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So, before leaving the country, I’ve been pondering my queasiness with 150-year prison sentences. I have no problem with an effective life sentence or even a longer-than-life sentence, but these blockbuster sentences somehow seem just wrong. I tried to figure out just what the problem is, when I realized that the 150-year sentence in the Bernie Madoff case is an artifact of the charges levied against Madoff by the U.S. Attorney. Recall that the government charged, and Madoff pleaded guilty to, 11 counts of criminal behavior with a collective maximum sentence of 150 years. Those charges and that maximum were the basis for the sentence Judge Denny Chin ordered.

But consider this: J. Allen Stanford, another Ponzi schemer, was just charged with 21 counts of criminal behavior with a collective maximum sentence of 250 years.

Now, if the judge in Stanford’s case were to impose the statutory maximum would it make any sense? 150 years for a $60 billion Ponzi scheme that lasted decades and swept up thousands of victims (Madoff); 250 years for a $6 billion Ponzi scheme that lasted just a few years and ensnared far fewer victims (Stanford)?

You can see the problem: the U.S. Attorney can (and frequently does) manipulate the sanction options available to the sentencing judge just by piling on causes of action. The U.S. Attorney’s office in Houston took some time and exercised some care in making the charging decision in Stanford (whom they expected to plead not guilty). Presumably, with a few more weeks and a more combative defendant, the U.S. Attorney’s office in the Southern District of New York could have come up with more charges and therefore sought many more years in their indictment of Bernie Madoff.

One can easily see a sanctions arms race among districts and increasing sentencing disparities of the sort the Sentencing Guidelines were intended to curb.

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As soon as our new Dean announced my appointment as Associate Dean for Faculty and Curriculum, my email inbox started to fill with various messages relating to law school administration. Among these messages was one that linked approvingly to Paul Lippe's "Welcome to the Future: Time for Law School 4.0."

On my first spin through the article, I thought it was just another rant on legal education, but Bill Henderson caused me to take a closer look. Bill uses the article as a springboard for talking about the apprenticeship model, but I am not sure Bill fully appreciated Paul's radical proposal. Bill asks, "is it appropriate to shorten law school to two years?" But that is not what Paul is proposing. Here is a quick outline of Law School 4.0:

That last bit is where I did a double take: law school is technically three years, but law students receive only one year of classroom instruction!

Given that clinical instruction is much more expensive than classroom instruction, I think it's fair to say that Paul's proposal would increase substantially the debt burden of most law graduates. And while we might be able to argue about it, I am pretty confident that Paul's proposal would not produce fully functioning lawyers. Even if a year of clinical work and a year-long externship taught them substantial lawyering skills, graduates from Paul's law school would suffer from having a much narrower exposure to substantive law than current law graduates. My guess is that Paul would concede that fully functioning lawyers need both lawyering skills and a knowledge of substantive law,* and his proposal simply strikes a different balance on instructional priorities than current law schools.

All law schools attempt to balance these instructional priorities, but the hard question is, what is the right balance? As I have observed in a prior post, "More this and more that inevitably means less of something else." So if you are going to reform legal education, you need to identify the opportunity costs. To his credit, Paul is willing to name his sacrifice: instruction in substantive law.

But we need more detail, and it should be easy to produce. What I want to know is this: if you had only one year of classroom instruction -- that's about 30 credits worth of classes -- what would you teach? Or, stated another way, what would you leave for the students to learn on the job? Once we know that, we can talk more intelligently about whether students would be better able to acquire missing lawyering skills (under the current system) or missing substantive knowledge (under Paul's proposal) while engaged in the practice of law.

* When I refer to knowledge of substantive law, I intend to include the skill of legal analysis, which is the primary skill taught in many substantive law courses. One possible implication of Paul's proposal is that law students would obtain less training in legal analysis, one of the areas in which law schools shone, according to the Carnegie Report.

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Lite reading for the holidays: I have a post up at the WaPo's Hearing blog on international financial regulatory reform - and you can read the chapter on which it is based at the Committee on Capital Markets Regulation.

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This Saturday, the 4th of July, will mark 70 years since Lou Gehrig's famous "Luckiest Man" speech, and Major League Baseball will mark the occasion:

In an effort to raise awareness and financial support for organizations leading the fight against ALS (Amyotrophic Lateral Sclerosis), otherwise known as Lou Gehrig's Disease, every Major League Baseball Club playing at home on July 4th will conduct a special on-field ceremony to commemorate Lou Gehrig's Yankee Stadium farewell speech. During these special ceremonies, all Clubs will honor Gehrig's memory by recreating part of his "Luckiest Man" speech....

