May 16, 2019

What Do In-House Lawyers Want From Law Firm CLE?

There are few non-chargeable events that law firms fret about more than their CLE programs for clients & potential clients. Of course, that fretting usually focuses more on the PowerPoint slides than things like actually seeking input from prospective attendees about what they’re looking for and who they would like to see participate in the program.

This recent In-House Focus survey of in-house lawyers concerning their own experiences with law firm CLE provides some interesting perspectives on these topics. For example:

– 70% of survey respondents said CLE programming should feature diverse lawyers, presenters and faculty. But just 30% of respondents agreed that diversity is adequately represented in current CLE content. At the same time, nearly two-thirds of respondents believe that participating in CLE programming is an effective way for law firms to connect diverse lawyers to clients.

– 52% of respondents to IHF’s survey agreed that law firms should do a better job of facilitating introductions of their diverse lawyers to their clients, while just 5% disagreed. Further, 62% believe CLE programming is a good way to cultivate relationships between diverse lawyers and clients.

– 62% of respondents believe law firm CLE is not adequately tailored to in-house lawyers. Additionally, two-thirds agree that CLE content is more tailored to law firm practitioners than in-house lawyers. In fact, another 79% of respondents said they would be more inclined to watch a CLE program that included in-house lawyers as presenters who speak to their issues.

– When asked what are some things that would make CLE more pertinent to in-house lawyers, many responses revolved around the need for real-world examples. Some responses included: “concepts to reduce outside legal expenses,” “when to involve outside counsel and how to engage them,” and “case studies and sample scenarios from current in-house lawyers.”

You should really check out the whole survey. As somebody who has spent his entire career in a law firm environment, I thought it was pretty eye-opening.

Crypto Mom Wants SEC to Wear “Reasonableness Pants”

You may agree or disagree with her remarks, but a speech by SEC Commissioner Hester Peirce – aka “Crypto Mom” – is always bloggable Her recent speech at Rutgers-Camden Law School is no exception. In discussing the SEC’s enforcement program, she makes no bones about her opposition to the enforcement approach favored during the tenure of former Chair Mary Jo White:

Most enforcement recommendations the Commission receives from the staff are legally straightforward and not controversial, but a small subset causes me to ask whether we are wearing our reasonableness pants.

In particular, I am not a fan of the so-called “broken windows” philosophy, a more-is-always-better, punish-the-small-violations approach to enforcement. Instead, I assess, when reviewing an enforcement recommendation from our staff, whether the recommendation is using our enforcement resources wisely. I ask, was there a meaningful violation? Is this a matter that could have been handled by our exam program? Are there other appropriate responses in lieu of an enforcement action, such as a rulemaking, interpretative guidance, or an educational bulletin for investors?

While she devotes much of her discussion to the SEC’s enforcement program, her “reasonableness pants” comments extend to the agency’s approach to rulemaking & interpretive guidance as well:

Lots of people want the SEC to wade into a whole range of issues that are not properly within our purview. Increasingly, we are urged to tell companies how many women to have on their boards, to limit the ways companies and their shareholders may resolve disputes, to direct financial firms to avoid providing capital for certain industries, or to prohibit investors from getting access to certain products we think investors should not have in their portfolios.

We do not have the time, resources, or authority to do these things. We have other things to do that are not headline-grabbers, but are neatly within our core mission.

Issues that should take priority in her view include things like updating transfer agent rules, disclosure modernization, fixed income & equity market structure, and ensuring that companies and investors across the country can participate in the capital markets. Peirce said these issues may not be as “trendy” as those that the SEC is being urged to undertake , but “subsequent generations will look back at us in disgust and wonder why we sacrificed the health of our capital markets for the chance to look cool for a moment.”

Rookies of the Year:  Do New Activist Directors Add Greater Value Than Other Newbies?

According to this recent study, “rookie activist directors” – unseasoned independent directors appointed at the prompting of activists – add greater value to a company than other unseasoned independent directors.  Here’s the abstract:

We examine the value-enhancing role of unseasoned independent directors nominated through shareholder activism events (Activist UIDs). Firms appointing Activist UIDs experience a larger value increase than those appointing Nonactivist UIDs, particularly when Activist UIDs have relevant experience, when they sit on the monitoring committees, and when their sponsors hold large target ownership.

Most of the companies in the study seem to have been small caps, and I think that needs to be taken into account when considering the study’s results. Established activist investors are likely to have access to a deeper and higher quality pool of director candidates than most small caps could find on their own.

John Jenkins