Friday, December 4, 2009

And a Happy 2nd Amendment Holiday to You!

I'm not much of a gun person.  I don't hunt.  I have no interest in owning a gun for self-defense.  I support a group that works to reduce gun violence in our communities.  So the fact that I can't buy and sell an assault weapon or, for that matter, any firearm through PayPal doesn't piss me off.  Apparently it does piss off some, though,  and as you know, a pissed-off American can be an entrepreneur's dream. 

GunPal, founded in 2004, touts itself as the "next generation" on-line payment system and a serious competitor to PayPal.

Through GunPal, you can send money to anybody with an email address and conduct any legal transaction, no questions asked.  You could use it to send money to Grandma or buy a vintage Tickle-Me-Elmo, no questions asked.  Or a gun, no questions asked.

Perhaps recognizing that PayPal had pretty much cornered the money to Grandma and vintage Elmo markets, GunPal recently issued a press release touting itself as the "payment platform of choice" for the firearms industry.

Now, GunPal has a charitable bent - use the service and a portion of the proceeds will be donated to the non-profit organization of your choice.  So you can send money to Grandma, buy a vintage Elmo (Rambo edition) and purchase any "legal" firearm-related product and donate to your favorite three-initialed, firearms-supporting charity (no questions asked) all at the same time.

Even if guns aren't your thing but you feel like making some sort of political statement this holiday shopping - if PayPal just seems too soft and squishy and liberal for you - you have an alternative.  Happy hunting holidays!

Friday, November 27, 2009

Legal Minimum Wage: Betting the Company on Less than $30 Per Hour

Shared Thanksgiving last night with some friends and family, one of whom is also an experienced attorney with a small practice.  He mentioned that in addition to his own matters - he was also working on a Second Circuit brief - he'd filled some time over the past couple of months working on an e-discovery project as a contract attorney.  For this experience, he was paid roughly 15% of what my last law firm would have charged to assign a paralegal to the same task.

Assigned Counsel, out of Philadelphia, tells recruits that its contract work pays between $30 and $100/hour, depending on complexity, and my unscientific survey of other contract attorney shops suggests that this range is typical.  How much top end complex work is available is the question.  The sweet spot for more sophisticated work may fall somewhere in the middle:  A recruiter called me a couple of months ago about a gig that might pay $60/hour to the right attorney (which I took to mean experienced) willing to make a full-time, multi-month commitment.  

But downward pressure on this market persists.  I've heard of recent rates down to $24/hour.  What's next - $19.95? 

Commercial clients may be happy that they can get experienced attorneys for $30 (or less) an hour, and big firms may be happy as well, since they can (directly or indirectly) hire back some of their fired attorneys for outsourced works at a fraction of the former toll. 

My attorney friend is not the cynical type and seemed happy for the experience.  But some of the lowly paid - particularly those taking orders from firms that wouldn't hire them (or did hire them, and then laid them off) - are more than disgruntled, if some blogs are an indicator. 

And so I wonder at the toll that this race to the bottom of the wage pool is taking on the legal work product itself.  Some of this contract work is taken on in connection with large commercial litigation cases, the kind that keeps general counsels up at night and warrants at least a footnote in public company securities filings.  Even in the most competitive legal market in decades, and even if the project is "just" e-discovery, at what price point ($19.95?) would you question whether you would bet the company on the results?

Friday, November 20, 2009

Small Businesses: Goldman Sachs Wants You to Grow Up to Be (Sort of) Big and Strong

Small business owners - rejoice.  Goldman Sachs wants to give you money (sort of).

In a fit of public relations awareness social consciousness, Goldman has launched its 10,000 Small Businesses  initiative, hard on the heels of its 10,000 Women initiative.  Let's call it 10KSB.  (Is it coincidence or irony that the most obvious acronym for this program looks like 10-KSB, the annual securities report required of small business issuers?)

