What are business entities for? What are security interests for? The prevailing answer in legal scholarship is that both bodies of law exist to partition assets for the benefit of designated creditors. But if both bodies of law partition assets, then what distinguishes them? In fact, these bodies of law appear to be converging as increasing flexibility irons out any differences. Indeed, many legal products, such as securitization vehicles, insurance products known as captive insurance, and mutual funds, employ entities to create distinct asset pools. Moreover, recent legal innovations, including “protected cells” (which were created to facilitate such products), further blur the boundaries between security interests and entities, suggesting that convergence has already arrived.
This Article identifies and defends a central distinction between business entities and security interests. We argue that while both bodies of law support asset partitioning, they do so with different priority schemes. Security interests construct asset pools subject to fixed priority, meaning that the debtor is unable to pledge the same collateral to new creditors in a way that changes the existing priority scheme. Conversely, entities are associated with floating priority, whereby the debtor retains the freedom to pledge the same assets to other creditors with the same or even higher priority than existing ones.
A fiduciary is someone with a certain form of discretion, power, or authority over the legal and practical interests of a beneficiary. As a result of this arrangement, the beneficiary is vulnerable to predation by the fiduciary. Fiduciary relationships trigger a suite of duties, at the core of which is the duty of loyalty. In a sense, the fiduciary relationship is oriented around the possibilities of trust and betrayal. One point of fiduciary duties is to prevent betrayal or, failing that, to assure that betrayals are rectified insofar as possible. What constitutes loyalty or betrayal in fiduciary law, however, is not always clear.
Consider Item Software (UK) Ltd. v. Fassihi. Messrs Fassihi and Dehghani were corporate directors of a small software distribution company called Item Software, whose main business was selling software developed by Isograph. Dehghani was the managing director, and Fassihi was the sales marketing director. In November 1998, Dehghani decided to renegotiate the terms on which Item sold Isograph’s products. Fassihi urged Dehghani to drive a hard bargain with Isograph, so Deghani negotiated aggressively. Ultimately, the negotiations between Item and Isograph broke down, and Isograph terminated its contract with Item.
In one of his columns, the economist Paul Krugman observed that “liberals don’t need to claim that their policies will produce spectacular growth. All they need to claim is feasibility: that we can do things like, say, guaranteeing health insurance to everyone without killing the economy.” Krugman’s belief that providing everyone with health insurance is desirable unless doing so would “kill the economy” expresses a familiar, if debatable, position. Many of us believe that some goods should be provided to everyone, and they should be provided even if their provision comes at a cost in economic efficiency. The underlying belief is that some goods are essential to leading decent, independent lives, and their provision therefore has a special priority. As a society, we owe it to each other to secure the basic conditions necessary for people to lead decent and independent lives.
Like health, physical safety is a strong candidate for inclusion on a list of the essential conditions of a decent and independent life. Illness usually takes the form of physical harm, and accidental injury can impair basic powers of agency as much as ill-health can. Assertions that safety has priority over garden-variety “needs and interests” are commonplace in popular discourse. You might, therefore, expect to find a debate in the legal literature on risk and precaution over whether or not safety, too, should be prioritized over efficiency and secured to the extent that it is feasible to do so. Prominent federal statutes take this very position. Indeed, they echo Krugman’s exact word choice in requiring that the risks of certain activities be reduced as far as it is “feasible” to do so, and they mean the same thing that he does in choosing this word. “Feasible risk reduction” requires that the risks in question be reduced as far as possible without killing the activity in question. A chorus of contemporary commentators, however, insists that feasible risk reduction is not just normatively mistaken; it is indefensible. Jonathan Masur and Eric Posner, for example, argue that statutes prescribing feasible risk reduction have no defensible normative underpinning. Feasibility analysis, they write, “does not reflect deontological thinking . . . [and] does not reflect welfarism in any straightforward sense,” and “[n]o attempt to reverse-engineer a theory of well-being that justifies feasibility analysis has been successful.” According to this line of thought, efficiency is the only plausible standard of precaution, and its handmaiden, cost-benefit analysis, is the only plausible test.
As adversary lawyers, prosecutors seek to convict defendants. But as government officials who take an oath of office, prosecutors must interpret and apply the Constitution in good faith. These two roles are at odds. The first pushes prosecutors to argue for narrow readings of defendants’ constitutional rights, while the second pushes prosecutors to enforce the Constitution evenhandedly. The crucial question is: when should prosecutors be adversary advocates, and when should they be quasi-judicial implementers of constitutional protections? This Article argues that prosecutors should adopt the latter role in situations where the adversary system fails to fully protect constitutional rights. This happens when judges are unable to effectively control prosecutors’ actions (for example, with regard to the duty to reveal exculpatory evidence), and also when judges underenforce constitutional rights out of concern for the separation of powers or the limitations of judicial doctrine (for example, with regard to charging decisions and plea bargains). In such situations, prosecutors should preserve defendants’ constitutional rights even if judicial doctrine does not require it, and even if doing so lowers the chance of obtaining a conviction.
