Professor Mark Movsesian’s piece, Are Statutes Really ‘Legislative Bargains’? The Failure of the Contract Analogy in Statutory
The New York Times published a letter from Professor Jeff Sovern on May 6. In the letter, Sovern observes:
Elisabeth Rosenthal bemoans the incomprehensibility of medical bills. A New York law captioned “Requirements for Use of Plain Language in Consumer Transactions” requires that agreements for services provided to consumers be written in a “clear and coherent” manner.
Wouldn’t it make sense that medical bills must also comply with the law?
Professor Mark L. Movsesian’s post, “Thomas More, Villain,” was quoted in a Washington Post story by David Gibson,
On Wall Street followed up with another article on the DOL fiduciary duty rule proposal, focusing on rollovers and IRAs. The article, Is Your Rollover Business at Risk Under Fiduciary Plan?, written by Suleman Din, included the following quote:
It is important that rollovers and IRAs are included in the fiduciary standard now, says Christine Lazaro, director of the Securities Arbitration Clinic at St. John’s University School of Law.
“As individuals retire and are faced with the decision of what to do with the money in their employer-sponsored plans, they often seek advice from investment professionals, expecting that the advice they receive will be in their best interests,” Lazaro says. “At that point in time, when they are being advised to move their money into IRAs managed by the investment professional, it is essential that the investment professional is held to the highest standards to protect the retirement savings of Americans.
“The standards shouldn’t only apply after the money has been moved,” Lazaro adds. “If it is not in the investor’s best interest to move the money out of the employer-sponsored plan, it should be left alone. The profit motives of firms cannot and should not drive the decision to move an investor’s retirement savings out of the employer-sponsored plans.”
Professor Lazaro commented on the Department of Labor’s proposed rule to extend a fiduciary standard to those providing investment advice to clients on retirement accounts in an article in On Wall Street, Tougher Rules But Flexible Comp Under New Fiduciary Proposal. The article, written by Andrew Welsch and Suleman Din, states:
Critics should remember that the DOL had initially come out with a fiduciary standard proposal in 2010, then pulled it and spent the next five years seeking additional comment and revising rules, said Christine Lazaro, director of the Securities Arbitration Clinic at St. John’s University School of Law.
“It’s not like they’ve moved forward quickly or haphazardly, or without considering viewpoints that they needed to,” Lazaro said. “They’ve moved forward carefully and I think thoughtfully in the process.”
The DoL proposal will be filed in the Federal register and will again be open for public comment, she added. “So there will be another opportunity for anyone to voice their concerns. The fact that they are moving forward faster than the SEC on a fiduciary standard doesn’t mean they haven’t given full consideration of viewpoints that they should be considering.”
Lazaro found little in the proposal for the industry to be alarmed about.
“It does seem like the general business models will be permitted,” Lazaro noted. “There really isn’t any need to panic. The major concerns raised by the industry regarding commissions and revenue sharing, these would be permitted to continue, so long as the advice given is in the best interest of the investor.”
“There are plenty of situations where advisors are already held to fiduciary duty, such as under state common law standards. It’s not like strict standards haven’t been tested and brokers haven’t been held to these standards already. It’s not a foreign concept when it comes to brokers.”
On March 25, PIABA released a report, entitled “Major Investor Losses Due to Conflicted Advice: Brokerage Industry Advertising Creates the Illusion of a Fiduciary Duty” co-authored by Joseph C. Peiffer and Christine Lazaro. The report compares the image brokerage firms project to the public in their advertising and on their websites with the position firms take in arbitration when it is alleged that they have breached their fiduciary duties to customers. Concurrent with the issuance of the report, PIABA held a news event during which Joe Peiffer and Professor Lazaro presented the report, and a customer shared her experience with one of the firms cited in the report. Professor Lazaro was quoted regarding the report in several stories, including Andrew Welsch, “Latest Fiduciary Rule Battle Cry: ‘Broker Ads Mislead Investors’,” On Wall Street, and James Langton, “U.S. brokerage firms misleading investors about fiduciary role: PIABA,” Investment Executive. Following the issuance of the report, Professor Lazaro traveled to Washington D.C. with other members of PIABA and met with a number of agencies and congressional staffers to discuss the fiduciary duty standard and other investor protection issues.
The Pittsburgh Post-Gazette has published Professor Jeff Sovern’s op-ed, Consumers often sign contracts they don’t read or understand. The op-ed, which drew on research reported in the the article Professor Sovern wrote with Professors Elayne Greenberg and Paul Kirgis, as well as the University’s Director of Institutional Assessment, Yuxiang Liu, ‘Whimsy Little Contracts’ with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, opens as follows:
Consumers often sign form contracts without reading them — if you don’t believe me, just drop by a car rental agency and watch what happens.
Consumers may have many reasons for not reading contracts, including that they are too long (the iTunes contract is 32 feet long when printed); that the contracts are incomprehensible (all that legalese); or that they can’t negotiate better terms.
On March 11, 2015, Professor John Q. Barrett participated in an international conference entitled “Legally Blind: Law, Ethics, and the Third Reich,” held at Boston College in Chestnut Hill, MA. Professor Barrett’s lecture, “Dawning, Developing Comprehension of Nazi Law-Breaking & Atrocities: Justice Robert H. Jackson on the Road to Nuremberg, 1940-1945,” will be published in a conference book. During the conference, he and other conferees also were interviewed for a documentary film that now is in production. For local press on the conference, click here and here.
Professor Ray Warner’s article Cross-Border Cooperation in the United States: A Retreat or Merely a Pause? appeared in a Festschrift delivered to leading international bankruptcy scholar Prof. Ian Fletcher in San Francisco on Friday. Prof. Fletcher is an Emeritus Professor of International Commercial Law at the University College of London and formerly was a Professor of Commercial Law and Head of the Insolvency Law Unit, Centre for Commercial Law Studies, Queen Mary and Westfield College, London University.
Professor Jeff Sovern’s article, Can Cost-Benefit Analysis Produce Better Consumer Protection? Or at Least Benefit Analysis? has been published at 4 UC Irvine Law Review 1241 (2014), as part of a symposium on cost-benefit analysis. Irvine, a relatively new law school, is ranked for the first time this year in the US News rankings, and came in at 30th. Here is the article’s abstract:
Cost-benefit analysis is often troubling to consumer advocates. But this article argues that in some circumstances it may help consumers. The article gives several examples of supposed consumer protections that have protected consumers poorly, if at all. It also argues that before adopting consumer protections, lawmakers should first attempt to determine whether the protections will work. The article suggests that because lawmakers are unlikely to adopt multiple solutions to the same problem, one cost of ineffective consumer protections is a kind of opportunity cost, in that ineffective consumer protections might appear to make unnecessary adoption of effective ones. Ironically, such an opportunity cost is unlikely to be taken account of in cost-benefit analysis. Among the protections that especially risk failing to benefit consumers are laws that require consumers to perform certain tasks, such as disclosure laws that presuppose consumers will pay attention to and act on the disclosures; if consumers instead generally ignore the disclosures, the consumer protection will be largely illusory. Accordingly, before adopting measures that depend on consumers to do something, lawmakers should try to verify that consumers will in fact undertake those actions. The article also makes some suggestions for ascertaining whether consumer protections will work — i.e., benefit consumers — and concludes with a brief critique of the proposed Independent Agency Regulatory Analysis Act.