Through 10KSB, the megafirm intends to funnel $500 million out to the nation's small businesses.  The money will flow through  community colleges and universities, Community Development Financial Institutions (CDFIs), and other program partners, through a combination of education and business support services, loans, grants, and investments.

10KSB is not for the freshly minted.  If you've just started a home business, or your purely and truly and utterly unique idea for a store is just a gleam in your eye, you won't sniff this money.  According to Goldman's website, the general guidelines for qualifying small businesses are:
  • Business revenues between $150,000 and $4M in most recent fiscal year
  • At least four full-time employees
  • Business operations for at least two years
  • Business model that could scale to create more jobs
  • Predominantly in underserved markets
In other words, if you've made it to two years, actually have a few employees and a scalable business - i.e., you're already over the hardest new business hump, and you might someday grow large enough to be a Goldman client - you may be able to tap into 10KSB resource.

Blogger Kenneth Anderson, a Volokh Conspiracy contributor and Goldman fan and stockholder, argues that the program is underfunded and a ham-fisted political ploy - a sop to the Obama Administration's love for community development programs (see Goldman Sachs and Its Small Business Fund Ploy).  About the money:  Whether it is a lot or not depends on your perspective.  $500 million is 15% of Goldman's net profits for its most recent quarter, although it's only 3% of the amount reportedly set aside by Goldman so far this year for compensation.  But I think the interesting figure is 10% - $500 million being 10% of Warren Buffett's reported investment in the firm a year ago ($5 billion for preferred stock).  Buffett's one of three heads of the advisory council for this initiative.  If anything, the program sounds like a tithe to the needy made at Buffett's insistance.  

Even if you look at it as a positive development, it's an achingly awkward one.  These days, watching an investment bank/financial behemoth give away - or even lend - some of its hard earned money to "small business" (you can almost hear Goldman execs choke when they try to say those two words together) is a bit like watching your six year old as he tremblingly puts his first allowance earnings into a jar for safekeeping and then stares at it for hours as if wondering if he's made a mistake - you're proud of him but you think to yourself, "Jeez, was that so hard?"

You know, someone at the firm must be in charge of this program.  I can't help but wonder what that kind of job would be like at a place like Goldman.  Possibly very cool.  Possibly mind-blowingly weird.  

Tuesday, November 17, 2009

We Need the People's Abstract: Or, Waiting for Bill James

I was revisiting Michael Lewis's Moneyball the other day.  At one point, Lewis describes the emergence of baseball statistician Bill James, well-known author of the annual Baseball Abstract, whose initial hand-typed, 64-page tome - 75 self-published copies sold in 1977 - led to a publishing career and a global revolution in the way that professional baseball players are analyzed by fans, the press, owners, and players themselves.

James was obsessed with baseball and incensed with what he perceived were statistical crimes foisted by the baseball establishment (including the press) upon fans, players, and owners alike. One of James' pet peeves with the then-existing state of baseball statistics was the focus on fielding errors.  The error, James argued, was merely an opinion by an observer about how a fielder handled the baseball once he got to it - by itself, a useless statistic.  For example, a outfielder with skill and speed who managed to get to a line drive but dropped it (although keeping the batter to a single) would be charged an error, while a slower, less skilled outfielder who was late to the ball and allowed it to roll to the wall (giving the batter a double or triple) would not be charged an error. In the first example, the fielder is charged an error and the batter is not credited for a hit; in the second, no error and the batter is credited with extra bases. The pitcher's statistics are impacted as well.  Did it make sense to statistically penalize the first outfielder and let the second skate?  Not to James, who envisioned other ways to measure the performances of these players on this particular play, and by extension to measure the aggregate value of these players' skills over the course of a year or a career.

