March 23, 2015
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.
March 13, 2015
On March 4, Professors Christine Lazaro and Ben Edwards co-authored a post
CLS Blue Sky Blog, Columbia Law School’s Blog on Corporations and the Capital Markets, entitled “The Fragmented Regulation of Investment Advice: A Call for Harmonization.” The post is based on their article of the same title, which is forthcoming in the Michigan Business & Entrepreneurial Law Review. Here’s the start of the post:
Discussions about regulating investment advice have largely focused on whether to harmonize the laws governing two categories of individuals within the securities world—registered investment advisers and stockbrokers. The discussion has overlooked insurance brokers who often times also provide investment advice. Lazaro and Edwards broaden the focus by arguing that harmonizing the regulation of investment advice necessarily requires reforms reaching beyond securities regulation and into insurance regulation as well. They argue that consistent standards should govern the investment advice provided to retail investors regardless of who is giving the advice.
March 11, 2015
The Consumer Financial Protection Bureau released a congressionally-mandated study of arbitration today and devoted two pages to discussing “Whimsy Little Contracts” with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, by Professors Jeff Sovern, Elayne E. Greenberg, Paul F. Kirgis, together with Yuxiang Liu. The St. John’s Arbitration Study was also mentioned in an American Bar Association publication, 21 Dispute Resolution Magazine, No. 2 at 2 (2015). In scholarly publications, the article is being cited at a rate of more than once for every month it has been available, as indicated by the following list of citations:
- Ann M. Lipton, Manufactured Consent: The Problem of Arbitration Clauses in Corporate Charters and Bylaws, Georgetown Law Journal n. 64 (Forthcoming) .
- Eyal Zamir and Yuval Farkash, Standard Form Contracts: Empirical Studies, Normative Implications, and the Fragmentation of Legal Scholarship, JERUSALEM REVIEW OF LEGAL STUDIES n. 142 (Forthcoming).
- Christopher P. Guzelian, Required Resolution: Enforcing Contracts Without Courts n. 26, Chapman NEXUS Law Journal (Forthcoming, 2015
- Jill I. Gross, Justice Scalia’s Hat Trick and the Supreme Court’s Flawed Understanding of Twenty-First Century Arbitration nn. 54, 141
March 9, 2015
Professor Anita Krishnakumar’s new article, Dueling Canons
, has been accepted for
publication by the Duke Law Journal. Here is the abstract:
This article offers the first targeted study of the Supreme Court’s use of the canons of statutory interpretation in a “dueling” manner–i.e., to support opposing outcomes in both the majority and dissenting opinions in the same case. Taking its inspiration from Karl Llewellyn’s celebrated list of canons and counter-canons, the Article seeks to examine how often and in what ways the members of the Roberts Court counter each other’s references to particular interpretive tools when disagreeing about the proper reading of a statute.
Many of the Article’s findings are unexpected and undermine the assumptions made by some of the most prominent theories of statutory interpretation. Textualists, for example, long have urged the rejection of interpretive tools such as legislative history, statutory purpose, and congressional intent on the ground that such tools are indeterminate and can be manipulated to support almost any statutory construction favored by the judge. Moreover, textualists have advocated the use of other interpretive tools–e.g., statutory text / the plain meaning rule, the whole act rule, language canons, other statutes–on the theory that these tools are neutral and will constrain judges to reach the correct or “best” reading of the statute. But the data from the Roberts Court’s dueling canon cases reveals that many of textualism’s most-favored interpretive tools are at least as susceptible to dueling use as the tools that textualists love to denigrate. The study shows, for example, that the Justices duel extensively over the meaning of statutory text but duel at low, virtually identical, rates over legislative history, purpose, intent, dictionary references, the whole act rule and language canons.
The study also reveals some less surprising, but equally interesting data. Most notably, the canons do not seem capable of constraining the Justices to vote against ideology. Further, non-canon tools of analysis, including precedent and practical-consequences-based reasoning, lead to higher rates of dueling than do most traditional canons or tools of statutory interpretation. After reporting the data, this Article examines doctrinal patterns in how the Justices duel over individual canons as well as the theoretical implications of the Justices’ dueling canon use.
March 3, 2015
Professor Michael Perino’s new article, Is the Price Right? An Empirical Study of Fee-Setting in Securities Class Actions (co-authored with Professors Lynn A. Baker and Charles Silver of the University of Texas School of Law) was accepted for publication by the Columbia Law Review. Here is the abstract:
Every year, fee awards enable millions of people to obtain access to justice and strengthen the deterrent effect of the law by motivating lawyers to handle class actions. But the process by which judges decide how much to pay lawyers remains a black box. Settlements go in one side; fee awards come out the other. The inputs and outputs have been studied, but the actual operation of the fee-setting mechanism has not. Consequently, it is difficult to know why judges award the amounts they do or whether they size fee awards correctly.