On July 4th all on-field personnel, including players, coaches, umpires and groundskeepers will wear a "4 ♦  ALS" patch. In addition, to honor Gehrig, who played first base with the Yankees for 17 years, a special "4 ♦  ALS" logo will appear on top of first base in each ballpark. Authenticated first bases from the July 4th games will be auctioned off at a later date on MLB.com to raise additional funds for ALS. A special "4 ♦  ALS" video was created for Clubs playing at home on July 4th.

But the coolest part of the commemoration is that my colleague, Michael Goldsmith, who suffers from ALS, has been asked to throw out the first pitch at Yankee Stadium!

I know that Michael is very excited about this, and it's a deserving honor, since he prompted MLB to stage the commemoration. Here's the relevant part of the press release:

"Seventy years after Lou Gehrig's farewell speech, no cure exists for ALS," said Goldsmith. "Doctors have no real way even to slow its devastating progression. Because research for a cure is still in its infancy, defeating ALS will require the same determination that Lou Gehrig and Cal Ripken, Jr. demonstrated in setting records for consecutive games played. I live for the day when all ALS patients can give you a standing ovation for fighting this fight with us."

Good work, Michael!

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The UMKC Law Review, published by the University of Missouri-Kansas City School of Law, is calling for papers by legal scholars addressing the potential for law and legal education to promote entrepreneurship and innovation and facilitate economic recovery and growth. Articles and essays accepted for publication will appear in the Fall 2009 Law, Entrepreneurship & Economic Recovery issue of the Law Review.

Suitable topics for this symposium issue would include critical analysis of the role of laws generally, or of particular laws, in either supporting or inhibiting the opportunity identification, creativity and business models that fuel successful entrepreneurial ventures; proposals for legal reforms to foster the generation of new ideas and inventions and to provide viable paths and regulatory climates for the commercialization of innovations; and ways in which law schools can improve the education of law students to better position them to become lawyers who are effective and valuable contributors to the success of entrepreneurial endeavors.

Submissions should be made by August 1, 2009. We welcome both articles (under 25,000 words) and essays (10,000-15,000 words). Professor Anthony Luppino is the coordinator of the Symposium, and you may contact him at UMKC School of Law, 500 E. 52nd St., Kansas City, Missouri 64110 (e-mail: luppinoa@umkc.edu) if you are interested in writing a topical article or essay.

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So, I'm sure you've all seen this story.  Robert Bowman, who reminds me of the joke "Someone gets mugged every 3 minutes in this country, and boy, is he mad," has weathered a lot of obstacles and bad luck in his Odyssey to complete college, law school, and an LL.M.  Now, at 47, after passing the New York bar on his third time, an appellate court has held that he cannot receive a license because he has amassed student loan debt of over $400,000 over the past 26 years without any serious effort to pay down that amount.

I guess my first reaction is sympathetic.  So what?  The State of California is paying its bills in I.O.U.s this month, and there are thousands of Americans who owe $400,000 on houses with the fair market value lower than Barbie's dream house.  It doesn't appear that Bowman is in default on his loans -- he has taken valid deferrals.  It does appear that he is disputing some of the amounts (interest and fees on various loans over 26 years probably does get complicated), but he's not a shirker.  Just a deferrer.  If the court is worried about the lenders, then denying Bowman a license to charge clients for legal services seems a little backwards to me.

If the NY state judges are uncomfortable with someone legally amassing this much federally-guaranteed debt, then they should alert their federal legislators about the possibility that the student loan program spawns "lifetime students" who make deferring a way of life.  But don't take your annoyance out on Mr. Bowman.  Just because he has a large loan balance doesn't necessarily mean he'll steal clients' money or abscond with retainers.

Has the financial crisis created some anti-debt backlash?  My retirement account is barely there now, and it's all the fault of people like you, Mr. Bowman, who borrow with no thought for the future?  We need to show this promiscuous borrowers that good people won't stand for it!

I saw a quip the other day that now there are 3 kinds of people:  the Haves, the Have-Nots, and the Have-Not-Paid-For-What-They-Haves.  This may be a (sort of) funny Twitter, but it's not good state bar policy.

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Friend of Glom Kim Krawiec has been guest-blogging over at the Faculty Lounge and, no surprises here, has had some interesting and thought-provoking posts:

My Tenure's For Sale.  How About Yours?