Of Bill James' guerrilla attack on the American Pastime's traditional notions of player value, Lewis makes a larger observation:
[I]f gross miscalculations of a person's value could occur on a baseball field, before a live audience of thirty thousand, and a television audience of millions more, what did that say about the measurement of performance in other lines of work? If professional baseball players could be over-or undervalued, who couldn't? Bad as they may have been, the statistics used to evaluate baseball players were probably far more accurate than anything used to measure the value of people who didn't play baseball for a living.

Bill James set about finding new ways to measure value in baseball and was able to explain why it mattered.  After three decades, his methods and his vocabulary have reached widespread acceptance in the baseball community, and his contributions to baseball thought led to his selection as one of Time magazine's 100 most influential people in 2006.

Outside of baseball, there is more chaos than clarity.  To paraphase Lewis, the statistics used to evaluate baseball players are probably far more accurate than anything used to measure the net value (or cost) to us, individually or collectively, of an economic measure, governmental program, or political position.  Statistics are fired at us every day with the subtlety of paint bombs - splashy, messy, and occasionally painful - from government sources, think tanks, and the media:  Unemployment numbers, health care costs, mortgage default rates, gross domestic product, the trade deficit, the costs of war in Afghanistan.  But there is no authoritative voice on these issues, and no authoritative statistics - at least, nobody we can all agree is authoritative.  We can't even agree whether the most recent unemployment statistics showed 10.2% unemployment, or 17%, or somewhere in between.  

Who can tell us which statistics are meaningful, and what has value, and give us a common language to discuss these issues?  We need somebody outside of politics, untethered to media, unfettered by ties to a think tank (even a non-partisan think tank won't do).  We need someone we can trust to finally summarize the key issues in 64 succinct, statistically supported, thematically coherent pages - call it the People's Abstract.  We need Bill James.

Monday, November 16, 2009

No Child Left Behind in the Race to the Top (of the Market)

In case you missed it in the summer scrums over Justice Sotomayor and death panels, No Child Left Behind (NCLB, or Nickleby to Beltway insiders) has been left behind.  Now we have "Race to the Top".  The Administration made the official announcement this summer - in July - when most of us were paying absolutely no attention to anything educational.  After sputtering along under the radar for three months, the President has now taken Race to the Top out for a public spin, providing more details about the program's goals and funding. 

Race to the Top is certainly a more positive catchphrase than No Child Left Behind.  Unfortunately, it seems to be the same theory using different incentives - or perhaps even the same incentives, coyly repackaged, a reformulation that would make any drug maker proud. 

NCLB's perverse incentives have been well-covered.  But RTTT (should we call it RATT or Rat-a-Tat-Tat?) doesn't appear to be a marked improvement or even much of a change.  NCLB operated through funding mechanisms that withheld money from states and schools that failed to meet certain standards.  RTTT?  As Obama stated in his speech in Madison, Wisconsin, on November 4, the goal of the program is to foster educational excellence through a new accountability metric that reward states and schools that meet or exceed certain standards with additional funding. 

It seems as if the "punishment" theme of NCLB has been replaced by the "reward" theme of RTTT without a fundamental remake of the inner workings of these programs, which look remarkably similar - meet certain goals  measured by standardized student testing, or bye bye funding. 

For that reason, although it pains me to do so on principle, I agree with the Wall Street Journal's initial reservations about the program.  I do, however, I quarrel with WSJ's solution, which is (now here's a shocker) - Let the market decide (i.e., privatize).

It's unfortunate that disaster capitalism has infected our national debate about education, just as it has our national debates on health care, war, and energy.  Education is a national emergency, we hear.  To solve the emergency, we've thrown one controversial, ill-considered, underfunded program at it for nearly a decade.  That didn't work, so let's try another controversial, possibly ill-considered, and sure to be underfunded program at it.  One other thing in common:  Sponsors and proponents of both programs waxing poetic about the benefits that competition will bring to our educational system.

