FEED YOUR BRAIN

It’s August. Vacation time. But how many people — especially hard-driving attorneys — are taking real vacations? Distressingly few, I suspect.

Many people who think they’re taking time off are kidding themselves. They are simply moving their work venues to a sandy beach or resort swimming pool. In a recent New York Times article, “Hit the Reset Button in Your Brain,” research scientist Daniel J. Levitin observes that essential revitalization of the brain comes only when a person enjoys a complete break from the daily demands of a job.

Previously, I’ve written about the myth of multitasking — the fallacy that the human mind can perform several tasks simultaneously. I’ve also discussed scientific studies proving that we underestimate the extent to which distractions — moving back and forth between tasks — undermine our productivity. Today we add another insight into how brains work and the implications for everyday life.

Two Roads; Different Destinations

Levitin’s research shows that our minds switch between two dominant “modes of attention.” One is a task-positive network, which engages when we focus on a specific activity, undistracted by anything else. In contrast, the brain’s task-negative network is akin to daydreaming. The mind wanders but, in doing so, achieves its greatest moments of insight.

Importantly, when one network is working, the other is not. Likewise, constantly moving back and forth between networks — as multi-taskers mistakenly think they can — is inefficient. It wastes mental energy.

Lawyers and Vacations

The relationship of the two networks to most attorneys’ lives is obvious. The billable hour regime that dominates today’s delivery of legal services rewards task-positive behavior. More time spent on an activity means more revenue for the law firm. Devising ways to keep attorneys engaged so that the hourly meter is always running — day, night, weekends, and during so-called vacations — becomes a key institutional objective unto itself.

Meanwhile, every minute that the brain spends in the task-positive mode is a minute that can never be available to the task-negative network. Vacations are supposed to be a task-negative period. But engaging in task-positive behavior during such times makes that impossible. It also interferes with the brain’s ability to recharge itself.

Levitin concludes, “If we can train ourselves to take regular vacations — true vacations without work…we will be in a more powerful position to start solving some of the world’s big problems. And to be happier and well rested while we’re doing it.”

Another Reason to Make Vacations Real

When I was 14 years old, we took our first family vacation. With my three younger siblings and me in the back seat of the first new car my father ever owned — a 1968 Oldsmobile 98 sedan — we drove from our hometown of Minneapolis to the Black Hills of South Dakota.

In those days, the things that keep the brain’s task-positive network engaged outside the office didn’t exist. No cellphones, laptops, or internet. With our task-negative networks free to roam, a simple road trip to see Mt. Rushmore became an unforgettable experience that remains a cherished memory.

My dad wasn’t a lawyer. He was a trucker — an over-the-road driver who had an interesting run-in with Jimmy Hoffa in the early 1960s and eventually moved himself up to a desk job. Except for the South Dakota trip, we didn’t take two-week vacations because he’d convinced his employer to pay him double for staying on the job instead. It was an understandable decision. Even with my mother working full-time, making ends meet was a continuing challenge.

How to Measure Costs and Benefits

In the end, the financial boost from two weeks of “double-pay” each year made only a temporary difference to our family. Most of today’s lawyers are working for a more subtle form of “double pay”: more billable hours usually translate into higher compensation. But is the marginal return worth the sacrifice? What’s a person’s leisure time worth?

My father’s calculation was incomplete. He failed to consider his own need for time off and the benefits accruing to an entire family as it spent task-negative time together. Attorneys are especially prone to making the same mistake. Technology conspires with institutional incentives to make it easy. If you want to become a better thinker and a more productive lawyer, take a vacation — a real one.

My next post will be in September.

DEWEY & LEBOEUF: CONNECTING MORE DOTS

[NOTE: August 8, 2014 at 5:00 pm EDT is the deadline for nominations to the ABA's annual list of the "100 best websites by lawyers, for lawyers." To nominate The Belly of the Beast, please click here.]

