I came home from the airport today to discover my car had been broken into again, only this time they decided to enter by shattering my front window, which will now cost me $200 to replace.  I feel bad for the person who is in a situation where he has to break my window to steal what amounted to about $4 and some pens, but I can’t imagine that it was worth the effort.  It also nets a $204 loss to me, while only a $4 gain to him.  The Coase Theorem teaches us that we would both be better off if I just gave $5 to him. He’d have an extra dollar, and I wouldn’t have to replace my window.

Of course, some people call paying someone not to break your stuff extortion.  If only I could pay a group of people to protect me from potential car-robbers.  I could even pool my money with other car-owners and they could protect all cars, not just mine.  And maybe, while they’re at it, they could protect people from murders, or guard public events.  And as long as they’re protecting everyone, maybe we could fund them through some sort of tax scheme - after all, their protection would be a public good.

But what would we call such a group, and who would stop them from beating the crap out of everybody?

Categories: Community, Governance, Incentive Centered Design, Law, Politics
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David Maister has posted a commencement address delivered by Stephen C. Ellis, the managing partner of a successful mid-sized law firm.  While he’s focused on the law (the address was at Case Western’s law school), it’s great advice for any professional, and I’m circulating it within my own firm and clients.  He has some great nuggets in there, including this interesting assessment of why the law can be such a miserable profession today:

The fact is our profession has become increasingly unhappy over the past couple of decades. I am convinced the vast majority of that unhappiness derives from a singleseemingly innocuous event in the late 1980’s: The American Lawyer magazine began publishing the AM LAW 100, and listed the profits per partner of the 100 largest firms. Virtually all of the firms in this country immediately bought in to that statistic as the only credible measure of success. The game was on - we lawyers would now take our measure almost entirely from money, at least in terms of what was publicly discussed. Without question, integrity, service and professionalism were important, but how we measured ourselves was money.

There’s also this great advice for aspiring lawyers:

If you’ve decided to become a lawyer solely to make money if to you it’s simply a job I fear you’ll hate it. As a career and a calling it’s great, and unbelievably interesting, but as simply a job, it’s way too hard and stressful. It’s the people, the pace and the endless puzzles of the law that make being a lawyer fulfilling. If you want tons of money for working twenty hours a day and nausea-inducing stress, Wall Street investment banking may be just the thing . In that business the grand old men are burnt out at 45.

I’ll frequently refer to investment banking as selling your youth - they pay you a fortune, but you spend the time in you have in your 20s and 30s working, and for many, large law firms have taken on the same climate.  But the people who don’t love it and just want the money won’t be able to work as hard or effectively as those who are passionate about their field, and subsequently, will never grasp the same rewards.

Categories: Business and Economics, Careers, Law
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Spanish authorities have released an American privateer treasure ship captain from custody:

The Spanish Navy blocked the salvage ship after it left Gibraltar on Tuesday and threatened to open fire when the captain refused to let police aboard.

In May, Odyssey found shipwreck booty estimated to be worth $500m (£245m).

After a tense standoff when it left the British port of Gibraltar, Spanish civil guards boarded and searched the vessel.

The Odyssey was then escorted to Algeciras, where the captain was arrested.

How awesome is it that stories like this still happen?

Categories: Ephemera, Funny, Law
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New York Magazine has an excellent piece on organizational psychology, fitting the right personalities with the right roles, and what makes managers successful. One nugget:

In the same vein, another researcher reports that one law firm deconstructs its HR needs by personality traits. It insists on extremely bright employees who are also extremely insecure. “They want them to think that working really hard matters,” he explains.

Here’s the short version: managers shouldn’t be narcissistic assholes, except when they should.

As an aside, New York Magazine seems to have one or two awesome pieces a month, and then the rest is only OK. Once they get up to 3 or 4, I’m going to become a regular reader (and maybe a subscriber).

Categories: Business and Economics, Careers, Employee Engagement, Law, Managing, Matching Mechanisms
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Also, if faculty governance actually means something, then faculty unionization makes no sense. You’re either management or labor; not both. If you really run the place, then you’re management. If you claim to run the place and you unionize to negotiate against it, I’d call that ’self-dealing.’ It’s a flagrant ethical violation, and of dubious legality. You can’t have it both ways.

From this blog that I just discovered, featuring the musings of an Anonymous Community College Dean

Categories: Careers, Education, Governance, Law, The Academy
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The article isn’t that interesting (police providing anecdotal evidence about increases in female crime, and an enlarged female cell at the ELPD), but I love the lede:

Beer-drenched heels, slurred speech and tear-streaked mascara paths.

This is a common scene Friday night.

