Incorporate This?

Breaking news: The Supremes have granted cert. on the Chicago gun case. The issue is whether or not the rule from Heller (i.e. the right to own guns in one's home is a 'fundamental right') should be incorporated against the states.

I wonder what impact (if any) this will have on the N.J. Blogger case. Remember him? The guy who wanted to kill Posner, Easterbrook, and Bauer because they refused to overturn the Cruikshank case? (For more insight into the pertinent legal issues, see Volokh).

More importantly, how crazy will this lunatic get if the Supremes disagree with him?

Personally, I think the Supremes will incorporate the Heller rule against the states. There really isn't much of a reason why it shouldn't be incorporated. Additionally, (and strictly as a matter of policy) Chicago is one of the most dangerous cities in the nation and it also has some of the most restrictive regulations on handgun possession and licensure. Steve Chapman agrees.

UPDATE (6:21 ET) For our more ambitious/eager readers, here's the link for the petition for cert.

Is President Obama Aborting his Campaign Promises?

The new hot topic surrounding the President's healthcare plan is a ban on federal insurance subsidies that will assist women in obtaining abortions. The New York Times reports that the ban has support from both Republicans and a large number of moderate Democrats, and both the House and Senate are waiting to hear the position of the Obama administration.

Obama has encouraged a fresh conversation on the abortion issue, and he has clearly established his support of reproductive rights. In the short time since becoming president, Obama has already struck down the Mexico City policy prohibiting U.S. money from funding international family-planning clinics promoting abortion. Also, he has nominated several pro-abortion advocates for high positions, including David Ogden as Deputy Attorney General and Elena Kagan as Solicitor General. However, the president has firmly promised to reach a middle ground with pro-life supporters, and he may just have to compromise on his healthcare plan to do it.

Clerkship Series: Day 1 -- The NYU Approach to Clerkships

Most law students have heard by now that there are tremendous benefits in completing a judicial clerkship—indeed, many former clerks with whom I’ve spoken say it was the best experience of their lives. However, there is an irritating aspect to the application process as it can sometimes lead to confusion, stress and, worst of all, depression.

In an effort to mitigate these negative feelings, BBL is beginning a series on clerking to help guide our readers through the sometimes nebulous process. To kick off our efforts, I caught up with Deborah Ellis, NYU Law's Assistant Dean for Public Interest Law Center. Dean Ellis oversees NYU's Judicial Clerkship Office, and has presided over what has been one of the school's best years in terms of placing federal judicial clerks. She talked with me about NYU’s approach to the process, and the process generally.

As the Dean noted, this year NYU "substantially increased the number of Court of Appeals clerkships" that its students obtained. The Dean attributed these successes, in part, to NYU's creation of a judicial clerkship office which serves to "highlight [the school's] institutional emphasis on judicial clerkships." This change was accompanied by other specific changes the school made. One constant is the degree of effort the faculty puts into helping and guiding their students—a process that begins from the moment the student enters her first class. According to Dean Ellis:

Our faculty and deans are very interested in helping our students, and are pleased that the students are doing very well. . . . I don’t want to comment on us versus Harvard or Columbia [for example], but we believe a clerkship is a great opportunity for every student no matter who it is . . . and no matter what type of work they want to do. [Ultimately], we try to give very close counseling to students, and faculty works very close with [them] during this process.

The school also believes that:

[T]here are advantages to all courts—from [District Courts] to the Court of Appeals, and magistrate courts and from bankruptcy courts to state supreme courts. So we really encourage students to apply broadly. For example, I went to NYU and clerked in Montgomery, Alabama for the 11th Circuit.

BBL applauds Dean Ellis and the outstanding work the Judicial Clerkship Office at NYU has done for its students. However, we wanted to glean some general advice from the Dean about how concerned students elsewhere should approach the process. Many of our readers were disappointed with how the application season has fared so far, so I asked the Dean what advice she would give them:

My general advice is that I would not feel discouraged. There are many judges who have not hired, especially at the trial . . . and state level[s]. The other thing students should always consider is applying beyond the major metropolitan areas where the competition is most intense.

