Tag Archives: NYU Law School

THE NHL, BRAINS, AND LAWYERLY DENIAL

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Back in 1988, the Surgeon General of the United States issued a report about the addictive qualities of tobacco. In summary form, its “Major Conclusions” were:

“1. Cigarettes and other forms of tobacco are addicting.

2.  Nicotine is the drug in tobacco that causes addiction.

3. The pharmacologic and behavioral processes that determine tobacco addiction are similar to those that determine addiction to drugs such as heroin and cocaine.” — The Health Consequences of Smoking: Nicotine Addiction: A Report of the Surgeon General.

All of that had been obvious to many smokers who’d tried unsuccessfully to quit — and to many others who had watched their efforts. But six years later, the presidents and CEOs of the seven major tobacco companies faced a continuing avalanche of tobacco-related lawsuits. Appearing jointly before a congressional committee on the health effects of tobacco, Congressman Ron Wyden posed a question that he asked each of them to go down the line and answer:

“Do you believe nicotine is not addictive?”

With only minor variations in word choice, one-by-one they replied, “I believe nicotine is not addictive.”

It became an iconic scene of corporate denial. Three years later, the companies did an abrupt about-face and settled the largest class action and government cases against them.

Not Quite Today’s “Tobacco Moment”

The tobacco episode came to mind as I read Senator Richard Blumenthal’s first two questions to Gary Bettman, commissioner of the National Hockey League. But there’s a critical difference: The tobacco executives stood together as one against the onslaught; Bettman and the NHL are all alone.

In a March 2016 congressional hearing, Representative Jan Schakowsky asked Jeff Miller, the NFL’s senior vice-president for health and safety, whether there was a link between football and degenerative brain disorders like chronic traumatic encephalopathy (CTE).

“The answer to that is certainly, yes,” Miller said.

It seemed reasonable to ask similar questions about hockey, and Blumenthal posed these two (among others) in a letter to Bettman:

  1. Do you believe there is a link between CTE and hockey? If you do not, please explain how head trauma in hockey differs from head trauma in football.
  2. Do you dispute that the documented CTE of former NHL players, like Derek Boogaard, is linked to injuries sustained while playing in the NHL?

Bettman reframed the first question and ignored the second one.

A Lawyerly Treatment

Bettman is a graduate of NYU Law School. The league’s litigation attorneys probably drafted his 24-page response to Blumenthal. But he signed what is essentially a legal brief outlining the NHL’s defenses to former players’ pending litigation against the NHL.

Bettman’s reframing of the first question is subtle: “The core of your letter goes to the question of why the NHL has not acknowledged a ‘link’ between playing hockey and developing CTE if an NFL executive may have done so with respect to football.”

Then he recites in great detail the scientific community’s failure to reach consensus on the causation between concussions in contact sports and CTE. Scientific consensus is the way experts approach research issues. But it has never been the standard by which ordinary, everyday people decide whether to engage in an activity. For example, it takes far less than a reasonable degree of medical and scientific certainty — the legal standard implicit in Bettman’s letter — for a parent to make a decision about what is best for a child.

For starters, a scientific study requires a sufficiently large sample size. For CTE, the sample is tiny and will be for a long time. Confirmation of CTE occurs only by examination of a deceased person’s brain. To date, only 200 brains with CTE have been analyzed. As athletes die, the sample size will increase, but it’s a slow process. Even in brains found to have CTE, isolating all variables to identify the specific contribution of contact sports is a daunting task that will take years, assuming it happens at all.

Here’s another way of reframing Bettman’s position on this issue: The NFL shouldn’t have acknowledged the link, either.

And Another Thing…

Bettman then suggests that the key difference between football and hockey is the frequency of hits to the head. That’s why for years boxers were the exclusive subjects of brain injury studies. Interestingly, footnote 37 of his letter defends fighting as an essential element of hockey:

“Outside the context of ‘staged fighting,’ we note also that players (not just Club General Managers) believe that some types of fighting — though penalized — play a useful and worthwhile role in protecting ‘skilled players’ from being targeted by more aggressive opponents because any such ‘targeting’ activity is capable of being appropriately ‘policed’ by a teammate… [S]pontaneous fights — which, of course, are also penalized — provide a ‘safety valve’ that enables players to confront opposing players in a less dangerous fashion than they might otherwise engage in through dangerous ‘stick work’ or cheap shots.”