Incentives and Institutions: Why Stop With the Banks? (My Tenure's For Sale, Part II)

When It Comes to Law Faculty, We're All Post-Modernists (My Tenure's For Sale, Part III)

"We All Contribute in Our Own Ways" is Not a Valid Institutional Goal (My Tenure's for Sale, Final Installment)

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Check out Steve Davidoff's review of the TARP so far, which, as he explains, has turned from a bank bailout into an auto bailout:

Meanwhile, the United States has sunk more than $79.7 billion into the automakers at this point. (Look it up in the Treasury Department’s transactions report.) The C.B.O. recently estimated that the subsidy rate in the first $55 billion of this investment was more than $40 billion in lost value, or roughly 70 percent — the highest subsidy rate of any TARP investment.

...[I]n real dollars, the United States is now likely to lose more on the automakers than on the rest of its TARP investments, including in American International Group.

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So last Saturday, I'm on an early flight home from our Outer Banks vacation, trying to read the NYT while hoping that the baby would fall asleep in his car seat (no such luck).  But, I see an article on "Cash for Clunkers."  This seems like the government is giving away coupons on new cars.  I'm not above clipping coupons, so I read on.  The program is officially titled the Car Allowance Rebate System (CARS, get it?).  If you trade in a qualifying car to buy a qualifying car, then you get a rebate of up to $4500.  Sounds pretty sweet.  The whole point is for people to trade in gas guzzlers and buy cars with better gas mileage.  I'm for gas mileage, and $4500 coupons.  This could be a match made in heaven.  But, no.

So, the first thing is that your trade-in will be scrapped, so the most you can "trade in" your car for is $4500 plus the scrap price, which I'll assume is pretty low here.  WikiAnswers told me $250/ton, so we'll say $500.  So, if you trade in a $10,000 car, you won't get to apply $14,500 toward a new car, you'll just get to apply $5000.  Logically, no one will take advantage of the program if the trade in value of their car is less than $4000 or so. 

OK, $5000 still covers a lot of cars on the road, so I'm still interested.  But, the trade-in has to qualify.  It can't be more than 25 years old (still a lot of cars on the road) and must have a combined new mpg of 18 or less. This website tells you what the combined (city/highway) mpg of your car is.  The car we would want to trade in is a Honda Pilot, which we bought in the summer of 2002.  However, because car things are silly, my husband tells me that our Pilot is a 2003 model.  Woo-hoo!  The 2003 Pilot's combined mpg is 17! 

So, we have an eligible trade, and now we just have to buy an eligible car.  An eligible car just has to be a new car (not pre-owned) and have a combined mpg of 22.  Wow, that's pretty low.  I thought it would be at least 30.  Well, I can't imagine that any car we would look at wouldn't qualify under that mpg.

As I'm looking this up, Paul is reminding me that we don't want to trade in the Pilot and that it is worth more than $5000.  But, I argue, in two years, this coupon will be gone, gone, gone, so we should think about taking advantage of it.  However, I look up the Bluebook value of our car, and Paul is right.  Even with the heavy wear that three kids have caused, I can't imagine this makes any sense at all for us.

So, who theoretically does it make sense for?  People with old cars worth a few thousand dollars or less on a trade in who were going to buy a new car anyway.  The NYT article didn't seem to find many car dealers who were optimistic.  Besides the occasional person who keeps cars for 10-15 years (like us and the guy in the article), most people who are driving around in $1000 cars can't afford a brand new car, they say. 

This of course leaves open the question of whether the program makes any sense at all.  Presumably, the thought is to get cleaner, more fuel efficient cars on the road, giving a boost to auto manufacturers in the process.  But the minimum mpg's are not all that great.  Even if a lot of people took advantage of the program, it might just succeed in replacing cars with only marginally more efficient cars.  I'm also not sure if it would save drivers that much money.  I remember in Texas, the government would host these "tax holiday" weekends with no sales tax.  On those days, though, retailers ran no sales.  Why run your normal 20% back-to-school sale if the government is going to subsidize a 9% sale?  The weekend after had more bargains.  Likewise, is a dealer going to negotiate off the sticker price very much when the government is giving you a rebate anyway?

