The Data-Centric, Empirical "Law Firms Working Group"

My friend Professor William Henderson at Indiana University School of Law—Bloomington just sent word of a new initiative the law school is launching in conjunction with the American Bar Foundation. 

Called the "Law Firms Working Group," the project includes no fewer than 14 research teams comprising 38 scholars in all, who will have access under a special license to the archival data of American Lawyer Media, which "includes cross–sectional and longitudinal information on law firm structure, financial performance, lawyer demographics, branch office size and location, lawyer mobility, associate satisfaction, relative law firm prestige derived from lawyer surveys, practice group prominence, and other facets of modern law firm practice."

What precisely are they researching, and what makes this initiative different from yet another set of academic papers on our complicated profession?

First, what promises to make it different is that the "LFWG" researchers will actually be working with data.  In other words, their work will be far more empirical than the usual armchair-observing and abstract-pontificating (and no, I'm not naming any names, thank you).

Second, their proposed projects include several that promise to be of genuine interest to those of us who are long since out of the academy and into the actual nitty-gritty of management and leadership.  Here are a few that struck me as particularly "real world" in focus:

• Lawyer Mobility:  "The investigators will study the volume of lawyer lateral mobility, and the and factors influencing it. They will explore the importance of a strong firm culture in the quality of client service, firm profits, firm stability, employee satisfaction, and associate attrition. After this analysis has been completed, Marc Galanter and William Henderson will utilize this dataset to study the relation of mandatory retirement policies to lawyer mobility."
• Interaction Between Law Firm Structure, Hiring, and Partner Promotion:  "John Gordanier will study the empirical relationship between the structure of law firms and the characteristics of associates and partners. His focus will be on whether a multi-tiered partnership structure [with equity and non-equity partners] changes the composition of a firm's associates and whether it affects the quality of the partners."
• Globalization Strategies of U.S. Law Firms:  "Carole Silver and Nicole DeBruin will combine Law Firms Working Group data with their own prior research into non-U.S. offices of U.S. law firms to analyze the consequences of different approaches to global expansion. They will examine a variety of factors, including the ways that offshore offices reflect or differ from their domestic counterparts, and the relationship between offshore office growth and financial success."
• The Professionalization of Large Firm Management:  "Elizabeth Chambliss will track the emergence of full-time ("professional") managers in law firms, focusing on the managing partner and law firm general counsel positions. Her research will examine the relationship between professional management and the economic success of the firm, and the sources of managerial authority for full-time versus part-time/practicing managers."

Other projects will look at the relationship between firm performance and a commitment to pro bono, the changing geographic footprint of global law firms, career trajectories of young lawyers, and race and gender in large law firms.

For some time now, Bill Henderson has been one of the rare law professors with a dominant "quant" gene and I for one will be fascinated to see the fruits of these various research projects.

And of course, you know that "Adam Smith, Esq." will be one place where you can read about those results as they materialize.

Who's Innovating?

The College of Law Practice Management was formed over a decade ago to "honor and recognize distinguished law practice management professionals, to set standards of achievement for others in the profession, and to fund and assist projects that enhance the highest quality of law practice management."  To date, over 200 practitioners have been inducted, from the US, Canada, and eight other countries.  The College is governed by a Board of 15 Trustees, and annually it sponsors the "InnovAction Awards," designed to identify innovation by lawyers and law firms.  The criteria for selecting among entrants are:

• Absence of precedent (never been done or done quite this way before)
• Evidence of action (the innovative idea was transformed into action and not merely reflective of best intentions)
• Effectiveness of innovation (there is some measurable outcome that would indicate that the innovation is accomplishing what it was intended to do)
• Action must have taken place within no more than three years prior to this entry.

Information about the InnovAction Awards is here, and I invite you to check out the inaugural issue of the online publication celebrating last year's awards.

So:  Have you or any of your good friends done something wonderfully innovative recently?  Nominations are open; what are you waiting for?

"Wealth" and "Conscience"

At "Adam Smith, Esq.," we don't talk about Adam Smith himself very much, but at year-end it seems appropriate to pay a moment's homage to this site's intellectual godfather and, I hope, provide those of you who may not have studied him closely a slightly more nuanced perspective of his views.

To start, there could be no better introduction than this discussion of the interplay between his most famous work, obviously, The Wealth of Nations, and its predecessor by 17 years, the relatively unsung Theory of Moral Sentiments.   The piece takes off from Adam's Fallacy: A Guide to Economic Theology, written by Duncan Foley of New School University in New York, which is described as "a beautiful little book. It contains some of the most lucid exposition of the core ideas of economics that I have ever read."  (The reviewer is David Warsh, author of Knowledge and the Wealth of Nations, which I will soon be reviewing here; Warsh is a former Boston Globe columnist.)

The "fallacy" of "Adam [Smith]" is this:

"So what exactly is Adam's fallacy? According to Foley, it's "the idea that it is possible to separate an economic sphere of life, in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome, from the rest of social life, in which the pursuit of self interest is morally problematic and has to be weighed against other ends." This abstraction of an economic sphere from the messy complexity of real life is indeed the kernel of present-day economics.

But this entirely overlooks Moral Sentiments (for the 18th-Century phrase "moral sentiments," substitute today's more apt "conscience," and your understanding will increase), which opens thus:

"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.... The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it."

And Adam Smith is astutely attuned to the inability to cabin human beings into the rigor of the model of homo economicus, without attending to

the social and psychological realities of free will, choice, and impulse:

And here he describes "the man of system," who "seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces on a chess-board; he does not consider that the pieces on a chess-board have no principle of motion besides that which the hand impresses on them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own altogether different from that which the legislature might choose to impress upon it."

Indeed, these extra-homo economicus considerations are not just competitive with rational, gimlet-eyed, calculating analytics, at times they overwhelm "reason" altogether:

"What is it that prompts the generous, on all occasions, and the mean, upon many, to sacrifice their own interests to the greater interests of others? Is it not the soft power of humanity, is it not that feeble spark of benevolence which Nature has lighted up in the human heart, that is capable of counteracting the strongest impulses of self-love?"

Now, for some reason, the received wisdom handed down over 200 years later about Adam Smith is that he abandoned these views with publication of The Wealth of Nations.  Well, I'll spare you the academic arguments, but suffice to say there's not a scintilla of evidence that was the case.  Indeed, the better reasoned side of the debate, able to marshal far more evidence in support of its view, is that Smith intended a third and possibly even a fourth volume (cut short by his death, and his mandated destruction of all his unpublished manuscripts) reconciling and extending Moral Sentiments and Wealth of Nations by adding to the mix a treatise on the theory and impact of law and another on science and the arts.

So where are we left here in the 21st Century? 

Economics, a somewhat feckless discipline for the last few decades (there you have, in a nutshell, why I never entertained the notion of pursuing a Ph.D. in economics), has opted to "model what it can at the expense of ignoring what it cannot," and "moral sentiments" are famously unsusceptible to modeling.