Two years ago, Dewey & LeBeouf filed for bankruptcy. Intriguing aspects of the firm’s unraveling are still emerging.

Recently, three of the firm’s former leaders, chairman Steven Davis, executive director Stephen DiCarmine, and chief financial officer Joel Sanders, filed an omnibus motion to dismiss the criminal charges against them. Such filings are not unusual. But their joint memorandum in support, along with DiCarmine’s separate supplemental brief, contain fascinating insights into the firm’s collapse. As the dots get added, it’s becoming easier to connect some of them.

Beyond the Scapegoats

Back in November 2012, former Dewey chairman Steven Davis hinted at the flaws in any narrative suggesting that he alone took the firm down. His filing in the Dewey bankruptcy proceeding promised another perspective:

“While ‘greed’ is a theme…, the litigation that eventually ensues will address the question of whose greed.” (Docket #654; emphasis in original)

The three co-defendants’ joint memorandum returns to that theme. It argues that the firm’s distress resulted from, among other things, “the voracious greed of some of the firm’s partners.” DiCarmine’s supplemental brief describes the greed of some former partners as “insatiable.”

The 2010 Bond Offering and 2012 Partner Contribution Plan

Some former Dewey partners might find the defendants’ recent filings uncomfortable. For example, much of the government’s case turns on the firm’s 2010 bond offering that brought in $150 million from outside investors. DiCarmine’s supplemental brief asks why, except for Davis, “the Executive Committee members who approved and authorized it have not been charged with any wrongdoing.”

Later, as the firm collapsed during the first five months of 2012, it drew down millions from bank credit lines while simultaneously distributing millions to Dewey partners. As I’ve reported previously, from January to May 2012, 25 Dewey partners received a combined $21 million.

The joint memorandum suggests that “if the grand jury presentation was fair and thorough, it demonstrates that drawdowns the firm made in 2012, prior to filing for bankruptcy, were made at the direction of several partners on the firm’s Operations Committee, and against the advice of Mr. Sanders, and despite the concerns of Mr. Davis and objections raised by Mr. DiCarmine.”

Shortly after those 2012 distributions occurred, Wall Street Journal reporters asked former Dewey partner Martin Bienenstock whether the firm used those bank credit lines to fund partner distributions. Bienenstock replied, “Look, money is fungible.”

He’s right. But that raises another question: Did some partners then use those eleventh-hour distributions of fungible dollars for their subsequent payments to the bankruptcy court-approved Partner Contribution Plan? The answer matters because the PCP capped each participating partner’s potential financial obligation to the Dewey estate. Unsecured creditors will recover an estimated 15 cents for every dollar the firm owed them.

There’s another twist. Dewey made its way through the bankruptcy proceeding without disclosing how partners shared those 2010 bond proceeds. In calculating each partner’s required contribution to the PCP, only partner distributions after January 1, 2011 counted. The PCP excluded consideration of any amounts that partners received in 2010.

Remember Zachary Warren?

The joint memorandum also counters the Manhattan District Attorney’s characterization of the accounting issues in the case as open and shut: “lf the grand jury had been properly instructed on these [accounting] standards, it would have concluded that the accounting methods were permissible,….”

Which takes us back to the curious case against Zachary Warren, a subject of several earlier posts. The charges against the former low-level Dewey staffer are predicated on an underlying violation of those accounting standards, too.

Warren has sought to sever his trial from that of his co-defendants, Davis, DiCarmine, and Sanders. Warren argues that plea agreements from witnesses who are cooperating with the government, notably Frank Canellas, demonstrate how thin the case against him is.

The Manhattan District Attorney responds that statements in the plea agreements are just the beginning: “[T]he purpose of the allocutions was to set forth facts implicating the witnesses in the crimes they committed; any part of them that inculpates the defendant is merely incidental.” (District Attorney’s letter to Hon. Robert Stolz, July 3, 2014) (App. I of Defendants Davis, DiCarmine, and Sanders Omnibus Memorandum in Support of Motion to Dismiss))

Really? Some career prosecutors might find it surprising to learn that when they get a defendant to “flip” and provide statements fingering a different target, the flipper’s statements are “merely incidental” insofar as they inculpate that target.