But not to worry. Bettman notes that only two of the league’s video-analyzed concussions resulted from fights. And please, let’s not discuss NHL Deputy Director Bill Daly’s 2011 email: “Fighting raises the incidence of head injuries/concussions, which raises the incidence of depression onset, which raises the incidence of personal tragedies.”

And Another Thing…

Finally, Bettman says that the NHL has educated players on the dangers of concussions. But he says it’s premature to provide a formal warning about CTE. In fact, he suggests, it could even be dangerous to do so. Players might decide they have an irreversible brain disease when they have only depression or other treatable disorders that have similar symptoms.

He concludes with an example. Rather than respond to Blumenthal’s question about Derek Boogaard, Bettman turns to another former player, Todd Ewen. After Ewen committed suicide. his autopsy showed no CTE. Because his widow said that she and Todd “were sure Todd must have had CTE,” Bettman leaps to an absurd conclusion: “This, sadly, is the type of tragedy that can result when plaintiffs’ lawyers and their media consultants jump ahead of the medical community.”

The Real Troublemakers

For Bettman, the villain in “the current public dialogue about concussions in professional sports (as well as youth sports)” seems to be “media hype driven in part by plaintiffs’ counsel.”

In December 1994, another NYU Law School graduate, NFL Commissioner Paul Tagliabue said: “On concussions, I think this is one of those pack journalism issues, frankly…The problem is a journalist issue.”

Twenty years later, what Bettman describes as the absence of medical consensus about the causal relationship between concussions and CTE didn’t stop the NFL from agreeing to a $1 billion class action settlement with 5,000 former players claiming brain injury. On the sliding scale of monetary awards to those victims, former players who died “with CTE” are in the second highest dollar recovery category — with a maximum of $4 million.

The NHL is only two decades behind.

TWO YEARS TO WHAT?

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It’s no panacea. It may not even be a good idea. But in a recent New York Times op-ed, Northwestern Law School Dean Daniel B. Rodriguez and NYU law professor Samuel Estreicher endorsed a proposal allowing students to sit for the New York bar exam after only two years of law school:

“[I]t could make law school far more accessible to low-income students, help the next generation of law students avoid a heavy burden of debt and lead to improvements in legal education across the United States.”

The state’s top judge told a gathering of “legal educators, practitioners and judges that the concept deserves serious study,” according to the National Law Journal.

Sorting out the facts

If the New York proposal is adopted, what aspects of legal education might change? No one really knows, but the answer may be: less than some people think. That alone doesn’t make it a bad idea, but it could produce unintended consequences, too.

Most students who leave law school after two years will still have staggering debt. The average private law school graduate incurs $125,000 in loans; for public schools, it’s $75,000. Lopping off one-third would help, but it would still leave graduates with significant five-figure burdens.

No degrees

Unfortunately, the current discussion isn’t about eliminating the third year altogether and awarding JD degrees after two years, although it should be. ABA accreditation requirements block that definitive innovation. So do most law schools because many of them couldn’t survive the resulting loss of third-year tuition revenues.

Would a student who has already sunk $100,000 into two years of legal education decide that passing the bar alone was sufficient reward for that investment? Only if the value of the degree itself was worth less than the cost of a third year to get it.

Improving the third year

Finally, even assuming that many students availed themselves of the two-year option, how would most deans respond? In their op-ed, Rodriguez and Estreicher suggest that schools might improve third-year curriculum so that students would stay. But couldn’t schools do that now? Only a handful do.

Perhaps inadvertently, Rodriguez and Estreicher implicitly make the real point: only the threat of losing significant third-year tuition revenues will dramatically change most deans’ behavior. Deans may say that they’re in the business of trying to get students through law school economically, but when they have opportunities to act accordingly, few seem to make the effort. That’s because they’re actually in the business of maximizing their schools’ short-term metrics, including revenues and U.S. News rankings.

