THE CHRONICLES OF A CAPITALIST LAWYER

RANDOM THOUGHTS OF A CAPITALIST LAWYER ON LAW, ECONOMICS, AND EVERYTHING ELSE

  • Conspiracy Theories Revisited


    From all the existing theories in the world, I bet conspiracy theories are the most long lasting ones. But why? Why people love conspiracy theories so much? What's the effect of these conspiracy theories and how the government should deal with it? A short paper from Cass Sunstein and Adrian Vermeule could give some hints to answer that. Download it here.
    According to them, one of the distinctive characteristics of conspiracy theories is their "self sealing" quality, meaning, conspiracy theorists are not likely to be persuaded by an attempt to dispel their theories; they may even characterize that very attempt as further proof of the conspiracy. I begin to think that these conspiracy theorists are acting like religious fundamentalists, resistant to correction and living in denial :p.
    In any way, the case of conspiracy theories is pretty relevant for Indonesia. The paper argues that conspiracy theories are more powerful in societies with systematical malfunctioning or skewed institutions of knowledge. Some simple questions, do you believe your own government, that they really work for the benefit of the society? Do you even believe that all of the cases related to "religious violence" are a part of bigger schemes?
    Conspiracy theories can also be dangerous. We wouldn't have any problem if they stay as nice gossips material to be discussed at "warung kopi". The problem is, they are not as simple as that. In some cases, conspiracy theories can produce an imminent threat to the society. Consider the case of zionist-american conspiracy to control the world, that everything that happen in this world until today are the result of their control? Do you believe this? Personally, I don't buy it, especially with the current economic crisis in America. But as you may see, some people believe that. Try the terrorists who think that they are in a holy war with Americans because of such conspiracy theories. Or if we look nearby, the case of Ahmadiya persecution can be a solid example of the danger of conspiracy theories. Ahmadiya has existed in Indonesia for more than 75 years, why the dispute occurs now? What's behind all of this? Will the violence stop?
    The paper further argues that the Government should carefully deal with conspiracy theories. Remember the "self-sealing" quality? Therefore, not all conspiracy theories should be rebutted, only the ones who pose the most serious danger. And even if it is the case, the rebuttal should not always be made by the Government, especially if the Government is the subject of the conspiracy theories. Independent think thank institutions can also help. Of course, these institutions must have solid credibilities to gain the trust of the people (and I must say, the case of establishing these trusted institutions is quite challenging in Indonesia).
    I would suggest you to read the entire paper by yourself. This is a very short paper, consisting of 30 pages only and has summarized the basic issues of conspiracy theories. Hopefully, the paper can open our eyes on how easy we can fall into the prey of conspiracy theories.
  • Studying Costs at US Law Schools: A Little Comparison with Indonesia


    I've just found this rather gloomy article accusing that some US law schools (mostly third and fourth tiers law schools) were tricking people to think that the super expensive tuition fee of those law schools is a good investment for their future, since in reality, many new law graduates later find out that they are succumbed to excessive amount of debt without any proper job to support the repayment. A pity indeed!

    Based on the data provided in this site and my own personal research, the general annual cost for studying at a US private university law school, whether it is a top tier or low tier one, is around US$65,000-US$70,000 (meaning that a law student needs to spend around US$200,000 to finish a 3 years JD course!). The cost can be cheaper though if it is a public university, but still, it's expensive from any point of view. If you are interested, you can see the data of various US law schools ranking here.

    With such huge amount of tuition fee and living expenses, no wonder law graduates are expecting to find a decent job that can help them to repay the loan as soon as possible. But, with a decline market for lawyers and the economic recession in the US (somehow the case is still the same for 2011), finding jobs are getting harder and harder for law graduates, and the situation is far worse for low tier graduates. Now, what surprises me is the fact that there are many people in the US who actually think that being enrolled in low ranked law schools can actually give them some advantages in competing with top tier graduates, especially when the tuition fees' discrepancy is relatively small. Are these people overestimated themselves, or are they simply the victims of an organized scam by law schools? Time will tell.

