Showing papers in "Washington and Lee Law Review in 1997"

Bribery in the Global Market: A Critical Analysis of the Foreign Corrupt Practices Act

Abstract: 1. Introduction Over the past twenty years, the United States has adopted and refined rigorous legislation to curb the payment of bribes by U.S. companies. Through the Foreign Corrupt Practices Act of 1977' as amended in 1988 (FCPA),2 payment of bribes abroad by U.S. businesspersons has become a crime subject to incarceration, fines, or both.3 Under the FCPA's influence, corruption in world markets has become an important legal issue for U.S. companies doing business abroad. The U.S. approach to bribery under the FCPA is severe by global standards. The United States is the only nation that has criminalized the extraterritorial payment of bribes by domestic companies.4 A district court decision suggests that the reach of the FCPA may go even further - that under appropriate conditions, foreign nationals subject to U.S. jurisdiction may be convicted under the provisions of the FCPA for paying bribes outside U.S. borders.5 The impressive scope and enforcement potential of the FCPA are enhanced by the recognition of private actions under appropriate conditions. Furthermore, if a pattern of violations exists, the FCPA's rigor can be intensified by the assessment of civil penalties, including treble damages, under the Racketeer Influenced and Corrupt Organizations Act (RICO). 7 Historically, authorities have been lax in enforcing the FCPA.8 Although the government has instituted aggressive surveillance policies during the past few years,9 illegal payment of bribes remains among the most prominently publicized white-collar crimes,10 both domestically and internationally.ll Corruption is a tenacious reality in many global markets, where foreign officials continue to solicit bribes routinely from U.S. companies and their representatives.'2 The proliferation of illegal payments has been exacerbated by recent increases in the size of typical kickbacks.'3 The remainder of this Introduction provides background information concerning the current worldwide challenge of corruption. Subpart A outlines a wide range of recent global efforts to eliminate bribery. Subpart B provides examples of corruption or alleged corruption in the 1990s, demonstrating the pervasiveness and persistence of the problem. Subpart C outlines the challenges Congress faces as a result of the observations made in subparts A and B. Subpart C also outlines the body of the Article, which assesses and ultimately rejects the wisdom of the FCPA approach. A. Recent Efforts to Eliminate Bribery Although it is the only country to criminalize the extraterritorial payment of bribes,l4 the United States is working to encourage other nations to follow suit. In the spring of 1995, U.S. Trade Representative Charlene Barshefsky stated that the United States would move aggressively to promote adoption of FCPA-type laws in other major trading nations as part of an effort to increase transparency in frequently furtive government procurement processes."5 By early 1996, the Organization of Economic Cooperation and Development (OECD) addressed a tax policy that is widely believed to encourage or support international bribery - the deductibility of bribes paid to foreign officials as business expenses in a number of industrialized nations.16 The OECD's Committee on Fiscal Affairs adopted a resolution that member countries reject or abolish such deductions.l7 Because the resolution represents a commitment only from the twenty-six member countries of the OECD, the organization is seeking ways to encourage nonmembers to institute similar reforms.ls Likewise, U.S. and Latin American officials are working on the development of a hemispheric agreement to curb the payment of bribes to foreign officials.'9 In March of 1996, the Organization of American States (OAS), consisting of thirty-four Western Hemisphere members, drafted a multilateral agreement to prevent bribery and corruption in international business.20 Under the agreement, known as the "Inter-American Convention Against Corruption" (Convention), 21 signatories make a commitment to adopt laws that are the "rough equivalent" of the FCPA. …

Proposals for Reform of Corporate Boardsof Directors: The Dual Board andBoard Ombudsperson

Abstract: Introduction The debate on reforming corporate boards of directors has centered on monitoring management to ensure that corporate board members act in the interests of shareholders rather than in their own personal interests.' To best monitor situations where managerial interests conflict with those of shareholders (conflicts monitoring), reformers have made numerous proposals to make boards independent of management. Two main problems confound these proposals. First, the proposals fail to deal adequately with social dynamics on boards that make independent decision making difficult when conflicted or nonindependent board members serve on the board, namely, inside (employee) directors and outside (nonemployee) directors with business relationships with the corporation or its management. Second, the proposals do not take proper account of the many important relational roles of the board other than conflicts monitoring. In recognition of the importance of an independent board to conflicts monitoring and of the importance of the full range of relational roles of the board that requires a mix of different kinds of directors, I propose that state legislators modify state corporation statutes to permit public corporations to utilize a dual board structure. This structure would consist of two boards, each ideally composed to perform certain functions. One board, called the conflicts board, would perform conflicts monitoring and would be composed solely of independent directors, who are outside directors with no business relationships with the corporation or its management. The other board, called the business review board, would consist of a mix of different kinds of directors and would perform other relational roles. A full-time ombudsperson, selected by independent directors, would assist the independent directors in performing conflicts monitoring on the conflicts board or existing unitary boards. Two theories of the board, contra-managerial hegemony theory2 (hegemony theory) and agency cost theory,3 have provided the foundation for the debate on corporate board reform. Both theories are conflicts monitoring theories. While hegemony theorists have given some attention to psychological factors that may hinder independent decision making by board members, they have not gone far enough in recognizing the substantial conformity pressures on board members. Both hegemony and agency cost theorists are content with a board containing inside directors and outside directors with business relationships with the corporation or its management.' As this Article suggests, such a board would be less effective at conflicts monitoring than a board composed solely of independent directors. The focus on conflicts monitoring by prevailing legal theories, however, gives inadequate attention to other important roles of corporate boards. To explore these roles, reference is made to a broader theory of the board, the power coalition theory,5 which is widely accepted in the business literature, but has been largely ignored by legal reformers. Whereas conflicts monitoring theories perceive the board as mediating conflicts between managers and shareholders, power coalition theory describes the board's roles in terms of the corporation's relationships with various corporate stakeholders (including shareholders) and the corporation's social environment. Under power coalition theory, the board provides the corporation with relational resources that decrease the corporation's uncertainty and enhance its chances of survival.6 These resources include coordination with the external environment, information access and exchange, support of corporate business, advice on various subjects, legitimacy and status in the eyes of relevant communities, monitoring, and control. Under this theory, functions of boards in addition to conflicts monitoring are economically significant. Independent directors, however, may not always be in a position to provide all of these resources. …

Limited Liability In Historical Perspective

Abstract: The sudden emergence of new limited liability vehicles -- notably limited liability companies (LLCs) and limited liability partnerships (LLPs) - suggests a revolution in the law of limited liability. When placed in historical perspective, however, the developments of the last decade can be seen as more evolutionary than revolutionary. Indeed, for as long as commerce has existed, merchants, financiers, and others associated in business activity have sought to eliminate, minimize, and shift their losses and liabilities. Often, those efforts have been reflected in the development of associational relationships, grounded in contract or law, that bear a striking resemblance to modern forms of business association, most notably the limited partnership and its cousins, the LLP and the LLC. This Article offers some historical perspective on both the quest for limited liability and the responsiveness of the law to that quest.' Its aims are modest, as is its length. No attempt is made to offer a comprehensive history of limited liability, or even to identify the earliest point at which limitations on liability were sought. To establish the point of the Article that the development of limited liability vehicles is an ancient activity in the law - it should be sufficient to sample the diverse periods in the development of law and commerce when creative efforts to limit liability have been revealed. This brief survey begins with Roman law.2 1. Roman Law Through the concept of noxal liability, Roman law recognized a form of vicarious liability for torts (delicts).3 Interestingly, Roman law also recognized a means of limiting such extended liability. Under Roman law, the paterfamilias - the head of the family - was personally answerable for the torts of his child or his slave,4 but in either case "possessed the singular privilege of tendering the delinquent's person in full satisfaction of the damage. "5 The option of turning over the offending family member or slave operated as an effective ceiling on damages and at least in theory, if not in practice, was the functional equivalent of limited liability.6 Extended liability in contract developed along somewhat different lines. Under Roman law, the essence of the contractual obligation was personal,7 which meant third parties could not be bound through contract, even if they controlled one of the contracting parties. Such a norm acted as an impediment to commerce, however, because it made conducting business through other parties (agents) difficult, if not impossible. Eventually, Roman law responded to meet the needs of the commercial environment in which it was applied. One sign of that change was the development of the actio institoria, which allowed a claim against the "principal" for acts done by the "agent" in the "course of the business."8 Although the application of the concepts may have differed, the core ideas are quite recognizable to contemporary business lawyers and merchants. Over time, relatively advanced methods were developed to limit liability in contract or for wrongful acts.9 The most important of the techniques employed the peculium, which achieved wide usage by the middle of Republican times. The peculium consisted of assets entrusted to a slave by his master or to a son by his father. io As the following description reveals, it provided a way of achieving limited liability in the conduct of business affairs. A slave or child in potestas could not own property themselves. However, where the slave, or son, traded with his peculium, as commercially minded slaves were encouraged to do by their masters, debts and liabilities incurred in such trading could only be enforced by third parties against the master or paterfamilias to the extent of the peculium, and not against all of the latter's property. Thus, any Roman seeking to invest in a business would trade through his slave or son and limit his liability by fixing the size of the peculium. …

Rethinking the Compatibility of Moral Rights and Fair Use

Abstract: Dane S. Ciolino' In 1990, Congress amended the Copyright Act to recognize limited federal moral rights of integrity and attribution. Under this legislation, American visual artists can prevent others from misattributing their works of art and from altering such works under certain circumstances. These moral rights, however, are expressly limited by copyright's fair-use doctrine, a doctrine that permits the otherwise unauthorized use of a copyrighted work for socially desirable purposes such as criticism, comment, news reporting, teaching, research, or parody. This Article argues that the fair-use doctrine is inherently incompatible with federal moral rights. Particularly, federal moral rights and fair use affect different types of property; federal moral rights and fair use relate to different types of rights; and federal moral rights and fair use are supported by different moral justifications. For these reasons and others, this Article calls for courts to decline Congress's statutory invitation to apply the fairuse doctrine as a limitation on artists' federal moral rights. L Introduction The moral-rights doctrine preserves for artists limited rights in their works, even after such works are transferred to others. Although moral rights vary among the jurisdictions that recognize them, these rights typically include the continuing right to prevent alterations and misattributions of an artist's work. For example, if Leonardo da Vinci were alive today, the moral-rights doctrine would, under certain circumstances, give him the right to prevent the alteration of the Mona Lisa by a parodist who wished to paint a mustache on the depicted woman's face.' Moreover, Leonardo could enforce his moral rights regardless of whether he still owned the tangible painting or the copyright in the underlying work of authorship. Developed in nineteenth-century France as an element of the artist's right of personality,2 moral rights traditionally protected an artist's work "his spiritual child" - as an outgrowth of his soul.3 Despite the sentimental appeal of the doctrine, moral rights met formidable resistance in the United States. Indeed, American courts initially refused to recognize any moral rights of artists. Indicative of this early hostility toward moral rights is the reported opinion of one New York court in 1949: "The conception of `moral rights' of authors so fully recognized and developed in civil law countries has not yet received acceptance in the law of the United States. No such right is referred to by legislation, court decisions or writers. "4 Over the years, however, the United States has retreated considerably from its early hard-nosed stance against moral rights. Perhaps the most notable evidence of this American retreat is the Visual Artists' Rights Act of 1990 (VARA).5 Although it is not expansive moral-rights legislation in the continental European tradition, VARA represents the first federal endorsement of moral rights6 inhering in an artist to protect his work after transferring its physical embodiment and its copyright to another. More particularly, VARA grants artists limited rights of integrity and attribution in their works of visual art.7 Hence, American artists now have the right (1) to claim authorship of their own works of visual art and to prevent the use of their names on works that they did not create (right of attribution)8 and (2) to prevent the "distortion, mutilation or modification" of their works under certain circumstances (right of integrity).9 Despite Congress's recognition of federal integrity and attribution rights, those rights are significantly more limited than their European counterparts. Among other limitations, federal moral rights are expressly subject to copyright's fair-use doctrine.10 Often termed an "equitable rule of reason,"" the fair-use doctrine-permits users of copyrighted works to engage in otherwise infringing conduct if their use of the copyrighted work is "fair" in light of all of the circumstances. …