Finally, although I'm assuming that the primary goals are upgrading cars on the road and increasing demand for new cars, the program distinguishes between "owners" and "speculators."  To qualify, the car must have been registered to you for a year.  So, you can't raid Craigslist and then use your "$2000 or best offer" find to upgrade to a Prius, even if the effect meets the program's primary goals.  This distinction seems silly to me, unless it's just a way to limit the number of users of the program.  The goal can't be to get people without drivable cars into a drivable car (a qualifying car must be drivable) or really even to get people into cars that are cheaper to drive (the difference in the qualifying mpg's is so small).

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Let's talk about excessive corporate luxury spending.  After the hullabaloo about the $440,000 AIG retreat in October 2008, and news in January of John Thain's $1.2 million office renovations, and the Citigroup plane fiasco, the luxury expenditures section of ARRA was inevitable.  The Act requires that the boards of TARP recipients adopt "a companywide policy regarding excessive or luxury expenditures, as identified by the Secretary, which may include excessive expenditures on—

(1) entertainment or events; (2) office and facility renovations; (3) aviation or other transportation services; or (4) other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the business operations of the TARP recipient."

Buried in Treasury's June 15 interim final rule on TARP Standards for Compensation and Corporate Governance is a requirement that the boards of TARP recipients by September 19th "adopt an excessive or luxury expenditures policy, provide this policy to Treasury and its primary regulatory agency, and post the text of this policy on its Internet website, if the TARP recipient maintains a company website.  After adoption of the policy, the TARP recipient must maintain the policy during the remaining TARP period." 

As the executive summary explains, Sarbanes-Oxley provided a similar method of disclosure of codes of ethics under Section 406.  Memo to Treasury: this doesn't work.  Letting companies make up their own rules and then disclose when they break them is a bad idea.  Clearly the incentive for the company is to make the policy as weak as possible.  

Note that these regulations, unlike Section 406, don't require disclosure of any waivers granted from the policy, just the policy itself and any amendments to it.  Presumably the requirement that the policy be "maintained" means that no waivers or exceptions are allowed.  But a company's luxury policy could provide that "officers may not spend more than $50,000 on a company car unless approved by the board."  The CEO then buys a $180,000 Lamborghini. As long as the board approved it, the expenditure would be in accordance with the policy.  (This particular trick is how some companies avoided "actually" violating Sarbanes 406, by the way).

Furthermore, website disclosure is flawed because it's ephemeral.  If you require companies to make filings with the SEC via EDGAR, then you create an easily searchable database for researchers.  In contrast, websites and the pages on those websites come and go, and the WayBack Machine has a 6-month lag. 

I know, I know, I'm overreacting.  Not all TARP recipients are SEC-reporting companies, and anyway, luxury expenditures are small regulatory potatoes. I just don't like website disclosure, and letting companies make up their own rules is faux regulation in my book.  Better not to regulate than to pretend to.

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In 2003, Forbes Magazine published an article entitled Millionaire Mullahs.  The article discusses the concentrated wealth that the elite clerics and well-positioned revolutionaries have amassed since 1979.  The undisputed champion of positioning, politics, and amassing wealth is a man at the center of Iran’s current uprising, Ali Akbar Hashemi Rafsanjani.  Here is Forbes’ take on Rafsanjani back in 2003:

The article does not paint a pretty picture of Rafsanjani.  Pre-Ahmadinejad, he was arguably the most despised public figure in Iran – the poster-child for corruption and dirty business in a country were the average family's annual income is about $2000.  He has been referred to as “the spider” for the careful way he weaves a network of political and business alliances, but many now hope that it’s Rafsanjani’s ever-pragmatic business sense that will save the opposition movement in Iran.

While Mir Hossein Mousavi may be the face of the current opposition, absent the open, vocal and financial support from Rafsanjani, Mousavi and the reform movement would not have its current legs.  Rafsanjani has been a long time and outspoken critic of President Mahmoud Ahmadinejad.  My guess is that Rafsanjani is less concerned with Ahmadinejad’s populist and isolationist rhetoric (which may have benefitted him financially) than he is with a national economy out of control and a new generation of cronies that have ascended with him, each with their open palms.  Ahmadinejad has also gotten significant political mileage out of making Rafsanjani the common man’s enemy, a strategy that has further pitted the two against each other. A thorough article of Rafsanjani’s move towards the moderate camp can be found here. 

