Minimum Competence - Daily Legal News Podcast
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Fri 10/27 - Big Law Bonuses, CA Crypto Regulation, Clarence Thomas Ethics, ABA Micromanages Law Schools and Judge Newman Fights Back

Fri 10/27 - Big Law Bonuses, CA Crypto Regulation, Clarence Thomas Ethics, ABA Micromanages Law Schools and Judge Newman Fights Back

Big Law bonuses hold steady, a CA bill to regulate crypto freaks out the cryptofolks, more Clarence Thomas ethical issues, the ABA micromanages law schools and nation's oldest judge fights suspension.

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This day in legal history, October 27, 1787, marks the first publication of the Federalist Papers, an event that significantly influenced the ratification of the United States Constitution. Written by Alexander Hamilton, John Jay, and James Madison under the collective pseudonym "PUBLIUS," these essays were intended to sway public opinion in favor of adopting the new Constitution, which had been drafted in Philadelphia earlier that year. The first paper, penned by Alexander Hamilton, was published in a New York newspaper and argued that the proposed system would safeguard against factionalism, a problem that had plagued the country under the Articles of Confederation.

The Federalist Papers consist of 85 essays, each dissecting different elements of the Constitution and the broader governmental system it sought to create. From the division of powers among the three branches of government to the mechanisms of checks and balances, the papers provide a comprehensive rationale for the Constitution's architecture. John Jay wrote only a few of the essays due to illness, while Hamilton and Madison carried the bulk of the work. Interestingly, these papers were aimed specifically at the state of New York, as it was a critical swing state for the Constitution’s ratification.

As an intellectual cornerstone, the Federalist Papers are not just historical artifacts but continue to be cited in legal opinions, scholarly works, and constitutional debates to this day. The trio’s incisive arguments succeeded in their immediate goal; New York ratified the Constitution on July 26, 1788. However, the enduring legacy of the Federalist Papers stretches far beyond that, serving as an indispensable guide to understanding the intentions of the Framers and the intricate framework of American governance.

This year's annual bonus season for Big Law firms is anticipated to be relatively uneventful in terms of changes to the bonus scale. Top firms are expected to maintain the existing bonus structure, offering up to $115,000 for the most senior associates, even as the industry faces a slowdown in corporate work and some firms have reduced staff. While firms that have laid off associates or faced declining profits are expected to offer market-rate bonuses to signal a return to full strength, eligibility criteria are likely to be stricter. Firms are expected to increase the billable hour requirements for bonuses and may also consider office attendance as a factor.

Joshua Holt, a former Goodwin Procter lawyer, suggests that the strict criteria allow firms to claim they offer market rates, even if few associates actually qualify for bonuses. Quinn Emanuel has broken the mold by announcing special bonuses based on seniority and billable hours, but this move is not expected to set a trend. According to industry data, lateral associate hiring has also declined by nearly one-third, reducing expectations for additional bonuses.

The widening gap between the most profitable firms and the rest raises questions about whether some firms will cease trying to match industry-leading compensation packages. Moreover, firms like Davis Polk & Wardwell, Sidley Austin, and Simpson Thacher & Bartlett have announced they might cut bonuses for associates not meeting office attendance targets, prompting discussions on the fairness of such criteria.

Big Law Bonuses Holding Steady But Now Come With More Strings

California has passed a bill (A.B. 39) to license the cryptocurrency industry, making it the second major U.S. state after New York to regulate the sector. While the comprehensive regulations will not come into effect until July 2025, the bill outlines various requirements for applicants and gives the state Department of Financial Protection and Innovation discretion over who should be regulated. Governor Gavin Newsom, who signed the bill, indicated that the licensing framework may still require further clarity and potential cleanup legislation. Industry groups are now focusing their attention on the department, which will write the rules for licensing and enforcement.

The bill also includes a provision that allows the department to grant exemptions from the licensing requirements if deemed "in the public interest." This has led industry groups like the Crypto Council for Innovation to lobby for broader exemptions, especially for startups and smaller companies. Joe Ciccolo, a board member of the Digital Currency Traders Alliance, said that the department could handle exemptions in various ways, including categorizing activities into different risk classes or regulating on a case-by-case basis.

Concerns have been raised about the logistical challenges of implementing the new licensing system. Industry representatives are wary of a slow rollout similar to New York's and are calling for a public plan detailing how the department will manage the expected influx of applications. Despite these challenges, there's optimism about the law's future, as California officials have reportedly been in communication with counterparts in New York, and the state has shown willingness to listen to industry perspectives.