It's a complex issue, but why go complex when you can simplify the problem - even better, find someone to demonize.  The enemy of all this education reform, as we've been repeatedly told (and will continue to be told) are the teachers unions.  The Obama Administration has not (yet) marginalized the unions, which have had some success in communicating concerns about RTTT to the administration, but conservative pundits will ensure that the teachers and their unions will continue to be demonized.  

Those that will benefit from privatizing our school systems have at least one hand on the wheel in this debate and the other hand on the radio tuner, where the anti-union hymn of the republic plays on an endless loop.  The melody of this anti-union song has always been that the unions shelter bad teachers, what we've come to know as the "accountability" ditty.

But what I hear instead of the accountability ditty is something even simpler and more directly tied to the concept that some sort of market-driven model will cure our school ills. That motif?  We hear the motif in the background, whispered in our ears, or the foreground, shouted at us if we've made the mistake of lingering on Fox News - "We pay teachers too damn much money!"  Forests of paper and terabytes of computer power have been devoted to arguments about teacher pay over the past decade.

There is no debate that teachers working for private schools, including charter schools, generally make less - sometimes far less - than their unionized counterparts.  So, a foreseeable result of market-driven education means teachers working for less money - sometimes far less.  If you believe, as some apparently do, that more than a handful of today's experienced teachers are less than competent, then a foreseeable result of market-driven education is fewer teachers working for less money.  Paying fewer teachers less money to teach no less than the same number of students = a higher return on investment, if you are an investor in a large private educational consortium. Does it mean a higher return on investment if you are a parent and the quality of our children's education is the metric?  That's certainly the market pitch.

We want to get our money's worth, whether at Best Buy or Joe Smith Elementary.  But when we take our kids to school and talk to their teachers, are we really comfortable that this message now dominates the subtext of our conversation: 
Thanks for teaching our kids, but you cost too much.  And some of you suck.  Some of you don't suck - but in any event, you all cost too much.  We should be paying less for more.
You've heard of the Waldorf School, where "truth, beauty, and goodness" is one of its educational goals, and art and music form the basis for education? Well, welcome to The Walmart School, where "Save Money, Live Better" is your educational mantra each and every day.

Thursday, November 12, 2009

The Curious Case of Anita Alvarez and the Medill Innocence Project Students

The battle of wills between the Northwestern University's Medill School of Journalism and the Illinois State's Attorney's office rages on.  The State wants the school's Innocence Project materials produced in connection with its investigation of the potential innocence of Anthony McKinney, who has spent decades in prison for a crime he claims that he didn't commit.  The State wants all of the Project's materials, and the Project claims such materials are shielded by a reporter's privilege and First Amendment protections.   The State submitted a lengthy brief on the issue earlier this week.   

The State doesn't exactly come out and say that the Project has purposely fabricated evidence.  Rather, it claims that the Project may have internal incentives that make it more likely that the evidence submitted by the Project is less than credible.  Those alleged incentives?  Innocence evidence = higher grade.  Therefore, the State seeks the course's grading criteria, course syllabus and other academic materials, and the students' grades in order to investigate the students for possible "bias, motive, or interest" that would cast doubt on the Project's evidence.  The State's brief claims that the receiving of a grade in exchange for investigating and preparing evidence is akin to being paid for investigating and preparing evidence.  Therefore, the argument goes, if it's reasonable to know how much a witness was paid to testify - say, to be an expert witness - then it's reasonable not only to ask whether a student was graded but what grade the student received.

My gut reaction to this theory:  Rubbish.  The State's Attorney's office should be ashamed for pursuing this drivel of an argument against one of the nation's best schools of journalism.

But as long as we're here, let's explore the argument.

