TEN TIPS FOR LEGAL MARKETING IN A RECESSION

Even in an economic downturn, there are things you can do
to grow your practice:
  • Adjust firm's mix of services, leveraging practice strengths and focusing on growing/emerging legal areas
  • Commit to ongoing client contact.
  • Cross-sell existing clients on other firm services
  • Recognize marketing as an investment - not an expense. Then INVEST.
  • Implement marketing programs that initiate a firm/client relationship (e.g., seminars) without committing the client financially
  • Develop marketing tools that can be utilized in many ways (e.g., an informational brochure that can be distributed in office, at seminars, as a direct mailer, and/or forwarded to the appropriate media for further dissemination to prospects)
  • Implement a low cost (though work intensive) PR effort that includes press releases and feature articles
  • Track sources of prospect calls and new clients as well as conversion rates
  • Maintain existing price structure (i.e. resist the temptation to be a low cost provider)
  • PLAN. PLAN. PLAN.

818 Area Code Overlay with 747 Area Code Begins in 2009

The California Public Utilities Commission (CPUC) has forecasted that the 818 area code (San Fernando Valley, California) will run out of telephone numbers in the third quarter of 2009 and has therefore announced an overlay with new area code 747; that is, as is the case with the old 310 and new 424 area codes, both area codes will exist in a single geographic area, with most new telephone numbers assigned receiving the new 747 area code.

Because an 818 and a 747 telephone number may therefore be in the same house or office building, ten-digit dialing (dialing the area code plus the number) will become mandatory in the 818 area code, effective April 18, 2009. The advantage of an overlay rather than a split is that any person or business with an 818 number will be able to keep that number, and no decision has to be made as to what geographic are retains the 818 area code and what area must adapt the new area code. Public hearings showed the public favored the overlay solution.

Cities in area code 818 include Agoura, Agoura Hills, Arleta, Calabasas, Canoga Park, Chatsworth, Encino, Glendale, Granada Hills, Hidden Hills, La CaƱada Flintridge, Lake View Terrace, Mission Hills, North Hills, North Hollywood, Northridge, Pacoima, Panorama City, Reseda, San Fernando, Sherman Oaks, Studio City, Sunland, Sun Valley, Sylmar, Tarzana, Toluca Lake, Topanga, Tujunga, Universal City, Valley Village, Van Nuys, West Hills, Westlake Village, Winnetka, Woodland Hills, and of course "Media Capital of the World" Burbank.

More information: CPUC 818 Area Code Change Information

California Scheming: What One-Party Rule Is Doing To Once-Golden State

California Scheming: What One-Party Rule Is Doing To Once-Golden State, Investor's Business Daily editorial, December 22, 2008:
.... As the financial crisis in California gets worse, it's pretty clear the real problem isn't the budget at all, but a political system that has resulted in a dysfunctional one-party state. ....

A reasonable response from a mature group of individuals might be to cut spending — especially since polls show that most Californians don't believe their taxes should be raised. Instead, they've chosen to thumb their noses at the people's will. It shows the danger of what is in effect California's one-party rule. .... Frustrated with their inability to raise taxes, Democrats got creative: They decided they could declare outright hikes in taxes to be "fee increases." This would let them pass a massive $9.3 billion in tax hikes without consulting Republicans in the legislature, in direct violation of state law. ....

California is already the most costly place in America to do business, according to the Milken Institute's business cost index. Its business costs in 2006 were 23% higher than the average for the rest of the states, and well above those of its neighboring states.

Worse, energy costs are already 35% higher than the national average. With California's costly new CO2 mandates about to kick in, the economy could well grind to a halt.

Such business mainstays as Intel, Exxel Outdoors, Toyota and Tesla have already left California. Intel is a particularly alarming example: The world leader in chip technology started in Silicon Valley but no longer makes anything in California.

Since 2001, according to the California Manufacturers and Technology Association, the state has lost 440,000 high-wage jobs. Today, the state's jobless rate of 8.4% is third-highest in the nation.

Even Hollywood feels the pinch. In 2003, 66% of Hollywood's feature films were made in-state; today, it's down to 31%. Increasingly, Hollywood is a state of mind — not a place to do business.

Things are so bad that, just last week, 25 business groups wrote an open letter to the state's legislature begging it to think about the role businesses play in the economy.

We wish them luck. Unfortunately, instead of aggressively addressing these competitiveness problems, California's Democrats think they can simply tax their way back to prosperity. They can't.

California's tax base is so narrow — 1% of the population pay 50% of income taxes — that you can't "tax the rich" and get more revenue, a long-held Democratic fantasy. California individuals today bear the sixth-highest tax burden in the nation. Raising taxes won't do anything but drive off productive workers and kill the economy.

It's already happening. Tired with having their voices ignored and faced with soaring taxes, high housing costs and state fiscal chaos, Californians are leaving in droves. They're voting with their feet.

Last year, 135,173 more people left California than moved in, the fourth straight year of net out-migration. As the Los Angeles Times accurately noted, "the trend remains significant because such declines usually occur when working Californians decide better opportunities lie elsewhere."

Members of California's one-party ruling class better start listening to their businesses and productive, overburdened taxpayers, or pretty soon they won't have an economy to fund their government. ....
See also:

Gas Buddy USA Temperature Map

California Legislature Plans To Increase Taxes Amid Recession

Study: Los Angeles, Santa Monica Among 10 Most Expensive Places to Do Business in United States

Maintaining Media Exposure (Particularly in a Down Economy)

What’s great about public relations is that it’s FREE. That’s also why we always urge our law firm clients to build credibility by getting their name in the papers (or on broadcast) by sending out those releases and constantly pitching articles and story ideas. We did this recently for one full service firm, developing an article on Special Education – outlining what parents of children with “special needs” should know about their rights.