One of my fonder, if milder, hopes is that my beloved discipline of economics will come to grasp more strongly the world as it really is with all its human complexity and contradiction, and return from its exile in the arid, mathematically intricate "blackboard economics" domain of homo rationalis economicus.

Happy New Year.

Web 2.0 in the Legal Blogosphere

As the legal blogosphere goes from childhood to adolescence to (eventually) full-throated adulthood, I've enjoyed not just contributing my own small efforts to that process, but also being able to be an armchair observer of other developments having nothing whatsoever to do with me. 

Partly this stems from my endless fascination with the proliferation of business models the online world has spawned, and with luck will continue to spawn.   Partly it stems from my wanting to vindicate—or invalidate—a theory of mine to the effect that any new media channel begins life by imitating the closest analogous old-media channel, and that it takes an explosion of experimentation before the new media understands "what it wants to be when it grows up."  Thus radio began by staging plays and running vaudeville acts years before discovering its real home in news, talk, and music.  Likewise, TV began by imitating radio before it found its strength in late-breaking news, sports, and series. 

And yes, thus the web began imitating print and has evolved roughly as follows:

• Web 1.0
  • revolution = hyperlinks
  • static content ("brochure-ware")
  • activity = surfing
• Web 1.5
  • revolution = self-contained portals
  • dynamic content (Salon, Nerve, Slashdot)
  • activity = search
• Web 2.0
  • revolution = collaboration
  • user-generated content
  • activity = share

Today I'm here to report on an emerging category of legal sites targeting micro-communities with micro-focused content. 

The best example I've seen, which I just learned of this week, is Drug and Device Law, which is—yep!—about pharmaceutical and medical device product liability.  Its founders and co-hosts are Jim Beck, with Dechert in Philadelphia, and Mark Herrmann, with Jones Day in Cleveland.  (Careful readers will recognize mark as the author of The Curmudgeon's Guide to Practicing Law.)  Their goal for the site?  As Mark put it to me, "Jim and I would be quite happy with a "fit audience, though few": inside counsel at drug and device companies and sophisticated lawyers who act as outside counsel for those companies."

Why is this different than, say, a three-ring binder treatise on the same subject?

Look back up at my bullets under "Web 2.0:"  The potential is for "Drug and Device Law" to become essentially home-base for a community of practice, exchanging ideas, analyses, and even briefs (well, OK, we could start with string cites).  Now imagine trying to replicate the robust functionality of that same potential community in the off-line world.

I rest my case. 

So Happy Zero Birthday to Drug and Device Law.

A Professional Courtesy Announcement

Those of you who know or have worked with me are aware that I'm pleased to have a "best friends" relationship with the principals of Edge International, founded over twenty years ago, and a group of wonderfully talented people who are also fun and deeply edifying to be around.  (I also am proud of my strong relationships with individuals at Hildebrandt, at Altman-Weil, and elsewhere in the industry, but those are not topics for today.)

The announcement:  As of December 1, an outstanding group of people from Edge have combined with Alan  Hodgart, based in London, and with Tim Leishman, based in Toronto, to form Kerma Partners. 

I wish the best of luck to both the new venture and to Edge, both populated by good friends of long standing. 

Aren't You Glad You Majored in Economics?

From the Journal of Economic Education (hat tip to "Truth on the Market") comes the first study I'm familiar with examining whether the choice of undergraduate major has any effect on a lawyer's career earnings.  And guess what?  If you major in economics, it helps; majoring in anything else makes no difference.

Here's the abstract, in full (emphasis supplied):

"Using nationally representative data, the authors examine the effects of preprofessional education on the earnings of lawyers. They specify and estimate a statistical earnings function on the basis of well-established theory and principles. Along with standard control variables, categorical variables are included to represent graduate degrees in addition to the law degree and an assortment of undergraduate major fields. Holding a Ph.D. or M.B.A. degree, with the law degree, is associated with significantly higher earnings in some sectors. Lawyers with undergraduate training in economics earn more than other lawyers, ceteris paribus, and economics is the only undergraduate field associated with earnings that differ significantly. The available evidence supports the hypothesis that economics training increases a lawyer’s human capital compared with other undergraduate majors."

That still doesn't mean Adam Smith would become a lawyer were he alive today; but I know in my heart that he would have an active and energetic blog.

The Dismal Science at Age 230

"The dismal science?"  You won't be surprised to hear that that's about the last way I'd describe the art and discipline of economics, and a new book, Knowledge and the Wealth of Nations, reviewed by Paul Krugman in yesterday's Sunday Times Book Review sounds like a wonderfully exciting intellectual exploration of why I believe economics retains its ability to fascinate as it attempts to explain how people, ideas, and things interact to try to produce value.

 The author, David Warsh, a former economics correspondent at the Boston Globe, Forbes, and The Wall Street Journal, writes the online weekly, "Economic Principals."  The book tells the story of how academic understanding of increasing returns to scale, and indeed of growth itself, was revolutionized in the past few decades by introducing the concept of knowledge itself as a factor of production, at long last joining the classical triumvirate of land (a/k/a tangible resources), capital, and labor.

When a book gets advance praise like this, the reason I continue to adore economics should be clear:

“Romer’s understated but earth shattering work deserves our attention and a Nobel prize in economics.”
— John Doerr, partner, Kleiner Perkins Caufield & Byers

Copyright Law, "Fair Use," and Why You Can Still Read My Analyses of The AmLaw 100 Statistics

As loyal readers know, I had a nasty brush with copyright law and the ALM Media inhouse law department this past Monday. 

In a nutshell, after spending part of the weekend generating four pieces on the 2006 AmLaw 100 (released last Friday)—here, here, here, and here—first thing Monday I returned a phone call from an assistant general counsel at ALM Media who proceeded to tell me that everything I'd written violated their copyright in the AmLaw 100 and that I must take it all down forthwith.

I did not, and I did what any lawyer with himself for a client would advise:  Call in the experts.

The good news is I learned a lot about copyright and fair use thanks to the superb counsel and advice I was able to draw upon, ranging from nearly a dozen readers, many of whom I'd never heard from, who offered their thoughts in personal emails (which were without exception generous and supportive) to a few friends who happen to be IP lawyers, to another friend who's the heaviest hitter of all in this area, as General Counsel of a major publicly-traded media organization.  (You know who you are.)

Consider what follows, then, a small effort to repay the collective efforts of the blogosphere, and an attempt to memorialize what I learned in hopes it might be useful in future to someone finding themselves in a similar situation.

One motivation for doing this is the remark of an IP practitioner and friend who, unsolicited, volunteered the opinion that "There are entire in-house law departments devoted to sending out legally unjustified cease and desist letters." And the truly bad news is not that dismaying commentary on the paucity of ethics, but his additional observation that far more than half the time, threats work.

For starters, my law school alma mater has a much-more-than-decent guide to fair use online.

But to get to "primary sources," the leading cases hereabouts are Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) and Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985).

Feist was a dispute over whether Feist, a directory publishing service, could copy telephone-book white page listings from Rural Telephone's directories and reproduce them in its own directories.  As Justice O'Connor felicitously put it:

"This case concerns the interaction of two well-established propositions. The first is that facts are not copyrightable; the other, that compilations of facts generally are. Each of these propositions possesses an impeccable pedigree."

