GOOD BUSINESS

August 2011
by Jesse Finfrock

California is poised to lead the nation in putting social and environmental good on an equal footing with a business’s profits. Two bills wending their way through Sacramento this summer would allow companies to become a benefit corporation (AB 361) or a flexible purpose corporation (SB 201), fundamentally changing California’s Corporations Code.

Currently if a company wants to undertake a mission other than earning profits, it faces substantial limitations, some say, especially during a merger or acquisition. To get around this, directors rely on the so-called business judgment rule, which permits them to do what they believe is best for shareholders’ long-term interest even at the expense of short-term profits. Yet when a company decides to sell, directors are obligated to take reasonable steps to maximize shareholders’ investment and accept the highest offer, which could put a company’s social benefits practices at risk.

But a new generation of consumers, entrepreneurs, and investors are demanding change. Nationwide, they are pushing legislation that allows for-profit businesses to formally incorporate social and environmental responsibility into their missions. Bills similar to California’s AB 361, have already been passed in Hawaii, Maryland, New Jersey, Vermont, and Virginia, and introduced in five additional states.

The benefit and flexible purpose corporation bills share some basic components, such as ensuring the dissenting rights of shareholders and protecting directors from liability. This has spawned a debate over whether the bills would compliment or compete with each other. “Each of the bills responds to a totally different need,” argues Jonathan S. Storper, a partner at Hanson Bridgett and a drafter of AB 361.

The bill requires a benefit corporation to meet independent, third-party standards of social and environmental responsibility and transparency; a company could lose its benefit corporation status if the requirements are not satisfied. But according to Susan Mac Cormac, cochair of Morrison & Foerster’s Business Department, SB 201 requires a flexible purpose corporation to detail its social purpose and provide shareholders with a progress report (permissibly its own). “There is nothing companies can do through AB 361 that they cannot do through SB 201,” Mac Cormac says.

“There may be issues with each of the bills, and they will be sorted out in the courts over time,” says professor Eric Talley at UC Berkeley School of Law. “We cannot know what forms do and do not work unless we try them.”

In Kono, the diamond-rich and war-ravaged district along the country’s eastern boarder, mining is a way of life for many people. During the dry season, when it is possible to dig down to the diamond-laden gravel, many young men head to the diamond fields. Some strike out on their own while others are hired by mining companies as short-term laborers, often for less than a dollar a day. With little alternative employment opportunities, most men don’t have a choice but to work in the mines for part of their lives, and many are forced to give up school to do so.

At this critical moment, it is imperative that Sierra Leone attracts the right kind of investors and NGO partners; along with diamonds and gold, the country recently made public discoveries of large deposits of iron and oil. Fortunately Saloneans, all of whom have been affected by the war, are strongly motivated to break free from the resource curse and craft their future to ensure that the value of their precious resources remains within their country and communities.

In May 2011, The Clarity Project, a member of Fair Jewelry Action, joined local miners and officials from Sierra Leone’s Ministry of Minerals to visit diamond and gold mining operations throughout the Kono District. The following photographs, taken during this trip, show artisanal, small-scale, and large-scale diamond mining techniques, conditions, and environmental consequences.

The Clarity Project works directly with miners and their communities to build a more fair and responsible alternative to the conventional diamond industry. We sell high-quality jewelry with only the fairest diamonds and invest all of our profits to build schools and rehabilitate land in mining communities. To learn more, please visit our website (www.clarityproject.com), or view more photos and get engaged at our Facebook page (http://www.facebook.com/TheClarityProject).

[Fair Jewelry Action members are invited to use these photos for their work with proper citation ("Photo by The Clarity Project"). Non-FJA members that would like to use a photo should first contact us to receive permission.]