In an economic downturn, it’s important to maintain media exposure by:

1. Recognizing that Even the Smallest of Happenings Can be Newsworthy
2. Being Cognizant of When Your Case May Have News Value
3. Thinking “Evergreens” (seasonal type stories)
4. Pitching Articles on Your Area of Expertise
5. Leveraging Events and Cases on which You’re Not Even Involved
(but in which you have expertise)
6. Pitching Speaking Opportunities to Relevant Groups

California Legislature Plans To Increase Taxes Amid Recession

State Democrats Plan To Increase Taxes, Los Angeles Times, December 17, 2008:
Democratic legislative leaders are planning to use a series of complex legal maneuvers to raise Californians' gas, sales and income taxes over the objection of Republican lawmakers, who have been able to block such proposals in the past.

Under the Democrats' plan, sales taxes would increase by three-fourths of a cent. Gas taxes would go up by 13.5 cents per gallon. And a surcharge of 2.5% would be added to income taxes.
More coverage: California Democrats Devise Plan To Hike Taxes:
By structuring them as fees, they would skirt GOP opponents and raise $9.3 billion; A court fight looms
, Los Angeles Times, Decemeber 18, 2008.

See also:

Study: Los Angeles, Santa Monica Among 10 Most Expensive Places to Do Business in United States

2009 California Employer Payroll Tax Rates

A Wicked Good Parenting Resource

Although many parents in and around Boston are already familiar with it, I want to make a plug for the free monthly publication Parents and Kids Magazine, and its parent site (pun intended), Wicked Local Parents (http://www.wickedlocalparents.com/). I was just looking through its recent articles online, including articles on ideas for parents in the coming holidays and New Year's, when I found an article quoting me as a custodial parent (see my last blog entry). Then I realized I have yet to add this great site to my blogroll, and to mention this resource here on my blog. Well then, here you have it.

The magazine is really well written, by and for Massachusetts parents, and is very helpfully available for free at schools, daycare centers, libraries, pharmacies and other stores throughout the greater Boston area. Take a look at it. You might just get an idea of something to do during the holidays, or learn something new that could benefit you and your kids.

For information about Massachusetts divorce and family law, see the divorce and family law page of my law firm website.

Single Custodial Dads

I just came across this article, The Life of a Single Dad, in which I am quoted, quite extensively, and not just as a divorce and family law attorney this time, but rather, primarily at least, as a single, custodial father. The article was published in the award-winning local Parents and Kids Magazine back at the end of May, but I have just now gotten around to finding it today. It's a good story about the interesting and small but growing demographic to which I belong - single custodial fathers - and some of the common challenges this particular group of parents faces.

EXCERPT, "THE LIFE OF A SINGLE DAD" (PARENTS AND KIDS MAGAZINE):
....In the past 40 years, the number of single fathers raising their children has swelled from 400,000 to more than 2.5 million, according to the U.S. census bureau. But, according to several single dads in the area, they are still few and far enough between to raise eyebrows when they appear at playgrounds with their kids and no wife in sight.

....

For information about Massachusetts divorce and family law, see the divorce and family law page of my law firm website.

There are no neutrals there

Natalie Merchant, Which Side Are You On?, on The House Carpenter's Daughter (2003):



They say in Harlan County
There are no neutrals there.
You'll either be a union man
Or a thug for J.H. Blair.

Which side are you on, boys, which side are you on?

Harlan County strikers


Rick Hills has posted a little item that inspires all sorts of thoughts with varying degrees of relevance (all of them positive) to MoneyLaw:
One reason I chose to be an academic is to gain the right to choose my positions a la carte rather than from the prix fixe menu of Left-Right vacuities that dominate the punditocracy and blogosphere. So, for instance (to pull a random example out of thin air), it strikes me as inane to have a general ideological position on "unions," as if one should endorse or condemn together the baseball players' union, the corrections officers union in California, the Teamsters, or District Council 37. Likewise, it strikes me as absurd to think that, because I worry about the latest round of contracts between the public sector and New York City, that I am hostile even to public-sector unions in general. . . .

Rick HillsMy hypothesis: Some academics have joined a sort of intellectual's trade union in which two positions — disapproval of District Council 37 and love of Wall Street — must somehow be bundled together as negotiating items. That sort of bundling of positions makes perfect sense in a two-party system as a means of simplifying ballots for busy voters: After all, Duverger's Law requires us to choose one of two sides. But it is senseless in an academic blog. When it comes to thinking and writing, we academics should put our union cards in our shoes and all be shameless scabs, choosing whichever intellectual position happens to yield the greatest payoff.
Rick's post is worth pondering for these reasons:
  1. Rick makes an appealing call for pluralism in academic thought. Diversity and freedom of thought, which after all are putatively prized values in academia, should permit the full range of views on all sorts of issues, including labor-management disputes in wildly different economic settings.

  2. Rick drops an awesome name, Maurice Duverger. The full cite is Maurice Duverger, Factors in a Two-Party and Multiparty System, in Party Politics and Pressure Groups: A Comparative Introduction 23-32 (1972). Duverger's Law predicts that first-past-the-post voting systems will yield a two-party polity. More grimly, moderate views tend to polarize until two entrenched parties dominate the political landscape. What is true of electoral politics, I'll hypothesize, is also true of the academic equivalent. Articulating the identity and mission of those parties will be an exercise left to the reader, or perhaps even a future MoneyLaw post.


  3. John Henry Blair, Harlan County (Ky.) sheriff, 1922-25 and 1930-33
  4. In a society that has rightfully come to scrutinize everyone's terms and conditions of employment, members of the most generously compensated and thoroughly sheltered segment of higher education — yes, the tenured professoriate — should be more circumspect. In case you hadn't noticed, there's a class war going on out there. Tenure and high professorial salaries are not outrageous per se. We do need, in these times as never before, to justify those privileges. Living up to our ideals regarding academic freedom and intellectual pluralism would be a good place to start.

