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  • JA Armour and M Sako, 'AI-enabled business models in legal services: from traditional law firms to next-generation law companies?' (2020) 7 Journal of Professions and Organization 27
    What will happen to law firms and the legal profession when the use of artificial intelligence (AI) becomes prevalent in legal services? We address this question by considering three related levels of analysis: tasks, business models, and organizations. First, we review AI’s technical capabilities in relation to tasks, to identify contexts where it is likely to replace or augment humans. AI is capable of doing some, but not all, legal tasks better than lawyers and is augmented by multidisciplinary human inputs. Second, we identify new business models for creating value in legal services by applying AI. These differ from law firms’ traditional legal advisory business model, because they require technological (non-human) assets and multidisciplinary human inputs. Third, we analyze the organizational structure that complements the old and new business models: the professional partnership (P2) is well-adapted to delivering the legal advisory business model, but the centralized management, access to outside capital, and employee incentives offered by the corporate form appear better to complement the new AI-enabled business models. Some law firms are experimenting with pursuing new and old business models in parallel. However, differences in complements create conflicts when business models are combined. These conflicts are partially externalized via contracting and segregated and realigned via vertical integration. Our analysis suggests that law firm experimentation with aligning different business models to distinct organizational entities, along with ethical concerns, will affect the extent to which the legal profession will become ‘hybrid professionals’.
    ISBN: 2051-8811
  • L Enriques and D Zetzsche, 'Corporate Technologies and the Tech Nirvana Fallacy' (2020) 72 Hastings Law Journal 55
    This Article introduces the term Corporate Technologies (“CorpTech”) to refer to the use of distributed ledgers, smart contracts, Big Data analytics, artificial intelligence and machine learning in the corporate context and analyzes the impact of CorpTech on the future of corporate boards. We focus on the tech manifestation of agency problems within corporations and identify—after considering possible market, governance, and regulatory solutions—elements of a governance framework for the CorpTech age. In particular, we take on a prediction often found in the literature, namely that CorpTech has the potential to solve a number of corporate governance problems for good and even make boards of directors redundant. We argue that this claim is based on what we call the “tech nirvana fallacy,” or the tendency of comparing supposedly perfect machines with failure-prone humans. The inherent features of technology and corporate governance reveal that even well-programmed CorpTech leaves the core issue of corporate governance—conflicts of interest among the relevant corporate stakeholders—untouched. In the Corptech age, the key question becomes: “is the human being that selects or controls the firm’s tech conflicted?” If so, CorpTech itself will be tainted. In fact, the problems arising from the transition to a CorpTech-dominated governance environment may, in the short-term, make things even worse: insufficient understanding of the promise and perils of CorpTech and over-confidence therein may even aggravate agency problems within firms.
    ISBN: 0017-8322
  • P Eleftheriadis, 'Corrective Justice Among States' (2020) 2 Ius Cogens 7
    DOI: 10.1007/s42439-019-00013-x
    The debate concerning solidarity and justice among states has missed the key contribution made to international affairs by corrective justice. Unlike distributive justice, which applies within states, corrective justice applies among states and in particular to cooperative arrangements creating interdependence among them. Corrective justice does not require fairness in outcomes, but only fairness in the risks and opportunities undertaken by the parties to any cooperative agreement. Corrective justice requires redress in cases of loss caused by unfairness. An important illustration of corrective justice at work is the Eurozone’s response to the financial crisis. The assistance offered to the states most burdened by financial turmoil can be best interpreted not as an attempt to arrive at fair shares, but as an attempt to remedy the losses unfairly caused to some states by the mistakes made by all of them, when designing the Eurozone’s architecture.