Categories: Ephemera, Law
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Turner Broadcasting and their ad agency are paying the city of Boston $2 million after law enforcement there confused a glowing Mooninite advertising the new AquaTeen Hunger Force movie with a terrorist threat.  Half will be “goodwill” funds given to the agencies for training and equipment.  Does this mean they just got a million dollars for their screw up?  Will they use this to prevent a similar embarrassment?  Doesn’t this provide an incentive for police departments to overreact, forcing a settlement with corporations who will then pay up to prevent a PR disaster?  After all, none of the departments in 9 other cities, who figured out that a glowing Moon Man isn’t a bomb, got any free money.
The companies can’t say what I’m going to: Boston law enforcement overreacted and behaved in a bumbling and incompetent manner.  The more we are willing to kowtow to our fears of terrorism, the more effective it becomes as a tactic.

Categories: America, Entertainment Media, Governance, Incentive Centered Design, Law, Marketing, Television
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Nobelists Gary Becker and Richard Posner take a look at Charitable foundations:

The main case for giving tax breaks to individuals who set up foundations, and for exempting from most taxes the incomes that foundations earn, is to encourage decentralized private support of universities, health care, and many other activities, as opposed to relying only on centralized government support of these activities. Universities and other recipients in turn have to compete against each other for funds from the many foundations. I believe that such competition and decentralization of support encourages a more efficient use of resources by recipients, and makes it easier to finance unpopular art, music, or other activities that have difficulty getting support when governments are the dominant source of support. (Becker)

From another perspective:

I agree with Becker that the great strength of charitable foundations, and the principal justification for the tax exemption (though a secondary one is to offset the free-rider problem in charitable giving–if you give to my favorite charity, I benefit, and so the more you give the less I will be inclined to give), are that they bring about a decentralization of charitable giving, breaking what would otherwise be a governmental monopoly and thus reducing the play of politics in charity. In addition, however, to the extent that charitable giving substitutes for government spending, such giving (minus the tax benefits to the giver) represents a form of voluntary taxation, like state lotteries. Given the enormous skewness of incomes in today’s United States, it is good to encourage voluntary taxation of the wealthy. But I would not place much weight on competition by universities and other recipients of charitable giving for foundation grants, since the recipients will compete whatever the source; universities compete for government grants just as they do for private grants. (Posner)

In their full posts, there is more depth, as well as some noteworthy disagreements. My favorite observation comes from Posner’s next line, “a perpetual charitable foundation, however, is a completely irresponsible institution, answerable to nobody.”

Categories: America, Business and Economics, Governance, Law, Philanthropy, Politics
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Wired News is reporting that Mexican drug cartels use YouTube to send warnings to their enemies before killing them.

Categories: Law, Politics, Social Software
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“Consent,” a short film featuring lawyers negotiating a hook up.  Sadly, even the best lawyers I know, DworinLaw, still don’t offer that service.

Via BoingBoing, who found it via LawGeek

Categories: Dating, Funny, Governance, Law
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Via Tyler Cowen at Marginal Revolution:

Our argument can be briefly summarized: Attorneys are “knowledge workers,” who differ from other employees because they essentially carry around key firm assets in their brains. The knowledge assets these lawyers control—an understanding of the needs and interests of clients—are obviously of greatest value when used with specific clients. This specificity gives individual attorneys considerable leverage over their employers. By threatening to “grab and leave” with an important client, attorneys can leverage an increased share of their firm’s revenues. The up-or-out partnership system found in large law firms has evolved over time as a workable resolution to this particular problem. By forming partnerships and firing experienced attorneys who are not promoted to partnership positions, law firms limit the opportunity for experienced attorneys to grab and leave with the firm’s valuable clients. Grabbing and leaving is more important in legal partnerships than in conventional firms because law firms cannot readily establish property rights over the knowledge essential for serving particular clients.

He also has a different exerpt.

The argument applies to most professional services firms, like large management consulting firms. In these types of firms, partners handle client relationships - especially sales - while the actual work is left to the lower level associates. Partnership is the carrot at the end of the stick as well as a method for keeping experienced and talented associates from breaking out on their own. The up-or-out model keeps the number of partners small, their quality high, and incentivises low level associates.

Organizations in knowledge industries need to realize how fluid their customer relationships are, and how important it is to manage those relationships. Dworin Consulting helps firms and non-profits identify their stakeholders’ needs and develop customized strategies for engaging them. In addition, Dworin Consulting helps organizations design incentive schemes, like up-and-out promotion, to align employee motivations with group goals.

For those interested in the full paper, it’s available here, or here.

Categories: Careers, Incentive Centered Design, Information Asymmetries, Information Economics, Law, Matching Mechanisms
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