  5. In light of all of these points, it seems churlish — even "thuggish," to use a term associated with J.H. Blair — to paint Rick as an "aspiring union buster" for the purported thoughtcrime of thinking and writing for himself.
Seriously. They say in academia, there are no neutrals there. Rick Hills has sounded the proper battle call:
Will you be a thinking prof
Or a thug for J.H. Blair?

The wonders of a pitiful, dreadful life

It's a Wonderful Life
Almost precisely a year to the day after the publication of Other People's Children and Marie Reilly's meditations on the Bailey Building & Loan Association comes Wendell Jamieson's fantastically insightful reexamination of It's a Wonderful Life:
It's a Wonderful Life“It’s a Wonderful Life” is anything but a cheery holiday tale. . . . “It’s a Wonderful Life” is a terrifying, asphyxiating story about growing up and relinquishing your dreams, of seeing your father driven to the grave before his time, of living among bitter, small-minded people. It is a story of being trapped, of compromising, of watching others move ahead and away, of becoming so filled with rage that you verbally abuse your children, their teacher and your oppressively perfect wife. It is also a nightmare account of an endless home renovation.
I wholeheartedly agree. This year's obligatory viewing of It's a Wonderful Life reminds me that any wise man would swiftly trade all the places, geographic and metaphysical, that he can reach through planes, trains, automobiles, and an Ivy League degree — fifteen countries, four continents, and three languages, if you insist on counting — for devotion worthy of Mary Hatch Bailey and his children's confidence that he really can fix everything complex as well as he can build a rose.

Multimedia bonus: It's a Wonderful Life

2009 California Employer Payroll Tax Rates

The base payroll tax rates for 2009 for California employers have been announced by the Employment Development Department (EDD), and are as follows:
Unemployment Insurance (UI): 3.4% of the first $7,000 of wages per employee, per year (however, an emergency surcharge is also in effect);

Employment Training Fund (ETT): 0.1% of the first $7,000 of wages per employee, per year;

State Disability Insurance (SDI): 1.1% of the first $90,669 of wages per employee, per year (up from $86,698, and up from 0.8% in 2008 and 0.6% in 2007)
Established employers may have a higher or lower UI rate, based on various factors. An emergency UI fund surcharge is in effect for the year.

If you are an employer or prospective employer unsure whether your current or prospective worker is properly classified as an employee or an independent contractor, you should hire an employment law attorney to advise you (I offer these services). Improper classification can lead to costly penalties and interest, as well as the assessment of back taxes.

Additionally, there are a host of legal hoops to jump through - which usually aren't, exposing employers to liability - when hiring a California employee (or an independent contractor). In either case, the relationship should generally be documented in a custom-drafted written employment or independent contractor agreement.

This article, written by a former director of EDD, is a few years old, but provides some general advice for employers on keeping their UI rates as low as possible.

Madonna Divorce Settlement - It'll Be A Big "Payout" to Guy Ritchie

News was just released of the Madonna divorce settlement, under which Guy Ritchie will take around $76 Million as his part of the couple's marital assets division. For more, see the Guardian's report, Madonna divorce deal 'worth £50m' to husband Guy Ritchie | guardian.co.uk, and look at People Magazine's web story, Rep: Madonna to Pay Guy Ritchie $76 Million in Divorce Settlement - People.com.

This will be one of the biggest "payouts" in celebrity cases, and will probably be the biggest one going from a high-earning female star to her husband. Also, according to some reports, it is believed the two parents will share residence of their children. Apparently, there had been hope the divorce would be settled amicably, but that was not really the case, as John Bolch points out on his blog here: Family Lore: Not So Amicable.

For information about Massachusetts divorce and family law, see the divorce and family law page of my law firm website.

Study: Los Angeles, Santa Monica Among 10 Most Expensive Places to Do Business in United States

And predicted to get worse. Westlake Village rated most business friendly in Los Angeles County. The Daily News reports:
The city of Los Angeles will finish 2008 in familiar company: Among the 10 most expensive places in the country to do business, according to a study released today.

Santa Monica is also on the list compiled by the 14th annual Kosmont-Rose Institute Cost of Doing Business Survey released by the Rose Institute of State & Local Government at Claremont McKenna College.

Los Angeles' placement on the list has remained steady, but at least it hasn't gotten any worse in the past year, according to Larry Kosmont, the survey's founder and president and chief executive officer of Kosmont Companies.

"Cities that charge the highest license fees such as Los Angeles, Philadelphia, and Cincinnati are often those that have a history of uneven relations with the business community," Kosmont said.

But Robert "Bud" Ovrom, Los Angeles' deputy mayor of economic development and housing, said the city is making progress.

For example, next year the city starts the final phase of a five-year plan to reduce the business tax by 15 percent. The final installment, a 3.9 percent reduction, kicks in Jan. 1.

"When I'm talking to companies I almost never hear about business taxes. I don't even hear much about workers' comp," Ovrom said.

"Everything I hear today is (about) the quality of the work force, schools, traffic and affordable housing." ....
On the contrary, the author's clients are more concerned with the high costs of state business taxes,* local business taxes, regulation, and workers' comp. Perhaps Ovrom's conversations are primarily with larger companies...? The article continues:
Los Angeles is challenging for businesses because of its fee and tax structure, it said. And while California cities are more competitive than in the past few years, costs for businesses remain high.

It also noted that Los Angeles County continues to be one of the nation's most expensive places for business and 10 of its cities are among the 50 most costly. The Bay Area is pricey, too.

The situation will worsen next year, Kosmont said, as voter-approved tax and fee increases kick in.

"What is happening in California is the cities are going to the ballot box and winning tax increases," Kosmont said. "Some of these cities were Los Angeles County cities. That makes a bad climate even worse."

Kosmont said that California and many of its cities have been expensive for a long time, but some have tried to compensate with aggressive economic development and redevelopment programs.

But now all are struggling with the state's budget deficit, which is the largest in its history.