1. The smell of burning trash can be nostalgic.

2. Goat kebab isn’t all bad.

3. There is no limit to how many times you can replay a hit song.

4. It can always rain harder.

5. Soccer, er football, is not a game.

6. Guys can hold hands too.

7. Rambo Stalone is cool; Nigerian Lion King is painful.

8. Ayn Rand is full of shit.

9. Always shake the hand of the man with the machine gun.

10. It’s probably easier to carry it on your head.

11. Obama matters.

12. Shoes and pants, or being white, indicates your status.

13. Shave it off, because hairdos are for women and celebrities.

14. You can’t always trust your textbook.

15. Everyone has a rash somewhere.

16. There is never too much Autotune.

17. When in doubt, laugh.

18. No one should care about breasts.

19. Dance it off.

20. Hope truly springs eternal — small; small.

Now consider what we’re seeing in the Middle East. Whatever the ultimate outcome of events in the Arab world, the speed with which large numbers of people have responded to events far away is remarkable. Just as audiocassettes of the Ayatollah Khomeini’s sermons served as a medium of transmission in Iran’s Islamic revolution in 1979, here a combination of modern mass media (Al Jazeera, the Internet, email, Twitter, etc.) has clearly played a major role in driving the pace of events.

In Iran’s revolution, media technology clearly played a critical role in Khomeini’s success. While the Shah controlled the state-run mass media (which eventually went on strike), Khomeini’s sermons were distributed through smuggled cassettes and pamphlets and broadcast over mosque loudspeakers. His speeches were transformed into slogans, idioms, and popular sayings that then appeared on posters, graffiti, murals, and even bubble gum wrappers.

Yet the key to understanding how Khomeini, through “small” media, was able to mobilize millions of Iranians is the recognition that Iran’s revolution was not just a political event; it was the reawakening of the Shi’a faith as a solution to the world’s problems—the process of Iranians reclaiming a religious identity and a place in history. By uniting Shi’ism and Iranian nationalism, Khomeini tapped into deep wells in the Iranian psyche thereby reigniting the mythology of martyrdom, stirring millenarian tendencies, and fueling the feeling of resistance and change.

In Egypt today, the importance of subversively democratic and social (“small”) media technologies in fueling revolution is manifest. However, the outcome of Egypt’s uprising hinges on an even more fundamental question: What is the nature of Egyptians’ sense of identity and destiny?

That was nice to rediscover, from Heather Rogers’s 2010 investigative book Green Gone Wrong: How Our Economy Is Undermining the Environmental Revolution.

Which reminded me of another public commendation:

But this month, Jesse Finfrock offers us a compelling counterpoint to all of that grim job-market news (“Finding Their Way”) by letting his hopeful subjects speak for themselves. Two are recent law school graduates; another is still in school.

Life isn’t a cakewalk for these aspiring lawyers; they are, after all, facing both job uncertainty and massive debt. But after talking with these people for a while, Finfrock came away not only impressed but also reassured, since he himself plans to attend law school next year.

Where did Finfrock, 28, get such a crazy idea? I’m afraid I’m at least partly to blame. Last year, I hired him as a research editor for this magazine. A few months later he sat in on one of our editorial advisory board meetings, with the likes of California Supreme Court Chief Justice Ronald M. George and Santa Clara University law professor Gerald F. Uelmen, as we brainstormed about article ideas. Finfrock also struck up a correspondence with Anthony Romero, the national executive director of the American Civil Liberties Union, after fact-checking our April profile of him. And in July, Finfrock literally had a front-row seat at the federal trial that overturned Proposition 8, California’s voter-approved ballot initiative banning same-sex marriages. “These were pretty inspiring experiences,” he reflects. “And they pushed me over the edge in terms of what I wanted to do with the rest of my life.”

If all goes according to plan, Finfrock will be out of law school sometime in 2014, at which point he’ll be looking for a job. Note to prospective employers: This guy’s a keeper.