An Inquiry into the Efficiency of the Limited Liability Company: Of Theory of the Firm and Regulatory Competition

Abstract: Table of Contents Introduction 630 I. Limited Liability and Economic Efficiency 633 A. The Limited Liability Company and the Law and Economics of Limited Liability 633 1. Efficiency Theory 635 2. Pro Rata Theory 637 3. Efficiency Theory, Pro Rata Theory, and the Limited Liability Company 638 B. The Efficiency Theory of Limited Liability in a Larger Theoretical Context 640 1. The Irrelevance Hypothesis and FirstGeneration Agency Theory 640 2. Limited Liability for Managers and Models of Investor-Manager Incentive Contracts 643 3. Optimal Ownership Structures, Agency Theory, and Limited Liability 647 C. Some Questions About Insurance 652 1. Efficiency Theory 652 2. Pro Rata Theory 654 II. Regulatory Competition and the Limited Liability Company: Law as Domestic Product 657 A. Corporate Charter Competition 658 B. Domestic Incentives: LLCs in an Island Jurisdiction . . . 661 1. Beneficiary Firms 662 2. Costs and Benefits 663 3. Interest Groups 664 4. Predicted Result 666 C. Incentives to Race to the Bottom: LLCs in a Federal System with a Rule of Sirge Reel . .. 667 1. Regulatory Races to the Bottom --Externalities, Preferences, and Prisoner's Dilemmas 667 2. Racing to Externalize with Limited Liability 670 3. Summary ......... 673 D. Incentives to Race to the Top: LLCs in a Federal System 674 1. Corporate Charter Competition as a Model for the Period Between t = 1 and t = 2 674 2. Incentives for the First-Mover State at t = 0 678 3. Incentives to Copy Between t = 0 and t = I 680 E. Summary - LLCs, Regulatory Competition, and Evolutionary Efficiency 682 F. Regulatory Competition and Producer Incentives 684 Conclusion 686 Introduction In an ideal world, inquiry into the efficiency of a legal regime would require the collection and analysis of empirical information concerning costs and benefits. But, due to cost constraints and limits on available means of measurement, fact studies are the exception rather than the rule in law and economics. Instead, legal policy debates respecting efficiency usually deploy economic theories in the absence of determinative empirical evidence. Efficiency emerges as presumption, not as fact. Absent data on costs and benefits, legal policy debates must be resolved by allocating an empirical burden of proof, with the party bearing the burden losing the debate. Participants in such debates draw on the behavioral predictions of economic theory as they search for ways to assure that the burden rests on their opponents' shoulders. Economic models do not come ready-made with burden of proof recommendations keyed to legal policy debates. The models must be translated and adjusted for legal contexts. Historically, these arbitrage exercises have simplified the economics and caused the models to yield clear regulatory or deregulatory policy signals. But as to some heavily traversed subject matter, the passage of time has brought such an accumulation of economic assertions that the presumptive regulatory signal has lost its clarity. Such a mature literature, by virtue of its very complexity, is less well suited to the sustenance of strong policy positions. Policy debates go forward, but clarity of position follows less from the terms of economic theory itself than from the employment of the ordinary tools of normative lawyerly debate. The law and economics of limited liability, with its succession of backand-forth arguments about the location of an efficiency presumption for and against,l presents a literature of this sort. So when Allan Vestal asked us to inquire into the efficiency implications of the recent proliferation of limited liability company (LLC) statutes for this Symposium, we accepted the invitation without making any projection about the exercise's probable results. We hoped that the economic literature, upon de novo review, would yield some new theoretical spin on limited liability - a spin that would provide new advice as to the appropriate location of the legal presumption and that would redirect the back-and-forth legal debate. …

Better off dead than disabled?: should courts recognize a "wrongful living" cause of action when doctors fail to honor patients' advance directives?

Abstract: Adam A. Milani* Introduction In 1976, Americans celebrated the bicentennial of the Declaration of Independence, which proclaims that all people are endowed with "certain unalienable rights,"' including those of "Life, Liberty and the pursuit of Happiness. "2 That same year also marked the recognition in both case law and statutory law of a new right: the right to die.3 In the following two decades, almost every state has affirmed this right in its statutory law or case law,4 and the United States Supreme Court has found that competent persons have a "constitutionally protected liberty interest in refusing unwanted medical treatment."5 More recently, a federal appellate court held that recognition of the right to die necessarily includes a right to physician-assisted suicide.6 These cases and statutes have arisen because advances in medical technology have drastically changed the way physicians treat patients7 and how and where Americans die. In 1939, barely one-third (thirty-seven percent) of Americans died in hospitals or nursing homes.8 Less than five decades later, however, between eighty percent and eighty-five percent of Americans died in hospitals or nursing homes.9 Furthermore, seventy percent of these individuals did so after a decision to forgo life-sustaining treatment.10 Many of these people died after enduring treatments that were unheard of fifty years ago. Cardiopulmonary resuscitation (CPR) was not effectively developed until 1960 when it was introduced as an emergency means of restoring circulation in cardiac arrest victims." Soon, however, CPR became standard procedure in hospitals, and many hospitals established a requirement that it be performed in all cases except when a do-not-resuscitate order had been executed. 12 Iron lungs for polio patients were introduced in the 1950s, and respirators, or positive pressure ventilators, came into use in the 1960s. 13 These ventilators require either an endotracheal or tracheostomy tube. 14 Like CPR, intubation of patients in respiratory arrest became standard practice in hospitals unless the patient had previously executed a do-not-resuscitate order. Widespread use of intravenous nutrition for patients that could neither eat nor tolerate gastrostomy tubes also began in the 1960s. Is Although not an emergency procedure giving rise to presumed consent, health care providers have often resisted removal of a feeding tube once it has been inserted, and patients and families have responded by suing to have their wishes honored. 16 These suits have sought equitable relief in the form of orders requiring health care providers to discontinue treatment and let patients die. The widespread recognition of the right to die has also spawned another type of lawsuit: suits for damages alleging that patients who received unwanted life-sustaining treatment suffered a compensable injury when their right to die was violated. The majority of the suits seeking damages for the unauthorized provision of life-sustaining treatment have relied on traditional common-law torts, such as battery and infliction of emotional distress, or on a constitutional tort under 42 U.S.C. 1983.17 There has also been a call, however, for the recognition of a new tort: wrongful living.X8 Plaintiffs bringing wrongful living actions essentially claim that their diminished quality of life after or while receiving treatment makes their life not worth living, and thus, that they would be better off dead. 19 To date, few courts have ruled on the viability of such a cause of action. Given the increasing use of living wills, durable powers of attorney, and other instruments memorializing patients' wishes to refuse treatment, however, the number of wrongful living cases is likely to increase dramatically. These cases will force courts to attempt to answer the question of whether a plaintiff's life is worth living. Their response may potentially have a profound impact on persons with disabilities that have historically been viewed as indeed having lives not worth living. …

Race, Class, and Gender Essentialism inTax Literature: The Joint Return

Abstract: [T]ax-law decisions are cultural artifacts - understood as a part of a larger societal structure and, simultaneously, revealing of that culture.1 I. Introduction The current literature discussing the federal tax laws' gender bias ignores all racial differences among women.2 Even the few authors who have acknowledged class distinctions similarly ignore racial differences among women.3 This Article demonstrates how the literature's gender essentialism masks the bias in the federal tax laws based upon race, class, and gender in ways previously ignored. For example, the literature focuses exclusively on the tax consequences of married women as marginal or secondary wage earners.4 The literature concludes that the gender bias of federal tax laws operates to encourage women to remain at home and out of the waged labor market.5 The literature's solutions, therefore, are designed to encourage women to work more in the waged labor market. The literature's gender bias analysis can be correct only if all married women are marginal wage earners. This Article examines never before published Census Bureau data to show that many married women are not marginal wage earners.6 Accordingly, an analysis of the gender bias in the federal tax laws from a non-essentialist perspective is needed. This Article provides such an analysis. This Article demonstrates that the married women most likely to be marginal wage earners, namely those who are the exclusive focus of the literature, are upper-income and white. In addition, the married women least likely to be marginal wage earners, namely those who were previously ignored by the literature, are most likely to be African-American. By constructing all families as homogeneous, the literature successfully masks any race, class, or gender bias that may be embedded in the operation of the federal tax laws. As Professor Fellows notes, "the hallmark of successful subordination is when subordinating actions and beliefs become so accepted that they become indisputable and widely accepted as reflecting fairness and objective truth."7 This Article unmasks the race, class, and gender biases in the federal tax laws previously ignored by questioning the "indisputable and widely accepted truth" articulated in the gender bias tax literature that all married women are marginal wage earners. Part II provides a summary of the existing gender bias tax literature.8 It begins with the literature's treatment of all husbands as primary wage earners and all wives as marginal wage earners.9 It then describes three federal tax provisions and policies that the literature suggests interact to penalize married women and their families when married women are marginal wage earners, namely: (I)the operation of the joint return which is designed to treat married couple as a single taxable unit;10 (2) the exclusion from income of the value of services contributed by a spouse to their household;11 and (3) the deductibility of child care expenses.12 Part II concludes by describing the literature's suggested solutions to the gender bias found in the federal tax laws.13 Part III examines Census Bureau household income data to show how the literature's treatment of all married women as marginal wage earners is overinclusive.14 Many married women are not marginal wage earners, but contribute significant amounts to household income.15 Once differences among married women are recognized, the federal tax laws must be re-examined for race, class, and gender biases previously ignored by the literature. For example, the federal tax laws penalize households in which spouses contribute roughly equal amounts to household income.16 This Part shows that AfricanAmerican households are more likely to pay a penalty under the federal tax laws because African-American spouses are more likely to contribute roughly equal amounts to household income.17 Part IV examines the solutions previous literature has designed to address the gender bias found in the federal tax laws. …