The survey compares 402 cities nationwide based on the array of taxes and fees each imposes. They include sales, utility, income, property, and business taxes....

It noted that the highest-cost cities, such as Santa Monica and Oakland, cluster around the aging urban cores, while newer bedroom communities in the outer suburbs charge developers for their growth and pass on the savings to businesses to stimulate their economies.

For example, Kosmont said the least costly city in the county is Westlake Village.

"It has no business tax, no utility tax and very low property taxes.

So it is one of the bargains," Kosmont said.

That's by design, said City Manager Raymond B. Taylor.

"We have strived to be one of the most business-friendly cities in California since our inception in 1981," Taylor said.

About 8,800 people live in the city that abuts the Ventura County line. But there are 850 businesses in the village that generate 11,000 jobs.

"The city recognizes the value and the role that businesses play in terms of job development and the vibrancy of the community," Taylor said.
* A domestic corporation in Utah costs a minimum of $100 in annual franchise tax payable to the state for the privilege of doing business as a corporation in the state; in California, $800, among the highest cost in the nation.

See also:

California Legislature Plans To Increase Taxes

2009 California Employer Payroll Tax Rates

Curtains on cowboy philanthropy: a cruel lesson from the Madoff scandal

CowboyFrom Margaret Soltan's excellent coverage of the Bernard Madoff scandal comes this tip regarding the impact of Madoff's $50 billion scam on Jewish philanthropy around the world.

According to Jonathan Sarna of Brandeis University, an expert on Jewish history, Madoff's swindle represents "an unprecedented loss to the 'Jewish economy' — the networks of Jewish institutions, donors and charities that include universities, schools, hospitals and community centers." Among Sarna's many insights is his prediction
that the wholesale destruction of fortunes and endowments would prove to be a turning point in American Jewish institutional life, which over the past 20 years has moved from a model of community funding — collecting small donations from a broad swath of donors — to focusing on a handful of "cowboy" mega-donors who launched hugely successful programs like Birthright Israel outside of the traditional federation system.
Although the Madoff scandal has cruelly concentrated much of its pain on Jewish charities — exclusive reliance on Madoff investments has already forced the Robert I. Lappin Foundation, the Chais Family Foundation, and the JEHT Foundation to close — Jewish philanthropy is not alone in suffering the vulnerability exposed by Madoff's fraud. Charitable organizations across the spectrum, including law schools, have come to rely more heavily on "a handful of 'cowboy' mega-donors" rather than "small donations from a broad swath of donors." Reliance on a single benefactor, like its agricultural equivalent (monoculture), simplifies fundraising at a terrible price. Any instability in that single funding source spells doom for the entire enterprise.

Monoculture"Cowboy philanthropy," a neologism readily suggested by Jonathan Sarna's evaluation of the Madoff scandal's impact on Jewish charities, is ultimately as unstable and unsustainable as the "cowboy economy." The dreaded counterpart to Kenneth Boulding's "Spaceship Earth," the cowboy economy assumes boundless resources and prescribes no duties of stewardship. As long as the open range or a blameless, wealthy benefactor continues to supply new resources, cowboy economies will appear to operate smoothly, in the for-profit and the philanthropic worlds alike.

That assumption, as the Madoff scandal demonstrates, is deceptive and dangerous. Monocultures don't last. Even the best of benefactors has her limits — mortality, if nothing else. And Bernard Madoff, sadly enough, fell far, far short of the illusory beneficence he used to swindle private investors and charitable organizations.

In discussions of fundraising strategy — which after all is an essential function in educational administration at any level — I am surprised at how many professionals favor cowboy philanthropy over the more democratic alternative. The 2008 political season, so I might have thought, demonstrated the power of small gifts from a broadly distributed base of impassioned donors. But the prospect of a single, decisive strike still holds its allure. Far too many university presidents, deans, and development officers imagine themselves too busy to bother with face-to-face, "retail" fundraising unless putatively transformative money hangs in the balance. Bernard Madoff, alas, has provided negative support for a fundraising proposition that has swept Barack Obama into the White House: small donors on the upswing can open big doors. The broader world of philanthropy, beginning unfortunately with the Jewish foundations that put all of their trust in Madoff, now knows that big financiers on the downswing can wreak utter havoc.

Today Is Final Day to Comment on ABA's Proposal to Eliminate Student-Faculty Ratio Data

Today is the final day to submit comments to the Council of the ABA Section of Legal Education & Admission to the Bar on the proposal of the Standards Review Committee to eliminate computation of the student-faculty ratio in connection with the accreditation of law schools (Standard 104 and Interpretations 402-1 and 402-2). Under the current Standards, a ratio of 20:1 or less creates a presumption of compliance; a ratio of 30:1 or more creates a presumption of noncompliance.

The Standards Review Committee will conduct a hearing on the proposal on January 9 at the AALS Annual Meeting in San Diego. Written comments on the proposal and requests to speak at the hearing can be emailed to Becky Stretch (stretchc@staff.abanet.org), the Assistant ABA Consultant on Legal Education.

The student-faculty ratio currently is included in the ABA/LSAC Official Guide to ABA-Approved Law Schools and accounts for 3% of the U.S. News law school rankings (and 5% in the U.S. News college rankings and 20% in the new U.S. News world college rankings).

The Legal Writing Institute and Association of Legal Writing Directors oppose the change; other criticism appears at Best Practices for Legal Education, Feminst Law Professors, and Legal Writing Prof Blog.