It is clear now, however, that the opposition movement has gone beyond the question of the presidency and Ahmadinejad to a challenge of the entire system of Velayat-e faqih whereby clerics have the ultimate say in all secular matters.  Iran’s system of government (diagrams here and here) guards all the final authority with the Supreme Leader, Ayatollah Ali Khamenei, and his Guardian Council, leaving the elected politicians only the power that they are granted from above.  In the past, calls from the electorate for reform have been uniformly ignored by the elite religious leaders within the Islamic power structure.  But Ahmadinejad has been a divisive politician and rifts have grown among the clerics.  The growing discontent among many established leaders, including Rafsanjani, for Ahmadinejad, plus Khamenei’s unquestioned support for Ahmadinejad, plus a very popular Mousavi running against the incumbent, plus Ahmadinejad and his supporter’s blatant and overzealous rigging of the election has created a perfect storm that is the first real challenge to the system of rule that has dominated since the revolution.

This is what the Times wrote about Rafsanjani last week:

Who knows Rafsanjani’s motives for becoming such an ardent supporter of the opposition movement.  It could be that another term of Ahmadinejad as president would simply be too detrimental to his net worth, or maybe Ahmadinejad simply hurt his feelings by labeling him the consummate corrupt politician.  I wonder if, now in his 74th year, Mr. Rafsanjani has taken a hard look at his legacy as a founding father of the revolution and is now determined that he be remembered not for robbing the country blind, but for putting the ‘republic’ in Islamic Republic.

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My colleague, Mary Hoagland, pointed me to the "Roundtable on the Future of Lawyer Hiring, Development, and Advancement," sponsored by the National Association for Law Placement, Inc., where 19 "industry leaders" did the following, among other things:

• Expressed great interest in development of an apprenticeship model of lawyer training;

A closer look at the transcripts reveals that this idea was floated by Glom friend and legal industry guru, Bill Henderson:

The group also "[c]oncluded that increased competition will create new demands for lawyer training." Training by whom? Based on the transcripts, the group was of two minds about this. We get the obligatory reference to new associates "hitting the ground running," but lots more talk about the need for firms to invest in training. Like this:

And we circle back to apprenticeship:

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I've been reading Public Enemies by Bryan Burroughs, a fascinating exploration of the most notorious bank robbers in the early 1930s (John Dillinger, Pretty Boy Floyd, Machine Gun Kelly, the Barker Gang, Baby Face Nelson and Bonnie and Clyde), who were foiling state and federal lawmakers at every turn with their simultaneous crime sprees.  Interestingly, the book points out that the Depression did not create these bank robbers.  They weren't down and out people who had lost farms or jobs.  They had been criminals in the 20s, also.  But, the technology of the day had brought them getaway cars and machine guns, giving them a new ability to rob banks and disappear into the back roads of the Midwest.  The book also reveals the ineptitude of the newly created FBI and has spawned a movie starring Johnny Depp as John Dillinger.

Thinking about Dillinger et al. has created an interesting backdrop to the Madoff sentencing.  We don't have a lot of bank robbers these days, and very few jail breaks.  The book depicts the relationship between the criminals and law-abiding folk as not that strained.  Dillinger in particular took many hostages to flee crime scenes, but then let them go, often with spending money.  He generally stole money from banks, which weren't very popular during the Depression, but not from individuals.  (He did seem to steal a lot of getaway cars, though.)  Some individuals saw his crimes as being against nameless banks or insurance companies, and not really having much to do with them.  Informants and witnesses were hard to find.  Of course, his crimes created a lot of danger for innocent bystanders and caused the death of several of them, and many law enforcement officers.  He also later teamed up with trigger-happy Baby Face Nelson, who didn't seem to have the marketing talent that Dillinger had.  Obviously, Dillinger's crimes were not bloodless financial crimes to be sure.  (Will Rogers famously criticized the FBI by saying that Dillinger might get lost in a crowd of innocent bystanders and then the FBI would accidentally shoot him.) 

Our public enemy of today is a very hated person, Bernard Madoff.  His financial crimes were bloodless, although we are having a debate in the comments to Jayne's "Extraordinary Evil" post about how life-ruining having one's life savings stolen, particularly late in life, can be.  One of Madoff's victims stated that he felt imprisoned because he lost the freedom that his life savings gave him.  Madoff seems to definitely be more reviled by middle America than Dillinger.  No Robin Hood myth could ever attach to Madoff.  He stole from the rich and the middle class to make himself richer, but Dillinger also kept his bounty.  Dillinger never got rich and definitely never led a life of luxury and leisure, like Madoff.  And Dillinger didn't look people in the eye, friends and confidants, and lie to them to get their money.  Perhaps these are the differences, or perhaps just differences in the times in which we live.

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