The decades-long explosion in tuition costs is one example. Another one appears in the Times op-ed, where Dean Rodriguez identifies his school’s “accelerated program that lets students pursue a three-year course of study in two years, allowing them to take the bar and enter the job market a year earlier.”

Rodriguez doesn’t mention that rushing through in two calendar years (thanks to summer classes and course overloads) won’t save students a penny on their total tuition expense. It’s two years for the price of three because, the school’s website observes, “The Law School prices tuitions based on the degree pursued rather than the length of enrollment.”

In fairness to Dean Rodriquez, he inherited the accelerated JD program and its pricing model from his predecessor, David Van Zandt. Among the program’s stated — and more dubious — goals has been to attract students who otherwise might not have gone to law school at all. Just what the profession has needed, right?

Taking chances with other people’s lives

Given their business models, many law schools seem likely to counteract any loss of third-year tuition revenues with larger entering classes. After all, that adjustment requires less work than improving curriculum, and total applicants overall still exceed the number of available spaces. Moreover, if the two-year option became popular, lowering the price of a legal education by one-third should increase demand, although the profession doesn’t need that, either.

What’s the correct approach to all of these unknown possibilities? According to the NLJ, Verizon’s general counsel Randall Milch urged throwing caution to the wind: “Analysis paralysis is our worst enemy here. If we are going to overanalyze, we’re never going to figure this out. In my opinion, we have to move and see what happens.”

There’s nothing quite like observing a real-life experiment on someone else.

DEWEY’S L. CHARLES LANDGRAF: THE PLIGHT OF THE LOYAL COMPANY MAN

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This is the last — for now — in a series profiling Dewey & LeBoeuf’s former leaders, especially its final four-man office of the chairman. L. Charles Landgraf (Rice University, B.A., 1975;  New York University, J.D. 1978) had been a long-time partner at LeBoeuf Lamb when it merged with Dewey Ballantine in October 2007.

In the 1990s, when LeBoeuf Lamb needed someone to bolster its London presence, Landgraf went. When the firm established a Moscow office, he helped. When duty called to the Washington, D.C. office that he was heading in 2012, Charley landed in Dewey & LeBoeuf’s four-man office of the chairman. It quickly became a thankless job.

A partner’s predicament

According to a Wall Street Journal interview, Landgraf helped out after the firm had failed to meet profit targets for several years. Unable to pay everything owed to guaranteed compensation partners, he and Jeffrey Kessler “spearheaded” a plan (according to Martin Bienenstock in that interview). It would have paid off partners who had taken IOUs from the firm by dedicating six percent of partnership earnings from 2014 to 2020.

Always candid, Landgraf said recently that the plan was necessary because “the firm had a lot of built-up tension about the fact that we had a compensation schedule last year that exceeded the actual earnings, and that had been true for a couple of years.” “Built-up tension” is a delicate description of the plight facing a firm that organizes itself around so-called stars whose loyalty extends no deeper than their guaranteed incomes.

Go along to get along?

My hunch is that the plan to deal with this problem wasn’t Landgraf’s idea. He wasn’t among those listed in the “Senior Management” section of the firm’s 2010 private placement memorandum. Nor was he mentioned in April 2012 when Dewey & LeBoeuf identified for Thomson Reuters seven key players essential to the firm’s survival.

He may fit the profile of many big law partners who have spent years — even decades — in the same firm and retain a deep loyalty to something that has actually disappeared from their institutions, namely, a true partnership and all that it entails. Perhaps they defer too willingly to others who are supposed to be smarter, more knowledgeable and/or have superior judgment. But when things get rough, they step up and do what they can to salvage the situation.

Undue deference revealed

From that perspective, Landgraf’s interview for The Wall Street Journal on Saturday, May 12, 2012 was revealing. A day earlier, Dewey & LeBoeuf’s resident bankruptcy expert Martin Bienenstock had announced that he was leaving the firm. By the time the interview appeared, he was already on Proskauer Rose’s attorney roster.

But during The Wall Street Journal interview, Landgraf — who was then the only remaining member of the original Gang of Four comprising the office of the chairman — let his former partner do all of the talking for a firm that was no longer Bienenstock’s. In printed form, the interview transcript fills seven pages. Landgraf’s words barely consume a half-page.