As one who teaches at a law school whose strategic plan emphasizes the many educational advantages available when a small student body (375 students) is combined with a comparatively large full-time faculty, resulting in one of the Top 10 student-faculty ratios (9.6 to 1) in the country, I agree with the critics of the proposal:

[T]here are obviously arguments in favor of continuing to produce a student-faculty ratio, as evidenced by the fact that three committee members voted to continue to calculate and publish a student-faculty ratio. First, schools may have put considerable effort and resources into improving the student-faculty ratio, so we ought not to eliminate the ratio without giving more careful thought to the different ways in which schools might be relying on the ratio. Second, even though the student-faculty ratio may not give us dispositive answers to the question whether a law school’s faculty is sufficiently large, it does provide a starting point for inquiry, and we ought not eliminate it until we have developed better output measures that we might use in lieu of this traditional input measure. Third, to the extent that Interpretation 402-1 encourages schools to give more faculty members (e.g., legal writing faculty) security of position so that they count in the ratio, that is a good thing. And fourth, we may invite a range of potential unintended consequences if we eliminate the student-faculty ratio as an isolated question without a full assessment of all of Chapter Four of the Standards.

As I have argued elsewhere, the ABA should require that law schools provide more, not less, information to our various constituencies and to the public.

[Cross-posted on TaxProf Blog.]

Orchestrating the university: Leon Botstein strikes the right note

Leon Botstein
Yes, times are tough in the American academy. But before panicking, let alone doing anything as drastic (and foolish) as freezing all hiring till further notice or raising tuition beyond levels that are already skyrocketing out of many families' reach, let us consider the wisdom of Leon Botstein, president of Bard College and director of the American Symphony Orchestra. With a hat tip to University Diaries, I present Inside Higher Ed's recent interview with Botstein:

Gatherings of college presidents these days aren’t exactly joyful. Stories are traded about budget cuts, hiring freezes, fund raising woes and more. For presidents who spent years building up their endowments, only to watch them shrink so suddenly, 2008 has been trying and frustrating.

[Leon Botstein has an answer to] the latest round of statements from college leaders explaining their strategies for retrenchment, and for dealing with smaller endowments . . . . The Bard College president has for years been telling anyone who would listen that endowment growth in higher education was irresponsible and encouraged all the wrong strategies. He has called for colleges to spend the money they raise, rather than stocking it away. With the economy crashing, and tuition-dependent colleges like Bard worried about enrollment and wishing they had larger endowments, is Botstein sticking to his views? How does higher education look to the person who warned that endowment dependence was a terrible thing? . . .

Leon Botstein[T]o Botstein, what is happening now is proof that the endowment strategy doesn’t work. “Institutions should not be banks. They are not good at it, and they are no better than anybody else. It should come as no surprise that as investing vehicles, there was a certain amount of arrogance and hubris,” he said. “There was much too much time and money spent on getting richer and richer without being clear about why.”

As a result, he said, the wealthiest universities have “endless tiers of overlapping management” and lack a tradition of making tough choices. “Instead of figuring how to cooperate [within universities], wealth let everyone do their own thing. Creativity was that you never subtracted, you added.”

The idea that university presidents at such institutions are publicizing their losses and announcing major cuts clearly offends Botstein. “These places are enormously rich. It’s like a rich person saying ‘I was worth a billion dollars and now I’m only worth 750 million.’ They are still rich.”

The reason this issue matters so much, Botstein said, is that leading universities are “trying to be even [more] risk averse” and are “learning the wrong lesson” from what’s going on. Many wealthy institutions are announcing hiring or salary freezes and doing so largely across the board, assuming equal value for most or all programs and justifying the approach by pointing to losses of 25 or 30 percent or more in their endowments.

“They are crying over money which was excessive to begin with, made faculty risk-averse, because they were like trust fund children. Their patrimony is being threatened. Rich is not better.”

Hiring freezes make no sense, he said. “This is the time to hire the best talent.”

Institutions should be going through programs, eliminating some, but building others — and spending their endowments to make institutions more creative. Operating on the assumption that endowment growth or losses matter “is a tragedy that makes everyone risk averse,” he said. . . .

While [Bard College's] endowment losses don’t cause him any lost sleep, Botstein said Bard will feel the economic downturn. He’s not sure by how much, but expects private donations to drop. Many more students may need financial aid, or more aid. So Botstein is ordering cuts. One is even across the board (in the administration building) — a 10 percent cut in the salaries of senior administrators, himself included.

And he’s talking to faculty members about a range of ideas to save money, but these ideas are intentionally not across the board.

Leon BotsteinFor instance, Botstein plans to ask professors to teach some sections for which they used to rely on adjuncts. “We have a first year seminar — a Great Books seminar — and everybody agrees it’s a good thing, but not everyone wants to teach it, so you hire outside,” Botstein said. “I’m telling faculty they need to teach it themselves. It will be a better course.” Another example: the college currently has 15 courses that can be used for the science requirement and Botstein would like the scientists on the faculty to instead come up with “a good course or two with problem based sequences” that could be taught in multiple sections. He thinks the course could be better than current offerings. In addition, he will ask professors to identify programs that could be changed or even eliminated.

Botstein is also putting his money where his mouth is on fund raising. He is converting a $500 million capital campaign — originally planned for endowment growth and building projects — entirely to current operations. And he’s starting new programs — programs that are unendowed — and planning others.

Among the ideas he wants Bard working on now are: creating better general education programs in the sciences, expanding its relationship in the sciences with Rockefeller University, and setting up new relationships with colleges abroad with the aim of using technology or exchanges to improve the teaching of foreign languages. In addition, he says that colleges like Bard need “to put a line in the sand” on certain issues, and refuse to cut spending whatever happens to endowments. One of those issues is student aid.

The other is the arts — not surprisingly given Botstein’s musical career and Bard’s strength in the performing and creative arts. “No one in this democracy is concerned about the arts. Who are those first on the firing line for cuts? Musicians and artists. We need to keep them alive.”

Most college presidents would say that if you care about your arts programs, you should endow them. Botstein disagrees. In a few years, when the economy is stronger, he said, Bard should build up its endowment so it has larger reserves to spend as needed. But for now, he sees the economic crisis as a good thing, and something to handle without worrying about the endowment.