Juno Moneta: On the Erotics of the Marketplace

Abstract: I. Introduction Over two hundred years ago, William Blackstone began his famous Commentaries on property by observing that "[t]here is nothing which so generally strikes the imagination, and engages the affection of mankind, as the right of property. "1 Blackstone's desire for wealth should not surprise us. Etymology tells us that money is a woman. Our word "money" derives from Juno Moneta. Juno, queen of the gods, was the Roman goddess of Womanhood, the personification of the feminine. Her title "Moneta" means She Who Reminds and Warns.2 The word "money" tells us that the feminine is a reminder - a warning. This reflects the Hegelian insistence not only that the market is fundamentally erotic, but that market relations are the most basic and primitive form of eroticism. It also echoes the Lacanian understanding that the feminine is the primal commodity.3 My work as a lawyer and a legal scholar is an encounter with Hegelian and Lacanian theory. I posit that property - the law of the market place and the feminine are both phallic. They serve parallel functions in the creation of subjectivity (i.e., the capability of being both a legal actor who can bear rights and assume duties as well as a sexed being who can speak and engage in social relations). In both theories, subjectivity is intersubjectivity mediated by objectivity. Property, according to Hegelian philosophy, and the feminine, according to Lacanian psychoanalysis, are fictions that serve as the defining external objects that enable us to make ourselves into acting subjects. By serving as objects of exchange between subjects, property and the feminine simultaneously enable subjects to recognize other humans as individual subjects - as the mediators of relationship, they enable us to desire and be desired. This creation of subjectivity is simultaneously the creation of the realm which Lacan called the symbolic: law, language and sexuality. I will explain my terminology in more detail shortly. Lacan interests me as a feminist because he simultaneously divorced sexuality from anatomy while explaining how sexuality is not only confused with, but figured by, anatomy. By reading Lacan together with Hegelian property jurisprudence, I show how property and markets are erotic and, therefore, are also figured in legal discourse by bodily metaphors. My theory is a thorough-going reconstruction of both feminist and property theory. I believe my theory gives a more complex and faithful account of sexual difference than do either of the two dominant schools of legal feminism -- cultural feminism and so-called radical feminism- which are simple negations or mirror images of masculinism reflecting back traditional gender stereotypes. That is, both implicitly accept the American imagery of masculinity as atomistic individuality and femininity as the opposite or complement of masculinity. The primary difference is that cultural feminists embrace the resulting vision of femininity as authentic, while radical feminists reject it as the abased condition of women imposed upon us by men in patriarchal society. My theory also helps to explain why we as a society tenaciously cling to certain property law doctrines despite their disutility and stubbornly continue to maintain certain legal theories despite overwhelming empirical evidence to the contrary. This article is intended for attorneys as well as jurisprudes and critical theorists, although different aspects will no doubt appeal to different segments of my audience. I believe that my theory is not merely of theoretical interest. I have personally found that my approach has been extremely useful not only in my teaching but also in my doctrinal scholarship and in my legal practice as a commercial lawyer. Readers of my doctrinal scholarship, as well as lawyers with whom I practice, are often surprised that I see an intimate connection between the work and my admittedly outre theorizing. Let me try to explain. …

Maladies of the Legal Soul: Psychoanalysis and Interpretation in Law

Abstract: And if for him the law guarantees an increment of pleasure, and power, it would be good to uncover what this implies about his desire he seems to get more sexual satisfaction from making laws than love.1 There is evidence that Freud hesitated over the possibility of studying law before he eventually undertook a career in medicine. One might say that the profession of law was repressed in favor of clinical science, and certainly the theme of law and its transgression constantly returns in Freud's work and was to become a foundational focus of the new science of psychoanalysis.2 Although positive law was never an explicit or conscious object of Freudian psychoanalysis, it is no exaggeration to observe that his work is structured by conflicts between desire and law, the pleasure principle and the reality principle, and at its most extreme, sexuality and death - eros and thanatos.3 The jurisprudential themes of authority and prohibition, of desire and transgression, litter his substantive elaborations of the workings of the human psyche. The legalism of Freudian thought is nowhere more evident than in his interpretations of the origins of the social order in the transgression of the authority or law of the father. This well known myth is elaborated in the story of Oedipus, the narrative of a son who kills his father and marries his mother. It is also elaborated in terms of the social anthropology of Totem and Taboo, the prehistorical story of the murder of a tribal father by jealous sons, which leads to the genesis of law. The conflict of desire and law, which Freud found exemplified in the story of Oedipus, can act as a guiding thread to the study of a psychoanalytic theory of law. Sophocles' story of King Oedipus, who was the son of Laius, King of Thebes, was itself, according to Freud, probably a reworking of a dream.4 Oedipus was exposed as an infant because an oracle had warned Laius that he would be killed by his yet unborn child. The child was rescued and grew up in an alien court. Uncertain of his own origins, he too questioned the oracle, who warned him to stay away from his home because he was destined to murder his father and marry his mother. While intending to travel away from his home, Oedipus encountered King Laius and in a sudden quarrel killed him. Oedipus then went to Thebes where he solved the riddle of the Sphinx and thereby liberated the city from plague and pestilence. The grateful populace made him king, and he married Jocasta his mother. A plague which the oracle reported would only end when the murderer of Laius had been driven from the land eventually interrupted Oedipus' peaceful and honorable reign. When he discovers that he is himself the unwitting murderer, Oedipus blinds himself and forsakes his home. The oracle has been fulfilled. The Interpretation of Dreams offers the fullest discussion of the myth of Oedipus, explaining the myth as a "typical dream" in which the subject expresses the desire to kill his father even though his father is dead.5 Freud interprets the story of Oedipus first and most forcefully in terms of the universal structure of a child's relation to its parents: His destiny moves us only because it might have been ours .... While the poet, as he unravels the past, brings to light the guilt of Oedipus, he is at the same time compelling us to recognize our own inner minds, in which those same impulses, though suppressed, are still to be found.6 Freud argues that the individual psyche forms as a result of the Oedipal crisis or conflict. The myth is a story of the foundation of subjectivity through an originary repression. The son learns to orient and limit his desire by recognizing the father's authority through his interdiction or prohibition of the son's desire for his mother. In other words, through recognition of what Lacan terms the law of father, the subject enters the social or, for Lacan, the symbolic: "If Freud insisted on the Oedipus complex . …

Seeking Shelter in the Minefield of Unintended Consequences--The Traps of Limited Liability Law Firms

Abstract: I Introduction "Where were the professionals?"' This infamous question posed by U.S. District Court Judge Stanley Sporkin ignited a national debate on the role of accountants and attorneys in the savings and loan debacle.2 Banking regulators embraced this quotation as their rallying cry in malpractice actions against attorneys and accountants.3 Government regulators pursued claims against hundreds of attorneys and accountants, including those affiliated with prestigious law firms and accounting firms.4 These actions, which sought millions in damages and restitution, threatened firm members who practiced in general partnerships because the individual members could be held personally liable if firm assets did not satisfy a malpractice judgment.5 Claiming that the potential exposure to these suits was so high and the defense costs so expensive, the professionals and their insurers paid millions of dollars to settle the lawsuits.6 Ironically, the malpractice suits against attorneys and accountants successfully galvanized these professionals to obtain protection from future professional liability claims.' Thereafter, a question on the whereabouts of professionals could easily be answered the professionals were actively lobbying state legislatures to limit the vicarious liability of firm partners for the acts and omissions of other firm partners. These professionals sought legislation that would enable them to limit their vicarious liability without having to organize as professional corporations and risk double taxation. The coalition of professionals and business lobbyists successfully convinced state legislators to adopt legislation providing for limited liability companies and limited liability partnerships (collectively called "limited liability firms"). Because limited liability firms provide liability protection without subjecting firms to double taxation, these new limited liability structures rapidly gained popularity. As described by a partner in a large Boston law firm, big firm partners look at limited liability firms with "an enthusiasm perhaps more appropriately reserved for the Holy Grail. "8 The flurry of firms to reorganize as limited liability firms reflects the enthusiasm for the new business structures. Within a few years, the limited liability firm movement swept the country.9 Those firms that have not yet organized as limited liability firms probably will consider doing so in the future." When they do, there may be little opposition to converting to a limited liability firm because attorneys have wholeheartedly embraced the limited liability firm structure.l' Commentators also herald the coming of the limited liability firm. Even the titles of law review articles reflect how authors have warmly received limited liability firms.'2 Although a plethora of these articles discuss the features and advantages of these limited liability firms, a relatively small number of the articles question the advisability of law firms rushing to reorganize as limited liability firms.'3 The paucity of articles scrutinizing the limited liability form suggests that commentators have devoted little attention to analyzing the negative implications of attorneys' practicing in limited liability partnerships or limited liability companies.'4 Similarly, in converting their practices to limited liability firms, attorneys may overlook the consequences of abandoning the traditional partnership structure. They may not realize how conversion to a limited liability partnership (LLP) or a limited liability company (LLC) completely transforms the dynamics and culture of law firm practice, creating financial and administrative problems.15This Article considers some of the unintended consequences of attorneys' limiting their vicarious liability in limited liability firms. After Part II reviews the forces behind the limited liability movement and the emergence of limited liability law firms, Part III surveys the statutory approaches to limiting vicarious liability in LLCs and LLPs. …

The "Agony of Suspense": How ProtractedDeath Row Confinement Gives Rise toan Eighth Amendment Claim ofCruel and Unusual Punishment

Abstract: I. Introduction In 1995, Texas death row inmate Clarence Lackey argued that the execution of a prisoner who had spent seventeen years on death row would violate the Eighth Amendment's prohibition of cruel and unusual punishment. ' The rationale behind the Eighth Amendment argument rested on the severe punishment Lackey had already received during his protracted death row confinement.2 Lackey contended that years of death row imprisonment, coupled with the extreme psychological anguish caused by such confinement, constitutionally deprived Texas of the power to inflict a death sentence.3 Although the Supreme Court's denial of certiorari in Lackey v. Texas4 leaves Lackey's question temporarily unanswered, Justice Stevens noted the novelty and significance of Lackey's claim and wrote a memorandum concurring in the Court's denial of certiorari.5 His concurring memorandum (Lackey Memorandum) briefly explored the constitutionality of imposing a death sentence after lengthy death row confinement.6 Justice Stevens observed that the Court has largely relied on two factors in finding capital punishment constitutionally permissible.7 First, the Constitution's framers (Framers) tolerated capital punishment.8 Second, the death penalty traditionally has furthered the public goals of retribution and deterrence.9 The Lackey Memorandum questioned whether either justification retains force after a prisoner has spent seventeen years on death row." Historically, the Framers did not anticipate protracted imprisonment before execution of a death sentence." Moreover, a lengthy and severe incarceration followed by execution of a death sentence may be overly retributive.12 Finally, any additional deterrent value of a seventeen-year delay followed by execution, as compared with a seventeen-year delay followed by life imprisonment, seems minimal. 13 In the absence of the factors that justify an execution's constitutionality, Justice Stevens concluded that imposition of death after prolonged delay may provide such diminished returns as to be patently excessive under the Eighth Amendment. 14 Since the issuance of Justice Stevens's memorandum, several courts have considered claims similar to Clarence Lackey's.15 A Lackey-type claim (Lackey claim) states that execution after protracted death row confinement is cruel and unusual punishment prohibited by the Eighth Amendment of the Constitution.l6 The Eighth Amendment argument hinges on the torturous psychological conditions prisoners experience during prolonged death row stays.' Due to nearly insurmountable procedural hurdles, however, courts have yet to decide the Eighth Amendment claim on its merits. 18 This Note argues that execution after protracted death row confinement violates the Eighth Amendment. 19 Part II explores the documented mental suffering caused by lengthy death row incarceration.20 Part III examines the substantive Eighth Amendment issues underlying Lackey claims, including the death row delay21 and the prolonged mental suffering2 that trigger Eighth Amendment protections. Part IV addresses the procedural hurdles associated with Lackey claims and proposes solutions for these dilemmas.2 Part V discusses the policy implications of Lackey claims, including the length and types of death row delay that give rise to an Eighth Amendment claim, as well as an appropriate remedy for such claims.24 II. Mental Suffering Caused by Protracted Death Row Confinement The Lackey claim rests on the well-documented fact that condemned prisoners experience severe mental suffering while awaiting execution: For over two years, [death row prisoner] Henry Arsenault "lived on death row feeling as if the [c]ourt's sentence were slowly being carried out." Arsenault could not stop thinking about death. Despite several stays, he never believed he could escape execution. "There was a day to day choking, tremulous fear that quickly became suffocating." If he slept at all, fear of death snapped him awake sweating. …