But the best line in the District Attorney’s surreply tries to connect Warren’s alleged December 2008 activities to Dewey’s collapse more than three years later: “[H]e was there to light the spark that fueled the scheme until its implosion in 2012.” (p. 6)

At least with respect to Zachary Warren, methinks the government doth protest too much. Meanwhile, his co-defendants are focusing on questions that cry out for answers.

 

 

ARE YOU A SMOKIN’ BUCKETFUL OF AWESOME?

[NOTE: For a limited time, the ABA Journal is soliciting nominations for its annual list of the "100 best websites by lawyers, for lawyers, as chosen by the editors of the ABA Journal." To nominate The Belly of the Beast, please click here.]

Some of my previous posts challenged law school deans, admissions officers, and faculty members who live in denial about the crisis in legal education. This time, I celebrate a law professor who sees things as they are and isn’t afraid to speak truth to power.

Before joining the faculty at the University of North Carolina, Professor Bernard Burk was an academic fellow at Stanford. Prior to that, he spent 25 years in private practice at a firm that eventually merged with Arnold & Porter. We don’t agree on everything, but Burk’s three-part series at the Faculty Lounge culminates in a June 30, 2014 post that earns him my latest “Commendable Comment Award.”

Questioning The “Versatility” Sales Pitch 

Burk analyzes the “versatility of a legal degree” argument. It’s often cited to counter some law schools’ dismal employment outcomes for graduates seeking jobs that actually require a JD. More specifically, the ABA allows schools to soften their self-reported employment results with a loosey-goosey category: “JD-Advantage” positions. To be sure, some are good jobs; but many aren’t. The problem is that schools don’t have to disclose any information about them.

The ABA’s definition of JD-Advantage includes a range of examples so broad that it demonstrates the potential for gaming the numbers: corporate contracts administrator, alternative dispute resolution specialist, government regulatory analyst, FBI agent, risk manager, accountant, journalist, human resources employee, law firm professional development worker, and almost anyone working at a law school in any capacity — from admissions to career services. And even that list isn’t exclusive.

Schools following the ABA’s honor system of reporting don’t need much imagination to dump lots of graduates into the JD-Advantage category. Perhaps that’s one reason that the category has been growing so dramatically. For the class of 2013, more than 6,300 graduates had what their schools called JD-Advantage jobs, a significant increase from 5,200 for the class of 2011.

Admissions Deans as Used Car Salesmen

Professor Burk compares law schools relying on undifferentiated JD-Advantage jobs to used car salesmen. Both assure you that what they have is what you need. But used car salesman never say, “No worries, pal. You should buy this car because, even if the engine implodes the minute you drive off the lot, the smoking pile of scrap that’s left will have measurable salvage value.”

“We generally don’t buy cars for their salvage value,” Burk notes, “especially when any car you buy will have salvage value if it can’t serve the purpose you actually bought it for.”

But some — not all — JD-Advantage jobs look more like the realization of a legal degree’s salvage value for those who have them. That doesn’t mean a legal education lacks intrinsic value. As Burk observes, some prospective students might view what they learn in law school as valuable for its own sake, regardless of whether it leads to a career in the law or enhances their earning power. But three years and $150,000 in tuition is more than most people are willing to spend on such a personal enrichment exercise alone.

A more thoughtful approach is what Burk calls the “Practical Justification Test.” Like the prospective used car purchaser, the prelaw student asks (or should ask), will a law degree actually take me where I want to go? For this group, full-time long-term JD-required employment upon graduation is the most meaningful outcome because law schools exist to produce lawyers. Distinctions based on that criterion should be critical in deciding whether and where to attend law school.

