Saturday, October 31, 2009
People either liked John or hated him. I think that very few people really knew him. They were reacting to what they read about him or what they heard from third parties.
Some take-aways: I think that John would have felt gratified to have known how many people did think highly of him, and I think that he would have liked to have known that he was important enough to have made the NYT's obituary page.
For anonymous posters who make gratuitous comments about people they don't know, you need to remember that every human is someone's son or daughter. If you're a pundit, a poster, a blogger, you may want to say something nasty about someone--and sometimes, that nastiness is well-earned. But every time you write something for public consumption, at least think about the fact that the person is human before you post it. If you still want to post it, go ahead. (I've read enough horrifying things about myself online to be inured to it by now.)
Oscar Wilde once said, "A gentleman is one who never hurts anyone's feelings unintentionally." Think before you post.
And John, I'm sorry that more people didn't tell you that they appreciated you while you were alive.
Friday, October 30, 2009
Thursday, October 29, 2009
I know that he reached out to me after my mother died, and he reached out to me and to the school after the Law Center (to which he gave a significant amount of money) was inundated with more than 14 feet of water after Tropical Storm Allison.
He had a hunger to be appreciated and valued, and I think he had the problem that most very rich people do: not knowing who one's true friends really are. That must be extremely difficult, and I'm sure that it's lonely.
He does leave behind some true friends (as well as several people who will be more than morbidly curious about his estate). Although we spoke from time to time after I left Houston, we lost touch over the past year or so. I'm sorry for the way he died, and I'm sorry for the personal demons that kept his intelligence and talents from staying in the forefront. I liked him, most of all for the charity that he did behind the scenes that never had his name visible and for the real love that he had for the strategy of trying cases. (Yes, yes--his name is on several buildings, but he wrote a lot of checks that never had his name attached to the donations.)
Like many plaintiffs' lawyers, I think that one of the things that drove him was the desire to be a hero for his client. Whether that drive took him beyond the rules, I don't know. There are certainly allegations that he crossed the ethical line in a variety of ways in several cases, but as far as I know, although he was brought before the disciplinary committee more than once, I don't think he was found to have violated the rules. But I could be wrong about this issue. I don't think I'm wrong about his drive to be a hero.
Most people who are happy in their jobs don't do it for the money. They do it for the chance to use their talents to the best of their ability. If the money comes (and it did, in John's case), that's great. But I've never seen money make someone happy. I've seen money give someone peace of mind and security--not happiness. The ability to use your talents is much more likely to contribute to happiness.
Rest in peace, John. My thoughts go out to all of those who truly cared for you.
Saturday, October 24, 2009
Friday, October 23, 2009
I don't think garden-variety caps on executive compensation are the way to go--but I don't care if there's a rush to the exits, either.
Look, I'm a firm believer in capitalism. I don't believe that the free market system works perfectly--obviously, we don't have anything near perfect information--but I have no problem with people making money, even scads of money. But boards of directors who let people get scads of money for failing abysmally, year after year, just aren't doing their jobs. Rewards aren't aligned with risks, and that's why so many boneheaded risks are being taken. It's all upside and no downside, because the risks are being paid for with other people's money.
Want the C-level officers to take more reasonable risks? Then create incentives for them to have more skin in the game? (Of course, that's what stock options were supposed to be about, but those options didn't quite work out the way we hoped.)
Boards are being told by compensation gurus that the best people won't work for less than huge salaries, all of which have to be earned up-front, or close to it, or these best folks will bolt for better jobs. Fine. Let them bolt. Heck, hold those doors open for them so that they won't bruise themselves during their dash for better, more lucrative work.