The American colonial protest against Parliament’s Stamp Act was a landmark event in the history of the Founding Era, propelling the colonies toward independence. To date, scholars have focused on colonists’ constitutional objections to the Stamp Act. Yet, the Stamp Act taxed legal and institutional services and, as this Article describes, the opposition to the Stamp Act also focused on defending low-cost institutions that served local communities. It examines the arguments for and against the Stamp Act as revealing two distinct visions of the role for institutions in economic growth. It suggests that American independence affirmed colonists’ commitment to low-cost locally managed institutions within their developing economy.
It was a dark time for the United States. Hopelessly outnumbered and outgunned, the federal troops at Fort Sumter surrendered to Confederate forces on April 13, 1861. Four days later, Virginia politicians voted to secede, and the Commonwealth militia mobilized to seize federal positions throughout the state. Terror swept through Washington, D.C., which suddenly found itself “on a military frontier.” Then things got worse. The Maryland state legislature announced a special session to decide whether to follow Virginia’s example. Riots by Confederate sympathizers exploded across Baltimore as word got out that the federal government was trying to bring in reinforcements by train. Mobs in Maryland blocked Massachusetts’s troops from reinforcing the pathetically under-defended capital. Authorities in Baltimore burned the city’s main railroad bridges—an act that “looked like plain treason” and left the government in Washington “defenseless and cut off from the rest of the North.”
Money buys things. This is the worry about money in judicial elections. As campaign spending in judicial elections has rapidly ramped up, there is increasing concern that judicial elections now have become “floating auctions” in which contributors purchase favorable judicial treatment in exchange for campaign financing. For sitting judges, the prospective need for money to finance their re-election looms over judicial decisionmaking and tempts them to decide cases in ways that attract, or at worst would not alienate, prospective contributors. Even the Supreme Court, which has hardly demonstrated great concern about campaign finance, recognized for the first time the potential for actual bias from big-money campaign spending in state judicial elections in Caperton v. A.T. Massey Coal Co.
What is regularly missed in this story of modern judicial campaign finance, however, is that the Republican and Democratic Parties play an indispensable role in the influence of money on judicial decisionmaking. The intuitive understanding of judicial campaign finance as a direct exchange of money for influence between individual contributors and candidates is too simplistic to capture the larger realities of modern judicial elections. Of course, there is a very real relationship between contributions to judges and judicial decisions by those judges favorable to their contributors that we ourselves have helped document. However, in the modern world of judicial campaign finance, the Republican and Democratic Parties broker the powerful relationships between contributors and candidates, particularly in partisan elections where their involvement is greatest.
Fawn Hall must not have been reading her Dworkin.
Her name has dissolved into history, but Fawn Hall was front-page news in 1987. Until 1986, she had served as personal secretary to Colonel Oliver North, the man at the center of the Iran-Contra scandal and its unlawful sale of arms to Iran and equally unlawful use of the proceeds to aid the Contra guerillas in Nicaragua. When the scandal broke, Hall was granted immunity and called before a congressional committee to testify about her role in the transactions and the ensuing cover-up. After it became apparent that Hall fully supported Colonel North and more than willingly participated in the alteration and shredding of incriminating documents, Representative Thomas Foley pointedly asked her how she felt about the multiple illegalities in which she and North had been involved. “[S]ometimes you have to go above the written law, I believe,” she answered. And with those eleven words, Hall became a historical footnote and target for the mockery and wrath of countless pundits and political opponents.
Most lawsuits settle, but some settle later than they should. Too many compromises occur only after protracted discovery and expensive motion practice. Sometimes the delay precludes settlement altogether. Why does this happen? Several possibilities—such as the alleged greed of lawyers paid on an hourly basis—have been suggested, but they are insufficient to explain why so many cases do not settle until the eve of trial. We offer a novel account of the phenomenon of settling on the courthouse steps that is based upon empirical research concerning judgment and choice. Several cognitive illusions—the framing effect, the confirmation bias, nonconsequentialist reasoning, and the sunk-cost fallacy—produce intuitions in lawyers that can induce them to postpone serious settlement negotiations or to reject settlement proposals that should be accepted. Lawyers’ tendency to rely excessively on intuition exacerbate the impact of those cognitive illusions. The experiments presented in this Article indicate that the vulnerability of experienced lawyers to these cognitive errors can prolong litigation.
All of law depends on vast concepts that stretch across time, space, causation, and agency. Far-reaching concepts make law possible from legislation and interpretation to enforcement and adjudication; from weighing evidence to establishing motive and intent; and from imposing fines or sentences to awarding compensation. But all of human thought and memory is just here and now. The vast dependencies of time, space, causation, and agency must exist in individual brains. How we manage to use here-and-now mental processes to produce legal concepts that stretch very broadly over vast expanses of our lives, institutions, and worlds is the point of this Article. We will discuss how human beings transform vast dependencies that stretch across time, space, causation, and agency into tractable, much smaller, and more compact concepts that we can hold onto, manipulate, and develop. We will explain how these compact concepts are “blends” for thinking about much larger mental webs of ideas that are too large to hold in mind themselves. We will also suggest a research agenda that may allow us to better understand what sorts of blends work, and which ones we discard and when. Examples of blends are everywhere in law. A “decedent” in law, for example, is a kind of agent who exists (but does not live) in the present, who is imbued with some of the intentionality of a person who once existed, and for whom there are documentary records expressing this past intentionality.