Hope v. Reality

A third rationale for law school involves magical thinking. That’s where some deans, faculty, and admissions officers have now staked their claims. Burk describes the premise of this argument as follows: “[T]he course of study transforms you into such a Smokin’ Bucketful of Awesome that the degree alone routinely opens doors to countless jobs unrelated to the course of study that would otherwise be closed to you or that you will be so much better at whatever you do that the degree is a Rocket to Success at almost anything.”

In response to Burk’s categories, University of Kansas Assistant Dean for Admissions Steven Freedman (the subject of one of my earlier posts) offers a fourth category: “[M]any students see the versatility of a law degree as form of risk insurance.”

Freedman’s comment generated lines from Burk earn him my latest “Commendable Comment Award”:

“[T]outing the salvage value of a law degree as ‘a form of risk insurance’ without offering a clear-eyed assessment of how likely it is that the risk insurance will be needed, what its coverage limits are, and how cheaply you could get the same benefit another way is inexcusably incomplete. It’s a failure to accept the difference between a Smokin’ Bucketful of Awesome and smoking pile of scrap.”

There’s an easy fix. The ABA could require law schools to disclose in detail what their graduates are actually doing in JD-Advantage jobs or, at a minimum, how much they’re earning in such positions. Until that happens, prospective students would be wise to assume that, for most schools, the category includes a lot of scrap.

THE ROBERTS COURT — PLAYING THE LONG GAME

It seems that everyone is trying to divine insights into how Chief Justice John Roberts is shaping the United States Supreme Court’s legacy. On July 2, The New York Times and The Wall Street Journal devoted front-page stories to that subject. On July 7, the Times published a review of Uncertain Justice, a book about the Roberts Court by pre-eminent constitutional scholar and Harvard Law Professor, Laurence Tribe, an unapologetic liberal.

While reading the review of Professor Tribe’s book, I recalled a January 2012 interview during which Stephen Colbert asked him about Roberts, who had taken his constitutional law course.

Tribe quipped, “I’m not sure how much of what I taught actually made a difference.”

All this is of special interest to me because Chief Justice Roberts was my law school classmate, and because I was in Professor Tribe’s course, too.

Activism v. Restraint

The Times story offers the Court’s unanimous rulings as a sign that the Chief Justice is sensitive to accusations that it has become an extension of the country’s paralyzing political polarization. The WSJ made a similar point in quoting from Roberts’ 2005 confirmation hearings on the subject of “judicial modesty”: “You don’t obviously compromise strongly held views, but you do have to be open to the considered views of your colleagues.”

Neither newspaper mentions other things that Roberts said during his confirmation hearings, including this: “Judges are like umpires. Umpires don’t make the rules; they apply them. The role of an umpire and a judge is critical. They make sure everybody plays by the rules. But it is a limited role. Nobody ever went to a ballgame to see the umpire.”

Conservatives bemoaning “activist judges” loved that analogy. For trial judges ruling on the admissibility of evidence, it may be reasonable. For a Chief Justice of the United States Supreme Court, it bears little resemblance to reality, as Roberts’ own actions on the Court have proven.

Tactics v. Strategy

In assessing Chief Justice Roberts’ approach, it’s worth distinguishing strategy from tactics. He is playing a long game. Although already on the Court for nine years, he could serve for twenty more. Tactically, he can move slowly in his desired direction. Over time, his strategic vision becomes more evident.

Jeff Shesol, the Times reviewer of Professor Tribe’s book, suggests that some elements of that vision are already in place, including the elimination of meaningful campaign finance limits, reduced regulation of economic activity, and erosion of long-established protections in civil rights, consumer rights, and criminal procedure.

The Journal quotes Cornell Law Professor Michael Dorf’s example of the interplay between tactics and strategy. In 2009, the Chief Justice issued an opinion “that upheld the toughest parts of the Voting RIghts Act of 1965, while opening new exemptions from federal oversight…. Four years later, Chief Justice Roberts, joined by his fellow four conservatives, built on the groundwork he had laid in 2009 by sweeping aside Voting Rights Act oversight that had been in place since 1965. All four liberals dissented.” (Professor Dorf chides the liberal justices as “naive” in lending Roberts their votes periodically, but what’s their second choice?)