In a wonderful case, reported by WSJ Blog's Peg Brickley here, Bankruptcy Judge Jeff Bohm said "no mas" to ludicrous requests for compensation:
Oblivious to recent congressional and public criticism over executives of publicly-held corporations who are paid monumental salaries and bonuses despite running their companies into the ground, two investment banking firms now come into this Court requesting that they be employed under similarly outrageous terms. They do so because two committees in this Chapter 11 case have filed applications to employ these investment banking firms to perform valuation services even though two other independent firms have already performed similar valuations. These investment bankers, who wish to have their fees and expenses paid out of the debtor's estate, have sworn under oath that they will render services only if they immediately receive a nonrefundable fee aggregating $1.0 million. This Court declines the opportunity to endorse such arrogance. The purse is too perverse.In observing that the two investment banking firms' proposed compensation was significantly higher than the compensation that an already-retained firm was charging in the same case, the bankruptcy judge also pointed out that
one other investment banking firm--i.e. Parkman Whaling--has already been retained to provide similar valuation services in the case at bar without demanding such a high premium; Parkman Whaling has received $75,000.00 per month, which is substantially lower than the fees demanded by Houlihan Lokey and Tudor Pickering. It is entirely legitimate to ask why Houlihan Lokey and Tudor Pickering are unwilling to work under the same or similar terms as Parkman Whaling. Neither Houlihan Lokey nor Tudor Pickering adduced sufficient testimony at the July 15, 2009 hearing to convince this Court that they should be treated so differently--indeed, so much more favorably--than Parkman Whaling. Stated differently, Parkman Whaling is as capable and competent an organization as Houlihan Lokey and Tudor Pickering, and to approve the far more exorbitant terms demanded by Houlihan Lokey and Tudor Pickering would suggest that these two firms somehow provide services that are superior in quality than those provided by Parkman Whaling. There is nothing in the record to suggest that this is true.The court then highlighted its shock at the tone-deafness of some of the specific compensation requests:
Nevertheless, the Court feels compelled to discuss the initial provision in the proposed terms requiring a daily witness fee of $25,000.00 because the very fact that Tudor Pickering made such an audacious request underscores how oblivious the investment banking community--or, at least this one investment banking firm--is to the extremely hard economic times in which the country in general, and this Debtor in particular, find themselves. This Court believes that a discussion of the $25,000.00 daily witness fee request is appropriate to telegraph to the business bankruptcy bar and the investment banking community how unseemly this request really is.One of the best parts of the case is the footnote immediately following this part of the court's opinion:
(Citation omitted.) In concluding its opinion, the court refused to fall for the adage that the requested compensation had to be paid or the case would lose the opportunity to get the best and brightest minds:
For example, the men and women of our nation's armed forces, who risk their lives to preserve and protect the abundant freedoms of this country, earn an annual salary that barely exceeds Tudor Pickering's proposed $25,000.00-per-day appearance fee. See United States Army Public Website, Benefits--Total Compensation, http://www.goarmy.com/benefits/total_compensation.jsp (listing the average annual salary for a military police sergeant as $26,967.00). Moreover, there are numerous other occupations whose members are in daily physical danger and who provide absolutely necessary services for our society but yet are paid an annual salary approximating the requested daily fee of the Tudor Pickering witness. For example, a nursing-aide at a public hospital, can expect to earn less annually than what Tudor Pickering is requesting for each day it appears for a hearing. See United States Department of Labor, Bureau of Labor Statistics Website, Occupational Employment and Wages, May 2008, Nursing Aides, Orderlies, and Attendants, http://www.bls. gov/oes/current/oes311012.htm (listing the average annual salary for a nursing-aid as $24,620.00). Finally, public school teachers who are educating future generations can expect to earn barely more in one year than Tudor Pickering seeks to be paid for each day that it appears for a hearing. The per annum salaries of the military personnel, nursing-aides, and public school teachers, compared with the requested daily fee of $25,000.00, speaks volumes about the level of hubris among some members of the investment banking community.
(Footnotes and citations omitted). Judge Bohm added that "Judge Lynn's willingness to concede his mistake [in Mirant] in order to educate others and improve the bankruptcy system underscores his own high integrity and brilliance."
The exorbitant fees requested by Houlihan Lokey and Tudor Pickering are similar to the "appearance fees" which certain of the world's top athletes--for example, Tiger Woods--are able to command. However, unlike Tiger Woods, whose presence does guarantee a financial benefit at any event where he appears, neither of these two investment banking firms introduced any testimony or exhibits guaranteeing some benefit to the estate in this case. They expect to be paid an appearance fee for simply showing up--not only do they not guarantee success; they do not even guarantee they will work a minimum number of hours in order to try to achieve success. This Court will therefore not approve the payment of their requested "appearance fees." Tudor Pickering is not Tiger Woods. Nor is Houlihan Lokey.
In In re Mirant Corp., 354 B.R. 113 (Bankr. N.D. Tex. 2006), the Honorable D. Michael Lynn made some very telling comments about the integrity of the process with respect to financial advisors demanding guaranteed compensation under [sec] 328:
The court erred seriously in entering orders which left it so little discretion in assessing the work of the financial advisors. Though the court was given to understand Debtors and the Committees could not obtain competent financial advisors without assurance that there would be substantial "success" bonuses, whether or not each advisor could show it had earned such a fee, the court has since learned that some financial advisors, at least, will accept more conventional arrangements in terms of compensation. In the future, the court hopes and expects that parties in large chapter 11 cases in this and other districts will seek out financial advisors that are willing to have their work judged on a basis similar to the rules applied to other professionals.