Iran and Libya Sanctions Act of 1996:Congress Exceeds Its Jurisdictionto Prescribe Law

Abstract: I. Introduction On August 5, 1996, Congress enacted the Iran and Libya Sanctions Act of 1996 (ILSA).1 Congress passed ILSA based on findings that Iran and Libya, and their acts in support of international terrorism, endanger the national security and foreign policy interests of the United States.2 Section 5 of ILSA requires the President to sanction3 any person4 who, with actual knowledge,5 invests $40 million or more in either Iran or Libya, so long as that investment directly and significantly contributes to the development of either country's petroleum resources.6 Congress reasoned that limiting the development of Iran's and Libya's petroleum resources would deny them the revenues produced by such resources and thereby deprive them of the financial means to support acts of international terrorism.7 ILSA has engendered a significant amount of criticism. Critics claim that, by purporting to govern "any person," ILSA exceeds the limits imposed by international law on the United States's jurisdiction to prescribe law.8 "Jurisdiction to prescribe" is a state's authority to make its laws applicable to certain persons or activities.9 This criticism is not surprising given that prior legislation and regulation based on national security and foreign policy typically contained rules applicable only to "persons" somehow affiliated with the United States.10 This Note examines whether the United States possesses the jurisdiction to prescribe and enforce ILSA against a person abroad who lacks affiliation with the United States. Part II analyzes ILSA in detail and sets the stage for a critical analysis of its legitimacy.11 Part III discusses how international law impacts domestic legislation such as ILSA and foreign policy decisions of states.12 Part IV reviews the generally recognized principles of prescriptive jurisdiction in international law and concludes that ILSA violates these principles.13 Finally, Part V addresses the separate question of whether the United States has the jurisdiction to enforce ILSA.14 II. The Iran and Libya Sanctions Act of 1996 Section 5(a) of ILSA provides that: [T]he President shall impose 2 or more of the sanctions . . . [listed in] section 6 if the President determines that a person has, with actual knowledge, . . . made an investment of $40,000,000 or more . . . that directly and significantly contributed to the enhancement of Iran's ability to develop petroleum resources of Iran.15 Section 5(b)(2) provides an identical provision regulating investments in Libya.16 Possible sanctions for a Section 5 violation include: (1) denying Export-Import bank financing; (2) denying export licenses; (3) prohibiting U.S. financial institutions from making loans worth over $10 million per year to sanctioned persons; (4) prohibiting sanctioned financial institutions from serving as primary dealers of U.S. government bonds or as repositories of U.S. government funds; (5) banning U.S. government procurement of any goods or services from sanctioned persons; and (6) Presidential import sanctioning in accordance with the International Economic Powers Act.17 The President must impose two or more of these sanctions against any person 18 who, with actual knowledge,19 violates Section 5, regardless of the person's nationality or residency. The unusually broad scope of the statute's applicability raises a difficult question: What authority does Congress have to impose its law on persons abroad having no connection to the United States? The answer to this question depends largely on the scope of the United States's jurisdiction to prescribe law, an issue addressed in Part IV. III. Relevance of International Law International law is part of our federal law and must be ascertained and administered by our courts.20 As with all American federal law, however,. Congress may modify or repeal its force and effect within the United States through subsequent legislative acts.21 Such a congressional modification or repeal, of course, does not relieve the United States of its obligation to obey international law. …

The Naked Emperor: A Corporate LawyerLooks at RUPA's Fiduciary Provisions

Abstract: Confronting an ongoing debate from the outside is somewhat like arriving in a foreign land. One knows something about the human species but perhaps has never experienced the local culture or encountered its norms. What is considered trivial and what is considered important? What do we observe of the locals? What do we consider unusual that they do not observe or consider unusual of themselves? And what does this foreign culture reveal to us about our own? The matter is complicated somewhat, perhaps, when the foreign land one is visiting previously has been colonized by our own or, like the United States and Canada, has been colonized by a common predecessor. Much is familiar. Many, if not all of the inhabitants, speak our language. We drive on the same side of the road. We eat the same foods. But much will be different, sometimes obviously and sometimes more subtly. And the proximity, indeed the intermingling, of two cultures makes aspects of each all the more striking. This analogy occurs to me as particularly apt as I encounter, really for the first time, the debate over the Revised Uniform Partnership Act (RUPA) and partnership fiduciary law in the context of this excellent symposium. I come, of course, from the land of corporate law which, like partnership law, has a colonial antecedent in fiduciary obligation. And much like the caricatured American tourist, I will undoubtedly be conspicuous in my bad manners and cultural arrogance. But, like that caricature (and really quite like myself as well), I will be direct. For what I find in this foreign land is that its Emperor, the centerpiece of the debate over RUPA, is stark naked. This debate is, I shall argue, a debate about nothing, because it has entirely ignored, except superficially, what is important. Having undoubtedly already ruffled some feathers, I shall be more specific. There are two points at which the debate fails to engage its substance. Each point is strikingly characterized by the way in which metaphors, labels, and just plain rhetoric substitute for any meaningful analysis.1 The first point is the broadly structural normative argument that has been characterized as the debate between contractarianism and the fiduciary approach. In evaluating this issue, I feel much like a visitor from a former colonial power, encountering a familiar form that has completely lost its meaning. The second point is in the fight over RUPA's fiduciary provisions. Here I feel like a visitor from a sister colony, encountering a common norm that has grown differently when rooted in different soil. My purpose in evaluating this debate is not to advocate a particular point of view, although that will undoubtedly be a byproduct (and it is no secret where my sympathies lie). Rather, it is to evaluate the extent to which the argument has failed to go beyond the level of rhetoric and metaphor to grapple with the real issues and to suggest some different ways of thinking about fiduciary issues in the context of this very important discussion. My conclusion is that the debate largely has missed the point. With a camera slung around my neck and a loud Hawaiian print shirt on my back, let me then go exploring. I The Complete Irrelevance of the Contractarian/Fiduciary Debate The debate over RUPA consistently has been characterized as one over contractarianism versus some "other" model, usually described as the fiduciary or mandatory model.2 Drawing on the history of the predecessor Uniform Partnership Act (UPA), which sought to provide a default contract for those persons who found themselves, whether intentionally or not, in partnerships without formalized agreements, a significant question concerning the drafting of RUPA appears to be the extent to which the goal was to provide anything more than that - a simple default contract. Largely forgotten, however, is the origin of the partnership form of business in common law and before that in observed human behavior. …

World Wide Web Advertising: PersonalJurisdiction Around the Whole Wide World?

Abstract: I. Introduction Courts use the minimum contacts test to determine whether the Constitution limits their ability to exercise personal jurisdiction over nonresident defendants.1 The test allows courts to exercise personal jurisdiction when the defendant possesses "certain minimum contacts" such that subjecting the defendant to personal jurisdiction "does not offend `traditional notions of fair play and substantial justice.'"2 When the Supreme Court adopted the minimum contacts test, it refused to exhaustively define either minimum contacts or traditional notions of fair play and substantial justice.3 This decision made the minimum contacts test a flexible standard rather than a rigid rule;4 the Court explained that "[w]hether due process is satisfied must depend . . . upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the Due Process Clause to insure."5 The test's flexibility gives courts the ability to fit new contacts and new combinations of contacts within the minimum contacts test's framework.6 Recently, federal and state courts have been called upon to use the flexibility inherent within the minimum contacts test to recognize a new genre of contacts: contacts arising from the use of the Internet's World Wide Web for advertising.7 Several courts have obliged,8 while other courts have refused.9 This split creates uncertainty for advertisers who want to avail themselves of the World Wide Web's opportunities, while still structuring "their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit. "10 Although the World Wide Web offers advertisers tremendous economic opportunities, exposure to lawsuits in distant forums raises the costs of doing business on the World Wide Web.11 This Note explores the constitutional limits to the exercise of personal jurisdiction over nonresident World Wide Web advertisers. It argues that while World Wide Web advertising can establish sufficient contacts to satisfy the minimum contacts test,12 the Due Process Clause13 requires courts to exercise restraint in their attempts to exercise personal jurisdiction over nonresident defendants based on the defendants' World Wide Web advertising activities.14 This Note also discusses the current risks faced by advertisers because of improper application of the minimum contacts test in several World Wide Web advertising cases.15 Although a court's ability to exercise personal jurisdiction depends on both state and federal law,16 this Note focuses on the constitutional limits to personal jurisdiction in World Wide Web advertising cases.17 This Note does not address whether or when state long-arm statutes allow the exercise of personal jurisdiction based on World Wide Web advertising activities.18 In addition, it avoids extensive discussion of World Wide Web-related cases where other contacts predominate over the defendant's World Wide Web advertising contacts, or otherwise significantly influence the court's minimum contacts analysis.19 The Note begins, in Part II, with a description of the World Wide Web and World Wide Web advertising practices and methods. Part III discusses the constitutional standards for the exercise of personal jurisdiction. Part IV criticizes current approaches used to measure purposeful minimum contacts in World Wide Web advertising cases and encourages courts to adopt a new standard that recognizes the great variety of World Wide Web advertisements and advertisers. Part V discusses whether and when fairness and reasonableness concerns may be used successfully to limit the reach of longarm jurisdiction over World Wide Web advertisers. The Note concludes, in Part VI, with final notes on the importance of exercising care in evaluating World Wide Web advertising contacts. II. The World Wide Web and World Wide Web Advertising Practices The Supreme Court's decision to adopt a flexible minimum contacts test made the minimum contacts analysis a fact-sensitive inquiry. …