I thought the advice about judges not having made hiring decisions was interesting. Along these lines, the Dean also emphasized, "sometimes many students think all calls get made on first day of hiring, and while many court of appeals judges do this, students should not get discouraged if they don’t get a call."

True, but it seems to be a known fact now that many judges now hire outside of the federal hiring plan—placing many other students at a competitive disadvantage such that it may, in fact, be reasonable to assume that calls will not come after the first week for rising 3Ls. While the Dean acknowledges that pre-plan hiring does occur, she emphasized NYU's policy of sticking to the plan:

I really do believe in the federal hiring plan, and as a school, we believe in following it. It helps to have deadlines that are being followed uniformly.

We thank Dean Ellis for her willingness to reach out to law students with candid, transparent advice. And we hope that our readers who didn't yet get clerkships this year don't give up—it's not (necessarily) over yet!

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UPDATE: A commenter was interested in NYU's actual numbers. While the Dean was unable to share the statistics, a tally on Law Clerk Addict reveals that 24 NYU students have received court of appeals clerkships at this point in the cycle. Particularly staggering is NYU's placement of 6 clerks on the D.C. Circuit, roughly double the count reported on Law Clerk Addict for the 2009-10 term. Obviously, these numbers are not conclusive--Law Clerk Addict's statistics are not entirely complete and, in some instances, may be inaccurate. Its statistics are generally reliable, however, and these initial numbers are very impressive. In fact, these statistics paint NYU as either number one or two in the raw number of clerks placed on federal courts of appeal.

In short, the numbers confirm Dean Ellis' noted assertion that NYU substantially increased the number of clerks it placed on the federal courts of appeal this year.

Em n' Apple

The Eminem v. Apple copyright trial started on Friday in Detroit Federal District Court. See Law.com. To the right is a photo of Slim Shady with his legal team.

New Contributing Blogger

BBLers, we have hired a new blogger: Robin Shah. Robin is a 3L at the University of Pennsylvania Law School. She graduated with a B.A. in Political Science from Johns Hopkins University in 2006. Her interests include constitutional law, civil rights, gender issues, and tort theory.

We look forward to her contributions over the next year. Meanwhile, we are still accepting applications for contributors, so keep 'em coming.

Cheers!

SCOTUS Health Watch

Justice Ginsburg was hospitalized today after feeling faint. As you may know, she recently underwent surgery for pancreatic cancer.

Our best to the Justice.

Read about it here.

The Court's official statement is here.

UPDATE: The Justice was released from the hospital Friday morning and is now back at work.

Judge Richard Posner . . . a Keynesian?

At the New Republic, Judge Richard Posner has confessed how the current financial crisis has caused him to become more attuned to the ideas of John Maynard Keynes and his vision of an interventionist economic policy where the government uses fiscal and monetary tools to counteract the cyclical--and, as this recent economic crisis perhaps illustrates, unpredictable--business cycle. As Judge Posner writes:

We have learned since September that the present generation of economists has not figured out how the economy works. The vast majority of them were blindsided by the housing bubble and the ensuing banking crisis; and misjudged the gravity of the economic downturn that resulted; and were perplexed by the inability of orthodox monetary policy administered by the Federal Reserve to prevent such a steep downturn; and could not agree on what, if anything, the government should do to halt it and put the economy on the road to recovery.

Central to Keynes' theory--the reason behind the now-apparent recovery, as the Judge writes--is that consumption is, after all, "the sole and end object of all economic activity." Sparing complicated mathematic explanations, this is partly because passive investments (i.e., income not necessarily infused into productive activity, but derived from savings) theoretically take some time to stimulate economic growth. Alternatively, active investments create income and essentially form what Keynes calls a "multiplier effect," further increasing the "incomes of people . . . on the receiving end [of any initial income spent on a given product]." Judge Posner uses this example:

When I buy a bottle of wine, the cost to me is income to the seller, and what he spends out of that income will be income to someone else, and so on. So the active investment that produced the income with which I bought the wine will have had a chain-reaction--what Keynes calls a "multiplier"--effect.