After observing that "the key to resolving the tension lies in understanding why facts are not copyrightable,"

she discussed the constitutional requirement of "originality" as a predicate to copyrightability. "Originality" means that an act of independent creation took place. By contrast:

"facts do not owe their origin to an act of authorship. The distinction is one between creation and discovery: the first person to find and report a particular fact has not created the fact; he or she has merely discovered its existence. [...] Census-takers, for example, do not "create" the population figures that emerge from their efforts; in a sense, they copy these figures from the world around them."

Compilations of facts, on the other hand, may possess originality, but since facts themselves do not become original through association together, "This inevitably means that the copyright in a factual compilation is thin."

The heart of the distinction is explained thus:

"No matter how much original authorship the work displays, the facts and ideas it exposes are free for the taking . . . . The very same facts and ideas may be divorced from the context imposed by the author, and restated or reshuffled by second comers, even if the author was the first to discover the facts or to propose the ideas.

"It may seem unfair that much of the fruit of the compiler's labor may be used by others without compensation. As Justice Brennan has correctly observed, however, this is not "some unforeseen byproduct of a statutory scheme." Harper & Row, 471 U.S., at 589 (dissenting opinion). It is, rather, "the essence of copyright," ibid., and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but "to promote the Progress of Science and useful Arts." Art. I, § 8, cl. 8. Accord Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work. Harper & Row, supra, at 556-557. This principle, known as the idea-expression or fact-expression dichotomy, applies to all works of authorship. As applied to a factual compilation, assuming the absence of original written expression, only the compiler's selection and arrangement may be protected; the raw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art. "

Finally, the Feist court takes pains to dispose of the "sweat of the brow" doctrine, whereby lower courts had (consistently, the High Court implies) granted unjustified protection to factual compilations merely because they were laborious to assemble:

"Making matters worse, these courts developed a new theory to justify the protection of factual compilations. Known alternatively as “sweat of the brow” or “industrious collection,” the underlying notion was that copyright was a reward for the hard work that went into compiling facts. The classic formulation of the doctrine appeared in Jeweler's Circular Publishing Co., 281 F., at 88:

“The right to copyright a book upon which one has expended labor in its preparation does not depend upon whether the materials which he has collected consist or not of matters which are publici juris, or whether such materials show literary skill or originality, either in thought or in language, or anything more than industrious collection. The man who goes through the streets of a town and puts down the names of each of the inhabitants, with their occupations and their street number, acquires material of which he is the author” (emphasis added)."

"The “sweat of the brow” doctrine had numerous flaws, the most glaring being that it extended copyright protection in a compilation beyond selection and arrangement -- the compiler's original contributions -- to the facts themselves. Under the doctrine, the only defense to infringement was independent creation. A subsequent compiler was “not entitled to take one word of information previously published,” but rather had to “independently work out the matter for himself, so as to arrive at the same result from the same common sources of information.” Id., at 88-89 (internal quotations omitted). “Sweat of the brow” courts thereby eschewed the most fundamental axiom of copyright law -- that no one may copyright facts or ideas. See Miller v. Universal City Studios, Inc., 650 F. 2d, at 1372 (criticizing “sweat of the brow” courts because “ensuring that later writers obtain the facts independently . . . is precisely the scope of protection given . . . copyrighted matter, and the law is clear that facts are not entitled to such protection”)."

Getting then to the heart of the dispute, the Court restates the question presented as follows:

"[D]id Feist, by taking 1,309 names, towns, and telephone numbers from Rural's white pages, copy anything that was “original” to Rural? Certainly, the raw data does not satisfy the originality requirement. Rural may have been the first to discover and report the names, towns, and telephone numbers of its subscribers, but this data does not “'owe its origin'” to Rural. Burrow-Giles, 111 U.S., at 58. Rather, these bits of information are uncopyrightable facts; they existed before Rural reported them and would have continued to exist if Rural had never published a telephone directory."

So the handwriting of the holding is on the wall, as it were:  Feist did not infringe Rural's copyright:  "copyright rewards originality, not effort."

The other case, Harper & Row v. Nation, has a much sexier set of facts.  But the real reason we're interested in it is that it's the primary authority on the parameters of "fair use."

Shortly after President Gerald Ford left office, he negotiated a book deal for his memoirs with  Harper & Row, which subsequently sold pre-publication rights of an excerpt dealing with Ford's pardon of Pres. Nixon to Time magazine for $25,000.   About ten days before the Time excerpt was to run, The Nation magazine (under the famous Victor Navasky) obtained a purloined draft of the Ford memoir and published a 2,500-word story on it, deliberately scooping Time and lifting 300-400 words verbatim, albeit of course with attribution, from the Ford memoir.  Time magazine promptly cancelled the story and refused to pay the second half of the $25,000, which was still owing.  Harper & Row then sued The Nation for copyright infringement.

The Southern District of New York (557 F. Supp. 1067 (SDNY 1983)) found for Harper & Row and rejected The Nation's defense of "fair use."

The Second Circuit reversed (723 F.2d 195 (2d Cir. 1983)), endorsing the defense of "fair use" and finding under the four tests enumerated in the Copyright Act (17 U.S.C. § 107), as follows:

• the purpose of the article was "news reporting,"
• the original work was essentially factual in nature,
• the 300 words appropriated were insubstantial in relation to the 2,250-word piece, and
• the impact on the market for the original was minimal.

The Supreme Court, in turn, reversed again, rejecting The Nation's "fair use" defense.  Its discussion of the four factors is the heart of the opinion.

• Purpose of the Use:  In general (there are no bright lines here—this is an "all the facts and circumstances" inquiry), nonprofit uses are favored over for-profit ones, news reporting and other "productive" uses are favored, and a "true scholar" is favored over "a chiseler."
  
• Nature of the Copyrighted Work:  The law "recognizes a greater need to disseminate factual works than works of fiction or fantasy," presumably on the theory that facts educate regardless of where they originated whereas fiction or fantasy is at its core the expression of the author.  Also critical in Harper & Row was that the Ford memoirs were unpublished when The Nation purloined them:

  "While even substantial quotations might qualify as fair use in a review of a published work or a news account of a speech that had been delivered to the public or disseminated to the press, see House Report at 65, the author's right to control the first public appearance of his expression weighs against such use of the work before its release. The right of first publication encompasses not only the choice whether to publish at all, but also the choices of when, where, and in what form first to publish a work."

• Amount and Substantiality of the Portion Used:  This is perhaps the single one of the four "tests" that most readily comes to mind when discussing fair use, but it needs to be stressed that the emphasis on the qualitative "substantiality," not the quantitative "amount:"  As the Supreme Court put it, "In absolute terms, the words actually quoted were an insubstantial portion of "A Time to Heal." The District Court, however, found that '[T]he Nation took what was essentially the heart of the book.' [...]  A Time editor described the chapters on the pardon as 'the most interesting and moving parts of the entire manuscript.'"
  