“What’s great about the economic crisis is that it’s such a huge opportunity to rethink what you are doing,” he said. “This is such a very exciting time in which to be working in this field — there’s a certain relief that good times are over.”

When the lights dim and the crowd fades

DreierBlagojevich

Portraits of shame

Madoff

Scandal scored a trifecta this week, as heavyweights from the worlds of politics, business, and law were accused of fraud. Illinois governor Rod Blagojevich has been arrested for offering to sell Barack Obama's open Senate seat to the highest bidder. Bernard Madoff ran his investment firm as a giant Ponzi scheme; losses are thought to approximate $50 billion. And lawyer Marc Dreier bilked sophisticated investors of $380 million. Neither law nor higher education in general can escape responsibility for the behavior of these men. Blagojevich and Dreier held law degrees. Indeed, the New York Times took pains to describe Marc Dreier as "a Yale graduate and Harvard-educated lawyer." For his part, Madoff served as treasurer of Yeshiva University's board of trustees.

The diagnosis is simple. Greed kills. One of MoneyLaw's running themes is that American universities fare rather poorly in identifying, let alone living or inculcating, moral values. As a partial antidote to the poison represented by Blagojevich, Madoff, and Dreier, I thought I would mark the untimely passing of an academic hero:
Jan KempJan Kemp, a former English instructor whose lawsuit against the University of Georgia in the 1980s drew national attention to preferential treatment of college athletes unable to meet academic standards, died on Dec. 4 in Athens, Ga. She was 59. . . .

While coordinator of Georgia’s remedial English program, Dr. Kemp was among several faculty members who had complained that officials at Georgia intervened in the fall of 1981 to enable nine football players to pass a remedial English course in which they had received failing grades. The athletes remained eligible to play for Georgia against Pittsburgh in the Sugar Bowl on New Year’s Day 1982.

Dr. Kemp was demoted in 1982 and dismissed the next year. She filed suit, maintaining that she had been ousted because of her complaints, a violation of her constitutional right to free speech.

In Atlanta Federal Court in January 1986, university officials defended their actions concerning the football players . . . . O. Hale Almand Jr., a lawyer for the defense, offered a justification for the favorable treatment accorded the athletes, citing a hypothetical player. “We may not make a university student out of him,” he told the jury, “but if we can teach him to read and write, maybe he can work at the post office rather than as a garbageman when he gets through with his athletic career.”

The jury found that Dr. Kemp had been dismissed illegally and awarded her more than $2.5 million (later reduced to $1.08 million) for lost wages, mental anguish and punitive damages. She was later reinstated.

The university’s president, Dr. Fred C. Davison, announced his resignation in March 1986. The board of regents of the University System of Georgia issued a report in April implicating Dr. Davison and the Georgia athletic department, headed by Vince Dooley, who was also the football coach, in a pattern of academic abuse in the admission and advancement of student-athletes over the previous four years. . . .

Jan KempDr. Kemp, a native of Griffin, Ga., received a bachelor’s degree in journalism and a doctorate in English education from Georgia, where she began teaching in 1978. She retired from her second stint as a faculty member in 1990. . . .

“All over the country, athletes are used to produce revenue,” she told The New York Times a month after the trial. “I’ve seen what happens when the lights dim and the crowd fades. They’re left with nothing. I want that stopped.”
I thank University Diaries for bringing Jan Kemp's obituary to my attention. And Pat Forde of ESPN has written a fine tribute to Dr. Kemp. I laud her here because she did something as important as it was simple: Jan Kemp told the truth. Even though she faced dire consequences for telling the truth, she did so for the best of reasons. The American academy, especially in its treatment of student-athletes, is a far better place on account of her actions.

If only the whole of our society understood the value of telling the truth. In political, financial, and legal arenas, no less than in collegiate coliseums, decency may be all that keeps us company when the lights dim and the crowd fades.

Jan Kemp

Cathy Young on Gender Gaps, Gender Differences and Competition

Cathy Young is back! For quite some time, I have patiently followed The Y Files, the blog by former Boston Globe columnist Cathy Young, one of the most fair minded, intelligent, reasonable, and important commentators on gender issues today, and author of what is in my humble view the best book of the last ten years on gender issues, hands down. (If it doesn't sound as if my view is very "humble" that's probably because I have read a lot of books and other writings on gender issues, by radical feminists and radical men, left and right and everything in between.)


The book, Ceasefire!: Why Women and Men Must Join Forces to Achieve True Equality, which I have discussed here previously, is a book which is as relevant today as it was when written in 1999, and still way under-appreciated.

Unfortunately, Cathy Young had recently gone on some sort of writing hiatus.

But now she is back, with two very insightful posts during the last few days. If you don't already have her on your blog roll, or haven't already subscribed to her feed, go to her blog and do it now. Here are the recent posts:

The Y Files: The paradoxes of gender gaps

The Y Files: More about gender differences and competition


For information about Massachusetts divorce and family law, see the divorce and family law page of my law firm website.

Proper (Business Attorney Assisted) Set Up and Maintenance Crucial to Limited Liability Protection of Corporations and LLCs

Couldn't agree more with this excerpt from today's article by fellow Southern California WealthCounsel attorney Alexis Martin Neely:
You'll recall from last week, that I said the purpose of your business entity is to limit your liability as a business owner. This is to encourage business owners to take risks that they would not take if they had unlimited personal liability.

Here's the thing though, the shield is only intact if certain formalities are maintained, such as proper filings with the State, annual meetings of the shareholders (for corporations), and separation of all financial activities between you and the entity.

Far too often, I've come across business owners who used an incorporation service, a shoddy lawyer, or a CPA to incorporate their business and when I asked these business owners where their operating agreements, bylaws, annual meeting minutes and state filings were kept, they couldn't tell me.

Why is that? Because they didn't realize that merely filing articles of incorporation with the State does not provide liability protection.
Your corporate entity must be established correctly from the beginning with governing documents and then maintained on a yearly basis.