More to Come

The Roberts Court has laid other foundational elements that could have a dramatic impact on American society. For example, most liberals were relieved when Chief Justice Roberts provided the deciding fifth vote upholding the Affordable Care Act (“Obamacare”). He found common ground with the majority in the federal government’s taxing power.

But on a key issue, he joined the dissent, which resurrected a moribund position on another critical constitutional source of the federal government’s power. As Jeff Shesol observes in his review of Uncertain Justice, Roberts joined a dissent that “took the most constrictive view of federal power under the commerce clause in 75 years, since the New Deal-era court got out of the business of overseeing economic policy.” In other words, the stage is set for a five-man Supreme Court majority to reverse a longstanding jurisprudential justification for federal legislation.

Professor Tribe Was Wrong

Whether the Roberts Court produces positive or negative outcomes for the country depends, of course, on an individual’s political views. The incontrovertible point is that, notwithstanding Professor Tribe’s offhand comment to Stephen Colbert, Chief Justice Roberts learned quite a bit from the course that we took.

Here are a few of the lessons: characterizing an issue can be critical in determining its outcome; one person’s judicial activism is another’s judicial restraint; one person’s liberty can compromise another’s freedom; a tactical loss today can lead to a strategic victory tomorrow.

The Justices of the United States Supreme Court are not merely umpires. They set the rules by which everyone else plays. Chief Justice Roberts is playing a very long game.

A DEWEY “FOOT SOLDIER”?

Back in March, I wrote about Zachary Warren. In 2007, his first job out of college was client relations coordinator at Dewey & LeBoeuf. In July 2009, he left the firm to attend law school. Unfortunately, his brief tenure was sufficient, years later, for the Manhattan District Attorney to name him as one of four undifferentiated “Schemers” in a 106-count criminal indictment.

When he joined the firm, Warren was a generation younger than his fellow alleged “Schemers”: former chairman Steven Davis, former executive director Stephen DiCarmine, and former chief financial officer Joel Sanders. Understandably, Warren would prefer not to be tried with his co-defendants, so he has moved to sever his trial.

Timing is Everything

In its latest filing, the Manhattan District Attorney acknowledges that Warren “was not the mastermind of the Dewey fraud scheme.” However, the government’s objection to Warren’s motion adds, “[H]e certainly was a willing foot soldier.” We learn some other things from the filing, too.

For example, it turns out that Warren was the first “Schemer” to be indicted. In December 2013, the grand jury charged him alone with six counts of “Falsifying Business Records in the First Degree.” But Warren first learned of the charges two months later, when a broader indictment named him along with Davis, DiCarmine, and Sanders.

Presumably, the timing of Warren’s indictment related to the five-year statute of limitations governing the claims against him. The government relies heavily on a handful of December 2008 events to make the case.

December 2008

According to the District Attorney, on December 30, 2008, Warren had dinner with two of his superiors, Joel Sanders and then-Dewey finance director Frank Canellas. To satisfy its year-end bank loan covenants, Dewey needed another $50 million by the end of the following day. Allegedly, Sanders and Canellas had developed a contingency plan of potential financial adjustments that Warren helped to implement.

The District Attorney emphasizes Warren’s supposed sophistication regarding accounting issues. But that’s a far cry from proving his competence to challenge directives from superiors holding CPAs and MBAs. In fact, the propriety of whatever transpired on December 31, 2008 with respect to Dewey & LeBoeuf’s financial statements is likely to become the subject of battling expert accounting witnesses at trial. Dive into those weeds at your peril.

Motive?

As for the aftermath of the alleged New Year’s Eve scheme, the Manhattan District Attorney cites Warren’s “$115,000 in bonus compensation in 2009″ as evidence of something sinister. The government claims that the amount exceeded bonuses paid to all but five other Dewey employees. At best, that argument is disingenuous.

