Bite-Sized Business Law

The Texas divisive merger, more commonly known as the Texas Two-Step, is a legal tool employed by businesses involved in substantial litigation to settle their tort liabilities through the bankruptcy process. Listeners may recognize this maneuver from recent headlines and the questions posed as to whether it is leading to abuse of the bankruptcy system. Rejoining us today to unpack all of this and more is returning guest Matt Cantor, senior managing director at Pretium, a specialized investment firm that currently has more than $50 billion in assets under management. Matt also has extensive experience in corporate restructuring at large law firms, has worked at various respected investment firms, and is known for his handling of the Lehman Brothers’ bankruptcy and liquidation case. In today’s conversation, we delve into the concept of divisive mergers, their relationship to bankruptcy, and how mass torts present an opportunity for investors who are willing to take on litigation risk. Matt gets into the variability that can occur in mass tort liabilities and what can be done to reduce uncertainty. We also discuss how the move from an industrial to a digital economy presents new opportunities for investors and some of the risks inherent to technology-based business models. To learn more about liability management, the Texas Two-Step, and much more, be sure to tune in today!

Key Points From This Episode:

•An overview of the Texas Two-Step; its origins, what it entails, and why it’s not as new as people think it is.

•Engaging in a liability management program and how it relates to bankruptcy.

•The high range of variability of outcomes within the American tort system.

•Different types of mass tort liabilities and how they demonstrate wide variability.

•What companies do to reduce variability: predicting outcomes, giving their case to a bankruptcy judge who will assign some certainty to it.

•The complexity of the risk-sharing arrangements between debtors and their representation.

•An overview of the opportunities in this space for investors with an appetite to take on litigation risk.

•Why this area of work is well-suited to anyone earning a JD–MBA.

•Some of the opportunities inherent in the move from an industrial economy to a digital economy.

•The embedded liability within some technology-based business models.

•Why settling a lawsuit provides benefits to both sides by reducing variability and uncertainty.

•Matt’s thoughts on whether lawyers are abusing the bankruptcy system.

Links Mentioned in Today’s Episode:

Matt Cantor on LinkedIn

Pretium

Richard Squire

Richard Squire on Google Scholar

Richard Squire on LinkedIn

Bite-Sized Business Law Podcast: Matt Cantor on Litigation Finance

Fordham University School of Law Corporate Law Center

Given the recent collapse of some of the major players in the crypto space, its future is uncertain. Joining us for the very first episode of the Bite Sized Business Law Podcast to discuss crypto bankruptcies and what some are calling the ‘crypto winter’, is business law professor and faculty director of Fordham University School of Law’s Corporate Law Center, Richard Squire. Richard breaks down some of the similarities that exist between the auto industry bubble, the dot-com bubble, the 2008 financial crisis, and what we’re currently seeing in the crypto space. We discuss the interconnectedness between companies and whether or not insolvency leads to insolvency before Richard sheds light on what he expects for the future of crypto. You’ll hear his thoughts on whether or not we should expect more regulation, why he doesn’t believe there is a path forward for FTX, and the likelihood of FTX’s creditors getting their money back. To find out why Richard is actually positive about the future of crypto despite its current state, tune in today!

Key Points From This Episode:

• An introduction to Professor of Business Law, Richard Squire.
• Today’s topic: crypto bankruptcies or the ‘crypto winter’.
• Parallels between the auto industry bubble, the dot-com bubble, the 2008 financial crisis, and what’s happening currently in crypto.
• To what extent there will be contagion.
• Concerns about the Federal Home Loan Bank system lending billions to crypto companies and whether or not insolvency leads to insolvency.
• The expansion of the monetary base by the Federal Reserve in recent years and how this has affected what has happened in crypto.
• Whether or not we should expect more regulation on crypto than that which already exists.
• Why big firms are in favor of stricter regulations.
• Whether or not there’s a path forward for FTX, as its CEO believes there is.
• The likelihood of the FTX creditors getting their money back.
• The emergence of markets where you can buy and sell FTX claims and whether or not they are specific to crypto bankruptcy.

Links Mentioned in Today’s Episode:

Richard Squire

FTX

Fordham University School of Law Corporate Law Center

Corban Rhodes represented consumers in the most significant data breach case: the Yahoo Data Breach. He also successfully extracted a settlement from Facebook for misusing biometric data. Today, he continues to represent consumers in cyber security and data privacy matters as a partner at DiCello Levitt. Corban joins us today to discuss the broad topic of surveillance capitalism. He starts our conversation by breaking down the three categories of personal information that companies can use to generate a profit. Next, he offers a glimpse into his process, revealing the educational piece that he uses to empower clients to understand and approach data protection. Listeners will learn what the United States' sectoral approach to data privacy means and what its implications are for everyday users. We touch on the implications of public trust which is at an all-time low, how contract law can serve as a gap-filler, and what Elon Musk’s moratorium on A.I. signifies for the state of technological progress and safety. Tune in today to hear all this and more from an inspiring expert in the field!