This is straight (no added emphasis) from the Editor’s Note in November’s California Lawyer magazine.*

*Which is the Daily Journal Corporation, which is Munger, Tolles & Olson LLP, which appears to have rebranded itself as MTO, which reminds me that MoFo is a pretty edgy moniker for a law firm…

At the time, I was a researcher for a small nonprofit in South India called Touchwood, and I was living and working in remote indigenous communities in the Mudumalai region of Tamil Nadu. This photo was taken in the Village of Semmanatham. To view photos from our census work in the village, see this photo essay I published in Mother Jones.

According to [Ted] Boutrous, by April the legal team had examined the issues from all angles and concluded it could win a majority ruling at the U.S. Supreme Court. “I think there’s a degree of stereotyping that goes on concerning the justices,” Boutrous says. “Everyone thinks they know exactly how they’re going to vote, based on who appointed them. We reject that kind of rigid analysis.

The litigation sponsors decided to proceed if they could get the necessary elements in place—including enough money to support the case all the way to the U.S. Supreme Court.

Boutrous describes Gibson Dunn’s fee arrangement with AFER as a “hybrid.” “We agreed to make a pro bono contribution of the first $100,000 of our services and then flat fees for the various phases, to be augmented and adjusted in our collective discretion,” he said.

Millions of dollars in fees and expenses would be required. To raise it, [Chad] Griffin gathered people from the business and entertainment industry for a series of private meetings in Los Angeles and New York. [Ted] Olson attended nearly every fundraiser, and Boutrous all the Los Angeles events. The foundation met its goals, though Griffin won’t identify the donors, saying he’ll reveal them only when the Prop. 8 proponents disclose their supporters. [Emphasis added.]

Ted Olson may well go down in history as one of our greatest attorneys.

The article begins:

Challenging Prop. 8: The Hidden Story

How Hollywood activists seized control of the fight for gay marriage

It was nearly 3:25 P.M. on May 22, 2009—the Friday before Memorial Day weekend—when Enrique Monagas approached the counter at the court clerk’s office in San Francisco’s Federal Building to file a complaint. Although Monagas tried to appear nonchalant, his heart was pounding.

The Gibson, Dunn & Crutcher associate had been told by his firm that secrecy was absolutely critical. Monagas hadn’t revealed to anyone—not even his secretary or family—anything about the case. Secrecy was the reason he was filing in person rather than using Gibson Dunn’s regular service. His instructions were to wait until the last possible moment, and the deadline for presenting new matters was 3:30 p.m. Dressed in his usual casual Friday clothes, Monagas nervously handed over the short stack of papers.

“This must be an important filing,” the clerk said.

“I haven’t even read it,” Monagas quickly replied.

After all the copies were stamped, the clerk entered the filing information into the computer, which assigned a case number and randomly selected a judge. Monagas saw the initials “VRW” and realized that the case—Perry v. Schwarzenegger, 09-2292—had been assigned to Chief U.S. District Judge Vaughn R. Walker. Monagas walked out of the building hoping that no reporter would pick up the story over the long weekend. No one did.

For months, the people backing the Perry suit had worked in the shadows. They wanted the complaint to be the challenge to the constitutionality of Proposition 8, the November 2008 statewide ballot initiative that declared, “Only marriage between a man and a woman is valid or recognized in California.” (Cal. Const., Art. I, § 7.5.) That measure effectively repealed the right of same-sex couples to marry, which California’s Supreme Court had recognized under the state constitution’s privacy clause in June 2008 (In re Marriage Cases, 43 Cal. 4th 757 (2008)).

“We didn’t want there to be an explosion of lawsuits around the country,” says Theodore Boutrous Jr., a partner in Gibson Dunn’s Los Angeles and Washington, D.C., offices who helped draft the complaint. The litigation group was mindful, however, that many lesbian, gay, bisexual, and transgender (LGBT) advocacy groups were pursuing a different strategy to legalize same-sex marriage, taking a state-by-state approach and avoiding a federal challenge. “We did not want to have a big debate about what we felt was the right strategy,” Boutrous explains. “We did not want that debate to break out before we launched our suit.”