Fiduciary Duty Contracts inUnincorporated Firms

Abstract: The 1994 revision of the venerable Uniform Partnership Act (UPA) and the development and rapid spread of new unincorporated business forms, including the limited liability company (LLC) and the limited liability partnership (LLP) have not only raised many new issues, but have also breathed new life into old ones. One of the most important of the latter is the extent to which fiduciary duties may be waived or modified by contract. Both the Revised Uniform Partnership Act (RUPA)1 and the Uniform Limited Liability Company Act (ULLCA)2 make unenforceable some contractual waivers of fiduciary duties. Although there has been some criticism of such restrictions on waivers,3 most commentators have defended restrictions on fiduciary waivers in partnerships and LLCs that are at least as extensive as those in the uniform laws.4 This commentary carries forward the long-standing debate between those who have argued that fiduciary duties are and should be essentially contractual in nature5 and those who argue for some restrictions on waiving these duties.6 This issue is worth revisiting despite the substantial amount of ink that has been spilled over it. First, the debate so far has focused on publicly held corporations, where the commentators were able to make the argument, albeit a questionable one,7 that the duties did not really arise out of contract at all. In a closely held firm, which is very much like any longterm contract, that argument is untenable. Second, the debate has focused on corporations. Partnerships and other unincorporated firms differ from corporations in several ways that are relevant in the present context, including the absence of rhetoric implying that the firm is a "creature" of state law, a general assumption that the parties' contract controls all important elements of the relationship among the members, and idiosyncratic and highly customizable terms that make mandatory duties particularly costly in this context. Third, the anticontractarians have made assertions about the present state of the positive law that no one so far has seriously refuted. This Article's basic premise is the one forcefully stated by Easterbrook and Fischel, who assert that fiduciary duties are simply a species of contract, "not a distinctive topic in law or economics. "8 They show how a transaction cost economics approach, which views fiduciary duties as presumptive contract rules, better explains the positive law of fiduciary duties, particularly including the variation across different relationships, than do noncontractarian approaches that attempt to identify fiduciary duties as a distinctive set of absolute duties. The present Article shows how this analysis applies to fiduciary duty waivers in unincorporated firms. This Article then moves beyond the Easterbrook-Fischel analysis in two respects. First, it refutes specific arguments against enforcement of fiduciary duty waivers whether or not these waivers are characterized as contracts. Although my prior analysis of fiduciary duties in public corporations relies primarily on theories and evidence of public securities market discipline of corporate contracts,9 the present Article shows that arguments for protecting individuals from potentially bad bargains in the context of one-on-one bargaining in closely held firms are unfounded. Second, this Article extensively analyzes cases relating to partnership fiduciary duties. It shows that anticontractarians have misconstrued the positive law of partnership and that restrictions in RUPA and the ULLCA would reverse long-standing case law favoring the enforcement of contracts. The Article proceeds as follows. Part I states the affirmative case for enforcing contracts in unincorporated firms that is based primarily on the inability of mandatory rules to cope with the significant variability of contracts in this context. Part II then unpacks and refutes the arguments of the anticontractarians against contract enforcement. …

Checkmate, the Treasury FinallySurrenders: The Check-the-Box TreasuryRegulations and Their Effect onEntity Classification

Abstract: I. Introduction On March 29, 1995, the Department of the Treasury (Treasury) issued Notice 95-14(1) in which it announced its intent to simplify the tax entity classification rules.2 Within two years, on December 17, 1996, the Treasury finalized these rules that are popularly known as the "check-the-box" regulations.3 The new regulations permit an eligible entity to indicate its desired tax treatment simply by checking a box. This Note explains how the new regulations affect the classification of entities for tax purposes. Part II presents the fundamental distinction between corporate and partnership tax classification? Part III summarizes the history of entity classification for federal tax purposes.6 Part IV explains how an entity selects tax classification under the new check-the-box regulations.' Part V addresses the potential problems and opportunities that may accompany the new regulations during their transition into practice.8 Part VI concludes that the check-thebox regulations provide a simple and efficient means for determining entity tax classification. II. The Stakes: Partnership v. Corporate Classification In the game of entity classification, choosing the most beneficial tax status for an entity is at stake. In most cases, the choice will result either in corporate or partnership tax status. Corporate tax status exposes an entity's income to double taxation because the Internal Revenue Code (Code) taxes corporate income at the corporate entity level and at the shareholder level.9 On the other hand, partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability companies (LLCs) escape the entity-level tax.10 Instead, their income flows through to the partners or members, and the Code taxes this income only at the individual partner's or member's rate.11 Likewise, partners and members directly deduct partnership tax losses.12 To explain the effect of the difference between corporate and partnership tax treatment, consider the following example. A corporation producing $100 worth of taxable income can be taxed up to the 35% maximum corporate rate.13 After taxes, the corporation has only $65 to disburse to its shareholders in the form of a dividend.14 The Code taxes shareholder dividends up to a maximum 39.6 % rate for individuals.15 Thus, the shareholders receive only $39 out of every $100 of corporate earnings because of double taxation.16 In contrast, the Code does not impose an entity-level tax on partnerships.17 Instead, $100 earned by a partnership flows through to the partners and the Code only taxes this amount up to the 39.6 % maximum individual rate.18 Therefore, partners in most circumstances ultimately receive $60 for every $100 of partnership income. Tax treatment of partnerships was traditionally counterbalanced by the disadvantages of the partnership form, most notably individual liability for partnership debts.19 However, these disadvantages are largely a remnant of the past. At one time, limited liability distinguished partnerships from corporations.20 The corporate form allows shareholders to avoid personal liability for debts and obligations of the corporation.21 Corporate creditors may not proceed against the personal assets of the corporation's shareholders.22 Conversely, partnership creditors may proceed against a partner's personal assets to satisfy partnership liabilities.23 The limited liability distinction vanished over the years as partners devised new entity configurations to limit their liability. The first such entity was the limited partnership.24 A limited partnership is a two-tiered structure consisting of general partners and limited partners.25 The limited partnership form allows the limited partners to escape personal liability for partnership liabilities.26 General partners, however, remain personally liable for partnership debts.27 State created entities such as LLPs and LLCs took limited liability a step further and afforded complete limited liability for all members of the entity. …

Freedom of Contract, Fiduciary Duties, and Partnerships: The Bargain Principle and the Law of Agency

Abstract: I. Introduction The topic of freedom of contract and waivers of or substantial inroads into fiduciary duties in the context of unincorporated business associations has enjoyed widespread attention lately.1 In part, this is the result of a bold sally made by the revised Uniform Partnership Act (1994) (RUPA),2 which directly influenced the Uniform Limited Liability Company Act (1995) (ULLCA).3 This Article will describe and briefly comment on the relevant provisions of RUPA. Its main focus, however, will be on the argument that the law of agency provides a compelling analogy for the use of the bargain principle in the context of defining fiduciary relationships among partners.4 This Article will conclude that, absent special circumstances, contracts addressing fiduciary duties should enjoy the same treatment as contracts on other matters. II. Fiduciary Duties A leading authority defines a fiduciary as "a person having a duty, created by his undertaking, to act primarily for the benefit of another in matters connected with his undertaking. "I The usual expectation, based on the nature of the relationship, is that a fiduciary will discharge this undertaking to act on behalf of6 another in a selfless manner and will indeed act "primarily" for the benefit of the other, which includes keeping the interests of the other foremost in mind (through loyalty and full disclosure) and acting with care.7 A fiduciary relationship is a relationship of trust, which necessarily involves vulnerability for the party reposing trust in another. One's guard is down. One is trusting another to take actions on one's behalf. Under such circumstances, to violate a trust is to violate grossly the expectations of the person reposing the trust. Because of this, the law creates a special status for fiduciaries, imposing duties of loyalty, care, and full disclosure upon them.8 One can call this the fiduciary principle. To recognize such duties and enforce a reasonable expectation of trust, requiring a person granted the trust of another to honor and respect that trust is both understandable and of utmost importance. The law would be abandoning one of its most basic functions if it were to overlook the importance of recognizing and enforcing relationships of trust.9 III. The Default Nature of Fiduciary Duties One feature of the law of fiduciary duties is that it is open-textured and uncertain.10 The very breadth of the fiduciary principle and the indeterminate number and kind of relationships that it touches lead to such a consequence. This results in considerable vagueness and ambiguity,11 creating an incentive under some circumstances to attempt to reduce the risks posed by vague and ambiguous standards by agreeing to redefine or even waive some or all fiduciary duties. Does the law allow this? The thesis of this Article is that the special status of fiduciary duties, as important as it is, should be of a default nature only.12 Fiduciary duties reflect the unspoken expectations of persons entering into a relationship of trust and thus exist in every such relationship when nothing specific is said about such duties. If, however, people choose to bargain expressly on this matter, their bargain should be respected, assuming that the parties observe the customary limits on contract bargaining. The very existence of an agreement on the nature and the extent of fiduciary duties tempers and qualifies the degree of trust one places in another. Expectations have changed. To ignore this is to raise fiduciary duties almost to the status of natural law,13 an approach inconsistent with the fundamental tenets of American law. IV. The Bargain Principle The bargain principle lies at the core of contract law. It states that courts will enforce a bargain according to its terms, with the object of putting the promisee in as good a position as if the bargain had been performed, assuming that the traditional defenses of fraud, undue influence, duress, or unconscionability do not exist to undermine the validity of the contract. …

Identifying Law's Unconscious: Disciplinary and Rhetorical Contexts

Abstract: Each time I tried to do a piece of theoretical work, it had as its starting point elements of my own experience and was always in relation to processes that I saw going on around me It's because I thought I could recognize in the things I saw, in the institutions that I was dealing with, in my relations with others, some cracks, mute tremors, malfunctionings, that I undertook a particular piece of work - some fragments of autobiography' Each of us, of course, thinks and writes on the basis of our own experiences and in relation to what each of us sees going on Several years ago I attended a paper presentation at a conference, after which a member of the audience responded critically to the presenter with the remark, "Your paper tells me more about you than the topic you addressed" Not surprisingly, perhaps, the theme of the conference was psychoanalysis and the respondent an analyst (thus, the joke about two analysts meeting on the street, one saying, "Hello, how am I today?" and the other answering, "Fine, how about me?") Nevertheless, while a scholarly paper on any topic should reveal something more than the scholar herself, some degree of self-revelation is inevitable Indeed, the turn to personal narratives in legal scholarship is theoretically justified as an acknowledgment that we are each socially situated and constructed, that we each have a history, and so forth I like the texts of Jacques Lacan, and I think that his theory of the human subject is both compelling and useful in the analysis of legal processes and institutions If I did not like Lacan's texts, I might nevertheless have written Lacan and the Subject of Law,2 but the subtitle would have been something like "A Useless Enterprise" (there is an industry in, and impliedly a market for, books criticizing Lacan) Similarly, if I spent as much time reading Foucault as I have Lacan, this conference might be titled "Foucault and the Subject of Law" My point is not simply the obvious one that I did study Lacan (and not Foucault) and that I became a Lacanian (and not an anti-Lacanian), but also that my interest in Lacan says something about me and not just about Lacanian theory Norman Holland, a critic of Lacan, actually suggests, quite rudely I think, that Lacanian theory is attractive to some because it allows one to do anything (immoral) one wants3 While that point is not well taken, Lacan's notion of the subject as constituted in symbolic and imaginary relations -- through networks of language and by identifying with other people - does imply that I am not a wholly rational and autonomous subject freely exercising my objective preferences Rather, I am positioned in such a way that Lacanian theory is attractive And, moving from self-criticism to social criticism, everyone else is positioned in ways that matter when they hear about Lacan In Part I below, I discuss the recent opinion by the United States Court of Appeals for the First Circuit in Cohen v Brown University4 because I think it is a very Lacanian analysis of Title IX's requirement of gender equity in college athletics5 I use the word "Lacanian" loosely, as Terry Eagleton did in referring to a Lacanian Irish Rebel song,6 to refer to the court's conclusion that evidence of women's lack of interest in sports must be viewed with suspicion: rather than indicating a lack of discrimination against women's sports programs, the lack of interest may signal the "historical lack of opportunities to participate in sports"7 The Cohen opinion provides an opportunity not only to consider the relevance of Lacanian theory for the types of problems that arise in law, but also to describe certain aspects of Lacanian theory as background for the remainder of this essay In Part II, I consider the question of why I chose, in my book on Lacan, to begin with a catalog of criticisms of Lacan - with what one reviewer called a "tone of slightly embarrassed defense "8 The reasons I give may end up saying more about me than about Lacan, but that too becomes a very Lacanian exercise in legal scholarship …