Key Points From This Episode:

• An introduction to today’s guest, Corban Rhodes, partner at DiCello Levitt.
• Corban’s disclaimer that his views are his own and don’t reflect those of his law firm.
• Biometrics, geolocation, IP address, and preferences.
• How companies use data to generate a profit.
• The bidding process behind banner ads.
• The educational piece of Corban’s practice.
• What it means to have a sectoral approach to data privacy.
• State intervention to data protection legislation.
• An analysis of EU regulation in comparison to US progress.
• Public trust and its implications for technology and business.
• Why focusing on consent might not be enough.
• How contract law serves as a gap-filler.
• Interpreting the moratorium on A.I. as called for by Elon Musk and others.
• Dangerous possibilities of A.I. integration according to pre-GPT4 research.
• Why it is so important that we have control over our data.
• Difficult predictions around A.I. influence based on your data.
• Data privacy’s tendency not to fall in a single political camp.

Links Mentioned in Today’s Episode:

Corban Rhodes on LinkedIn

Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society'
DiCello Levitt

Americans Can’t Consent to Companies’ Use of their Data by Joseph Turow, Yptach Lelkes, Nora A. Draper, and Ari Ezra Walman

Fordham University School of Law Corporate Law Center

What responsibility do corporations have to society (if any)? How should they balance environmental, social, and governance factors? Here at Bite-Sized Business Law, we’ve already covered corporate social responsibility and environmental social governance (ESG) from a few different perspectives. Today, we unpack a straightforward defense of shareholder primacy, or in other words, the idea that pursuing any corporate aim that does not maximize shareholder value conflicts with the legal and practical purposes of a corporation. Here to unabashedly defend this concept is one of the foremost American experts in corporate governance and the William D. Warren Distinguished Professor of Law at UCLA School of Law, Stephen Bainbridge. Stephen is a business law professor and one of the most cited scholars in corporate governance law. His new book, The Profit Motive, argues that shareholder wealth maximization is not only “required by law, but what the law ought to require.” In this episode, Stephen addresses questions surrounding corporate purpose using historical, legal, economic, and social perspectives and explains why he believes that shareholder primacy is inevitable. To find out how we can reconcile ESG initiatives with shareholder value creation, tune in today!

Key Points From This Episode:

• The role of the Business Roundtable in prompting Stephen to write The Profit Motive.
• Lessons about shareholder primacy from the Dodge v. Ford case of 1919.
• Whether or not the Milton Friedman Doctrine is still relevant in the 21st century.
• The problem with asking corporations to help governments solve social issues.
• Insight into the extent of greenwashing and the challenges of juggling competing pressures.
• How the story of Etsy illustrates the threat of hedge fund activism.
• Public benefit corporations and whether they alleviate the ESG/shareholder primacy tension.
• Why shareholders can’t change the fundamental nature of the businesses they invest in.
• The realities of “shareholder voice”.
• Ways that organizations are struggling to navigate the political polarization of ESG.
• Stephen’s win-win scenario: give directors wide discretion that they use toward the long-term benefit of shareholders.
• Why Leo E. Strine, Jr. is the perfect example of who The Profit Motive was written for.
• How to reconcile broader social interests with corporate interests: be more like Bill Gates!
• Ways that Stephen subscribes to the “think globally, act locally” philosophy.

Links Mentioned in Today’s Episode:

Stephen Bainbridge

The Profit Motive

Stephen Bainbridge Blog

Stephen Bainbridge on Twitter

Stephen Bainbridge on LinkedIn

Business Roundtable

Fordham University School of Law Corporate Law Center

We often talk about how corporations affect society, but what about the way society impacts corporations? Shareholders, customers, and employees are increasingly leveraging social media to influence corporate behavior. During this episode, we are joined by Dr. Akshaya Kamalnath, who is an expert in this arena, referring to the phenomenon as Hashtag Capitalism. She teaches Business Law, Corporate Governance, and Corporate Insolvency in her capacity as an Associate Professor at the Australian University College of Law. Defining key concepts like retail investment and rational apathy, we consider the problem of collective action and two ways in which social media interacts with it. The conversation also explores the way in which consumers engage with companies and government today, and what this means for our economy. We also discuss the emergence of ‘finfluencers’, distinguishing between those making a positive impact and those who are not, and how this can be regulated with existing law. To close, Akshaya shares the themes of her upcoming book: corporations, technology, and the law. Tune in today to hear all this and more!

Key Points From This Episode:

• The effect of corporations on society and vice versa.
• Defining retail investment, rational apathy, and the problem of collective action.
• Two ways in which social media influences retail engagement.
• Unpacking the concept of ‘wireless investors’ and ‘finfluencers’.
• The nostalgic resurgence of GameStop and the David versus Goliath story that unfolded.
• Considering the shifting focus on social influence and whether or not this challenges Milton Friedman’s theory of shareholder wealth maximization.
• How companies are responding to social media pressures and how this is changing the nature of corporate governance.
• The evolving nature of how the public engages with companies, accountability, and government.
• Regulating ‘finfluencers’ with existing law and distinguishing between financial advice and storytelling.
• Incentivizing the voices prioritizing financial inclusion and financial literacy.
• What Akshaya is currently working on: a book about the intersection between corporations, technology, and the law.
• How she foresees the Hashtag Capitalism project unfolding.

Links Mentioned in Today’s Episode:

Dr Akshaya Kamalnath on LinkedIn
Dr Akshaya Kamalnath on X

Corporate Law Academic

ANU Law

GameStop

Fordham University School of Law Corporate Law Center