Bienenstock credited Landgraf and Kessler for the plan that committed future partner earnings to pay guaranteed partner IOUs from prior years. Landgraf said that the lateral contracts were “something we’re looking at. Whether all the contracts were the subject of full discussion or simply known as a technique that was used…is still being reviewed.”

His next line suggested that others at the firm may have been a bit too persuasive in selling him a bad idea: “But the technique of using guarantees of all forms, especially in the recruitment of laterals and retention of key business users, is pretty widespread throughout the industry.”

For limited periods involving laterals? Maybe. For four- or six-year deals involving legacy partners? I don’t think so. For 100 members of a 300-partner firm? Not for something that should call itself a partnership.

Two days after that interview appeared, Landgraf was gone, too. As hundreds of remaining Dewey & LeBoeuf lawyers and staff around the world wondered what might come next, one gets the sense that he was trying to be a good partner to the end.

I don’t know if a final caution applies to Landgraf, but it’s an appropriate note on which to conclude this series: a team player serves neither himself nor his institution when he defers to others as they move the team in the wrong direction. It’s time to empower dissenting voices with Aric Press’s “Partner Protection Plan.”

DEWEY’S RICHARD SHUTRAN — RUNNING THE NUMBERS

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This is the fourth of a five-part series profiling Dewey & LeBoeuf’s former leaders. Richard Shutran (Trinity College, B.A., 1974; New York University, J.D., 1978) joined Dewey Ballantine in 1986 and rose to co-chair of the firm’s Corporate Department and Chairman of its Global Finance Practice Group. He left his position on Dewey’s Executive Committee in 2010, but in 2012 became a member of the four-man office of the chairman tasked to save the firm.

The Dewey & LeBoeuf website described Shutran’s transactional practice as “counseling…with respect to leveraged finance and project finance matters, mergers and acquisitions, and restructurings and reorganizations….” That makes him a numbers guy, someone especially well-suited to the challenges facing his firm when it asked him to return to leadership as one of the Gang of Four.

The 2010 bond issuance

Dewey’s 2010 private placement memorandum included Shutran’s biography in its “Senior Management” section. At the time, Bloomberg news reported on the $125 million bond offering for which Shutran said that the bonds’ interest rates were more favorable than the firm’s bank loans. That was true.

As partners were checking out two years later, the Daily Journal reported that Dewey was renegotiating those bank loans: “Richard Shutran, co-chair of Dewey’s corporate department, described the negotiations as standard.” At that point, perhaps they were.

Another “bond” issuance

Meanwhile, the firm was pursuing what fellow Gang of Four member Martin Bienenstock described as “a plan to deal with the shortage of payments to some partners.” In particular, those with guaranteed compensation deals had taken IOUs during earlier years when profits had fallen short of targets. The “plan” was to dedicate six percent of the firm’s income for six or seven years to pay them off, starting in 2014.

In addition to ongoing bank debt, the first wave of 2010 bond payments came due in 2013 and would continue through 2023. Now another debt repayment plan — to a special class of so-called partners — would take another chunk of future partnership earnings from 2014 to 2020.

Funny numbers

At about the same time, Shutran moved to the center of another controversy – also not of his making – relating to his firm’s financial health. He assured a Bloomberg reporter that the departure of Dewey’s elite insurance group “had no impact on our firm’s profitability. That group was break-even at best.” But he also said the firm had earned about $250 million in profits for 2011. The American Lawyer didn’t think that number jibed with what Dewey had provided for the magazine’s annual rankings.

On March 21, 2012, The Wall Street Journal reported The American Lawyer’s retroactive revisions to Dewey & LeBeouf revenue and profits numbers for 2010 and 2011 — by a lot. For example, Dewey’s 2011 average partner profits dropped from $1.8 million to $1.04 million. Shutran suggested methodological differences were to blame:

“‘They’re just not comparable numbers,’ Mr. Shutran said. ‘That’s something people like to pick on.’ Robin Sparkman, the editor-in-chief of the American Lawyer, said Dewey & LeBoeuf’s numbers were given to them by the firm’s management.”