Parental Law, Harmful Speech, and theDevelopment of Legal Culture:Russian Judicial ChamberDiscourse and Narrative

Abstract: I. Introduction Throughout history, scholars have asserted that a developed legal culture is a precondition for establishment of the rule of law.1 Yet, they have failed to offer any concrete blueprint for creating such a culture.2 For post-Soviet Russia this is not a theoretical concern but a practical imperative. With a "barren legal culture"3 as its legacy from its imperial and socialist past, Russia confronts the enormous challenge of constructing a legal tradition, language, and culture virtually from scratch.4 This Article examines Russian efforts to develop a popular legal consciousness and, ultimately, legal culture5 during the Second Russian Republic of January 1994 to the present. It focuses on techniques employed by the Russian Federation Presidential Judicial Chamber for Information Disputes (Judicial Chamber), a body specifically created by Boris Yeltsin in December 1993 to assist in effective enforcement, interpretation, and inculcation of constitutional norms and rules.6 In its brief history, the Judicial Chamber has wrestled with issues that have challenged more developed legal institutions worldwide. These include the constitutionality of hate speech, pornography, unpatriotic speech, limits on public access to government information, and direct and indirect controls on the media by state and commercial entities.7 In the process, it has made a concerted effort to provide a "public assessment"8 of information disputes and to raise citizens' "understanding"9 of the appropriate relationship between individual constitutional rights of free speech, press, and information and the competing interests of the Russian "democratic" community.10 Moreover, from the start, the Judicial Chamber has relied heavily on "publicity" as a powerful sanction and enforcement mechanism.11 This Article is based on an examination of Judicial Chamber opinions published in the newspaper Rossiiskaia gazeta from February 1994 through December 1996.(12) My primary interest is not in the results of these opinions but rather in the texts themselves. What do they convey to the reader about the court's definition of itself, the parties before it, its audience, and the relationship between Russian citizens and institutions? What do these texts communicate about "law in general and the Constitution in particular?"13 How do they contribute to development of a post-Soviet Russian legal discourse and culture? To answer these questions I turn to a substantial literature by U.S. legal scholars on how courts attempt to "influence patterns of thought"14 through judicial opinions. In particular, I draw on the pioneering work and methodology of James Boyd White. Professor White has demonstrated that analysis of the discourse, rhetoric, and narrative of legal texts, including judicial opinions, can yield new insights into the U.S. legal system.15 A key methodological goal of this Article is to offer a critical examination of the application of these analytical techniques to foreign law, an examination that explores not just the new insights these techniques can offer but also the dangers inherent in any attempt to use domestic methodologies to study truly foreign legal systems. Part II briefly reviews existing U.S. scholarship on the communicative functions of judicial opinions. It introduces Professor White's metaphors of judicial opinion as "performance" and "conversation" and considers possible extensions of U.S. analytical approaches to comparative study of judicial opinions. The remainder of the Article applies White's notions of performance and conversation in the Russian context. Part III provides the background necessary for evaluating Judicial Chamber opinions. Part IV utilizes White's performance metaphor to examine the major group of cases decided by the Judicial Chamber, those involving media dissemination of "harmful speech."16 I study Judicial Chamber discourse and narrative techniques by reconstructing the plots and characters of these opinions. …

Chasing Down the Devil: Standardsof Prudent Investment Under theRestatement (Third) of Trusts

Abstract: Table of Contents I. Introduction 336 II. The Evolution of Fiduciary Investment Standards 337 A. Foundations of the Prudent Man Standard 337 B. Shortcomings of the Prudent Person Standard 342 C. An Introduction to the Prudent Investor Rule 345 III. An Overview of Modern Portfolio Theory 348 IV. Advancements Made Under the Restatement (Third) of Trusts 353 A. The Duty to Balance Risks Against Total Returns 353 B. The Duty to Diversify 355 C. The Duty of Impartiality 358 D. The Authority to Delegate 361 E. Expanding Liability for Trustees 364 V. The Practical Effects of the Prudent Investor Rule 366 A. A Current Perspective on Past Cases 366 1. Estate of Knipp 366 2. First Alabama Bank v. Martin 370 3. In re Bank of New York (Spitzer) ... 372 B. The Response Among the States 375 VI. Conclusion 381 I. Introduction Be sober, be vigilant; because your adversary the devil, as a roaring lion, walketh about seeking whom he may devour. - 1 Peter 5:81 For more than one hundred years, protecting trust principal while generating the highest income possible marked the fundamental purpose of fiduciary investment standards.2 In keeping with this purpose, trust doctrine evolved throughout the nineteenth and twentieth centuries to forbid speculative fiduciary investments.3 Because traditional trust doctrine caused ultimate liability for losses to the trust to sit like a devil on the shoulder of every trustee, the threat of losses encouraged investments in low-risk ventures only.4 Today, however, it is the corrosive effects of inflation that create the greatest threat for trustees.5 Increasingly, low-risk, interest-bearing securities fail to keep pace with inflation, and thus, inflation becomes the roaring lion, walking about, seeking to devour the trust.6 Unfortunately, the traditional restrictions on fiduciary investment largely remain in place.' Such restrictions now hamper a trustee's ability to be vigilant against this new adversary - the devil of inflation.8 The Restatement (Third) of Trusts emerges in response to this challenge. Drawing heavily from current investment techniques, it seeks to reformulate trust doctrine so that trustees may be flexible enough to avoid the effects of inflation.9 This effort takes shape in the form of the Restatement (Third)'s "prudent investor rule.'o Given the importance of the investment function to fiduciary administration, an understanding of this new standard for prudent investing is essential. In Part II, this Note provides a brief overview of the historical evolution of fiduciary investment standards." Part III provides an introduction for laypersons to the central features of modern portfolio theory- the conceptual foundation of the prudent investor rule.l2 Part IV demonstrates the recent progression of trust doctrine by reviewing the fundamental changes made by the Restatement (Third).13 Part V.A considers the practical application of the prudent investor rule by using it to revisit three prominent fiduciary investment cases.14 Part V.B assesses the effect of the new standard by reviewing the statutory response to the Restatement Third) among the states.l5 Part VI concludes by discussing recent demographic trends that make the use of trusts more important than ever. Part VI then recommends that state legislatures quickly move to adopt legislation reflecting the standards of the prudent investor rule so that trustees have the flexibility needed to respond effectively to those trends.l6 II. The Evolution of Fiduciary Investment Standards A. Foundations of the Prudent Man Standard England greatly influenced the development of "prudent" trustee investment practices in nineteenth-century America."7 The English fiduciary investment standard was the product of financial disaster, and it worked primarily to protect beneficiaries from losses caused by speculative trust investments. …

Limited Liability and the Real World

Abstract: This is not a traditional academic law review article. Rather, this Article describes a personal debate that the two co-authors had through electronic mail in late 1995 and early 1996. Initially, the subject of this debate was the appropriate role of limited liability in the jungle of newly created unincorporated business forms that have appeared in the 1990s, but the debate rapidly expanded into a discussion of contrasting views of the rationality of markets in American society. Because these exchanges were by electronic mail, they are frank and uninhibited and perhaps sometimes wander from the basic issue. However, the exchanges raise basic issues that need to be addressed in any discussion of the future of unincorporated business forms. Part II of this Article represents the actual exchange of views. By and large, the comments speak for themselves and were left untouched. Some minor editing of this text was made to eliminate obvious typographical errors and to insert footnotes when the authors referenced other published work. The authors also omitted a couple of observations that seemed irrelevant or substantively wrong, but that did not go to the merits of the debate.1 The selection of the four introductory messages that were placed on the LNET-LLC net was made solely by Professor Hamilton in an effort to give some perspective to the debate that followed. Part III of this Article, the Postscript, reflects comments that each author wished to make about this exchange following the Symposium at Washington and Lee University School of Law and after reviewing the earlier discussions. Each communication begins with the name of the writer, the date of the communication, and the audience to which it was addressed. I. Background The genesis of this debate was a conference at the University of Colorado in early 1995 entitled "LLCs, LLPs, and the Evolving Corporate Form."2 During the course of this conference, a lively discussion developed among the participants (and to some extent within the audience) as to the desirable scope of limited liability in these new business forms. Several papers argued that limited liability should be accepted as a reasonable default form.3 Professor Hamilton had prepared an article on the development of the limited liability partnership (LLP) in Texas4 for that symposium which defended (or at least accepted) the narrow form shield of limited liability5 for electing LLP status. At the same time, Professor Hamilton's article criticized the New York and Minnesota statutes that provided a broad form shield of limited liability.6 At the Colorado conference, several participants strongly took issue with this conclusion and expressed the view that the shield of limited liability should be extended to cover many business relationships. II. The Debate Following the Colorado conference, a series of messages that considered the limited liability issue were posted on the LNET-LLC,7 a bulletin board for persons interested in limited liability companies and a host of interrelated "threads. " The first four messages set forth below frame the background for the more personalized discussion that followed. Even though the debate began with a discussion of the effect of changing default rules for general partnerships, the debate quickly turned to more fundamental issues about the kind of society in which we live. Robert W. Hamilton: September 12, 1995 Broadcast on the LNET-LLC Net I have been reading with considerable interest the recent dialogue [on this net] about limited liability in LLPs. LLPs were invented in Texas and I was indirectly involved in the enactment of the original statute. Last winter, I gave a talk that considered many of the questions being discussed on this net at the present time.8 I hope that those of you interested in the LLP problem will take the time to read that article. I might add that I do not agree that it is good policy to extend the limitation of liability in LLPs to general contract claims, as was done in Minnesota,9 New York,10 and the prototype statute, and as is now proposed below by Mark Pruner. …

Lacan and the Subject of Law: Sexuation andDiscourse in the Mapping of SubjectPositions That Give the Ur-Form of Law