  The fact that the purloined 300-400 words were certainly less than 1% of the memoir manuscript, in other words, cuts no ice.
  
• Effect on the Market:  Finally we get to my favorite test, the economic impact of the alleged infringement, and the Supreme Court evidently is of the same view:  "This last factor is undoubtedly the single most important element of fair use."  Indeed, quoting the estimable Nimmer, they say "Fair use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied."
  
  Since Time reneged on its agreement to pay the second installment of royalties to Harper & Row, the economic impact here was obvious. But the Court went further:

  "More important, to negate fair use, one need only show that, if the challenged use "should become widespread, it would adversely affect the potential market for the copyrighted work." Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. at 451 (emphasis added)"

  In other words, courts will consider not just the isolated alleged infringement, but how the world would look if they approved a pattern of same.

Held:

"The Court of Appeals erred in concluding that The Nation's use of the copyrighted material was excused by the public's interest in the subject matter. It erred, as well, in overlooking the unpublished nature of the work and the resulting impact on the potential market for first serial rights of permitting unauthorized prepublication excerpts under the rubric of fair use. Finally, in finding the taking "infinitesimal," the Court of Appeals accorded too little weight to the qualitative importance of the quoted passages of original expression. In sum, the traditional doctrine of fair use, as embodied in the Copyright Act, does not sanction the use made by The Nation of these copyrighted materials."

Here endeth our discussion of Harper & Row v. Nation.

Applied to what I did here on "Adam Smith, Esq." last weekend with the AmLaw 100 statistics, I concluded that my use of their non-copyrightable facts advanced knowledge and was newsworthy in its own small way, that I did not deprive them of any publication rights of their own, and that my analysis of their raw data increased, if anything, the economic value of their initial listing.

Again, I would like to humbly and graciously thank all those who contributed to my education on this topic.   My devout hope is that this piece will help, in some small way, a future target of a claim of copyright infringement to understand the pertinent law and to govern their behavior accordingly.

Maister On Why "Leadership" Won't Work

David Maister, who knows his way across the management/leadership landscape so much better than almost anyone else that he seems to have been GPS-enabled while the rest of us were relying on 15thC. parchment maps, has taken off from my post of a few days ago about leadership.   Here he is getting warmed up:

"I keep getting asked about this topic, so here goes my ten cents worth. I think more rubbish has been written about ‘leadership’ than almost any other business topic. A lot of it is patently false, and even more of it is dangerous."

And I bet you didn't know that "manager" derives from medieval French or Italian meaning, roughly, "holder of the horses," while "leader" is of Chaucerian-era origins and means one who chose the expedition's route, a model "that won't work," David states flatly.

Enough; just go read the whole thing right now.

"The Magic Middle"

Every once in awhile, it pays to stand back and reflect for a moment on the "Adam Smith, Esq." community—yes, dear reader, that means you.

The more involved I've become with "Adam Smith, Esq.," and the more readers I've heard from and even met in the real world, the more I've come to think of it not as a "blog" but as a publication, with all of the responsibility for accuracy, even-handedness, and citation of original source material, that that entails.  As the managing partner of an AmLaw 25 firm said to me, "The difference between you and The American Lawyer is that you publish a couple of dozen times a month."  [And there's a nontrivial difference in the cost of a subscription, but I chose to be kind and avoid pointing that out.]

Have I, then (horrors!), become "Mainstream Media"?!

Wrong question, at least if you believe David Sifry, founder and CEO of Technorati, the first and in many ways still the best search engine dedicated to blogs.  In a thoughtful and, blessedly, data-rich post, Sifry points out that some famous blogs, including the ubiquitous Boing Boing, have professional journalists on staff.  Other sites which he classifies as "MSM," including Slashdot, let readers spontaneously create and populate their content. 

The point is that the line between the MSM and the blogosphere is blurring, particularly as we gain more experience with what I think of as "Blogs 2.0:"  Sites, like "Adam Smith, Esq.," that are professionally produced, directed at a focused target audience, and (so people tell me) offer content equivalent in quality and analytic rigor to anything to be found offline in more conventional media addressing the same topics.

That said, blogs are never going to supplant The New York Times or CNN, as this handy little graphic makes clear:

It's also overly simplistic to conclude, as the hypothesis of "The Long Tail" would have it, that you're either on the A-List, read by millions, or you're nowhere.   Going just a very short distance further down the popularity distribution curve shows blogs gaining a lot of real estate on the MSM:

Sifry calls sites that are neither on the A-list nor irrelevant The Magic Middle of the attention curve:

"This realm of publishing highlights some of the most interesting and influential bloggers and publishers that are often writing about topics that are topical or niche, like Chocolate and Zucchini on food, Wi-fi Net News on Wireless networking, TechCrunch on Internet Companies, Blogging Baby on parenting, Yarn Harlot on knitting, or Stereogum on music - these are blogs that are interesting, topical, and influential, and in some cases are radically changing the economics of trade publishing. [...] 

"And what is so interesting to me is how interesting, exciting, informative, and witty these blogs often are. "

So it's official:  You are a subscriber in good standing to "The Magic Middle."  And "Adam Smith, Esq." is a publication in every sense intended by that moniker.

Does Italy Recognize a Right of Privacy?

File this under "Truly Useful."

Charles Glasser, Jr., Media Counsel at Bloomberg News, has just published the "International Libel & Privacy Handbook," subtitled "A Global Reference for Journalists, Publishers, Webmasters, and Lawyers."  As the reach of print, broadcast, and of course online media becomes worldwide, ignorance about the libel and privacy laws of seemingly far-away jurisdictions is no longer a viable option.

Glasser has put together certainly the most up-to-date and comprehensive, if not the first and only, nation-by-nation summary of these laws, written by legal experts in Europe, Asia, and the Americas, and concluding with a section on "Issues of Global Interest," including a cross-reference chart, discussion of special issues for book publishers, enforcing foreign judgments, and fair use (guess what?—it "stops at the border").

As Floyd Abrams says (and if you don't know who he is, you don't need to worry about media law),

"At long last, we can now compare on a nation-by-nation basis how countries in the Americas, Asia, and Europe deal with libel and privacy issues and how that treatment differs from that of the United States.  This book offers a sophisticated and reader-friendly response to the core questions that any practitioner frequently must consider."

Not available on Amazon, you can buy it through Bloomberg Books.

 

Your Money or Your Reputation: Adam Smith, the First Behavioral Economist?

Seventeen years before The Wealth of Nations (1776), Adam Smith published his Theory of Moral Sentiments (1759), nowadays a relatively neglected work which, to my mind, is nearly as astute, deserves far greater current recognition, and which not-incidentally puts pad once and for all to any charge that Adam Smith was unsympathetic to human nature or cavalier about the consequences of his theories for individuals.  Merely contemplate the book's very first sentence if you doubt me:

"How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it."

One reviewer nicely summarized its relationship to Wealth of Nations as follows:

"To truly understand Adam Smith's economic masterpiece "The Wealth of Nations", one must understand its moral foundation. Without Smith's essential prequel, "The Theory of Moral Sentiments", the more famous "Wealth of Nations" can easily be misunderstood, twisted, or dismissed."