In re Mirant, 354 B.R. at 128 (emphasis added). In effect, Judge Lynn has recommended that parties in large Chapter 11 cases should call the bluff of investment bankers who make Shermanesque statements that they will only provide services pursuant to a huge, guaranteed fee approved under [sec.] 328. Judge Lynn is urging parties to respond to these investment bankers by telling them that if they will not work under the more conventional arrangements pursuant to [sec.] 330, or at least pursuant to reasonable fee arrangements under [sec.] 328, then the parties will find one or more of their competitors who will. Implicit in Judge Lynn's remarks is that if the parties themselves give in to these investment bankers, then the bankruptcy courts themselves must call the bluff of these financial advisors and challenge them to accept reasonable fee arrangements.This Court shares Judge Lynn's concerns about the integrity of the process and also accepts his remarks and advice. Given the state of the record in this case, this Court will not approve the proposed enormous fees for Houlihan Lokey or Tudor Pickering, but rather chooses to call their bluff. Every other key professional in this case--including the investment banking firm of Parkman Whaling--has agreed to reasonable fee arrangements that are governed by, among other orders, the Procedure for Professionals Order, the Cash Collateral Order, and the Budget. Given the state of the record, there is no good reason why Houlihan Lokey and Tudor Pickering should be exempt from these same reasonable compensation arrangements. This Court does not want to make the error (about which Judge Lynn cautions in Mirant) of approving the Applications and later learning that some other financial advisors would have accepted much more reasonable compensation arrangements, which include agreeing to oversight by this Court. Indeed, given that Parkman Whaling, an investment banking firm every bit as competent and qualified as Houlihan Lokey and Tudor Pickering, was willing to work for a reasonable fee, this Court's approval of the compensation schemes proposed by Houlihan Lokey and Tudor Pickering would not only be an error; it would be a gross error.
My point? A judge in Houston, Texas understands the difference between good compensation for good work and unreasonable compensation for very little work. And he's not the only judge with, well, judgment. I'd expect boards of directors to be able to distinguish gold from dross as well. If they can't, then let's vote them out and vote in others who can distinguish the two, and who have the courage to do so.
Thursday, October 22, 2009
Wednesday, October 21, 2009
Friday, October 16, 2009
Tuesday, October 13, 2009
Monday, October 12, 2009
And, thanks to John Steele over at Legal Ethics Forum, I found this interesting case (here).
So far, what I've found out is that judges, when writing opinions sanctioning lawyers, are exceptionally clear about what behavior has irked them so. These sanctions opinions have some of the crispest language I've ever read--sad tales, all, and you can just about hear the anger and clenched teeth that the judges have while writing the opinions.
Oh, and one other thing some law profs do. We blog.
Saturday, October 10, 2009
I've noticed, though, that I tend to read the NYT for its business news and the WSJ for its op-eds. It used to be the other way around. I'm not saying that I ignore the WSJ's business news--far from it--or that I never agree w/the NYT's op-eds.
Perhaps I'm just contrarian, and now that the Democrats are back in power, I like hearing what the other side has to say. But perhaps I fear groupthink on either side of the political spectrum. We've all seen what happens when a majority congratulates itself on its correct-thinking tendencies, without having some "loyal opposition" challenging whatever notions are popular.
My guess is that most of the country is solidly moderate, as I am. But who knows? I'll be watching the 2010 elections, knowing full well that, whatever happens, both sides will be reading the entrails for prophecies about what it all means.
Thursday, October 08, 2009
One of my students raised her hand and asked, "Wasn't that unethical to wait until afterwards to file suit, just to avoid amending your bar application?"
My first thought was that the statute of limitations had barely begun to run on the case (I was bitten in January; took the bar in February) so I was well within my rights to wait. But she caused me to think about the bigger picture. I answered her: "Yes. You're right. I should have gone ahead and updated my application and gone ahead with the suit."
Good for the student for calling me on this one. I like the fact that she was comfortable enough in the class to ask.
Tuesday, October 06, 2009
And yet, how far are we going to let the rankings dictate law schools' admissions, curricular, and placement policies? USNWR is just a news magazine, after all. Its rankings exist far more to sell advertising and its rankings themselves than for its stated objective of providing useful consumer information. (Useful consumer information would concentrate more on what goes on during a student's law school education than on the inputs of LSAT and undergraduate GPA, and it wouldn't rely on surveys with relatively small numbers of participants to judge "quality.")
Until the more elite schools figure out how to deal with USNWR and its pressures on turf that used to be the province of reasoned faculty decisions about how to choose and educate law students, the rest of legal education is going to be hard-pressed to buck the trend.