Anticipating an adverse ruling by the state Supreme Court in a case challenging the validity of Prop. 8, the Gibson Dunn team had planned to file its complaint just before the scheduled announcement of the court’s decision on May 26, and to reveal its star litigators—former U.S. Solicitor General Theodore Olson and celebrated trial lawyer Davis Boies—at a press conference the following day.

The plan worked perfectly. On May 26 the court upheld Prop. 8, though it declared valid the 18,000 same-sex marriages performed from June to November 2008 (Strauss v. Horton, 46 Cal. 4th 364 (2009)). The next day, leaders of a freshly minted organization called the American Foundation for Equal Rights (AFER) stood before the national press at a hotel in downtown Los Angeles to announce its lawsuit and reveal that Olson and Boies—opposing counsel before the U.S. Supreme Court in Bush v. Gore—would be leading the trial team. “We’re taking this fight to the federal courts in order to protect the equal rights guaranteed to every American by the United States Constitution,” declared Chad Griffin, AFER’s board president.

The announcement produced the national headlines AFER had hoped to generate. But it caught many LGBT advocacy groups by surprise. “It was a very high-stakes move,” said attorney Kate Kendell, executive director of the San Francisco–based National Center for Lesbian Rights (NCLR). Kendell’s group had worked closely with the American Civil Liberties Union and the Los Angeles office of Lambda Legal, the nation’s oldest and largest LGBT legal organization, in litigating both In re Marriage Cases and Strauss. “This federal case has the potential to be a total game changer,” she added. “But it also has the potential to have devastating consequences. You hope that it will be the former.”

Nan Hunter, founder of the ACLU’s LGBT Project, shared Kendell’s concerns. She called the lawsuit “reckless” because “there is a significant chance of failure if the case reaches the U.S. Supreme Court.” Hunter, now a professor at Georgetown University Law Center in Washington, D.C., also noted that LGBT legal groups had been following a “very careful and deliberate, collaborative” strategy for many years, only to have it “thrown off by an organization with a small number of people who are wealthy enough to pay for a major litigation effort.”

Of course, advocating social change is as much a political issue as a legal one. So it’s not surprising that measures to advance gay civil rights in the courts, in state legislatures, or at the ballot box can provoke strong disagreements. But in this case, the moving party operated with an astonishing degree of independence from the LGBT groups that had litigated the issues for decades.

The dozens of individuals interviewed for this story share a belief that Prop. 8 is discriminatory, that it violates the U.S. Constitution, and that same-sex couples should have the right to wed. They have publicly united in support of the federal suit. But after some tense weeks of discord, they remain divided about the suit’s wisdom and timing.

This is the story behind the filing of Perry v. Schwarzenegger.

Continue Reading at California Lawyer

Finding Their Way: Young attorneys discover new skills to help them land work after law school

November 2010
By Jesse Finfrock

How are young lawyers finding work in this brave new job market?

That’s the question I set out to answer as I interviewed law students and new lawyers who hope to make it in the legal field. But I was hardly a disinterested observer; I was also deciding whether I should apply to law school myself.

Is a law degree worth the mountain of debt? If I won’t be able to find a decent job, why should I spend all that money and time on law school? Over dozens of conversations, a few lawyers urged me to think twice, pointing out the glut of labor in the industry. Certainly other professions must offer a better deal.

Yet there is cause for hope. Creative and adaptable young attorneys are redefining success, reevaluating their expectations, and adjusting how they interact with the legal world. By modifying their time frames and leveraging idiosyncratic work experience, tenacious young attorneys are bucking conventional wisdom and even uncovering new potential for their field.

If I sound inspired, it’s because I am. Here, edited from their own words but without their names, are the stories of three different people making the transition from law school to a legal career. -JF

UC Hastings College of the Law, 2009
Age 31; San Francisco

When I first tell people the area that I practice in, they usually get this sort of bedazzled look.

