Another suggestion for dealing with the housing crisis.

See this New York Times op-ed (here).  We have to figure out some way to give banks an incentive to help the folks who can pay their mortgages but who are so underwater that they feel like shnooks for continuing to make payments.  Although I still favor the Van Niel proposal (see here), this one's not a bad start, either.

It's a good day at the Van Niel-Rapoport household.

See here.

Focus, shareholders. FOCUS.

Yesterday's New York Times story on directors who presided over corporate failures being snapped up as directors by other companies (see here) did exactly what the authors (Susanne Craig and Peter Lattman) intended.  It frustrated the heck out of me. 

Yes, we should kick out C-level officers who plunder companies.  That's a no-brainer.  But we should also hold directors accountable when they should have known that something was going dreadfully wrong on their watch.   (Remember Andy Fastow's personal profit on deals with--well, against--Enron?  That was board-approved.)

Shareholders need to pay attention to who's running their company and who's monitoring those who are running their company.  And if the directors aren't doing what they should to watch over the CEOs, CFOs, and the like, shareholders should replace them.

See? Clients want to push for fees calculated other than by the billable hour.

See here.  (Hat tip to my buddy Walter Effross.)  Law firms are thinking about how to stay profitable while figuring out new ways to value their services (good), but they may not have realized how much the legal landscape has changed (bad).

We're talking about a paradigm shift.  Lawyers are supposed to make a decent living, but if they're hoping for perpetual multimillion-dollar draws, they have (as Mom used to say) "another think coming."

Aspen will give you a taste of Law School Survival Manual by posting one free chapter.

And we think that the chapter's a doozy--it's on how to prepare for exams.  See here for the link to Aspen1L.

A nice feather in Boyd School of Law's cap.

One of the things I love about Boyd is how engaged our faculty is in research.  Now Brian Leiter has a post that recognizes how we're doing (see here).  It's also nice to see Ohio State in that list--not at all surprising, but nice nonetheless.

Thanks, Brian!

Another good column on the housing crisis.

I always look forward to the Sunday columns by Gretchen Morgenson (see the latest one here).

More shameless self-promotion.

Click here for a podcast that gives advice to law students, and click here for a post that links the podcast to our Law School Survival Manual.

Thank you, Faculty Lounge & Laura Appleman!

Woke up today to this review of the Law School Survival Manual over at The Faculty Lounge (here).   Thanks, Laura!  You made my day!

Another good column on Nevada's budget crisis.

I look forward to John L. Smith's columns in the Review-Journal, and today's column is no exception (see here).  Let's face it:  imposing taxes on tourists isn't working well for us, because there is a price point at which tourists will choose another vacation location, rather than paying through the nose for lodging.  Imposing higher taxes on food is more broad-based, but it's going to fall disproportionately on the poorest among us, who look to stretch every penny of their budgets.

Mining, on the other hand, probably hasn't reached its price point for taxes.  A couple of observations:  (1) the minerals are here, so as long as the mining companies want to mine here, they're captive; and (2) I'll bet that there are other businesses that aren't at the price point for leaving the state or laying off their employees.  That second point is tricky, because raising taxes on businesses across the board will hurt those smaller businesses with razor-thin profit margins.  And we don't want to go around killing more businesses.  They're dying left and right already.

We need more broad-based taxes, but let's try to levy them on sources that have a solid profit margin (so that the businesses are still left with a hefty profit), rather than on people and business that are struggling to survive.  Maybe it's time for a state luxury tax?

Shameless self-promotion here: LexisNexis Top 25 Business Law Blogs voting begins now....

When I came back from class this afternoon, I saw this email:

Dear Nancy:

Each year, LexisNexis honors a select group of blogs that set the online standard for a given industry. I’m pleased to notify you that Nancy Rappaport Blogspot [sic, but I'm still flattered] is one of the nominated candidates for the LexisNexis Top 25 Business Law Blogs of 2010, featured on the LexisNexis Corporate & Securities Law Community and the LexisNexis UCC, Commercial Contracts & Business Law Community.