    ISBN: ISSN: 2524-3977
  • L Enriques, Alessandro Romano and T Wetzer, 'Network-Sensitive Financial Regulation' (2020) 45 The Journal of Corporation Law 351
    Shocks that hit part of the financial system, such as the subprime mortgage market in 2007, can propagate through a complex network of interconnections among financial and non-financial institutions. As the financial crisis of 2007-2009 has shown, the consequences for the entire economy of such systemic risk materializing can be catastrophic. Following the crisis, economists and policymakers have become increasingly aware that the structure of the financial system is a key determinant of systemic risk. A wide consensus now exists among them that network theory is the natural framework for studying systemic risk. Yet, most of the existing rules in financial regulation are still “atomistic,” in that they fail to incorporate the fact that each individual institution is part of a wider network. This Article shows that policies building upon insights from network theory (network-sensitive policies) can address systemic risk more effectively than traditional atomistic policies, also in areas where an atomistic approach would seem natural, such as the corporate governance of systemically important financial institutions. In particular, we consider four prescriptions for the governance of systemically important institutions (one on directors’ liability, two on executive compensation and one on failing financial institutions’ shareholders appraisal rights in mergers) and show how making them network-sensitive would both increase their effectiveness in taming systemic risk and better calibrate their impact on individual institutions.
    ISBN: 0360-795X
  • Elizabeth Fisher, Jeff King and Alison Young (eds), The Foundations and Future of Public Law: Essays in Honour of Paul Craig (OUP 2020)
  • S Fredman, ' Tolerating the Intolerant: Religious Freedom, Complicity, and the Right to Equality ' (2020) Oxford Journal of Religion and the Law 1
    Tolerance has always been a central principle underpinning freedom of religion. But what if a person’s deeply held beliefs include intolerance of others’ rights or freedoms? Does tolerance of religious difference include tolerating intolerant behaviours? The paradox of tolerance has been thrown into relief by recent case-law on ‘complicity’ claims by religious adherents. Complicity claims assert that freedom of religion includes the right to exemptions from laws which the claimant regards as making her complicit in the sinful behaviour of others. Accommodating such claims can be stigmatic and demeaning of third parties. This paper argues that, in the context of complicity claims, neither tolerance nor neutrality can determine what weight to be given to the conflicting interests. Rather, they operate to disguise background value judgements. Instead, a proportionality analysis should be applied which is based on a hierarchy of values which expressly locates itself in substantive equality. Using a multi-dimensional conception of the right to substantive equality, the paper examines recent case-law on complicity claims in the US, UK, Canada and under the ECHR. Part II sets up the analytic framework. Parts III and IV apply the analysis to complicity claims in relation to LGBTQI and reproductive rights respectively.
  • TAO Endicott, 'Authentic Interpretation' (2020) 33 Ratio Juris 6–23
    I approach the identification of the principles of legal interpretation through a discussion of an important but largely forgotten strand in our legal heritage: the idea (and at some points in English law, the rule) that the interpretation of legislation is to be done by the law maker. The idea that authentic interpretation is interpretation by the law maker united the Roman Emperors Constantine and Justinian with Bracton, Aquinas, King James I of England, Hobbes, and Bentham. Already in the early 17th century, a new modern approach was emerging in England. The modern approach separates the interpretive power from the legislative power, and allocates the interpretive power to an independent court. I will argue that there are some cogent, general considerations in favour of the modern approach. But it is worth identifying the elements of good sense that made it seem that the interpretive power ought to be reserved for the law maker. And it is worth identifying the drawbacks in the modern approach; they are relevant to the complex question of how judges ought to interpret.
    ISBN: 1467-9337
  • JA Armour, B Garrett, J Gordon and G Min, 'Board Compliance' (2020) 104 Minnesota Law Review 101
    What role do corporate boards play in compliance? Compliance programs are internal enforcement programs, whereby firms train, monitor and discipline employees with respect to applicable laws and regulation. Corporate enforcement and compliance failures could not be more high-profile, and have placed boards in the position of responding to systemic problems. Both case law on boards’ fiduciary duties and guidance from prosecutors suggest that the board should have a continuing role in overseeing compliance activity. Yet very little is actually known about the role of boards in compliance. This paper offers the first empirical account of public companies’ engagement with compliance at the board level, drawing on director-level data from BoardEx and data on federal organizational prosecutions from the Duke University and University of Virginia Corporate Prosecution Registry. We find that, despite a standard account that compliance has boomed, few boards actually adopt compliance committees. Less than five per cent of U.S. public companies have done so, although the proportion has grown steadily over time. We use our data to explore why boards establish compliance committees. Our results suggest that there is room for more constructive engagement with compliance by many boards. We conclude by recommending ways in which board compliance might be facilitated or encouraged: reconsidering norms about board size and independence, enhancing accountability of directors to regulators, and tightening state law fiduciary duties regarding oversight.
