow a separate claim for betrayal. In this Article, we suggest that betrayal deserves a remedy and propose …

Unconscionable Contracting For Indigent Defense: Using Contract Theory To Invalidate Conflict Of Interest Clauses In Fixed-Fee Contracts, Jacqueline Mcmurtie

University of Michigan Journal of Law Reform

Indigent defense remains in crisis and yet constitutional challenges to promote systemic change have met with mixed success. This Article explores the new strategy of applying contract theory and principles to challenge indigent defense contracts that violate the canons of professional responsibility. This Article begins by discussing the author's experience working on cases of indigent defendants whose convictions were overturned through the efforts of the Innocence Project Northwest. The erroneous convictions were facilitated by the indigent defense contract in place at the time of the convictions. Pursuant to this contract, the indigent defense contractor agreed to provide representation in all …

Foxes Guarding The Chicken Coop: Intervention As Of Right And The Defense Of Civil Rights Remedies, Alan Jenkins

Michigan Journal of Race and Law

This article focuses on the recent spate of cases in which educational institutions on the grounds that their race-conscious admissions policies are unconstitutional. The author analyzes the role of minority students and organizations who are the beneficiaries of those polices at the defendant institutions and their recent attempts to intervene in the lawsuits pursuant to Rule 24 of the Federal Rules of Civil Procedure. First, the author argues that under the traditional interpretation of Rule 24(a); intervention of right should be granted to minority students and organizations in the great majority of instances. Second, the author looks at the reasons …

Ethical Issues In Managed Care: Can Thetraditional Physician-Patient Relationship Be Preserved In The Era Of Managed Care Or Should It Be Replaced By A Group Ethic?, Eugene C. Grochowski

University of Michigan Journal of Law Reform

Over the last decade managed care has become the dominant form of health care delivery, because it has reduced the cost of health care; however, it has also created serious conflicts of interest for physicians and has threatened the integrity of the traditional physician-patient relationship. In this Article, Dr. Grochowski argues that the efficiencies created by managed care are one time savings and will not in the long run reduce the rate of rise of health care expenditures without a concomitant plan to ration health care. He explores the traditional physician-patient relationship and concludes:

• a) that while rationing of health …

The Scholar As Advocate, Rebecca S. Eisenberg

Articles

Academic freedom in this country has been so closely identified with faculty autonomy that the two terms are often used interchangeably, especially by faculty members who are resisting restraints on their freedom to do as they please. While there may be some dispute as to whether or how far academic freedom protects the autonomy of universities or of students, the autonomy of faculty members seems to lie close to the core of the traditional American conception of academic freedom. As elaborated by the American Association of University Professors, this conception of academic freedom calls for protecting individual faculty members from …

Shareholder Passivity Reexamined, Bernard S. Black

Michigan Law Review

This article argues that shareholder monitoring is possible: It's an idea that hasn't been tried, rather than an idea that has failed. I defer to a second article currently in draft the question of whether more monitoring by institutional shareholders is desirable. Will direct shareholder oversight, or indirect oversight through shareholder-nominated directors, improve corporate performance, prove counterproductive, or, perhaps, not matter much one way or the other? What are the benefits and risks in giving money managers - themselves imperfectly monitored agents - more power over corporate managers? If more shareholder voice is desirable, how much more and …

Chinese Wall Or Emperor's New Clothes? Regulating Conflicts Of Interest Of Securities Firms In The U.S. And The U.K., Norman S. Poser

Michigan Journal of International Law

This article has two principal theses. The first is that, while Chinese Walls of securities firms are undoubtedly useful in some instances in preventing the flow of confidential information, the evidence that they actually do this is insufficient to justify basing a legal defense on the existence of a wall in a particular firm. In fact, it is difficult to avoid the conclusion that at some firms the Chinese Wall is nothing but a convenient fiction aimed at avoiding liability for market abuses. The article's second thesis is that the isolation of information within a department of a firm which …

The Regulation Of Insider Trading In The United States, United Kingdom, And Japan, Barbara Ann Banoff

Michigan Journal of International Law

Part I of this article will briefly discuss the American laws regulating insider trading; Part II will discuss the law of the United Kingdom; and Part III will discuss the regulation-or, more accurately, the non-regulation-of insider trading in Japan.

In Defense Of A Double Standard In The Rules Of Ethics: A Critical Reevaluation Of The Chinese Wall And Vicarious Disqualification, Frances Witty Hamermesh

University of Michigan Journal of Law Reform

This Note suggests that no change is warranted at the present time; courts should not adopt the Chinese wall defense to vicarious disqualification of private firms. The Chinese wall should, however, continue to operate as an internal device for protection of confidentiality. As such, it encourages firms to avoid disqualification by obtaining client consent to successive representation. Neither the historical record of the work of the Commission on the Evaluation of Professional Standards (the Kutak Commission), the empirical evidence currently available, nor the pragmatic arguments offered by many commentators justify an exception to, or modification of, the standard of imputed …

Target Litigation, Michael Rosenzweig

Michigan Law Review

In Part I, I explore the motives of litigious target managers. I briefly examine the takeover defense literature and empirical evidence regarding the frequency of target litigation, both of which indicate that target managers usually sue bidders in order to defeat unwanted takeover attempts. I also suggest that judicial reactions to target lawsuits largely confirm this hypothesis.