Abstract: In 1972 and 1973, Jacques Lacan gave the Seminar he entitled Encore.1 In Chapter 7 of Encore, "A Love Letter,"2 he offered an interpretation of Freud's Totem and Taboo3 that is essentially an original theory of the foundation of law. By reinterpreting Freud's development of the Oedipus myth as the founding myth that explains the derivation of law, Lacan offers a structural logic to explain his theory in light of Freud's fable of the primal hoard in Totem and Taboo. Working since the 1950s to understand the differences between metaphor and metonymy, Lacan reconceptualized the Oedipus complex as a paternal metaphor derived from the subject's experiences of castration and the phallus.4 By arguing that metaphor functions by predictable laws and that myth has structure as well, Lacan demonstrated in Seminar XX that myth has an ordering that guarantees a certain predictability. Myth, says Lacan, gives epic form to that which works from structure. He defines this structure in Seminar XX as the Borromean triadic unit of the real, symbolic, and imaginary.5 A fourth order, the order of the Symptom or sinthome, knots the other three units of associational meaning into a necklace of mind/memory made of thousands and thousands of such connexions.6 This Article will seek to establish that cultural law has the same roots as individual desire. This paradox lies at the heart of the minimal requisites necessary to maintain the "social link" Lacan recognized as present when language is used to negotiate a lack-in-being. Therefore, for Lacan, "discourse" is not commensurate with conversation, communication, speech, or intersubjective language exchanges. Rather, discourse makes a social link insofar as the agent of speech addresses the other from a place of lack. Lacan did not envision the other as other person, but as representative of something. Thus, the other occupies a place in language that Lacan defined as having quantifiable dimensions at the level of meaning something for someone. In the master discourse, the one seeking confirmation of his or her knowledge (S^sub 1^) addresses the other as the-one-who-knows, the supposed subject of knowledge (S^sub 2^). The simple supposition that the other's knowledge confirms or guarantees your being is not necessarily commensurable with the grammatical usage of "I" and "you." It is, rather, the castration or lack-inbeing of the subject of desire that Lacan stressed. In the academic discourse, the professor addresses the cause of the student's desire (a), seeking to transmit knowledge by evoking interest. The hysteric speaks to the other, not so much as a guarantee of his or her own knowledge, but as an embodiment of law or authority (S^sub 1^). Finally, in her discourse, the analyst addresses the analysand's lack of knowledge about his or her desire (formula omitted) in reference to his or her identity as symbolized by a few master signifiers (S^sub 1^).7 Lacan's other theories implicitly propose that one must symbolize a minimal number of places -- eight, to be precise - in order to make "a social link." This assertion makes sense if one accepts linguist and logician Charles Pyle's premise that: (1) most individuals in a group have symbolized mother, father, self, and a fourth position that Lacan called dummy at bridge; and (2) the psychotic subject has not symbolized the position of the father. At the simplest level, one could define the dummy position as the awareness that at the place of the other, one symbolizes something other than the common terms of one's own narcissistic identifications with the first figures of one's base family unit; it is also a question of to what one's desire is referred.8 Long before he formalized his discourse theory in Seminar XX, Lacan had schematized the individual speaking subject in Seminar II by using the Schema L, a quadrature of four places. In Schema L, Lacan argued that the speaking subject is stretched over these four places rather than being a unity or unitary self. …

Civil Money Sanctions Barred by DoubleJeopardy: Should the SupremeCourt Reject Healy?

Abstract: What the commentators do agree on is that double jeopardy is a realm of law so confusing, so replete with contradictions, corrections, and exceptions to the rules, that after 120 years no sensible meaning or policy has evolved.1 I. Introduction Prior to 1989, courts could easily resolve a Double Jeopardy Clause2 defense to a civil proceeding brought by the Government - the Clause simply did not apply to civil proceedings.3 Then, the Supreme Court held in United States v. Halper that a civil proceeding brought by the Government following a criminal conviction based on the same conduct violated the Double Jeopardy Clause to the extent that the civil sanction was punitive.5 The decision enabled defendants to raise a double jeopardy defense whenever faced with successive criminal and civil proceedings brought by the Government6 and instructed lower courts to apply the standards announced in Halper.7 Recently, the United States Court of Appeals for the Seventh Circuit held in S.A. Healy Co. v. Occupational Safety & Health Review Commission8 that an administrative sanction following a criminal conviction violated the Double Jeopardy Clause even though the sanction did not exceed the Government's costs of investigation and prosecution.9 The Seventh Circuit recognized the split that Healy caused with the decision of the United States Court of Appeals for the Tenth Circuit in United States v. Hudson,10 which held that a sanction not exceeding the Government's costs of investigation and prosecution was not punishment.11 Moreover, the decision also raised issues regarding whether a sanction is punitive if the regulatory statute lacks consideration of the Government's expenses12 and whether a sanction is punitive when the Government is not the victim.13 Presumably to resolve the split between Hudson and Healy, the United States Supreme Court granted certiorari in the Hudson case.14 Although the Hudson and Healy decisions created a split among the Tenth and Seventh Circuits,15 it is the Healy decision that provided an in-depth discussion of the issues regarding statutory allowance of the consideration of the Government's expenses and the relevance of the Government's status as a victim.16 Thus, this Note focuses on the reasoning in Healy. This Note analyzes the issues raised by Healy with regard to the Halper decision and the holdings of other courts. Part II gives an overview of the use of civil money sanctions by agencies and the increased allowance of both civil and criminal sanctions in regulatory legislation.17 A review of the basic doctrines that have developed regarding the Double Jeopardy Clause and its protections follows in Part III.A.18 After discussing Halper,19 Part III.B examines the views of several commentators regarding the Halper decision and discusses the impact of Halper on the use of civil money sanctions.20 Part IV analyzes the three issues raised in Healy: (1) whether lack of statutory consideration of the Government's expenses makes a sanction punitive;21 (2) whether a sanction is punitive when the Government is not the victim;22 and (3) whether a sanction that does not exceed the Government's costs can be punitive.23 This Note concludes that a lack of statutory consideration of the. Government's costs does not make a sanction punitive24 and that a sanction may be remedial even if the Government is not a victim.25 Finally, this Note addresses the explicit split between Hudson and Healy and argues that although in some cases a sanction that does not exceed the Government's costs may be punitive, courts should generally follow the rule of Hudson.26 II. The Use of Civil Money Sanctions and Criminal Sanctions in Agency Enforcement In recent years, the number of civil sanctions authorized in regulatory legislation has grown.27 Many regulatory statutes now contain both criminal and civil sanctions for the same conduct and create a mixture of enforcement remedies.28 This combination of civil and criminal sanctions has many implications. …

Agency and the Unincorporated Firm: Reflections on Design on the Same Plane of Interest

Abstract: Regardless of their legal form, all firms confront questions of governance, that is, the recurrence of situations that may not be resolved satisfactorily if their resolution is left solely to the discretion of individual actors Two principal reasons explain the inevitability of governance questions within firms First, the interests of persons involved with the firm may diverge In particular, the interests of owners and managers, and of owners and creditors, do not always coincide Even among themselves, owners' interests may well diverge Second, the firm benefits over time through the existence of a structure that defines the ability of individual actors to take action that binds the firm and its owners, as well as some mechanism, whether direct or indirect, to control the conduct of people whose actions bear consequences for the firm and its owners The law of agency provides a set of doctrines that underlie the mechanisms of firm governance My purpose in this Article is to illustrate recurrent aspects of unincorporated firms that generate governance problems, problems formally addressed by agency-law norms, but troublesome in practical respects nonetheless Many unincorporated firms have internal governance structures that are insufficiently differentiated in function to resolve predictable difficulties with the clarity achieved by governance structures that differentiate more extensively among the functions of persons associated with the firm Agency-law norms resolve these difficulties by providing formal answers to them, but the theoretical and practical challenges are often greater than in firms in which functions are more differentiated In many unincorporated firms, the same people occupy multiple roles -- equity ownership, management, employment -- rather than distinctive roles Lack of differentiation in function often leads to instability in small firms The legal consequences of incorporation themselves specify various differentiations in function,1 some of which could be, but often are not, replicated in unincorporated firms Lack of differentiation helps explain some of the distinctiveness in legal norms applicable to unincorporated firms In a more speculative mode, I suggest that the persistence of such governance challenges in unincorporated firms may limit firm growth, particularly growth funded through external sources of equity investment My inquiry begins with a visual metaphor intended to reflect a baseline assumption about many unincorporated firms, which is that from the standpoint of issues relevant to agency, the design of many such firms places all actors on the same plane of interest This feature is a defining visual quality in many works of art, in particular, work that preceded the Italian Renaissance or later work that does not evidence its influence My specific illustration comes from Antonio Pisano, known as Pisanello, who worked in the first half of the fifteenth century Consider the organization of visual experience in Pisanello's masterpiece, The Vision of Saint Eustace2 To be sure, the center of the painting depicts the Saint and his vision of Christ on the Cross But there is so much else as well - a large stag with handsome antlers, a smaller stag with an even more impressive set of antlers, finely detailed equipment on the Saint's horse, elegant clothing on the Saint himself, a dog chasing a hare, other dogs awaiting their chance, what appears to be a bear, various birds, and much, much more Each might capture the viewer's attention as readily as any other Of this painting in particular, and of Pisanello's style more generally, the influential art historian, Bernard Berenson, wrote: The art of Pisanello, like that of the early Flemings, was too naive In their delight in nature they were like children who, on making the first spring excursion into the neighbouring meadow and wood, pluck all the wild flowers, trap all the birds, hug all the trees, and make friends with all the gay-coloured creeping things in the grass …

"Assume a Rather Large Boat . . ":The Mess We Have Made ofPartnership Law

Abstract: There was a fear, there is a fear, there always will be a fear, that highly productive partners . . . can leave, go to another place and get more money. And life is not made up of love, it is made up of fear and greed and money how much you get paid in large measure. Unless we didn't get Cadwalader's profitability to where it was with our competitors' firms, my great fear was that people were going to leave and that we would then not be able to sustain ourselves. - John Fritts, Esq., Co-Chair, Management Committee Cadwalader, Wickersham & Taft1 Co-partners, owe to one another, while the enterprise continues the duty of finest loyalty. Many forms of conduct permissible in a workaday world for those acting at arm's length, are forbidden to those bound by fiduciary ties. - Chief Justice Benjamin Cardozo Meinhard v. Salmon2 [Wrongfully ousted former partner] James W. Beasley, shall recover from the Defendant, Cadwalader, Wickersham & Taft, damages in the amount of $2,487,502.00, for which let execution issue. - Judge Jack H. Cook Beasley v. Cadwalader, Wickersham & Taft3 Introduction In several ways, the ruling in Beasley v. Cadwalader, Wickersham & Taft measures our collective failure with respect to partnership law. One measure of our failure is that popular support of the traditional norms of partner behavior has eroded to such an extent that the managers of a partnership, a leading law firm no less, might have assumed the behavior chronicled by the court was acceptable. It is another measure of failure that the outcome of Cadwalader under the Revised Uniform Partnership Act (RUPA) and its progeny would be far from certain, both because RUPA reflects the erosion of the traditional norms and because RUPA does not fully implement either the traditional structure or the competing philosophy, but represents an uneasy and unworkable compromise between the two. It is a further measure of failure that although the group of knowledgeable commentators assembled for this Symposium would probably agree as to how a client could best arrange its affairs to avoid the situation in which the Cadwalader firm and James Beasley found themselves, there is no agreement as to whether the new structures are justified on the basis of any well-articulated policy. It is also a measure of failure that we are seeing a breakdown in uniformity of the law of unincorporated firms. Such a breakdown is not directly involved in Cadwalader, to be sure, but the breakdown does promise to make situations such as that in Cadwalader more likely in the future because it gives a new means for partners acting in bad faith to attempt to avoid their fiduciary duties. Cadwalader measures our failure the largest in the loss of any consensus as to what the law ought to be. Behind advocates' arguments over the application of the existing or emerging law, and behind disputes over new forms and uniformity within forms, we have abandoned the historical consensus on the theory of partnership law without having any consensus with which to replace it. We have discarded historical assumptions about the nature of partnership law, the importance of personal responsibility as reflected in the liability of general partners, and the desirability of uniform laws. And that abandonment of shared assumptions is the root cause of our failure and the resulting mess we have made of the law of the unincorporated firm. I. The Case: Beasley v. Cadwalader, Wickersham & Taft Cadwalader itself is interesting, and merits a short introduction.4 From his lateral entry in 1989, James Beasley was a partner, "an extraordinary rainmaker and a skilled litigator,"5 in the Palm Beach office of Cadwalader, Wickersham & Taft, which bills itself as the oldest law partnership in the United States.6 In 1993, the share value of the Cadwalader firm declined, and concern among some partners resulted in a substantial change in the composition of the management committee. …