We are inviting the business law community to comment on our list of nominees. If you’d like to request that readers support your nomination, please ask them to comment on the announcement post at either of the following links:

Top 25 Business Law Blogs 2010 – Corporate & Securities Law Community

Top 25 Business Law Blogs 2010 – UCC, Commercial Contracts & Business Law Community

To submit a comment, log on to your free web center account. If you haven’t previously registered, you can do so on the Corporate & Securities Law Community or the UCC, Commercial Contracts & Business Law Community. Registration is free and does not result in sales contacts. The comment box is at the very bottom of the page.  The comment period for nominations ends on October 8, 2010.

Congratulations on your nomination. 

So, because it would be just lovely if this blog were to be included as a top-25 blog (even though all of the blogs are interesting, and many of them are remarkably good), if you have the ability to vote for my blog, please consider doing just that.  Thanks!

UPDATE:  As my buddy Brian Goldberg pointed out to me, the blog's been nominated, and now it's a matter of talking it up (if you're comfortable doing that) on the various LexisNexis communities.  Thanks!

SECOND UPDATE:  In order to post a comment to talk up a blog, register for one of the communities and click on this link (here) or this one (here).   In addition to voting for my own (think Hillel), I also voted for
The Corporate Library Blog,
Race to the Bottom,
The Conglomerate,
WSJ Law Blog, and
Credit Slips.

Best explanation of what Nevada needs to do to turn the state's economy around--EVER.

See here.  The whole "we don't have to raise taxes to fix the state's economy" problem brings to mind my favorite speech that Michael Douglas gives as President Andrew Shepherd in The American President (see here):

President Andrew Shepherd: For the last couple of months, Senator Rumson has suggested that being president of this country was, to a certain extent, about character, and although I have not been willing to engage in his attacks on me, I've been here three years and three days, and I can tell you without hesitation: Being President of this country is entirely about character. . . .  America isn't easy. America is advanced citizenship. You gotta want it bad, 'cause it's gonna put up a fight. It's gonna say "You want free speech? Let's see you acknowledge a man whose words make your blood boil, who's standing center stage and advocating at the top of his lungs that which you would spend a lifetime opposing at the top of yours. You want to claim this land as the land of the free? Then the symbol of your country can't just be a flag; the symbol also has to be one of its citizens exercising his right to burn that flag in protest. Show me that, defend that, celebrate that in your classrooms. Then, you can stand up and sing about the "land of the free". . . .  We have serious problems to solve, and we need serious people to solve them. . . .
[pauses]
President Andrew Shepherd: I've loved two women in my life. I lost one to cancer, and I lost the other 'cause I was so busy keeping my job I forgot to do my job. Well, that ends right now. . . .  We've got serious problems, and we need serious people, and if you want to talk about character, Bob, you'd better come at me with more than a burning flag and a membership card. If you want to talk about character and American values, fine. Just tell me where and when, and I'll show up. This is a time for serious people, Bob, and your fifteen minutes are up. My name is Andrew Shepherd, and I *am* the President.

It's time for our candidates to step up to the plate.  Stop going for the votes, and start thinking seriously about how to fix Nevada's economy.  I know that you don't have the scriptwriter of The American President there to make your words powerful, but let's see if you can show that you're serious about your responsibilities to Nevada's citizens.

Why I like Steven Horsford.

Everyone makes mistakes, but not everyone apologizes for them or takes responsibility for them.  When Senate Majority Leader sent out a fundraising letter that linked access to donations, the public was outraged (well, at least the part of the public that thought that donations didn't create access was outraged).  But Horsford then apologized (see here) and refused to blame anyone on his staff for the original decision to send the fundraising letter (see here). 

Personally, I like leaders who own up to mistakes and don't sacrifice staffers for them.  So my opinion of Horsford has gone up, not down.

Give the banks a monetary incentive to do the right thing.

Guilt doesn't work.  Shame doesn't work.  Threats don't work.  "Affordable homes" programs don't work (see here and here for some examples).  What might work to get banks to agree to modify mortgages quickly and reasonably?

The first thing to realize is that banks are businesses.  Some might not be run very well, but they're businesses.  And businesses respond best to financial incentives. 