If you don't do that, you may come to find out too late that your business entity doesn't provide the protection you thought it did.

So, make sure that once you decide what kind of an entity to use, you set it up right and then maintain that entity.
While I'm open to a pleasant surprise one day, thusfar I have yet to review one corporation or limited liability company that was properly set up and maintained by a do-it-yourselfer (including those who used online incorporation services, paralegals, CPAs, non-business attorneys).

Looking for Help on SSRN

I do not want to jump to conclusions and may be the last to know so I'd like to understand the SSRN business plan. I have in the past expressed my suspicions about what numbers of downloads mean and why there appears to be a top ten list for virtually everything. I personally have made some with just a handful of downloads. My non-holiday-spirit side thinks that the infinite number of top ten lists is a selling point to encourage people to upload, then make a top ten list, and promptly report it to the dean or the world.

Now, again perhaps the last to discover it, there is something else. If you click on my ssrn page which I think is to the right of this post an then click on the second article down, you will see that it is about estate planning. And, to the right of the abstract there are ads for estate planners.

I assume the advertising is not free and that this the source of ssrn revenue. If I have this right, should ssrn be paying law professors or their schools to upload their articles? Or, is there already payment in the form of "top ten" lists.

I guess in a world in which Senate seats may appear on ebay soon, I should not be surprised.

Beyond IRAC: Law Exam Taking Tips

Visit my official grading procrastination site over at Legal Profession Blog for a few choice but undoubtedly useless words to students on taking exams.

Hot Topics Panel: The Financial Crisis

The Financial Crisis: Hot Topics Panel, AALS Annual Meeting
Friday, January 9, 8:30-10:15 am.

A discussion of the causes, short-term solutions, and longer-term implications of the current financial crisis.

Moderator: Theodore P. Seto (Loyola Law School – LA)

Speaker 1: Lauren E. Willis (Loyola Law School – LA): The Role of Mortgages

Professor Willis has written extensively on problems in the subprime mortgage market and consumer financial transaction regulation more generally. In speaking engagements in the U.S., the E.U., and South Africa, she has discussed regulation of the U.S. home mortgage market, predatory lending, financial literacy education, behavioral decisionmaking, and other consumer law topics. She was one of a select group of law professors that conferred with members of the Federal Reserve Board in crafting new mortgage regulations that will take effect in 2009. Before joining the Loyola Law faculty, she practiced at the Civil Rights Division of the U.S. Department of Justice, litigating lending discrimination matters.

Professor Willis will discuss the crisis at the retail level – the evolution from credit rationing to risk-based pricing of mortgages, the effects of risk-based pricing on consumers’ mortgage decisions, the financial and psychological antecedents of borrower demand for mortgages posing a high risk of foreclosure, and the marketing and sales practices that respond to and create that demand. She will further explain why prior law governing mortgage transactions and even law enacted to address subprime lending problems were ineffective.

Speaker 2: William K. Black (University of Missouri-Kansas City School of Law): The Role of Securitization and Financial Instruments

Professor Black is an Associate Professor of Economics and Law at UMKC. In October 2009, he testified before the relevant Senate committee on the role of financial derivatives in the ongoing crisis. Before joining the academy, he served as litigation director of the Federal Home Loan Bank Board, deputy director of the Federal Savings and Loan Insurance Corporation, Senior Vice President and General Counsel of the Federal Home Loan Bank of San Francisco, Senior Deputy Chief Counsel, Office of Thrift Supervision, and deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement. He is author of The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry (University of Texas at Austin Press 2005), has written extensively on financial sector issues, and recently helped the World Bank develop an anti-corruption initiative.

Professor Black will cover the securitization of home mortgages and the development of derivatives that contributed to the financial crisis. He will describe the legal and regulatory actions that allowed for these developments and will explain why the securitization of heterogeneous subprime mortgages and the existence of an over-the-counter credit default swap market are fundamentally inconsistent with a stable financial system.

Speaker 3: Arthur E. Wilmarth, Jr. (George Washington University Law School): The Role of Financial Regulation

Professor Wilmarth is chair of the AALS Section on Financial Institutions and Consumer Financial Services and a member of the editorial board of the Journal of Banking Regulation. He has authored numerous articles in the fields of banking law and American constitutional history and co-authored a book on corporate law. In 2005, the American College of Consumer Financial Services Lawyers awarded him its prize for the best law review article published in the field of consumer financial services law during the previous year. He has testified before committees of the U.S. Congress, the California legislature, and the D.C. Council on bank regulatory issues.

Professor Wilmarth will speak on the role of large financial conglomerates and the failure of the various regulators (especially the OCC, the OTS, the Fed and the SEC) to control the risk-taking of those conglomerates. He will cover the failure of capital regulation and the evident failure of on-site examination teams at major financial institutions.

Mad Dogs and terrific trios

Greg Maddux
Any careful reader knows that the Atlanta Braves are the official Major League Baseball team of MoneyLaw. Just look at the banner atop this blog.

It's worth a MoneyLaw post, then, to note the impending retirement of Greg Maddux. Some of the key numbers: A lifetime 355-227 record. A 3.16 ERA. Four consecutive Cy Young Awards. Eight All-Star games; 18 Gold Gloves. A key part in the Braves' 1995 World Series championship, the only one they've won in Atlanta. A sure-fire first-round Hall of Famer.

Smoltz, Glavine, MadduxChicago Cubs fans may argue that Maddux's image in the Hall should wear a Cubs cap or, at least, should wear no logo at all, akin to Catfish Hunter (who divided his career between the Oakland A's and the New York Yankees). No. Maddux was part of a terrific trio. He, John Smoltz, and Tom Glavine helped the Braves dominate the National League for more than a decade. If Smoltz and Glavine also decide to retire during this offseason, the trio should enter the Hall of Fame together — all wearing Atlanta Braves caps.