    If you ask me, I am more interested to know why US law schools are very expensive and whether the same will someday happen in Indonesia. As a comparison, the total tuition fee of my law education for 3.5 years (2001-2005) at the University of Indonesia, an Indonesian public university, is only US$980 (with an exchange rate of US$1 = Rp9,000). Try to compare this with the current annual tuition fee of the University of Washington School of Law, a public university in the US, which reaches US$22,267 for residents and US$32,777 for non-residents. I know that University of Indonesia's tuition fee has increased significantly for the last few years, but I am certain that the total amount is far cheaper than its counterparts in the US.

    Another interesting question, does the overall quality of top tier US law schools justify the expensive tuition fee? Hopefully yes, since I'll be going to one of them in September. Wish me luck :p
  • Do Corporations Have Personal Privacy?


    I've just found an interesting case from the Supreme Court of the Unites States on whether corporations have the so called "personal privacy". You can review the opinion here and a brief commentary from the SCOTUS Blog here. Apparently, according to the Supreme Court, while in legal terms the word "person" may include corporations, the word "personal privacy" is not applicable for corporations since the word itself pertains to the privacy interest of individuals, it suggests a type of privacy evocative of human concerns, and this is not the sort usually associated with an entity like corporations. To put it simply, can you actually hurt the feeling of a corporation?

    The case itself is about the request from a US trade organization asking the US Federal Communications Commission to disclose information related to its investigation upon AT&T on the basis of the Freedom of Information Act ("FOIA"). The request was rejected due to some exemptions under FOIA, i.e. (i) trade secrets and commercial or financial information, and (ii) records or information compiled for law enforcement purposes that could reasonably be expected to constitute an unwarranted invasion of personal privacy. The main issue came from the second exemption. While in the end no information was shared, the exemption was made by FCC on the basis that some of the information may attack the personal privacy of AT&T's employees. AT&T cannot accept that reasoning and further asked the court to protect the information on the basis that the disclosure of such information may attack the personal privacy of AT&T. Yes, this is a game of words.

    As discussed above, the Supreme Court finally decided that personal privacy is not applicable for corporations. They have already received enough protection from the restriction to disclose trade secrets and commercial or financial information. So why bother asking protection for personal privacy information? However, it should be noted that the above opinion was made on the basis of a strict grammatical interpretation on the words "personal privacy". While I mostly concur with the use of grammatical interpretation when the text of the laws is clear, I think it would be better if the US Supreme Court can also provide an economic insight on their decision.

    Sure, companies do not have any feeling and no board of directors are crazy enough to claim that a disclosure of certain information can hurt the feeling of their company. BUT, any company would do almost anything to maintain its reputation and disclosure of certain information can surely hurt the reputation of the company, which is bad for the business. Can we cover this issue of reputation within the context of personal privacy? Maybe, but for now, the United States Supreme Court will stick with their latest concept of personal privacy, and I will reserve that question for another time.

    I would love to know what Indonesian jurists will do if a similar case is happening here. This might open an engaging discussion on the limit of imposing human attributes to legal entities.
  • Remembering Joe Flom


    A little bit late but still important to be shared in this blog. Joe Flom, the last founding partner of Skadden, Arps, Slate, Meagher and Flom, one of the biggest law firms in the world in terms of size and revenues, passed away on 23 February 2011. Now, every aspiring corporate lawyer should know this guy as he is simply a legend among corporate lawyers, especially those who focus their practice in merger & acquisitions. You can check his profile here or read a beautifully crafted obituary about him from one of his fellow partners, Peter Atkins, here. Goodbye Mr. Flom, I am sure your legacy will continue to live for a very long time. Rest in peace.
  • Thinking Like a Lawyer for Corporate Lawyers


    To be honest, I've practiced as a lawyer for more than 6 years and still, I don't know exactly what's the true meaning of thinking like a lawyer. Apparently, Prof. Bainbridge thinks that to enable more lawyers to think like a lawyer, law schools require more experienced lawyers than PhDs to teach at those schools. See the article here. You can also see a nice law review article on thinking like a lawyer here.

    I have to disagree with some of his premises though. My gut feeling says that the main problem with those PhDs is not that they can't teach lawyers about other fields that can enrich a lawyer's ways of thinking but simply because the quality of those PhDs are mediocre. On the other hand, I am quite certain that asking more experienced lawyers to teach at law schools seems like a good proposal, especially if you're talking about corporate laws. Like it or not, in Indonesia, the development of corporate laws lies mostly in the hand of corporate lawyers instead of theoretical lecturers. The problem is, most of these lawyers don't have the time to share their knowledge to law students, which is a pity.