Say the Project is compelled to turn over this information.  Say the following is discovered about the particular investigation at issue and the Project in general:
  • Students A and B worked on the project and received an A
  • Students D and E worked on the project and received a B
  • Students A and B were the primary producers of exculpatory evidence
  • Students D and E produced markedly less exculpatory evidence
  • The course syllabus states that one of the goals of the course is to investigate and develop exculpatory evidence in appropriate cases (After all, it is called "The Innocence Project")
  • The grading criteria includes a statement that, among other things, each student will be assessed in several areas including the scope and quality of the evidence produced by the student's investigation
If these facts turned out to be true, the State would argue:

See, the production of exculpatory evidence can be tied to better grades in the class.  Ergo, the exculpatory evidence at issue must be discounted and may very well have been fabricated in order to obtain such better grades.

Of course, the State would be arguing correlation, not cause-effect.  An alternative explanation?  Students A and B received better grades because they showed more skill and resourcefulness than Students C and D.   Students A and B were better investigators - better researchers, better interviewers, better synthesizers of the evidence uncovered - than Students C and D.  The result?  Students A and B produced more exculpatory evidence than C and D.

But so what?  This whole "bias" argument is a canard, and the State knows it.  Of course the students are biased - they are working on The Innocence Project, not The Guilty Project.  (The Guilty Project is the province of the State's Attorney. 

I may be giving the State's Attorney's office too much credit, but I think that it knows that it may get some of the other investigative materials but its attempt to get the grade-related material will fail.  But this only raises the level of stink.  It means that the attempt to look behind the academic curtain is solely intended to harass.  It's the State's shot across the bow. 

It doesn't even matter if the State's theory, that the students had an structural incentive to fudge evidence, is true, as Chicago Reader columnist Michael Miner has pointed out.  If the State can show that, in this case, some of the newly-generated exculpatory evidence is less than compelling or, for that matter, doubtful, then attack the evidence. The State can do this without flipping the students around, throwing them up against the wall, frisking them - that is, without publically humiliating them.  In fact, the State argues in its brief that it has already conducted lengthy investigations into some of the new evidence and has found some of it wanting.  This is a tacit admission, in my mind, that it doesn't need to look behind the academic curtain to challenge the evidence - but it wants to, nevertheless.  The State, being the State, sometimes has to remind us that it has police powers.  It can't help itself.  

However this turns out, two things I'm sure of:  The State's Attorney's office is making life-long enemies of the hard-working students and professors at a local, and preeminent, school of journalism - not a wise move.  And, the Medill/Alvarez stand off will find itself morphed into a Law & Order episode sometime soon.

Wednesday, November 11, 2009

Bad Newz: Who Knew that Michael Vick Might Singlehandedly Cause the NFL to Shut Down in 2011?

Often lost in the Michael Vick saga -- dogs, Eagles, PETA, financial ruin and personal redemption -- is the story of the collateral impact of his situation on pending collective bargaining negotiations between the the National Football League and the NFL players' union.

As some of you may recall, Vick filed bankruptcy under chapter 11 of the Bankruptcy Code, the chapter usually used by businesses to reorganize or, in some cases, attempt an orderly liquidation. This past August, his personal plan of reorganization was confirmed. An open issue when his plan was confirmed was the fate of $20 million in signing bonuses that his former team, the Atlanta Falcons, sought to recover.

Yesterday, the 8th Circuit Court of Appeals confirmed a lower court ruling that Vick could keep $16.25 million.  [See Michael Vick Wins Appeals Court Ruling On $16 Million Bonus | NPR and 8th Circuit Opinion]  This makes Vick's creditors happy, the Atlanta Falcons not so happy, and the NFL dreadfully unhappy.

The pro-Vick ruling may prove to be a major sticking point in upcoming collective bargaining discussions between the NFL owners and NFL Players Association.  [See Vick win is another issue for owners | National Football Post]  Long before the Vick ruling, the negotiations were expected to be tense:   In May 2008, the NFL opted out early from the current collective bargaining agreement [see NFL Owners Opt out of CBA], leaving 2010 as the last assured season.   2011 could be a strike year - 1982 all over again.

For Vick, attempting to rehab a career; for the players (not paid for not playing); and for fans - that's Bad Newz all around.