Crypto Industry Girds Itself for California’s New Licensing Law

New findings suggest that U.S. Supreme Court Justice Clarence Thomas failed to fully repay a significant portion of a $267,230 loan he received in 1999 from wealthy friend Anthony Welters. Senate Democrats have intensified their criticism of the Supreme Court for not having a binding code of conduct in light of this information. The loan was reportedly forgiven in 2008, but Thomas did not disclose the "forgiven debt" on his 2008 financial disclosure forms, raising ethical and legal questions. Senate Finance Committee Chair Ron Wyden has asked Thomas to clarify how much debt was forgiven and whether it was reported on his tax returns.

In response, Thomas's attorney stated that the loan was never forgiven and that all payments were made until the agreement's terms were satisfied. The case adds to previous criticisms of Thomas for failing to disclose luxury trips and real estate transactions. Unlike other federal judges, Supreme Court justices are not subject to a binding code of ethics, although they do have certain financial disclosure obligations. Legal ethics experts have noted that the failure to disclose the loan is more significant than past omissions, highlighting the absence of a binding ethics code for Supreme Court justices. The Senate Judiciary Committee has approved a Democratic-backed bill to mandate such a code, but it faces stiff Republican opposition.

Clarence Thomas loan report spurs new ethics criticism of US Supreme Court | Reuters

Legal academics are expressing concern over a proposal by the American Bar Association (ABA) to standardize what law students should learn and how they are assessed. The ABA suggests that law schools should adopt and publish specific learning objectives for each class to help schools better understand their educational goals. However, numerous law professors and deans argue that the ABA is overreaching its authority and micromanaging how law is taught. They worry that the proposal could stifle the freedom faculty members have to teach courses based on their own expertise and approaches.

Law deans from prestigious institutions like Columbia, UC Berkeley, Vanderbilt, and Georgetown have jointly written that the proposal could constrain faculty members and deprive students of a diverse learning experience. The ABA’s managing director of accreditation and legal education, William Adams, explained that the proposed changes aim to provide clearer guidance to schools, as existing standards were criticized for being "too general."

The proposal also includes a requirement for all first-year classes to have at least one early assessment and mandates academic support for students who don’t perform satisfactorily. Some critics say this proposal could dismantle the successful system of student learning outcomes that the ABA introduced in 2015, which allows schools to set their own objectives and evaluate student progress accordingly.

The new proposal extends to individual classes as well, demanding a set of skills and knowledge that students should acquire from each course. Some commenters worry that this could create additional bureaucratic burdens for schools, particularly as the proposal offers no specifics on how these outcomes should be measured. The ABA's legal education council is expected to consider the proposal in its February meeting.

Law professors say ABA is 'micromanaging' with proposal to make courses more uniform | Reuters

Judge Pauline Newman, the oldest federal judge with active status at 96, is fighting for reinstatement after her colleagues on the US Court of Appeals for the Federal Circuit suspended her. The suspension followed an investigation into her mental fitness and her refusal to undergo a full neurological workup. Newman has sued several of her fellow judges and the court's Judicial Council, which voted unanimously to suspend her for at least a year. In a recent filing, Newman argues that the US District Court for the District of Columbia should grant an injunction to restore her to the bench immediately.

The Judicial Council contends that the district court lacks the authority to review its disciplinary actions. Newman fired back, stating that a judicial council should not operate without constraints or review mechanisms, as that would be an exercise of "arbitrary power" not tolerated by the Constitution. Newman is also challenging the council's dual suspensions against her; one for a case backlog and another for her refusal to cooperate with the mental fitness investigation.

Newman argues that the council was not acting as a court but in an administrative role when they suspended her, which means their actions should be reviewed by a district court, not the Supreme Court. She accused Chief Judge Kimberly A. Moore of pre-judging her case, arguing that her colleagues merely adopted formal procedures afterwards.

Mediation between Newman and the council has reached a deadlock, and both parties are now disputing a confidentiality agreement they signed before the mediation session. Newman also plans to challenge the council’s order at the US Judicial Conference’s Committee on Judicial Conduct and Disability. The case represents a significant clash over the extent to which judicial councils can exercise authority over individual judges.

Nation’s Oldest Judge Claps Back as She Seeks Reinstatement (1)

Minimum Competence - Daily Legal News Podcast
Minimum Competence
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