“Medical cannabis?” they ask, intrigued by my seemingly sexy, rebellious career choice. And then I watch their eyes glaze over as I launch into my latest thriller about land use compliance, the city health code, or state taxes.

The truth is that the vast majority of my practice involves unremarkable drudgery. I do permitting, compliance, and consulting work for medical cannabis cultivators and dispensaries in California. And believe me, that much paperwork is really not sexy. I joke with people that it would be easier to open a nuclear reactor here than it is to open a dispensary, but medical cannabis dispensaries are probably one of the most regulated businesses in San Francisco.

Which is where I come in.

Before law school I worked in City Hall for the president of the Board of Supervisors, and I continued to do so through graduation. I was mostly responsible for drafting planning and zoning legislation, and in 2005 I helped write the first land use regulations for medical cannabis anywhere in the country.

I was in my second year of law school when I started doing advocacy work around medical cannabis issues in San Francisco and began assisting patients, dispensaries, and cultivators with permits, just helping them understand the process. I kind of fell into it.

I have about $70,000 dollars [in student debt] to pay back, so I got my bar license, and I stumbled across a client who had heard about my work history. And I stumbled across another client. Seemingly overnight, I was running a business.

Becoming a medical cannabis attorney wasn’t initially my plan, but the more I started thinking about it, the more I understood that it was an amazing opportunity. Also, despite the detractors, there are really a lot of legitimately ill people who benefit from using medical cannabis and need and deserve legal representation.

This area of the law does require caution though. I’m working with clients who follow state law but whose business involves violating federal law, and I’m an attorney licensed by the state of California with certain duties and responsibilities. I obviously never advise any client to violate any laws, only how to comply with state and local laws. However, I spend a decent amount of time just to understand what my own liabilities are. My malpractice insurance ain’t cheap.

But I’m lucky. I’ve built myself a pretty policy-intensive and interesting little practice. It probably helps that I’m allergic to marijuana; I think it’s an oil in the plant that makes me severely congested. This gives me a little credibility when I talk with policymakers.

I probably have to turn down a couple new clients a month because I don’t have time to find another lawyer to help me. I split my time between doing direct client legal work here in San Francisco and policy consulting for organizations, cities, and states that takes me all across the country. It’s exciting. I’m lucky to be busy doing something I enjoy.

New York University School of Law, 2009
Age 29; Los Angeles

I work at a nonprofit legal aid organization here in California, where I grew up. It is an incredible experience, but this wasn’t what I’d planned on doing after graduation; I expected to start working at a big firm.

I did everything I was supposed to do: I did well in college and law school and summered at a top firm. When I was interviewing with firms in 2008, I was a wanted entity. They were coming to me, and I was pretty much in the driver’s seat. Everyone that I know at NYU got multiple offers from great firms. According to plan, I would be working in the firm’s complex litigation group in New York after I passed the bar.

What happened next came as a big surprise. In the spring of 2009, right before graduation, my firm announced mandatory deferrals for everyone, and suddenly it became clear that I really didn’t have the element of control I thought I had.

My class of summer associates at the firm consisted of about a hundred people. I think everyone got an offer to start in the fall after graduation. But with the deferrals, our start date was pushed pack to January 2010. We each received a check for $15,000 for our living expenses until then.

There was also an option to take a longer deferral and begin a year later, in January 2011. And I had another choice: The firm offered to pay deferred associates $60,000 to do whatever we wanted for a year-travel, anything-or they would pay us $75,000 to spend that year doing public interest legal work. The deferral program would allow some nonprofit organization to hire an extra attorney (me) at a time when it wouldn’t otherwise have the resources to do so.

I saw the latter as a good opportunity to gain experience and new skills. If I started at the firm in January 2010, there was a risk I would be laid off a few months later if the economy further declined.