Consumption, in Keynes' theory, is the driving force of economic growth. And, as the Judge explains in this article, the government must effectively counterbalance times when consumption is lacking and hoarding is rampant. From this vantage point, Judge Posner notes that "[b]y now a majority of economists are in general agreement with the Obama administration's exceedingly Keynesian strategy for digging the economy out of its deep hole."

Keynes' theory, of course, presupposes business cycles. However, I have rarely seen consideration given to the structural imbalances in the capital structure of our economy. Many economists, in fact, quite convincingly show that reckless monetary policy obfuscates real interest rates, creating distortions in long-term demand for capital. In addition, persistent bailout guarantees and a hyper-expanding credit market have created perverse incentives for private market actors. Put another way, these instances may in some respect be attributed to bad government policy. So a question I must ask is that, even if Keynes' theory solves the structural distortions of the business cycle--a point which I am admittedly not equipped to debate--are there other policy measures directed at resolving potential core causes of the financial crisis that should be taken into account before we grant the government a medal of honor?

Check out Judge Posner's article.

New York Court of Appeals Holds Governor Can Appoint Lieutenant Governor

The New York Court of Appeals handed down a decision this morning holding that Governor David Paterson had the constitutional authority to appoint a lieutenant governor. The victory is a big one for Governor Paterson--particularly since the Court could have, as a practical matter, reached the same conclusion by disposing of the case for lack of standing.

Check out the decision here.

The UBS Effect (and TTT)

According to Bloomberg, the UBS prosecution is accomplishing exactly what the IRS intended: massive disclosure. Clients of numerous Swiss banks are disclosing their offshore accounts to the IRS to avoid criminal prosecution. (Hint: If you happen to have an offshore account, declare it before September 23 to avoid the Wesley Snipes treatment).


Further, the IRS is using the disclosed information to chase down other banks and law firms that may be holding out:

The disclosure program and the U.S. lawsuit settled by UBS are helping the U.S. crack down on offshore tax evasion by pursuing financial institutions and intermediaries including law firms, IRS Commissioner Doug Shulman said Aug. 19.

This makes sense.
Advising US taxpayers not to declare their income, from whatever source derived, is a crime. See I.R.C. §§ 7201 et. seq. As a US Citizen or resident, you are subject to tax on your income earned anywhere in the world (This is today's TTT). Thus, if a law firm advises a US Citizen or resident not to report their offshore accounts (or any other income from anywhere in the world) on their annual 1040, both the law firm and the taxpayer face criminal liability.

And that is how they got UBS. UBS was advising clients not to report their Swiss accounts to the IRS. The IRS went after UBS on criminal charges of facilitating tax evasion (Aside: the Swiss distinguish between tax evasion and tax fraud). UBS has substantial assets and clients in the US and opted to cooperate rather than see its US operations shut down.

Now that disclosure has started, expect to see a lot more cooperation by foreign banks, tax attorneys, and high net-worth individuals when it comes to their future dealings with the IRS. Maybe, just maybe, the extra added revenue will reduce the inevitable future tax increases imposed on the rest of us.


UPDATE: The IRS has extended their disclosure deadline to October 15.

Next On the Agenda? Will Law Schools Need A Bailout?

Some people tend to think there are too many law schools in the world (see generally: any ATL post on schools outside of the T14). I agree, even though I do not attend one of the Blessed: there are far more law schools in the U.S. than should reasonably exist, and the ABA just keeps accrediting these Madoff-esque institutions with impunity. A similar problem exists with the TTT-equivalent of undergraduate institutions: the middle of the road liberal arts college. There are too many mediocre liberal arts schools tricking gullible students (and their parents) into shelling out big bucks to get a bad education that will be no more helpful in gaining a job than would have been hanging shingles. Well, it should come as no surprise that the Recession is starting to hammer at the foundations of these schools.