Both numerically and in terms of dollars recovered, securities cases dominate the federal courts’ class action docket. We therefore undertook to peer into the fee-setting black box by studying in detail all of the 434 securities class actions that settled in federal district courts from 2007 through 2012. We examined the actual court filings in each case to create an original, comprehensive dataset of information on all points at which federal judges are likely to consider issues relating to fees. These data enable us to paint a picture of the fee-setting process that is unusually detailed and nuanced and that falsifies many common beliefs.
Among our major findings are that: (1) federal judges often deviate from the path Congress laid out in the Private Securities Litigation Reform Act (PSLRA), which requires lead plaintiffs to set the terms of class counsel’s retention and federal judges to serve as backstops against abuses; (2) fees tend to be lower in federal districts that see a high volume of securities class actions than in districts that handle these cases less often; (3) fee cuts are significantly more likely among judges that see a high volume of securities class actions than among low volume judges; (4) the well-known “decrease-increase” rule, according to which fee percentages decline as settlements become larger, operates mainly in high-volume districts; and (5) judges appear to cut fees randomly, that is, on the basis of their own predilections rather than the merits of fee requests. Finally, we learn that so-called “lodestar cross-checks,” which require judges to consider the “time and labor expended by counsel” and other factors to ensure against excessive fees, accomplish nothing. Actual fee awards reflect something closer to a pure “percentage of the fund” approach.
In sum, we found little evidence that the actions currently taken by the courts in securities class actions move class counsel’s fees closer to the “right price.” We therefore propose a set of procedural reforms which courts could easily adopt that would make fee-setting in securities class actions more transparent, more compatible with the normative goals of the PSLRA, and more predictable. The reforms would encourage lawyers to invest optimally in class actions, with salutary effects for investors seeking compensation and the integrity of the financial markets.
March 3, 2015
Anita S. Krishnakumar
Professor Krishnakumar presented her paper, Dueling Canons, at a faculty colloquium at Seton Hall Law School on Tuesday, February 24th. The paper examines, empirically, the extent to which majority and dissenting opinions employ the same canons/tools of statutory construction to reach opposing outcomes in the same cases during the first five terms of the Roberts Court.
February 20, 2015
Professor Nina Crimm and Professor Laurence H. Winer (Arizona State University, Sandra Day O’Connor College of Law) have written a post on their recently published book, God, Schools, and Government Funding: First Amendment Conundrums (Ashgate, 2015). The post was noted on SCOTUSblog’s Wednesday round-up.
February 19, 2015
Professor Jay Facciolo has just published “Do I Have a Bridge for You: Fiduciary Duties and Financial Advice,” his latest article on securities regulation, in 17 University of Pennsylvania Journal of Business Law 101 (2014). The issue of whether broker-dealers should be held to a fiduciary standard as are investment advisers has generated a great deal of debate since 2010, when Dodd-Frank mandated that the SEC study the issue. Currently, the Department of Labor is considering proposing a new rule that would apply a theoretically strict fiduciary standard to financial professionals in the ERISA context. Professor Facciolo’s article argues that a fiduciary standard is no substitute for substantively regulating conflicts of interest in the provision of financial advice. Fiduciary standards fail to provide strong legal protections because of the contractual nature of such standards. In addition, standards are only as strong as the enforcement mechanisms available and, in financial advice, regulatory oversight has been ineffective and there are no robust private rights of action. Finally, disclosure, the standard fall back in securities regulation, has not worked well in creating limitations on conflicts that protect investors. In fact, some recent research has even suggested that disclosure of conflicts of interest may make investors trust their conflicted investment advisers more. After all, only a trust worthy individual would be willing to disclose something potentially negative about herself.
January 23, 2015
Vincent Di Lorenzo’s article, “The 2008 Amendments to the New York Adverse Possession Law: Unresolved Ambiguity and Suggestions for Clarity,” has been published in the winter 2015 issue of the N.Y. Real Property Law Journal. He will present his findings at the Annual Meeting of the New York State Bar Association on January 29, 2015.
December 11, 2014
G. Ray Warner
Professor Ray Warner will be in Vienna, Austria, this week working with United Nations UNCITRAL Working Group VI. Working Group VI is preparing an international model law on secured transactions.