Does Law Need an Analyst? Prospects for Lacanian Psychoanalysis in Law

Abstract: LACAN AND THE SUBJECT OF LAW: TOWARD A PSYCHOANALYTIC CRITICAL LEGAL THEORY. By David S. Caudill. Atlantic Highlands, NJ: Humanities Press, 1997. 206 pp. SIS.95 paper, $49.95 cloth. The debate continues over the merits of French psychoanalytic theorist Jacques Lacan - was he a "charlatan"' or an "intellectual hero? "2 Enter David Caudill's book, Lacan and the Subject of Law: Toward a Psychoanalytic Critical Legal Theory.3 In providing practical applications of Lacan to the law, the book will no doubt be seen as an important contribution in resolving the debate. Caudill, a law professor with a Ph.D. in philosophy, demonstrates how, despite its complexity and obfuscatory tendencies, Lacan's psychoanalytic theory can illuminate our understanding of law and public discourse in new and important ways. To be sure, Caudill's project demonstrates that law needs an analyst. From contract interpretation to the role of religion in politics, Caudill employs Lacanian psychoanalysis not only to understand but to mediate the "culture wars" and some current controversies in law and public policy. Caudill sets out to provide the first comprehensive application of Lacan to law, within the tradition of critical legal studies (CLS) scholarship - thus the book's subtitle, "Toward a Psychoanalytic Critical Theory." Applying Lacan's tenets about the socializing power of language, the relation between the subject and others (including the "Otherness" of the law), and the internalization of the law in the Other, Caudill critiques mainstream legal theory and practice.4 Caudill "intends to ally Lacan's approach to critical movements in legal theory, such as critical legal studies, feminism, and critical race studies, each of which represents a challenge to mainstream legal theory. "5 (Though, interestingly, Caudill finds Lacan useful in serving conservative as well as liberal politics.) These approaches view law as ideological and indeterminate, and as marginalizing certain communities by imposing hegemonic doctrines and practices. Readers will appreciate Caudill's ability to make Lacan accessible, while at the same time writing in an engaging but rigorous style that avoids oversimplification. Caudill is a superb writer, but the book is in no sense an easy read because the subject matter is very complex and every paragraph in the book is packed with ideas. It is largely a compilation and substantial modification of Caudill's previously published essays that have appeared in legal and psychoanalytic journals. Part I, entitled "Coming to Terms with Lacan," discusses the difficulties in applying Lacan, explains the aspects of Lacanian theory most relevant to law and places the theory in the context of Freud and other psychoanalytic traditions, various philosophical schools of epistemology, and postmodern and critical legal theory. It concludes with an analysis of the problem of the self in relation to law, posing "law's need for an analyst." Part II, "Legal Analysis in Lacanian Terms," analyzes some current legal controversies from a Lacanian perspective, the most provocative of which are community and court hysteria surrounding false accusations of child abuse and religion's place in politics. This review has four goals: (1) after discussing difficulties in applying Lacan, to introduce Lacanian theory and its applications to law; (2) to ascertain whether Lacan is consistent with current psychological theory and research; (3) to place the theory and the book in the context of ongoing controversies in the "culture wars" and postmodern/critical legal studies; and (4) to evaluate the prospects for Lacanian psychoanalysis in law. Obstacles to Lacan [I want] to leave the reader no other way out than the way in, which I prefer to be difficult.6 Chapter 1, "Trafficking in Lacan: The Next Intervention of Psychoanalysis in Law?," begins with the observation that Lacanian theory will be "bruised and beaten" by the time it becomes an established mode of legal analysis. …

DOMA as a Defensible Exercise of Congressional Power Under the Full-Faith-and-Credit Clause

Abstract: The whole issue of faith and credit as applied to the law of domestic relations is difficult, and the books of the Court will not be closed on it for a long time, if ever.' I. Introduction At 12:50 a.m. on September 21, 1996, President Clinton signed into law the Defense of Marriage Act (DOMA).2 Congress passed DOMA with a "veto-proof" majority3 in response to Baehr v. Lewin,4 the case that is likely to legalize same-sex marriages in Hawaii and may ultimately require other states to recognize such marriages.5 DOMA establishes two objectives: first, it permits states to ignore legal same-sex marriages of other states;6 second, it provides a definition of "marriage" for federal purposes.7 This Note examines Congress's exercise of a full faith and credit exception or "negative" power in DOMA that permits states to ignore the acts of other states in the case of same-sex marriages.8 Congress cites the Full-Faith-and-Credit Clause of the Constitution9 (the Clause) as both the reason why DOMA is necessary and as the source of congressional authority to enact it.lo The Clause states: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records, and Proceedings shall be proved, and the Effect thereof."" The enactment of DOMA reflects congressional concern that if Hawaii permits same-sex marriages, then the Clause will require other states to recognize those marriages.12 According to DOMA's legislative history, however, Congress believed that states rightfully could raise a public-policy exception"3 to avoid recognizing such marriages. Nonetheless, Congress and the states were unwilling to rely on this Court-created protection." Instead, Congress invoked the second sentence of the Clause as authority to enact DOMA.15 Thus, Congress enacted legislation permitting states not to recognize the acts of other states for the first time in this country's history." Critics have argued that this enactment reflects a misunderstanding of the words and intent of the Clause and that DOMA is either premature because no state currently permits same-sex marriages or unnecessary in light of the public policy exception to full faith and credit." The questions raised by congressional enactment of DOMA under the Clause go beyond the national policy differences over homosexual rights or same-sex marriages.l8 The greater issue is whether Congress has authority to permit states to protect themselves from unwanted policies of sister states or, as DOMA's critics claim, to grant more autonomy to the states in a way that may lead to isolation or "balkanization."'9 DOMA raises a novel question of congressional power over interstate legal relations through the exercise of a rarely used and seldom interpreted constitutional provision.20 This Note explores the power of Congress to create exceptions to the Full-Faith-and-Credit Clause using DOMA as the example. Part II of this Note examines the power of Congress under the Clause from a historical perspective in order to provide a better understanding of the Clause's scope and meaning.2' In addition, Part II analyzes debates and draft changes made during the Constitutional Convention,22 as well as case law, legislation, and scholarly discussions of the Clause since ratification.23 Part II also analyzes the exceptions to full faith and credit as a guide for a possible model of the scope of this newly-exercised congressional authority.24 Part III discusses DOMA's creation of a full faith exemption for state recognition of same-sex marriages in light of the constitutional history of the Clause.25 It also discusses the potential scope of Congress's power today under the Clause, assuming that Congress can exercise this power to create exceptions within a unified federal system.26 Finally, this Note contends that Congress has an exception power under the Full-Faith-and-Credit Clause to enact legislation that permits states to ignore certain acts of other states2' and that the Constitution does not limit this power to providing specific exceptions for state determinations of public policy similar to the constrained state public policy exceptions currently recognized by the Supreme Court. …

An Inquiry into Efficiency of the Limited Liability Company. Of Theory of the Firm and Regulatory Competition

Abstract: Table of Contents Introduction 630 I. Limited Liability and Economic Efficiency 633 A. The Limited Liability Company and the Law and Economics of Limited Liability 633 1. Efficiency Theory 635 2. Pro Rata Theory 637 3. Efficiency Theory, Pro Rata Theory, and the Limited Liability Company 638 B. The Efficiency Theory of Limited Liability in a Larger Theoretical Context 640 1. The Irrelevance Hypothesis and FirstGeneration Agency Theory 640 2. Limited Liability for Managers and Models of Investor-Manager Incentive Contracts 643 3. Optimal Ownership Structures, Agency Theory, and Limited Liability 647 C. Some Questions About Insurance 652 1. Efficiency Theory 652 2. Pro Rata Theory 654 II. Regulatory Competition and the Limited Liability Company: Law as Domestic Product 657 A. Corporate Charter Competition 658 B. Domestic Incentives: LLCs in an Island Jurisdiction . . . 661 1. Beneficiary Firms 662 2. Costs and Benefits 663 3. Interest Groups 664 4. Predicted Result 666 C. Incentives to Race to the Bottom: LLCs in a Federal System with a Rule of Sirge Reel . .. 667 1. Regulatory Races to the Bottom --Externalities, Preferences, and Prisoner's Dilemmas 667 2. Racing to Externalize with Limited Liability 670 3. Summary ......... 673 D. Incentives to Race to the Top: LLCs in a Federal System 674 1. Corporate Charter Competition as a Model for the Period Between t = 1 and t = 2 674 2. Incentives for the First-Mover State at t = 0 678 3. Incentives to Copy Between t = 0 and t = I 680 E. Summary - LLCs, Regulatory Competition, and Evolutionary Efficiency 682 F. Regulatory Competition and Producer Incentives 684 Conclusion 686 Introduction In an ideal world, inquiry into the efficiency of a legal regime would require the collection and analysis of empirical information concerning costs and benefits. But, due to cost constraints and limits on available means of measurement, fact studies are the exception rather than the rule in law and economics. Instead, legal policy debates respecting efficiency usually deploy economic theories in the absence of determinative empirical evidence. Efficiency emerges as presumption, not as fact. Absent data on costs and benefits, legal policy debates must be resolved by allocating an empirical burden of proof, with the party bearing the burden losing the debate. Participants in such debates draw on the behavioral predictions of economic theory as they search for ways to assure that the burden rests on their opponents' shoulders. Economic models do not come ready-made with burden of proof recommendations keyed to legal policy debates. The models must be translated and adjusted for legal contexts. Historically, these arbitrage exercises have simplified the economics and caused the models to yield clear regulatory or deregulatory policy signals. But as to some heavily traversed subject matter, the passage of time has brought such an accumulation of economic assertions that the presumptive regulatory signal has lost its clarity. Such a mature literature, by virtue of its very complexity, is less well suited to the sustenance of strong policy positions. Policy debates go forward, but clarity of position follows less from the terms of economic theory itself than from the employment of the ordinary tools of normative lawyerly debate. The law and economics of limited liability, with its succession of backand-forth arguments about the location of an efficiency presumption for and against,l presents a literature of this sort. So when Allan Vestal asked us to inquire into the efficiency implications of the recent proliferation of limited liability company (LLC) statutes for this Symposium, we accepted the invitation without making any projection about the exercise's probable results. We hoped that the economic literature, upon de novo review, would yield some new theoretical spin on limited liability - a spin that would provide new advice as to the appropriate location of the legal presumption and that would redirect the back-and-forth legal debate. …