This got me to thinking: what if law schools begin to get gutted as a result of the continuing recession? I mean, everyone knows that the Big Boys are getting crushed, and, as a result, have been cutting back at their respective law schools (among other cost-cutting measures that they've implemented). But, what about those non-Billion dollar club members that have law schools? What are they going to do if the economy does not pick up for a couple more seasons? How will they be able to continually justify tuition raises when it becomes apparent that the school's name is worth nothing more than the ink on the faux-lamb skin of the diploma? What about those new schools (save for UCI, of course, who will quickly become one the Blessed) and the students who continue enrolling and paying $30k+ to go to a garbage school?

Today's Tax Tidbit (TTT)

This is a TTT post. The first of many more if it proves to be popular.

Did you know that the IRS considers any illegal gains to be income? See Treas. Reg. § 1.61-14 (2009).

Make sure you declare your earnings from rum running or pimping to the IRS or risk a nice trip to the pokey (Aside: ACORN offers great advice as to how to maximize your brothel deductions).

UPDATE: No, poor Mr. Snipes did not do anything illegal to earn his money, he simply failed to report and pay tax on his legitimate earnings (well, only if you consider proceeds from the Blade series to be legitimate).

Even the SEC Needs Legal Training

Bloomberg reports that the SEC is considering the prospect of establishing a "fraud college" to help staff detect "market abuses" like Bernard Madoff's $65 billion fraudulent ponzi scheme. Reasoning that such an educational program would be "particularly valuable," Commissioner Mary Schapiro noted that "[the] SEC is already training more than 300 examiners on ways to spot fraud after Madoff eluded the [agency] for more than 16 years."

Check it out.

Open Thread - Law Firm Compensation (Revisited)

Several months ago, we opened a thread putting forth a commenter's proposal for changes to law firm compensation that would help firms "cut costs and still harbor and nurture their talent." While the proposal was most readily criticized for its initial pay-scale ranging between 90 and 135k, a pay cut to that level may be on the horizon--albeit in a considerably different manner than that suggested by our commenter.

As legal consultant Jim Cotterman explains on the Altman Weil blog:

[A]ssociate compensation still appears out of line. The reductions announced so far are about half of what is probably required (i.e. going from $160,000 to $145,000 should probably go much further to $125,000 or even $100,000); thus resetting the wage scale by a decade. This is a painful reality and one that surely will fire up emotions. But the tide has changed; clients are moving quickly and assertively to reduce legal spend. This goes beyond alternative fee arrangements (AFAs). Costs of outside legal bills are going to come down, and from the early signs — down dramatically. Services will be competitively bid, outsourced, off shored, converged, internalized, re-engineered, and even forgone. Now add the AFAs to create greater certainty regarding total cost along with a healthy measure of risk transfer from the client to the law firm. All of this will bring the major line item in any law firm — the cost of people — under assault. This will affect total employment, wage scales and job expectations. The pace of the salary change is directly affected by the pace of change in what clients will pay for legal services.

Thoughts?

Your Friends and Mine. . . .

Happy Labor Day! Now on to the post:

While the details of any health bill are still being hammered out, there will be one certain outcome of any bill: the IRS will have a whole lot more power.

Here is a laundry list of the (likely) new powers Congress will bestow upon the Service should any health care legislation pass:

1) You will have to report your health insurance status to the IRS;

2) Your insurer will have to report your health insurance status to the IRS (you thought they would trust you?);

3) The IRS will be responsible for fining you if you fail to purchase adequate insurance;

4) The IRS will be responsible for administering a web of subsidies and tax credits to help low-income individuals obtain health insurance, including releasing your tax information to a central authority who will determine if you are eligible for those credits and subsidies.

That last point is one of the scarier ones. If you thought having Progressive Auto Insurance watching you from the skies was unsettling, just imagine your earnings history, address, social security number, and any other juicy tax tidbits suddenly finding themselves spawned across several government computer systems.