I've blogged about some possible incentives before (see here).  Give the banks a reason to write down the principal due on underwater mortgages, perhaps by agreeing to take any profit above that write-down if the house sells in the five years after the write-down.  The homeowner gets a lower principal balance that's more in line with the real value of the house.  The bank gets any upside for a reasonable time after the modification, if housing prices rebound.

Of course, we'd also have to deal with the accounting and tax implications of such a change.  Banks don't have an incentive to write down the value of these underwater homes; without either a positive (benefit) or negative (penalties) incentives, banks are engaging in behavior designed to inflate the value of their collateral.  Too many banks are foreclosing but not selling homes, in part because selling would set a real value at odds with the book value.  Not only are the banks not selling the foreclosed homes, but they aren't keeping up the property or the payments on the HOA dues (see here).  Banks are dragging out short sales beyond all economic reason.  Unless we figure out a way to provide financial incentives to get banks to behave better, all of the shame and guilt and anger in the world won't get them to change.

Hey, I've never been the subject of a rap video....

See here.  At least not to my knowledge....  Hat tip to my buddy Eric Van Horn.

Larry Temkin changed my life, too.

One of my favorite professors from Rice University, Larry Temkin, now teaches at Rutgers.  The Rutgers home page is featuring a salute to Larry (here) for the next two weeks. Although I hated to see Larry leave Rice, I was happy to see him courted by the best philosophy program in the country.  (Oh, and Harvard courted him, too.)

What made Larry so good, in addition to his obvious desire to get his students excited about using their brains, was his ability to tease out--even from shy folks like me (and yes, I was shy!) a willingness to sink our teeth into difficult material.  He didn't teach down to us, not even once.  And like anyone else who's at the top of his game, his talent made us want to be better students.  He was vibrant in class, engaging outside class, and downright inspiring.  I can still see him bounding into class each day (and "bounding" is the correct word), ready to get the discussion started.  Best of all, he put the lie to the fiction that really great teachers can't be great scholars as well.  He was superb in both arenas, and he made everything look effortless, even though it wasn't effortless at all.  Rutgers is very lucky to have him.

And while I'm thanking Larry for his remarkable contribution to my education, I should thank some other Rice profs as well.  (I owe Bob Weisberg, Tom Jackson, and Jack Friedenthal, among others, thanks for my education at Stanford Law School, too, but that's a post for another time.)

Larry, along with folks like Baruch Brody (here), Dennis Huston (here), David Lane (here), Hank Hudspeth (here), and Harold Hyman (here), kept Rice's promise to provide an excellent undergraduate education.

Baruch Brody did give me a scare during my first semester, though.  I'm from a small town in deep East Texas, and although my parents were from "up north" (New York and Toronto), I had never heard a rich Brooklyn accent before.  I spent the first month of Dr. Brody's lectures wondering what he was saying and hoping that I didn't flunk his course.  After I was able to translate his accent into "Texan," I figured out that I was getting what he was saying, after all.

Dennis Huston taught me that good professors could cuss up a blue streak without shifting our focus away from the material at hand.  I took every course that he taught, and I'm still a member of his unofficial fan club.

David Lane turned me into a statistics geek, to our mutual amazement.  He even let me take some graduate-level courses in statistics while I was an undergrad.  Through him, too, I got to design my honors thesis on the effect of time of day on teaching performance, which is my own personal explanation for why my students fall asleep in class when I teach in the 3-4:30 slot.

Hank Hudspeth, who was kind enough to hire me for my first summer law job, was demanding without being demeaning, and he modeled how a true gentleman behaves.  When I worked for his firm in the summer of (gasp!) 1983, I saw his commitment to professionalism first-hand and began to model my own professional life after his.  I wish I could find his book, A Baker's Dozen of Torts, somewhere, because I lost my copy and I sure loved that book.

Harold Hyman scared me to death at Rice.  He had an imposing presence and a booming voice, and his face reminded me of a real-life Sam the Eagle.  He's also the first person I told about my getting into Stanford, and I remember him coming out from behind his desk to congratulate me.  When Jeff & I came back to Houston in 2000, Harold and Ferne became our fast friends.

All of these folks contributed to my love of learning (which actually started with my mom and dad--there were more books in our house, and more time spent reading them, than I ever noticed in any of my friends' homes).  I owe them big.

