In a recent blog posting on the Wisconsin State Bar Business Law Section blog, I wrote the following about Environmental, Social, and Governance (ESG) programs:
In connection with ExxonMobil’s annual meeting held on May 26, 2021, three dissident directors nominated by hedge fund Engine No. 1 were elected to ExxonMobil’s board, beating out the incumbents.
Engine No. 1 had proposed the director nominees (along with one other) to help lead ExxonMobil to long-term shareholder value creation, including through “net-zero emissions energy sources and clean energy infrastructure.”
The fact that these dissident directors won the election over the incumbents indicates the increasingly broad shareholder support for clean energy to reduce climate change.
ExxonMobil is not alone in facing an investor challenge to its strategy in favor of a more carbon-neutral strategy. . . . Continue reading “Environmental, Social, and Governance Programs Take Center Stage for Businesses”
This week in my Contracts class we are discussing how to interpret a contract — that is, how to give contractual language meaning. This discussion inevitably focuses on how courts interpret contracts, because Contracts casebooks primarily examine principles of contract through case law. Cases do, in fact, provide a useful lens through which to study contract interpretation, for they allow an examination of courts’ goals and tools in approaching conflicting arguments about how to interpret an ambiguous term. Yet we also considered judicial interpretation of contracts from a policy perspective.
Specifically, in light of Professor Robert Scott’s Boden lecture “Contracts Design and the Goldilocks Problem,” I asked my Contracts students to reflect on the wisdom of judicial determination of the meaning of ambiguous contractual language. Continue reading “Reflections on Judicial Contract Interpretation and the Boden Lecture”
[Editor’s Note: Over the past month, faculty members have been posting on upcoming judicial decisions of particular interest. This is the fourth post in the series.]
In January of 2011, the Securities and Exchange Commission, as part of its implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, began requiring U.S. public companies to provide their shareholders with a non-binding vote on the compensation of certain executive officers. This “say on pay” gives shareholders an advisory say on the amount of compensation paid to those executives. Related disclosure is also designed to prompt the board to consider how the “say on pay” vote affects its broader executive compensation policies and practices.
The Dodd-Frank Act specifically provides that the shareholder say-on-pay vote is not intended to affect directors’ fiduciary duties. Despite this, in at least two cases, shareholders have sued directors for breaches of their fiduciary duties, primarily on the basis that they implemented compensation practices that shareholder had voted against. Continue reading “Shareholder “Say on Pay” – Can it Expose Directors to Liability?”
[Editor’s Note: This month, faculty members will post on their exam taking tips. This is the first post in the series.]
If my first year of law school was any indication, first year law students are looking ahead to final exams during the coming weeks with some trepidation. Undoubtedly one of the main sources of that trepidation is the fear of the unknown – specifically, what is the final exam going to look like and are students adequately prepared to take that exam? Continue reading “Exam Preparation Advice – Practice Practice Practice”
The top five things I wish I would have known when I started law school:
1) Professors don’t bite. When I first started law school, I thought that if I approached a faculty member outside of class (or even in class but voluntarily), my head might explode. I eventually realized that I was missing out on a valuable opportunity to develop professional relationships with my professors that I could benefit from both during my academic career at law school as well as my professional career after law school.
2) Not every lawyer has to be a litigator. Continue reading “What I Wish I Had Known When I Started Law School, Part III”
In one of his characteristically thoughtful blog postings (available here), Ed Fallone argues that market regulation follows the Second Law of Thermodynamics, which states (to paraphrase) that in any closed system, disorder will reign over time. Ed argues that this principle holds true for federal securities regulation, where technological and market changes have made the comprehensive statutory scheme of market regulation obsolete. With respect to non-financial institutions, he proposes (consistent with the Obama administration’s proposal) replacing our current scheme of detailed disclosure rules with regulation that focuses on the consumer (the investor), and the consumer’s need for multiple products to choose from as well as information to make product comparisons.