So, to today:  Harvard Business School's Working Knowledge has a piece positing that the Theory of Moral Sentiments was the original intellectual precursor to what we all know today as Behavioral Economics.  [The HBS WK article refers enticingly to the primary source, "Adam Smith, Behavioral Economist," published in the summer 2005 edition of The Journal of Economic Perspectives, but the troglodyte JEP keeps its online archives under severe lockdown—trust me, I tried.]

The premise of the HBS piece, "Adam Smith, Behavioral Economist" is that Moral Sentiments and Wealth of Nations, which Smith never sufficiently inter-connected during his own life, nevertheless together constitute the intellectual foundation of how human psychology (including incentives, preferences, risk-aversion, and the endless struggle between immediate and delayed gratification) affect how people behave in markets:  In other words, Behavioral Economics.

"Smith's two main works—The Wealth of Nations (WN) and The Theory of Moral Sentiments (TMS)—show him to be a brilliant economist and arguably a brilliant psychologist, but he was never fully able to bring the economics and psychology together."

One of the primary arguments of TMS is that human behavior is driven by passions—fear, desire, and greed among them—but that these passions are moderated by an "impartial spectator" looking out for the individual's long-term interests.  And there's apparently something to the theory:  Using it, the Harvard professors designed a "commitment savings product" for banks in the Phillipines that required customers to sign a contract prohibiting them from withdrawing funds until a certain amount of time had elapsed or a level of principal value had been achieved.   According to them, this "had a large and significant effect on clients' total savings," resulting in increased home purchases, educational investments, and small business-building.

But it's when we come to Smith's bedrock belief,  intimated in the opening sentence above, in the importance of trust, concern for fairness, and reciprocity, that the linkage of human psychology to market functioning becomes most clear.  Smith believed that those values become more, not less, important as markets evolve.  For example, with many of the professions, most assuredly including our own, clients cannot monitor "quality" in real time—and the same goes for doctors, auditors, and financial advisors.  So trust and reputation stand in where cold economic calculus fails.

Likewise with corporations:  Shareholders must at a fundamental level trust management to operate in the shareholders' interest since the range of variables over which management has control or influence is far too vast to specify contractually (and such a hypothetical specification would also be obsolete the moment it was completed).

Finally, Smith recognized, and placed great value upon, "the aerial coin of praise," and social and professional status, as critical motivational ingredients.  Reputation ("the aerial coin") is the flip-side of trust; one trusts those who have earned their blue-chip reputations.  And Smith would have insisted on the most scrupulous care and feeding of reputation, if for no other reason than the dire consequences attendant upon its destruction.

More currently, consider this (emphasis supplied, hat tip to Larry Ribstein): 

"The market is capable of levying harsh penalities [for financial malfeasance] on its own. Recent evidence comes from Karpoff, Lee and Martin, The Cost to Firms of Cooking the Books (July 25, 2005). Here’s the abstract:

"We examine the penalties imposed on all 585 firms that were targeted by SEC enforcement actions for financial misrepresentation from 1978-2002. Consistent with the view that penalties are small, monetary fines were imposed on only 7% of the firms. A larger fraction, 36%, faced class action lawsuits from investors. Overall, however, the penalties imposed on firms through the legal system appear to be small, as the unconditional mean total of all legal penalties is only $14.3 million per firm.

"The penalties imposed by the market, in contrast, are huge. Our point estimate of the reputational penalty - which we define as the expected loss in the present value of future cash flows due to higher contracting and financing costs - is over twelve times the sum of all penalties imposed through the legal and regulatory system.

"For each dollar that a firm misleadingly inflates its market value, on average, it loses this dollar when its misconduct is revealed, plus an additional $2.47. Of this additional loss, $0.18 is due to expected legal penalties and $2.29 is due to lost reputation. This evidence belies a widespread view that financial misrepresentation is disciplined lightly. To the contrary, reputational losses impose substantial penalties for cooking the books."

So next time you're cynically thinking that money is the only motivator, try putting a price on your reputation; Smith would have.

Blawg Review #39

"Adam Smith, Esq." is honored and delighted to host Blawg Review #39; I consider myself in excellent company given the distinguished and talented people who have hosted Blawg Review in the past.  

This week we celebrate:

Epiphany:  n.   1.  From the Greek epiphania "manifestation," often referring to the appearance of a divine being. Christ's appearance to Paul on the Damascus road was an epiphany. The word is used to describe the first appearance of Christ to the Gentiles in the visit of the Magi to the baby Jesus (Matthew 2:1-12), an event celebrated January 6.
2. Epiphany in fiction, when a character suddenly experiences a deep realization about himself or herself; a truth which is grasped in an ordinary rather than a melodramatic moment.

The most famous representation of "The Epiphany" in art history is doubtless Giotto's (more formally, Giotto di Bondone:  Italian, Florentine, 1266/76–1337) from New York's own Metropolitan Museum of Art:

My wife, who majored in art history at Vassar, has indelibly memorized this educational little ditty placing Giotto in art-historical context:

"Giotto, Giotto, Giotto-Giotto:  Renaissance
He paints in the morning and he paints at night;
If it's a Giotto it'll turn out right.
Giotto, Giotto, Giotto- Giotto:  Renaissance."   

Of course, here in New York City we celebrate the end of the 12 days of Christmas with our own tradition:  The annual rite of The Ceremony of the Mulching of the Christmas Trees, jointly supervised by the NYC Sanitation and Parks Departments:

Before we begin our cyberspatial tour, like all accomplished explorers, we need to be well-equipped.  To that end I commend to you Google Pack, a handy-dandy Swiss Army-knife compilation of everything the Prepared Scout of virtual-space needs, from Adobe Acrobat and Firefox to anti-virus and anti-spyware armor.

Let the tour begin!

Alito Fireworks

"Adam Smith, Esq." is resolutely non-partisan and apolitical.  That said, without question the best-quality daytime drama scheduled for this coming week will be the nomination hearings for Judge Samuel Alito to SCOTUS—they promise an extremely high entertainment-value quotient, and I for one intend to Tivo them in their entirety.  But for commentary and observation, I'll turn to those who plow these fields for a living, starting with the newest addition to the Law.Com "Inside Opinions:  Legal Blog Network," the consummately qualified Howard Bashman of How Appealing.

The "Epiphanic Moment" ("EM") from this post is Howard's intimate knowledge of the witnesses who will be testifying in favor of Alito this week: "I know about all of these judges as a result of having handled numerous appeals in front of the Third Circuit over nearly the past sixteen years and having clerked for a judge serving on the Third Circuit for two years before that. Here are my quick insights..."

Our friends at Law.Com have their comprehensive "A Field Guide to the Alito Confirmation Hearings."  You were expecting, perhaps, a red hawk pair nesting above Fifth Avenue?