Maddux's retirement reminds me of the hundreds of Braves games I've watched, especially during their streak of 14 consecutive division titles from 1991 through 2005. And thinking about Maddux with Smoltz and Glavine reminds me of another terrific trio that looms over my memory of the 1990s: Dan Farber, Phil Frickey, and Suzanna Sherry. Hall of Famers all, if only our sport enshrined its legends as baseball does.

Holiday Parties: How Businesses Can Avoid Sexual Harassment Lawsuits

Guest Post by Jessica Hawthorne

As holiday decorations start to go up around the office and everyone is full of seasonal cheer, many businesses may find that work parties, along with a more relaxed environment, can lead to sexual harassment claims.

Much too often – especially if the event is off-site and the alcohol flows freely – the office holiday party becomes a breeding ground for this sort of behavior. It seems that some employees can get the impression that professional behavior isn’t necessary at the festivities.

But that’s not the case. If it’s a work-sponsored event, workplace etiquette applies. And unfortunately for employers, liability can be the unexpected Christmas delivery if things aren’t handled properly.

Every year, claims and lawsuits over sexual harassment problems cost companies millions of dollars. In 2007, for example, the Equal Employment Opportunity Commission received nearly 25,000 sex-discrimination complaints and fined businesses more than $135 million for violating these workplace protections, the highest level since 2002.

But businesses can protect employees against legal turmoil by taking simple steps to prevent harassment from occurring at the office holiday party – or anywhere else:
  • Advise employees of all relevant policies, such as harassment, dress code and appropriate workplace behavior.
  • Make sure all supervisors have received sexual harassment training.
  • Make sure everyone knows how to report unwanted or unwelcome behavior.
  • Remind all employees that the company's sexual harassment policies will be in full force and effect during the event.
Despite training and preparation, sexual harassment claims could arise, so employers should also be aware of how to mitigate the situation. It’s important to act swiftly if there are any complaints to determine what happened and how best to deal with the claim. That way, you will have done your harassment prevention due diligence if any legal situation arises later.

The best way to accomplish this – and follow California law – is to conduct proactive employee training and awareness against all forms of harassment.

All organizations, and that includes businesses, government agencies and non-profits, with 50 or more employees are required to train all supervisory personnel in sexual harassment prevention. Employers must prove that all of these employees take an interactive, two-hour harassment prevention course within six months of hire and every two years thereafter.

So keep in mind that while sexual harassment prevention is relevant all year round, now is a good time to give your office a refresher course. Your business should enjoy this festive time of year by keeping employees aware and preventing sexual harassment before it starts.

Jessica Hawthorne is an employment attorney the California Chamber of Commerce. More information on sexual harassment prevention training and many other workplace issues can be found at www.CalBizCentral.com.

Men As Caregivers

There was an interesting blog post by Leanna Hamill at the Massachusetts Estate Planning and Elder Law Blog yesterday commenting on a recent report that more men have in recent years taken on caregiving roles for aging parents or other relatives: Massachusetts Estate Planning and Elder Law: More Men Taking Over the Caregiving Role. It's interesting to see that just as men have become more active in recent years in caring for children, they are also becoming more active in caring for aging parents as well.


EXCERPT, MASSACHUSETTS ESTATE PLANNING & ELDER LAW BLOG:


The image of a caregiver for an aging parent or relative is usually a woman in her 40's or 50's who is raising her own children, probably working outside the home, and then trying to care for her aging loved one at the same time. But according to a recent article in the New York Times, more men are serving as caregivers than ever before.

[Quoting the New York Times - link directly above:] "The Alzheimer’s Association and the National Alliance for Care- giving estimate that men make up nearly 40 percent of family care providers now, up from 19 percent in a 1996 study by the Alzheimer’s Association. About 17 million men are caring for an adult.

Often they are overshadowed by their female counterparts and faced with employers, friends, support organizations and sometimes even parents who view care-giving as an essentially female role. Male caregivers are more likely to say they feel unprepared for the role and become socially isolated, and less likely to ask for help."
....

For information about Massachusetts divorce and family law, see the divorce and family law page of my law firm website.

College football deserves the BCS

Tommy TubervilleCharlie Weis

On good days I wouldn't wish the BCS on Division I-A college football. No serious fan prefers that lousy, irrational system over a real playoff. But December 3, 2008, was not a good day in college football.

Auburn fires a good coach in Tommy Tuberville, while Notre Dame clings to Charlie Weis, who is quite possibly the worst football coach in the universe. At a minimum, Weis is probably the most arrogant coach in the business.

Charlie WeisIn ten seasons at Auburn, Tuberville went 5-3 in bowl games, won six consecutive Iron Bowls against Alabama, and posted a magnificent 13-0, SEC-winning record in 2004. The BCS cheated Auburn out of a shot at the national title. Weis can't name a single victory of note. His high-water mark came in 2005, in a 31-34 loss to Southern California that prompted Notre Dame to extend his contract and to saddle itself with a buyout reported to be as high as $20 million. That is a bit more than the payout per team for a BCS bowl appearance. For the foreseeable future, Notre Dame is no likelier to appear in a BCS bowl, notwithstanding that system's strong bias in favor of the Irish and their rabid fan base, than it is likely to break its nine-game losing streak in postseason play.

Oh, did I mention that Tuberville, a 14-year veteran in college coaching (four at Ole Miss, ten at Auburn), works for $1.375 million less than Weis? Losing is awful enough as it is. Imagine how much it must feel to spend profligately for terrible results.

A sport this irrational deserves a championship system that is as bad as the BCS. This prescription is as harsh as condemning American legal education to the continued reign of the U.S. News & World Report rankings. Then again, law schools also make regrettable personnel decisions. Perhaps it is enough to praise the deans and professors who deserve better and to hope that somewhere, somehow, someday, our corner of the American academy will discover the sense of decency and proportionality that evidently eludes our athletic counterparts on campus.