Warren received his $75,000 bonus for 2008 in early 2009, as expected. When he left Dewey in July 2009, Sanders promised Warren a $40,000 bonus for his half-year of service, payable in the fall.

Three months later, Warren was at Georgetown Law and still waiting for his final bonus. He left messages for Sanders, who eventually wrote, “If you’re wondering about your bonus, I have you down to receive $40k right after our year end close.”

Warren replied, “I didn’t take out any student loans this semester because I was anticipating the bonus to be paid in the fall as we discussed before I left.” (For unknown reasons, the District Attorney’s brief italicizes for emphasis the last phrase — “as we discussed before I left.”) When Warren still hadn’t received the bonus In November, he tried again and, shortly thereafter, the firm sent him $20,000 — almost the entire net amount. He received the final installment of $1,400 in April 2010.

For the District Attorney, Warren’s requests of his former employer are proof of his ongoing involvement in the original scheme: “In September 2009, he began chasing down the additional bonus that defendant Sanders had promised him.”

Seriously?

 The Continuing Mystery

A fundamental question still begs for an answer: How does whatever happened in the presence of Zach Warren during December 2008 relate to the demise of a storied law firm in May 2012?

So far, it doesn’t. Unless the prosecution develops that connection, something will remain terribly wrong with this picture — and with the effort to put Zachary Warren in prison.

UPDATE ON THE BATTLE FOR CHARLESTON

Call it an eleventh-hour reprieve. Or maybe it’s just a break before the executioner arrives. On Thursday, June 5, the South Carolina Commission on Higher Education was going to decide on InfiLaw’s application for a license to own and operate the for-profit Charleston School of Law. But a day before the scheduled vote, InfiLaw suspended its application.

As I wrote last week, InfiLaw owns and operates three for-profit law schools (Arizona Summit, Charlotte, and Florida Coastal). Its owner is Sterling Partners, a Chicago-based private equity firm that lists InfiLaw as a holding in its “education portfolio.” In July 2013, InfiLaw agreed to buy the Charleston School of Law. On May 19, the Committee on Academic Affairs and Licensing voted 3-to-1 against recommending InfiLaw’s license request. Then things got interesting.

On May 23 — four days after the Committee’s rejection and just before the Memorial Day weekend — state representative John Richard C. King wrote to the South Carolina Attorney General’s office. He sought an advisory opinion that, if provided, would essentially require the Commission on Higher Education to approve InfiLaw’s application, notwithstanding the earlier Committee rejection. Representative King is also a first-year student at the InfiLaw school in Charlotte, North Carolina.

Only a week after King’s request, the AG’s office issued a detailed 10-page single-spaced legal opinion that gave InfiLaw what it wanted. The final sentence warns: “Any licensing decision based upon criteria outside the law would, of course, be subject to judicial review and possible reversal.”

State senator John Courson immediately suggested that InfiLaw suspend its request temporarily because the AG’s opinion “needs to be vetted” and Governor Nikki Haley needs to fill vacant seats on the Commission before it discusses the issue.

Senator Courson hasn’t revealed publicly where he stands on the merits of InfiLaw’s proposed acquisition. But when legislators want a governor to fill vacant committee seats before taking a final vote on a matter of interest to them, there’s usually a reason. As InfliLaw’s statement accompanying the suspension of its application declares: “We are committed to this acquisition and intend to renew our application in due course.” Close observers might get the uneasy feeling that they’re watching sausage being made.

Meanwhile, no one is discussing the more important point that transcends the Charleston situation. Typically, private equity investors seek opportunities that will provide them with above average returns. That’s not a criticism; it’s their business. However, if for-profit legal education generates returns that are appealing to private equity investors, non-dischargeable federal student loans are the reason. In a glutted market for lawyers, that’s a remarkably unfortunate outcome.