  • P Eleftheriadis, 'Book Review: EU Legal Acts ' (2020) Common Market Law Review [Review]
  • P P Craig, 'Brexit a Drama: The Endgame—Part I' (2020) 45 European Law Review 163
  • J Dammann and H Eidenmüller, 'Codetermination: A Poor Fit for U.S. Corporations' (2020) Harvard Law School Forum on Corporate Governance
  • H Eidenmüller, 'Competition Between State Courts and Private Tribunals' (2020) 21 Cardozo Journal of Conflict Resolution 329
    In this essay, I investigate the competition between state courts and private tribunals for dispute resolution. I distinguish between different market segments: B2B and B2C transactions and, in each case, small-, medium- and high-stakes disputes. The analysis is informed by a survey of the dispute resolution preferences of “case placers” carried out in 2015. I find that competition between state courts and arbitral tribunals is currently most intense with respect to high-stakes B2B disputes. A significant portion of the total dispute resolution volume in this market segment goes to arbitration. If parties decide to arbitrate, they do so primarily because of the effective international enforceability of an award, the autonomy to choose competent and neutral arbitrators and the confidentiality of the proceedings. Speed and costs of the proceedings are much less relevant. Commercial arbitrations are usually administered by an arbitral institution. The choice of institution is primarily influenced by its reputation as a professional case manager and by prior positive experiences of the parties. I argue that access to arbitration should be made easier with respect to B2C small- and medium-stakes disputes. The trend in the European Union of promoting conciliation/mediation for the resolution of these disputes should be reversed. Arbitration is less “dangerous” for consumers because it is a legal process governed by fundamental due process guarantees. By contrast, conciliations/mediations are not subject to these guarantees, and they are not well suited for the enforcement of mandatory consumer rights. No compelling case can be made to increase access of businesses to arbitration in medium-stakes B2B disputes. Arbitral institutions have high-powered incentives to design new and efficient procedures for these types of disputes. Technological innovations will reinforce the trend towards privatizing dispute resolution. This poses unique regulatory challenges for the protection of weaker parties, especially consumers.
  • Maurice Stucke and AE Ezrachi, Competition Overdose - How Free Market Mythology Transformed Us from Citizen Kings to Market Servants (HarperCollins 2020)
    Using dozens of vivid examples to show how society overprescribed competition as a solution and when unbridled rivalry hurts consumers, kills entrepreneurship, and increases economic inequality, two free-market thinkers diagnose the sickness caused by competition overdose and provide remedies that will promote sustainable growth and progress for everyone, not just wealthy shareholders and those at the top. Whatever illness our society suffers, competition is the remedy. Do we want better schools for our children? Cheaper prices for everything? More choices in the marketplace? The answer is always: Increase competition. Yet, many of us are unhappy with the results. We think we’re paying less, but we’re getting much less. Our food has undeclared additives (or worse), our drinking water contains toxic chemicals, our hotel bills reveal surprise additions, our kids’ schools are failing, our activities are tracked so that advertisers can target us with relentless promotions. All will be cured, we are told, by increasing the competitive pressure and defanging the bloated regulatory state. In a captivating exposé, Maurice E. Stucke and Ariel Ezrachi show how we are falling prey to greed, chicanery, and cronyism. Refuting the almost religious belief in rivalry as the vehicle for prosperity, the authors identify the powerful corporations, lobbyists, and lawmakers responsible for pushing this toxic competition—and argue instead for a healthier, even nobler, form of competition. Competition Overdose diagnoses the disease—and provides a cure for it. The book was listed as one of Inc. Magazine top business books you need to read in 2020 and one of Publishers Weekly Top 10 Business & Economics books for Spring 2020.