I then discuss, in Part II, target management's conflict of interest in control contests and the particular strategic considerations that lead target managers to sue hostile bidders. I argue that target litigation is peculiarly likely to be frivolous and, based on a study …

New Ways In Corporate Governance: European Experiments With Labor Representation On Corporate Boards, Klaus J. Hopt

Michigan Law Review

Corporate governance has been discussed in Europe for over 150 years. Indeed, in the 1840's, when the first Corporation Act was enacted in Prussia, three troubling features of the corporate organization form had already been discerned: (I) the vulnerability of small investors who lacked the influence and sophistication to. control the corporation; (2) the risk to creditors and the public created by the limited liability of the corporation, especially when combined with inadequate funds and poorly controlled management; and (3) the power that big corporations could amass economically, by monopolizing markets, and politically, by exerting influence on public opinion and …

Prospective Waiver Of The Right To Disqualify Counsel For Conflicts Of Interest, Michigan Law Review

Michigan Law Review

Part I of the Note discusses canon 4, first explaining the presumptions and policies that underlie it, then arguing that courts should enforce prospective waivers of the presumption of shared confidences when conditioned on the law firm's effective screening of client confidences - keeping them from the attorneys within the firm who will take part in the adverse representation. Part II turns to canon 5, and argues that prospective waivers of the presumption of diluted loyalties should be enforced against clients moving to disqualify law firms for a canon 5 violation.

Union Decisions On Collective Bargaining Goals: A Proposal For Interest Group Participation, Eileen Silverstein

Michigan Law Review

This Article assesses the consequences of unions' virtually unrestrained power to set bargaining priorities and to reconcile antagonisms among the workers they represent. It then evaluates the function that economic interest groups within unions might serve if workers were encouraged to form interest groups and these groups were recognized as legitimate mechanisms for meeting the diverse needs of a heterogeneous workforce.

Conflicts Of Interest And The Changing Concept Of Marriage: The Congressional Compromise, Michigan Law Review

Michigan Law Review

The number of women, including married women, seeking prominent positions in American business and government has increased rapidly in recent years, and this development raises serious questions regarding potential conflicts of interest between spouses who work either in related areas of the public and private sectors or solely within the public sector. Specifically, when one spouse is a member of Congress, conflicts of interest can occur if the other spouse occupies a high-level position in private industry or in the executive branch of the government. This Note examines the potential dangers in these employment arrangements of members of Congress and …

Objectivity And Habeas Corpus: Should Federal District Court Judges Be Permitted To Rule Upon The Validity Of Their Own Criminal Trial Conduct?, Marilyn L. Kelley

University of Michigan Journal of Law Reform

It has already been suggested that one of the main purposes of section 2255 was to provide a convenient forum in which the trial judge might testify, if necessary. That purpose is, obviously, contrary to the interpretation rendered in Carvell.

Beyond this inconsistency, Carvell suggests two significant issues: first, that it is highly desirable that the motions be passed upon by the judge who is familiar with the facts; and second, that the criminal trial judge is not likely to be misled by allegations in the 2255 petition as to what had occurred. The first issue raises the question …

Fighting Conflicts Of Interest In Officialdom: Constitutional And Practical Guidelines For State Financial Disclosure Laws, Michigan Law Review

Michigan Law Review

This note will examine the individual interests in running for office and in personal financial privacy in order to determine what level of scrutiny should be applied to disclosure statutes. After concluding that only minimal scrutiny should apply--a standard certainly met by the state's strong interests--it will be argued that nonconstitutional considerations bearing on the practicality of disclosure statutes nevertheless require a careful balancing of the state interest in disclosure against the individual interests of each class of persons affected by the statutes. The discussion of the strength of the state's interest in disclosure with respect to each class will …

Michigan Standards Of Conduct And Ethics Act Of 1973, Rogan Alan Petzke

University of Michigan Journal of Law Reform

This article undertakes an analysis of the Standards of Conduct and Ethics Act. After a discussion of the factors prompting enactment, the statutory framework of the Act is presented. Finally, the Michigan legislation is contrasted with and evaluated in light of similar statutory efforts in other states.

Disqualifications For Interest Of Lower Federal Court Judges: 28 U.S.C. § 455, Michigan Law Review

Michigan Law Review

Disqualification of a judge occurs when he is ineligible by law to sit in a particular case. At the Supreme Court level, disqualification is a personal decision of the individual justice, who seldom records the reasons for his decision. Thus, there is little material on the Court's disqualification practices that can be subjected to legal analysis. However, substantial case law on disqualification has developed in the lower federal courts, where the decision of a trial judge to sit or step down in a case may appear in the trial record and is subject to review by a court of appeals. …

Attorneys' Conflicts Of Interest In The Investment Company Industry, Farrell C. Glasser

University of Michigan Journal of Law Reform

This article explores the problem of conflicts of interest resulting from the retention of the same attorneys by investment companies and their affiliates. After an analysis of the problem, it suggests appropriate remedial measures that could be instituted to prevent these conflicts from occurring in the investment company industry.

Douglas On Democracy And Finance -- A Review, Arthur A. Ballantine

Michigan Law Review

A book by a Justice of the Supreme Court of the United States would be important under any circumstances. Such a publication is of special significance when its author is the youngest member of the Court, with many years of service ahead, and is endowed with unusual character, ability and earnestness of purpose. In these days of change such a book supplies valuable insight into the mental processes and attitude that will enter deeply into the shaping of our institutions.