Scott Bovitz ROCKS! (As does the Bovitz-Spitzer law firm....)

So I'm bugging my friends for some samples of stay relief motions to effect setoffs and for samples of objections to exemptions, and Scott Bovitz (one stylin' dude, BTW--see here) calls me to direct me to his portal (here).  That portal has all sorts of handy-dandy links, like the one to his law firm (here), which in turn led me to some form links for the Central District of California.  Thanks, Scott!

And, for the rest of my buddies who might have some such forms (hint, hint, folks like Marc, Billy, and others....), please let me know if you have some exemplars I can use.  I'm doing a pro bono representation of a creditor (Stop laughing! Creditors need love, too!), and I could use the help.  Thanks!

Shout-outs for new law professors

Thanks to my buddy Tim Zinnecker for mentioning the advice I've given to "newbie" law profs (see here), and kudos to my buddy Jeff Lipshaw (and his co-authors, Brandon Denning and Marcia McCormick) for their forthcoming ABA book, Becoming a Law Professor: A Candidate's Guide (see here).  Brian Leiter mentioned this book on his blog today (see here). 

I'd call today a good day for law professors.

Newest guilty pleasure: everything "Jen Lancaster-y"

First, I picked up Bitter is the New Black.  Loved it.  Then I went straight to a Jen Lancaster trifecta:  Bright Lights, Big Ass; Such a Pretty Fat (with the world's best descriptions of working out w/trainers; and, like her, I too now have my own "strongs," thanks to my own trainer--our buddy Jeff Monroe); and Pretty in Plaid.  Loved 'em.  Now I'm reading My Fair Lazy and the Jen Lancaster blog, Jennsylvania.  I really like her snarky sense of humor and her way with descriptions. 

I know, I know.  Law professors are supposed to read highfalutin things in the summer.   Nope.  At least, not me.  Yes, I read stuff for the articles/books I'm doing; yes, I read other people's articles, especially when I've been asked to do a tenure review.  But for fun, I read things that take me out of my normal routine.

Now, back to my fun summer reads.  If you want to follow down the Jen Lancaster path, start w/Bitter is the New Black and go from there.

Billing judgment matters.

As I was reading this morning's Above the Law post about a federal court cutting legal fees because the law firm requesting fees failed to use good "billing judgment" (see here), I felt particularly vindicated by the Court's discussion of reasonableness.  I've been focusing on issues about legal fees lately (see here), and I think that it's much easier to rack up high fees and expenses when you're assuming that someone other than your client will be footing the bill.

Check out this language from the Court's opinion, which you can download here, thanks (again) to Above the Law:

The Court recognizes that the work performed on researching, drafting, and arguing the preliminary injunction motion provided important roadmap for Plaintiff with respect to its strategy in pursuing this litigation. However, spending almost 420 hours, which equates to almost 53 full work days7, on drafting and defending a preliminary injunction motion is unreasonable in light of Plaintiff’s counsel’s familiarity with the disputed issues. For the same reasons, spending approximately 50 hours on drafting and revising 11-page supplemental declarations and expending significant number of hours on post-Complaint research and preparation appear unreasonable to the Court.

(Opinion at 16.)  The opinion continues with a reduction, not just of fees, but of expenses as well:

Having considered the invoices submitted by Plaintiff and objections raised by Defendant, the Court finds that some of the expenses incurred by these Signature personnel were unnecessary and unreasonable. For example, it is difficult for the Court to believe, and Plaintiff does not explain how, that the faxing or internet charges incurred at the Westin, frequent “entertainment” charges in addition to meals, numerous first class plane tickets, limousine rides or pick-up service to and from the airport, and approximately $400 nightly stays at Hyatt were necessary and reasonable costs related to this litigation when cheaper more reasonable options were at the witnesses’ disposal. 

(Opinion at 36.)

When a lawyer speaks directly with a client about a high bill, there's that moment when the client is likely to ask about the reasons behind some of the charges.  When a lawyer doesn't have to look the client in the eye, so to speak, it's easier to lose track of what a "reasonable" fee or expense should be.