Not to dwell on it, but I have debt from college and law school amounting to more than $250,000. That’s no joke. So I opted for the public service deferral, got a single $75,000 check in the mail (the firm also covers my health insurance), and started working here in California. I mostly do labor law for the organization, but we also do work in consumer fraud, government benefits, and fair housing. I enjoy the work; it’s a small organization, so I’m able to take on a lot of responsibility.

I know people who took the $60,000 check and just traveled for a year. That sounds great, but they must have a completely different way of looking at this. Or maybe they don’t have any debt. I don’t know. I just can’t get into that mind-set while my dreams are deferred.

UC Hastings College of the Law, Class of 2011
Age 27; San Francisco

The first time I visited a prisoner on San Quentin’s death row in 2009, I was a second-year law student and intern with a legal nonprofit organization. San Quentin is a haunting place, an eerie and gothic fortress built in the most picturesque, bayside location. Marin County isn’t exactly known for its prisons.

As I passed through various iron-gated checkpoints, I was in denial that I had ever wanted to be a law enforcement agent. But in fact, I had wanted to be in law enforcement when I was a teenager. Childishly, I imagined myself growing up to become an FBI agent like Clarice Starling, catching serial killers in The Silence of the Lambs. I even did my high school senior exhibition on serial killers and psychopaths. My about-face from enforcer to defender is pretty simple: After college, I was hired as a paralegal at a public defender’s office.

Compared to the noise and chaos of county jail, the visitors’ area of San Quentin is quiet. Visitors walk into a sterile hallway lined with holding cells. At the far end of the hall against the wall sits a microwave. Visitors buy the inmates lunch from vending machines that sell everything from burritos to avocados, heat up their food in the microwave, and sit and talk with them as they eat.

Such real-world work experiences have shaped my professional ambitions. I’m fascinated by the “why” behind criminality?not just with respect to the unique influences of individual biology and brain chemistry but more specifically the broad social factors and institutional failures that convicted clients experienced in their personal lives. For example, when a medicated client informs you with a scared look that he has no memory of committing a brutal crime, you face a challenge that is both legal and psychological.

Why did this individual who’s been living a normal life for 30 years suddenly wake up one morning and attack two dozen people? What causes someone to resort to drug use? Given the right conditions and triggers, do we all have the capacity to “break”? These are fundamental questions, and there are no easy answers, often just more questions.

So my dream job is to become an attorney at a public defender’s office, admittedly a tall order in the current economy; those positions are extremely competitive. Once I pass the bar, I’ll volunteer in a PD office. (Thanks to my family, I’ll be graduating with zero debt.) Not so long ago I was riding my bike around, dropping off résumés by hand, and I’ll do it again if need be.

Jesse Finfrock is a writer, social entrepreneur, and law school applicant; he lives in San Francisco.

The whole piece is worth reading, but I wanted to dwell on the aside about fact-checking simply because this is something people periodically get a bit confused about. The genius and the horror of something like D’Souza’s argument is that it’s perfectly possible to put together something utterly loopy that makes no factual errors whatsoever. Indeed, in some ways punctiliousness about the facts is the signature of the conspiracy theorist. Glenn Beck’s TV show is, in its way, the most fact-filled program on cable. It’s just that you can string together a lot of data points in a nutty way if you want to.

This is not a bad point altogether. However I will push back a bit. Having worked as a fact-checker for several years, both at an investigative journalism magazine and a legal publication, I offer that the mandate of the fact-checker encompasses quite a bit more than Matt suggests.

The role of the fact-checker is not only to confirm that the hard facts in a story are accurate. It is also to ensure that the arguments are logically reasonable — that the conclusions follow from the premises and evidence presented, that there is not critical evidence omitted that would call into question the premises or conclusions, and that any assumptions (if made at all) are realistic and practicable.

By this measure, neither Beck’s nor D’Souza’s work passes muster.