Meanwhile, over at the Electronic Privacy Information Center, they've a remarkably comprehensive complete copy of a conference report from the Seeley G. Mudd Manuscript Library at Princeton University—the conference in question taking up "The Boundaries of Privacy in American Society," chaired by none other than then-Princeton-student Samuel Alito, who was responsible for putting the conference together, doing the research behind it, and preparring the "remarkable summary that accompanies the final report."   This should have the C-SPAN junkies going back to their Red Bull's for stamina.

NSA Surveillance Fireworks

Also on the late-breaking political newsfront, we have the story that our very own NSA ("No Such Agency") has developed an expertise in data-mining that Wal-Mart would envy, but rather than applying it to how our household purchases index on Crest and Pampers, they've applied it to determine how many degrees of separation lie between you and Osama.

Jay Leno has his own take on this revelation:

According to a new poll, President Bush's approval ratings are on the rise. A lot of these polls are phone polls and people were worried Bush is listening in.

Kierkegaard Lives, a new blog to me, provides a "wire-tapping link repository" aiming to constitute one-stop-shopping for digerati running down primary sources on this. 

For the attention-span challenged, yesterday TalkLeft uncovered a Congressional Research Service report questioning the NSA/White House's authority.  EM from the summary:

"The 44-page report said that Bush probably cannot claim the broad presidential powers he has relied upon as authority to order the secret monitoring of calls made by U.S. citizens since the fall of 2001."

For the record, I do not subscribe to the cynical view of this imbroglio that it's merely a matter of whose ox is being gored—that if you're an upstanding American citizen you have nothing to fear from the snoops, so what's your problem, buddy? Rather, I view the debate as the latest incarnation of the timeless, "no permanent solution" tension between human liberty and free and open societies, and the reality that "the Constitution is not a suicide pact."

Lawyers Behaving Badly

This topic can only be introduced by:  "Where oh where to begin?!"

f/k/a reports on a lawyer who:

"... gets three months in jail for being one of the two major actors in a complicated scheme to steal millions of dollars [$25.6-million, in fact] from people he himself describes as "decent, hardworking people looking for an honest way to resolve their debt issues.""

How is this possible?  Maybe the judge was swayed by character witnesses, or the lawyer's own questionable character:

"Attorney Lisa B. Shelkrot came up with the usual defense gobbly- gook, including: "What stands out [in letters from prominent members of the community] is his selflessness and commitment to service." "It was a fear of destitution, not a high flying lifestyle ... that lead him to this.  Sinnott had a "deeply and tragically" flawed personality."

My EM question to Ms. Shelkrot:  Are you yourself buying that for a second?

And since when does being "flawed" exempt you from responsibility for the consequences of your premeditated actions over a period of years?

We don't apply this standard in dealing with children or dogs, and it's not time to start with grown, bar-passing adults.

More seriously, Jack Balkin asks whether it now "seemed as if there was no legal proposition, no matter how outlandish, that you couldn't get some prominent lawyer these days to defend."  Answering his own question, he writes:

"Lawyers have always, to my knowledge, been willing to come up with clever and ingenious arguments for the interests they represent."

But he's only warming up:

"Put another way, we have all known for many years that lawyers are rhetorical whores; their job is to confuse, obfuscate, and make unjust and illegal things seem perfectly just and legal, or, if they cannot quite manage that feat, to muddy up our convictions sufficiently that we conclude that it's a close case. There is nothing new about this."

"Nothing new?" Meaning it's essentialy an ineradicable and hopeless condition? Well, not quite. EM moment in bold (my emphasis:

"Lest I be misunderstood, I do not mean to say that law and legal doctrine counts for nothing, and that lawyers have no independent role to play other than as political cheerleaders for one side or the other. Rather I mean to say that the law always needs help from other sources in political culture if it is to do its job appropriately. The rule of law, I would insist, is not a purely legal or professional ideal-- it is a political ideal."

TalkLeft decodes what motivates outstanding federal prosecutors to go to the defense side—and questions whether they ever really make the transition.  "The real problem is most of these former high-level prosecutors can't make the mental shift. They don't have it in them."   Or, as former Deputy Attorney General James Comey puts it in a quote so rich you couldn't make it up (EM in bold):

“You go from being paid to do the right thing every day, from having the freedom never to make an argument you don’t believe in, to being a defense attorney, where you are duty-bound to make the best argument you can,” he told the New York Law Journal. “I have a tremendous respect for people who do defense work, and it’s not lying, but in a private moment, sometimes, you say, ‘Geez, this is a bunch of baloney.’”

And you really  anticipate even a soupcon of "zealous representation" on behalf of a criminal defendant from Mr. Comey?   TalkLeft certainly doesn't:  "Pathetic...irksome beyond description."

For a moment's worth of comic relief, the always-reliable Walter Olson at Overlawyered chronicles a Dallas restaurateur who sued the Dallas Morning News over a review of his restaurant, "Il Mulino"—specifically, so it would appear, over the newspaper critic's take on Il Mulino's bolognese and vodka sauce.  I am pleased to be able to report that the matter has been settled without admission of much of anything, it seems, but with a promise of a second review from the newspaper.  "And you're ugly," perhaps?

The serious message here is simply, Who comes off looking worse?  The benighted restaurateur who exponentially increased circulation of the critical review by his action, or the lawyer who took good money from him to help?

Craig Williams, another Scottish lawyer with a penchant for economics, regales us at May It Please the Court with Major League Baseball's claim that it "owns" all baseball statistics.  The party offending MLB's expansive notion of the territorial reach of its intellectual property is one CBC Distribution & Marketing, a fantasy baseball game operator—dependent for the reality of its fantasy upon real-world baseball statistics.  EM of the post:  "Next thing you know, they'll be charging the fans to quote statistics to one another."

Mauled Again kicks off 2006 with a confident prediction:

"The culture of corruption, of bribery, of putting one's own selfish interests above those of the public one is required to serve will also trigger yet another easy-to-predict Top Ten tax story of 2006. At least one politician, one celebrity, and one lawyer will run afoul of the tax law by failing to file a tax return or by failing to pay income taxes."

What's to be done?   You might try starting young:

"It is a challenge getting across to law students the point that when they enter the profession, and even as law students, they are subject to a higher set of integrity standards than those that apply generally to citizens of the nation."

Put that on your refrigerator.

On a less consequential, but equally depressing, note, Matt Homann of "the [non]billable hour" reports seeing a serious-minded piece of advice that clients should not talk to their lawyers until the deal they're doing is completely worked out.   What on earth would prompt such advice?  "Our predominant business model"—the billable hour.

In contradistinction to the billable hour, Greatest American Lawyer advocates serious, candid discussions with clients about budgets.  The goal?  Try, "Truth."   

Over at Houston's Clear Thinkers, Tom Kirkendall writes about "The High Price of Asserting Innocence," and sees a vicious double standard infecting the Enron prosecution, wherein the right to defend oneself has essentially been emasculated by trigger-happy prosecutors and the federal sentencing guidelines' emphasis on co-operation as a get-out-of-jail-free card: 

"Last week, former Enron chief accountant Richard Causey pled guilty to a single count of securities fraud and agreed to a seven-year prison term after vigorously defending himself from multiple charges of business crimes for over two years. Had he elected to defend himself at trial against the charges and lost, he would have faced an effective life sentence."