About that bank loan

On April 11, 2012, Dewey identified seven key players essential to the firm’s survival. Shutran wasn’t among them, but he responded to questions about whether the wave of partner defections had triggered bank loan covenants: “It has not had any effect under (the) agreements,” he said. There’s no reason to doubt him.

But the real problem by then wasn’t the bank loans. It was the accumulated amounts owed for annual distributions to partners in excess of the firm’s net income. As Bruce MacEwen’s analysis suggests, whether it’s called mortgaging the future or something worse, the result is the same.

Something went terribly awry at Dewey & LeBoeuf, but here’s the scary part: among big law firms, some of the things that created Dewey’s predicament aren’t unique.

PRACTICAL SKILLS

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A few days after the Bureau of Labor Statistics announced the loss of another 2,600 legal jobs in June, the Wall Street Journal ran “Law Schools Get Practical.” Some schools are changing curriculum to develop skills that real lawyers need; that makes sense. But some hope that more big law positions for graduates will result; that is magical thinking.

Reconsidering legal education is important. The first year teaches students to think like lawyers; the second year covers important substantive areas. To deal with the universally maligned third year, Stanford is considering a clinical course requirement involving 40-hour plus weeks of actual case work, while Washington and Lee University of Law School replaced lectures and seminars with “case-based simulations run by practicing lawyers.”

Meanwhile, Harvard has updated its curriculum significantly in recent years. Indiana University Maurer School of Law teaches “project management” and “emotional intelligence.” NYU offers courses in “negotiation” and “client counseling.” Some innovations are more valuable than others, but no one should think that improved job prospects will result.

The article quoted a recruiter at McKenna, Long & Aldridge LLP who said that clients weren’t willing to pay for new lawyer training. Likewise, Xerox’s general counsel described his company’s policy of not paying for first-year associates. The implication is that if new graduates received more practical training in school, clients would pay for them and hiring would increase. Not a chance.

First, new associates in large firms don’t need the practical skills that most law schools are promoting. If there were courses on “maximizing billable hours,” “withstanding unreasonable partner demands,” or “surviving a culture of attrition where fewer than ten percent of new associates will become equity partners,” that would be one thing. But document review, due diligence undertakings, and other mundane tasks that consume most big law associates’ early years don’t require much special training. Some don’t even require a law degree. Xerox — and many other companies sharing its dim view of first-year associate value — won’t start paying for young attorneys just because they have taken the new courses.

Second, average equity partner profits for the Am Law 100 have moved steadily upward over the last decade — to over $1.3 million in 2010. If those firms are already “suffering” from client resistance to paying for new associates, partners nevertheless seem to be thriving financially.

Finally, when asked whether current law school innovations will help students land jobs, Timothy Lloyd, chair of Hogan Lovells recruiting committee, told the Journal:

“It could enhance the reputation of the law school…as places that will produce lawyers who have practical skills. As to the particular student when I’m interviewing them? It doesn’t make much of a difference.”

Bingo. As a big law interviewer myself, I looked for intelligence, personality, and potential. Specific courses didn’t matter. Assessing candidates was and is subjective but, to adapt Justice Stewart’s pornography test, I usually knew a good one when I saw one.

Schools should expand clinical programs, but not because such student credentials matter to large firm recruiters. They don’t. However, those who don’t get big law jobs really need practical lawyering skills. Do it for them — the vast majority of today’s 50,000 annual graduates.

Schools should modernize curriculum, but not to become business school knockoffs for big law. That’s a mistake.

Even more urgently, schools should educate prospective attorneys more fully about the big law path — from the challenge of getting a job to the unforgiving billable hours culture to the elusive brass ring of equity partnership. (See, e.g., The Partnership)

That would be real reform, but at most place it won’t happen. Yale’s cautionary memo about the real meaning of 2,000 billable hours a year and Stanford’s “Alternatives to Big Law” series that compliments its outstanding student loan forgiveness program are hopeful beginnings. But such candor runs counter to the enticing big firm starting salaries that pervade law school websites aimed at the next generation of would-be lawyers. After all, their student loans pay the bills.