But that's not all! Not only will your information be spread throughout the "system," but the government is also planning to use your tax returns to advertise other government services to you:

In H.R. 3200, the IRS would be required to provide taxpayer information to the Social Security Administration for the purpose of helping Social Security officials find qualifying seniors who can then be encouraged to enroll in the prescription drug program. 'There is no precedent for using taxpayer information for the purpose of identifying people to go out and advertise to them,' says the House expert.

Should your information really be used this way? Tax returns have generally been treated with a high degree of confidentiality. This confidentiality seems reasonable considering that everyone is required to provide their annual earnings information to the government (Tip: Your 1040 is not optional). Essentially, the government acknowledges they are invading your privacy, but in exchange, they promise to keep your information safe (theoretically). Maybe we are witnessing the end of that grand bargain.

Check your mailbox, the government may have sent you a notice indicating that you are eligible for their cheese.

The Taxman Cometh

Hello everyone, I will be (one of) your new bloggers here at BBL. I have a particular interest in tax law and economics so I found the following article interesting.

According to Bloomberg, Wegelin & Co., Switzerland's oldest bank, is requiring customers to dump their U.S. assets or close their accounts. As you might have guessed, Wegelin's decision has to do with the recent battle between UBS and the IRS. Essentially, Wegelin believes it will be less onerous to require its customers to dump their U.S. assets rather than comply with the ever increasing reporting requirements demanded by the I.R.S.

While the I.R.S. has a legitimate interest in collecting tax owed to it from U.S. citizens and certain foreign persons holding U.S. based assets, its efforts may cause more foreign banks to follow in the footsteps of Wegelin. And that my friends, is a bad thing.

Offshore financial institutions hold approximately $7 Trillion in assets. If these institutions start insisting their clients dump a certain asset class, the supply of that asset will increase and its price will tend to decline (assuming, like all economists, we ignore many of the realities of the universe). Thus, if offshore institutions start dumping lots of U.S. assets (likely a healthy chunk of that $7 Trillion dollars), U.S. asset prices will begin to decline.

Normally, it is not such a big deal that U.S. assets are getting cheaper. However, we are currently in the midst of a financial crisis that was precipitated in large part by the fall of asset prices. It is difficult for U.S. financial institutions to raise sufficient capital and "get healthy" unless the value of their assets begins to increase. Dumping large quantities of U.S. assets onto the market will make any financial recovery just a bit more difficult.

Should the IRS continue to pursue its crack down on tax-shelters? It depends. Does the short term gain of more (badly needed) revenue outweigh the potential cost of propping up more financial institutions in the future? The I.R.S. and our current administration certainly seem to think so!

Is Justice Stevens Retiring?

Law.com reports that 89 year-old Justice John Paul Stevens has hired fewer clerks this year than he has in the past, raising questions on whether his retirement is imminent. Recently-retired Justice David Souter employed similar hiring practices in the year before he left the Court. As the article notes, "Souter's failure to hire clerks was the first signal that he was contemplating leaving the court."

Justice Stevens has only hired one clerk for the Court's 2010 term--three less than sitting Justices typically retain for a given year--but did not say whether he planned to hire any more. Justice Stevens' retirement would give President Obama a second Supreme Court appointment.

Update: New Blackbook Legal Contributing Editor

BBLers, we want to introduce a new member of our team: Samuel Greenberg, tax commentator extraordinaire. Sam graduated with high distinction from the University of California, Berekely with a degree in Economics and is currently at the Loyola Law School, Los Angeles, where he is an Articles Editor of the Law Review.

Sam's legal and research interests include economics, tax, and constitutional law. Sam hopes to give BBL readers a some insight from the west coast, and assist us in piecing together the enigma that is California. We are excited to have him on board.

In other news, we are still reviewing applications and anticipate hiring one more contributing blogger. Keep the resumes coming. Cheers!