Yet another triumph of the Law of Unintended Consequences; but lawyers created this injustice. Can't lawyers be expected to fix it?

Part of the problem may be that lawyers can't be expected to fix injustices if they simply can't be trusted in the first place.  To that point, Dennis Kennedy recounts the "baffling" decision of the Florida Bar's Board of Governors to prohibit lawyers from looking at metadata—presumably on the principle that gentlemen don't read other gentlemen's mail.  To my mind, the only conceivable rationale for such (a feckless) rule of "Enforced Ignorance" is that the children can't be trusted near the liquor cabinet.

Is there hope?  Point of Law writes about "Merit-Based Judging" and urges all of us (is the MSM listening, here?) to get the notion out of our heads that judicial decision-making is a clone of the legislative process, where all that matters are results.  Ted Frank comes out decisively in favor of hoping Alito will truly judge matters strictly on the merits, and even though Frank is confessedly pro-business, he argues correctly that "business is better off in the long run with a judge and judiciary that decides cases on the merits"  rather than "a hack judge who makes his or her decisions based on the identity of the parties in the caption." 

Wouldn't it be nice if a greater proportion of the American public (and again, the American media) understood that "decisions based on the identity of the parties" enjoys a one-for-one identity with being "a hack."

Finally, we can all breathe a sigh of relief—inbetween chuckles, anyway—at the extremely welcome news that The Bitch is Back. 

Practice, Practice, Practice

Lest you begin to form the impression that lawyers never get any real work done, we have an eclectic roundup of practitioners opining on their specialties.  I'm not sure any one of this exactly qualifies for an "EM," being, as they are, proudly technical and rational self-contained essays, you hey, you might learn something; I surely did.

• Ever wonder about the extraterritorial application of US Antitrust Laws?  You understand, of course, that ever since Alcoa (1945), it's been settled that they do have some such reach.  Law & Society sets us straight (and I'm personally a sucker for their banner image).
• Patent Baristas educates us on the USPTO's proposal to limit continuations, which have "become the current whipping boy."  (Who knew?!)  PB opines that "this has not been thought through very well," and as part of their argument to that effect notes (and trust me, I quote):

  "Note that proposed Rule § 1.78(f)(2) provides that for applications that fall under set proposed § 1.78(f)(1) above, there will be a rebuttable presumption that the nonprovisional application contains at least one claim that is not patentably distinct from at least one of the claims in the one or more other pending or patented nonprovisional applications. In that case, [etc.]"

  I'm willing to take them at their word.
• Staying in IP-land for a moment, The Invent Blog notes that David Allen's "Getting Things Done" (a collection of techniques I heartily endorse), which relies upon tabbed folders for organization, wouldn't be possible without the handiwork of one James Newton Gunn, who in 1897 obtained a patent for tabbed folders and index cards.  Respect your ancestors, I always say!
• My e-friend Ingo Forstenlechner has just completed his Ph.D. thesis titled "Impact of Knowledge Management on Law Firm Performance - An Investigation of Causality across Cultures" and wants to let you know that you can get a copy directly from him.  I'm sure Joy London already has hers.  Here's an excerpt from Ingo's abstract of the thesis: 

  "The set of cause and effect relationships at the heart of the [balanced] scorecard - referred to as the success map – is at the core of this research, which aims to investigate if the link between managing knowledge and financial performance really exists and – if it does – how it can be influenced." [And his conclusion?] [...]  "This thesis provides the empirical evidence for a link between KM and organisational performance."

• Carolyn Elefant at My Shingle offers very practical advice (##'d 1 through 5, in fact) for people seeking contract work from local attorneys or solos.
• And last, both Carolyn and I contributed to the launch of Law.com's "Career Center" earlier last week.

And The Final Word Goes to The Economics of Law Firms

I hope you all saw that coming.

Patrick Lamb, at  In Search of Perfect Client Service, essays upon "The Essence of Leadership."  The first thing he does, with a hat tip to Tom Peters, is distinguish leadership from management:  "Management has a lot to do with answers.  Leadership is a function of questions. And the first question for a leader always is "what do we intend to be?""

Those of you who were comparative lit majors may be interested to know that I took off from the same Harvard Business School paper Patrick is launching from, in a post of my own, here.

The anonymous Wired GC kicks off the New Year by turning his thoughts to New Ventures, and to the pilot fish that invariably accompany them in schools, your friends the Venture Capitalists, and The Top 10 Lies of VC's as recounted by Guy Kawasaki, who's in a position to know.  My personal favorite is #9 (EM included) :

"Do you know why we all know about Google's amazing return on investment? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. If they were common, no one would write about them. If you scratch beneath the surface, venture capitalists want to invest in proven teams (eg., the founders of Cisco) with proven technology (eg., the basis of a Nobel Prize) in a proven market (eg., ecommerce). We are remarkably risk averse considering it's not even our money."

Gerry Riskin at Amazing Firms, Amazing Practices (who I know well, whom I hope to have breakfast with in New York this coming week, and who deprived the world of stand-up comedy of a potential ace when he stuck to law-land) turns the kleig lights on "old-fashioned bad management" at Dorsey & Whitney's London office, leading the en masse departure of 8 associates. What, Gerry asks rhetorically, does it cost to recruit 8 associates? And what firm would "dare subtract that number from the billing revenue of some maniac in order to determine compensation?" Another rhetorical question.   But the EM is this:  Thanks at least in fair measure to the blogosphere, dysfunctional people cannot remain anonymous.

Finally, the question you've all had in the backs of your minds, especially those of you contemplating hosting another Blawg Review of your own some day: Am I glad I did it?

Yes, I thoroughly enjoyed it!  I had the chance to delve deeper into some old friends, to meet some new ones (as it were), and finally, to point you all towards two of my own post-children of the past week:

• Five Questions (Or Is It Only One?) For Your Firm in 2006, and
• Build on Your Strengths or Tackle Your Weaknesses?

It's good to be King For A Day.  Still, I hope I've done justice to Blawg Review #38's 10 Resolutions for Better Blogging.

And to all a good night, and a most merry and enjoyable 12 Days of Christmas next year.

Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues.   Final Note: I'm also interviewed there.

 

"The Wall Street Journal Online, Esq."

As of this morning, there's a noteworthy new kid on the legal blogosphere block: "The Wall Street Journal Online, Esq."

Well, not quite—actually, they're calling it simply their "Law Page," but a "centerpiece" of their new coverage is their new Law Blog.  Grab the feed.

Who's behind this?:

"We've beefed up our legal team with two great journalists: Ashby Jones, our legal editor, was a reporter at The Deal and American Lawyer Media. A former litigator and clerk to a federal judge, Ashby is a graduate of Haverford College and the University of Michigan Law School. He'll be writing The FLaw column.

"Peter Lattman will be writing our law blog. Peter joined the Online Journal from Forbes Magazine. Before becoming a journalist, he was a litigator at a law firm and worked on Wall Street. He is a graduate of Harvard University and Fordham University Law School. The blog will also include contributions from reporters at The Wall Street Journal and Dow Jones Newswires."