It does seem to make sense to consider the needs of investors in creating legislation aimed at protecting investors. But in my view, any new regulatory scheme aimed at protecting investors should leave to the states the regulation over business organizations’ internal affairs. Continue reading “The Second Law of Thermodynamics and “Say on Pay””
In a prior post, I criticized law schools’ heavy reliance on the case-method as a way to prepare lawyers for practice. As I argued in that post, the case method, which primarily teaches students the law through an analysis of the legal reasoning in appellate cases while ignoring most of the factual context for those cases, leads law students to think more like judges and judicial clerks than practicing lawyers.
Still, being able to think like a judge is helpful to some degree to a litigator, for it enables her to place herself in the shoes of her potential audience — the judge – to identify her strongest (and weakest) arguments. Moreover, learning the law through the case method, even absent much of the factual context giving rise to the case, gives students some exposure to what a lawsuit is, who the different parties to a lawsuit are, and how to read and understand the procedural posture of a case. It also helps students to develop legal reasoning skills in the context of a legal problem arising due to existing facts and circumstances. The procedural and evidentiary aspects of litigation are further explored and reinforced through courses on civil procedure and evidence, which are mandatory at many law schools.
But thinking like a judge is nearly irrelevant to a transactional attorney. Continue reading “Langdell’s Curse and Transactional Lawyers”
Michael Ariens has, through a number of blog posts, shared with us his thoughtful sentiments about American legal education. This post is an attempt to continue that dialogue and to consider how we can better prepare our students for practice by contextualizing legal education.
Most legal commentators believe the primary purpose of law school is to prepare students for practice. While there isn’t a single interpretation of what that means, it must at least include the ability to help clients “solve” their legal problems. (I use quotation marks around the word “solve” because legal problems are not like most mathematical problems in which there is only one solution.)
While that objective might seem obvious to some, especially the legal practitioner, it isn’t necessarily obvious to everyone, especially in light of the pedagogical approach to legal education that most law schools take. This is because most law school courses teach substantive law, as well as fundamental legal skills like legal reasoning, through the vehicle of the case method.
The use of the case method as we know it can be traced to at least as early as 1870, when Christopher Columbus Langdell first instituted it at Harvard Law School in an effort to make the study of law more rigorous. The idea was to treat the law as a science, and to treat cases (the source of the law) as if they were to be poked at and dissected in order to reveal their legal principles. By requiring students to learn the law through such demanding exercises, the case method achieved its goal – law school became a more rigorous enterprise. Continue reading “Langdell’s Curse”
The most recent issue of the Marquette Law Review includes a provocative article written by Professor Allen Blair of Hamline University Law School on contracts and fraud (92 Marq. L. Rev. 423). In the article, Professor Blair explores why courts tend to not enforce so called “no reliance” clauses in contracts, clauses in which one party disclaims any liability for fraudulent statements (which includes lies) made outside of the four corners of the contract.
According to Professor Blair, courts generally refuse to enforce no-reliance clauses on the grounds that it violates public policy to protect a person against his own fraud. While some courts have enforced no-reliance clauses, they have generally done so only after finding that the clauses were specifically negotiated, and only to the extent that they set out the precise representation on which the other party may not rely. Only a handful of courts have upheld no-reliance clauses without attaching these types of limitations.
While Professor Blair does not promote blind enforcement of all no-reliance clauses, he argues that courts should not ignore the numerous legitimate reasons why sophisticated parties in complex transactions might agree to a no-reliance clause. Continue reading “Should Courts Enforce Contracts Induced by Lying?”
One of the principal things a new administration is going to have to address in the area of corporate law is how to encourage business managers to properly assess the long-term risks facing their businesses, and to manage those risks so that their businesses are sustainable in the long-term. The need for U.S. businesses, on which Americans rely for jobs as well as many basic goods and services (such as banking and insurance), to appreciate and guard against the long-term risks associated with their business activities should be evident from the current financial crisis, which stemmed in large part from financial institutions’ failure to appreciate and guard against the risks associated with the complex mortgage-backed securities and derivative instruments they held and the inevitable bursting of the housing bubble. As a consequence, Americans not only worry that their investments (including retirement and life savings accounts) held by these financial institutions might be at risk, but they also question the long-term stability of the U.S. economy.
So what should a new administration do to make businesses better appreciate, and protect themselves from, the long-term risks associated with their businesses? Continue reading “Priorities for the Next President: Corporate Law”