  • P Eleftheriadis, 'Cosmopolitan Legitimacy' in Jorge Fabra (ed), Jurisprudence in a Globalized World (Edward Elgar 2020)
  • K van Zwieten, H Eidenmüller and L Enriques, 'Covid-19: A Global Moratorium for Corporate Bonds?' in H Eidenmüller, L Enriques, G Helleringer and K van Zwieten (eds), Covid-19 and Business Law (München, Oxford and Baden-Baden: C. H. Beck, Hart Publishing and Nomos 2020)
  • L Enriques and Marco Pagano, 'Emergency Measures for Equity Trading: The Case Against Short-selling Bans and Stock Exchange Shutdowns' in C Gortsos, G Ringe (ed), Pandemic Crisis and Financial Stability (European Banking Institute 2020)
    After the Covid-19 crisis struck, equity prices abruptly plunged across the world. The clear prospect of an almost unprecedented decrease in supply and demand, coupled with extreme uncertainty about the longer-term prospects for the economy worldwide, justified the price adjustments. Yet, in conditions of plummeting prices and high volatility, policymakers around the world felt under pressure ‘to do something’ to stop the downward trend in market prices. As was the case during the financial crises of 2008-09 and 2011-12, these pressures have quickly led to the adoption of market-wide short-selling bans. In addition, both in Europe and in the US, there have been calls for an even more drastic measure: a lasting ‘stock exchange holiday’. This chapter reviews the evidence on the effects of short-selling bans during the financial crisis and discusses the merits of stock exchange holidays and concludes that neither of these measures bring benefits to financial markets.
  • P P Craig and M Markakis, 'EMU Reform' in F Amtenbrink and C Hermann (eds), EU Law of Economic and Monetary Union (Oxford University Press 2020)
  • P P Craig and G de Burca , EU Law, Text, Cases and Materials (7th edn Oxford University Press 2020)
  • P P Craig and G de Burca , EU Law, Text, Cases and Materials, UK Edition (7th edn Oxford University Press 2020)
  • A Romano, L Enriques and JR Macey, 'Extended Shareholder Liability for Systemically Important Financial Institutions' (2020) 69 American University Law Review 967
    Regulators generally have tried to address the problems posed by the excessive risk-taking of Systemically Important Financial Institutions (SIFIs) by placing restrictions on the activities in which SIFIs engage. However, the complexity of these institutions makes such attempts necessarily imperfect. This Article proposes to address the problem at its very source, which is the incentives that SIFI owners have to push for excessive risk-taking by managers. Building on the traditional rule of “double liability,” we propose to modify the current (general) rule limiting the liability of SIFI shareholders to the amount of their initial investments in such companies. We propose replacing the extant limited liability regime with a new system that imposes additional liability over and above what SIFI shareholders already have invested in a preset amount that varies with a SIFI’s centrality in the financial network. Our liability regime has a number of advantages. First, by increasing shareholder exposure to downside risk, it discourages excessive risk-taking. At the same time, by placing a clearly defined ceiling on shareholders’ total liability exposure, it will not obliterate shareholders’ incentives to invest in the first place. Second, the liability to which shareholders are exposed is carefully tailored to the level of systemic risk that their institution creates. Thus, our rule induces shareholders to account for the negative externality SIFIs can impose without unduly stifling such financial institutions’ role within the financial system and in the wider economy. Third, as the amount of liability is clearly defined ex ante using the rigorous tools of network theory, our rule minimizes the influence of interest groups and the impact of idiosyncratic government decisions. Last, as markets know in advance the amount of liability to which shareholders are exposed, our rule favors the creation of a vibrant insurance and derivative market so that the risk of SIFIs defaults can be allocated to those who can better bear it.