A heartfelt "Welcome" to the blawgosphere is in order!   And you thought blogging was going to turn out to be a fad....

So You've Made Your New Year's Resolutions....

What are your New Year's resolutions?  And, of greater interest, what makes you think you might really observe them?

Let's take a step back:  Isn't there something fundamentally irrational about New Year's resolutions to begin with?  After all, if you want to start running five miles a day, getting to work earlier, or cutting out the cheesecake, you shouldn't wait until January 1st to start.

Prof. Thomas Schelling, this year's Nobel prize-winner in economics for his work on conflict, has something to tell us about this:  He's written at some length about the archetypal situation in which a "resolution" may come in handy to change your actual behavior.  He posits a divided self:  One part of us wants to stop smoking, the other part wants to reach for the cigarette after dinner.  One part of us wants to get up earlier, the other part wants to hit the snooze button.  So far, so familiar.

The insight he adds is that these two parts of ourselves exist at different times.  The Angel Part is in control before the decision is actually made; the Devil Part takes over at the moment of truth.  So the question becomes:  Are there tools/techniques/strategies we can employ to strengthen the Angel's ability to constrain the Devil when push comes to shove?  There are some.

• The very fact that you have made A Formal (Written, I hope) Resolution raises the price of non-compliance; if you've also made the commitment public with a spouse or loved one, posted it on the refrigerator and above your desk, so much the better.  Shame doesn't always trump temptation, but you can give it a fighting chance.
• Make bright-line rules, not vague incantations of improvement.  So:  Rather than "eat less," specify "zero carbs."  Rather than "only one cigarette after a meal" (what exactly is a "meal" in today's grazing/snacking society?), "one cigarette only at 1pm and 7pm."
• Physically remove temptation:  If you have to go out to buy dessert, the Angel may have time to reassert control, but had it been ready to hand in the freezer, the Devil starts out on top.
• Bargain with yourself and promise a reward for the pain inflicted by compliance with the Resolution:  If you lose 10 pounds, you can buy a new dress.  Just make sure the incentive is something you really want; make it meaningful, so that its loss would be painful.

So what are my New Year's Resolutions? 

• To connect with more readers of "Adam Smith, Esq." in the real, off-line world—one of the greatest rewards of this site, to me.
• To try to make "Adam Smith, Esq." ever more insightful, carefully reasoned, and just plain intrinsically interesting.  And
• To celebrate everyone's entitlement to one vice of their choosing.

Comparative Strategic Advantages: The NYC Subway Strike

It's official:

 

The  power of the Transit Workers to wreak economic havoc is unsurpassed—yet just this side of unthinkable.  For the police or fire departments to strike is unthinkable; but the MTA union has the unmatched tactical advantage of being able to bring the City to its knees, literally within minutes of commencing their strike, without inflicting permanent damage. 

(When I went running this morning at 5:30, cars and trucks were already backed up as far as the eye could see from the police checkpoints at 96th Street, stopping all vehicles with fewer than four passengers from proceeding further downtown—and the strike was 2-1/2 hours old.)

I view the negotiations surrounding the strike as a fascinating example of strategic considerations, because the City's legal cudgel is the flat statutory prohibition on the transit workers' striking, with fines of double their daily pay for each day they're out.   Raising the stakes for both sides is the nature of the key issue which has become the sticking point:  The City is insisting that newly hired transit workers not be eligible for retirement until age 62 (current employees are eligible at 55).  Under the slogan, "protecting the unborn," the Union is refusing to agree.

What makes this particularly problematic?  That it's not a readily "divisible" issue:  It's all or nothing.  If this strike were only about 4% vs. 6% raises, it would never have happened.  You and I both know the answer to that one is 5%.

But both sides in the end have to play to public opinion:  The union taking the stance of hard-working, under-appreciated public servants at the end of their rope, the City as guardian and savior of the working class masses from the outer boroughs.  Or, as a store owner adjacent to the busiest Brooklyn subway station (Fulton Street), put it, showing an estimable level of economic sophistication:  "I pay good money to have my store here.  Is my rent bill gonna go on strike?"

Those who must be physically at their jobs (or whose customers, patients, or students must be) are hardest hit by this.  As for people like me?  If we don't already live within walking distance of our Manhattan offices, we can telecommute.

Limits to Capitalism: The New York City Subways and When Public Benefits Private

Aside from law firms and the business thereof—my genuine professional passion—I must occasionally share a personal passion, but only if it touches upon economics.  One personal passion is the almost unimaginable centrality of the subway system to New York City as it exists today.

Today's threatened subway strike in New York (which was averted by "stopping the clock" for four more days, at which point we'll be on the brink again barring a settlement), is such an occasion for breaking the rules about what you come to "Adam Smith, Esq." expecting.

What on earth do the subways have to do with economics and business?  Plenty.

If you look at a map of downtown New York in 1900, before the subways were built, there were no skyscrapers.  Look at the same map 10 years later (the first, primary, branch of the IRT opened in 1903, from City Hall to Harlem), and you will see a virtual curtain wall of skyscrapers down Wall Street and Broadway.  Did engineering technology change?  No—what changed was the ability of the subways—the physical infrastructure of the city—to deliver the throngs of office workers from Brooklyn, Queens, and the Bronx needed to make those skyscrapers economically viable.  

The same is no less true today. 

New York could not live without it.

Courtesy of the WSJ:

FAST MTA FACTS

• Carry 7,711,945 passengers on the average weekday
 
• Have 343 routes, 8,259 train and subway cars, 4,895 buses, 2,058 miles of track, 2,967 miles of bus routes, 734 train stations, and 63,884 employees
 
• Give New Yorkers about 2.4 billion rides each year
 
• Carry roughly one in every three users of mass transit nationwide and two-thirds of rail riders.
 
• Serve 14.6 million people in New York City, Long Island, southeastern New York and Connecticut.
 
• Are used by four of every five rush-hour commuters in New York City.
 
• Had a 2004 operating budget of $8.0 billion
 
• Last went on strike in 1980, when they were out for 11 days
 

Announcing "BlawgWorld 2006: Capital of Ideas"

With pride I would like to announce the release this morning of "BlawgWorld 2006," the first in what is promised to be an annual series of "e-books" comprising the best of the blawgosphere, brought to you by our friends at TechnoLawyer.  In their own words:

"According to various studies, approximately 80,000 new blogs launch every day, including dozens of legal blogs (blawgs). No one knows how many blawgs exist, but whatever the number, monitoring them would amount to a full-time job.

"For this reason, we've published BlawgWorld 2006: Capital of Big Ideas, a TechnoLawyer eBook designed to take you on a journey through 51 of the most influential blawgs.

"You cannot buy a copy of BlawgWorld 2006. It's free, but available exclusively to TechnoLawyer members. To receive your free copy, please use the form on this page."

The inaugural issue contains "best of" posts from 51 separate blawgs, and I am honored that the &quo