    Why do I say that the teaching of corporate laws needs corporate lawyers? Corporate law is not only about legal issues per se. There is an economic structure behind the corporate laws and to understand such structure, lawyers need to have sufficient experience handling various corporate transactions. These experiences will enable lawyers to gain knowledge on the commercial issues of their clients which will further help them in understanding the economic structure of the corporate laws and how to improve such laws.

    Some thought provoking questions: Why there should be a limited liability concept for companies? Why directors have fiduciary duties toward the company? Why do we need commissioners for supervising the management of the company? Why we tend to limit a company to enter into affiliated party transactions? And many more.

    As you may see, the above questions pose certain economic rationales. There is no simple right or wrong answer in corporate laws as in the end, it depends on the economic structure that the regulators choose to build the foundations of corporate laws. There are virtually unlimited ways to improve our corporate laws, promote efficiency and create more preferences to the society. We need to always remember that corporations are essential institutions of the market, and therefore, it is natural if the laws that govern corporations should be designed carefully and thoughtfully.

    Stay tune as I will uncover some of these economic structures in my future posts.
  • SEC's Shareholder Proposal Policy and the Materiality Principle


    Here is a very interesting article from Prof. Stephen M. Bainbridge on the absurdity of the new SEC's Shareholder Proposal Policy which basically gives the right to minority shareholders of a publicly listed company to force a vote in a general meeting of shareholders. The absurdity lies in the fact that according to a US court precedent, the tests for granting the validity of such proposal include matters on ethical and social significance, and not only economic matters.

    Of course this would be problematic for companies as this is the same with providing the minority shareholders with the ammunition to control the company for matters which are not directly related to its financial and business performance. In this case, I fully agree with Prof. Bainbridge analysis on the importance of materiality principle in securities laws. If the shareholders want to be involved in the company's management, it should be done only for material transactions that may economically affect the investment value of the relevant shareholders in such company. If the shareholders can actively use the company for their own personal and political needs, why bother to have the concept of limited liabilities?

    Luckily, Indonesia does not adopt this kind of rule, though I am surprised that the development of shareholders protection law in the United States has already reached a position where it is difficult to differentiate the role of shareholders and management.
  • Going to Chicago Law School


    So I guess it's official. I will be going to the University of Chicago School of Law in September 2011! I must say that I'm very happy and excited with this result. After all, learning Law and Economics at the law school which created this field at the first place is one of my biggest ambitions. But the best part of being admitted at a first class law school like Chicago is that I will have access to "unlimited" legal materials, and not to mention the fact that I will also be able to spend nine months to read and write new materials without being disrupted with my day to day work as a lawyer. Hopefully, I will have more time to write in this blog during my school days. Another advantage is that Chicago is not that far away from Ohio where my Shiye (the teacher of my kung fu teacher) teaches his class of Bajiquan. An opportunity to learn the art from a real living master is surely a big bonus for me, and I can only be grateful for all of these opportunities. Can't wait to go there! :)

  • The Protection of Criminal Suspects in Law and Economics Perspective

    Forthcoming in Jurnal Teropong Edisi RUU KUHAP 2015 | 23 Pages | Posted: 10 May 2015 | Date Written: April 28, 2015

    Public Choice Theory and its Application in Indonesian Legislation System

    24 Pages | Posted: 8 Oct 2012 | Last revised: 8 Nov 2014 | Date Written: October 8, 2012

    Special Purpose Vehicle in Law and Economics Perspective

    Forthcoming in Journal of Indonesia Corruption Watch, 'Pemberantasan Kejahatan Korupsi dan Pencucian Uang yang Dilakukan Korporasi di Sektor Kehutanan', 2013 | 15 Pages | Posted: 22 Aug 2013 | Date Written: August 18, 2013

    Legal Positivism and Law and Economics -- A Defense

    Third Indonesian National Conference of Legal Philosophy, 27-28 August 2013 | 17 Pages | Posted: 22 Aug 2013 | Last revised: 3 Sep 2013 | Date Written: August 22, 2013

    Economic Analysis of Rape Crime: An Introduction

    Jurnal Hukum Jentera Vol 22, No 7 (2012) Januari-April | 14 Pages | Posted: 12 Nov 2011 | Last revised: 8 Oct 2012 | Date Written: May 7, 2012

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