The Chronicles of a Capitalist Lawyer

Here is a rather gloomy article on the future of lawyering. I would say that while some US and UK law firms might face serious problems, the same thing is not happening in Indonesia, or rather, not happening yet. Will it someday happen? Might be, but I doubt that it will be soon.

The main issues raised in this article are among others: globalization (i.e. legal outsourcing), super expensive bills, and technology innovation that might reduce lawyers' administrative work. Compared to Indonesia, all of these issues are not relevant.

There is no incentive in Indonesia to do a legal outsourcing, especially to India, simply because the costs might be very similar. Expensive bills might be a case, but for most of foreign and local clients, Indonesian firm bills are still cheaper compared to international law firms (in terms of sophisticated projects) and surely Indonesian firms have a better understanding about Indonesian law in any case. Technological innovation? Yes it will help lawyer's job. But can it replace the lawyers? I really doubt it. It would be foolish to think that technology will replace lawyers completely or reduce their existence significantly in the future.

In my opinion, the legal market in Indonesia is strong. There are still a lot of works to do and there are also many types of clients and law firms. In this case, specialization is very important, either you want to focus on administrative tasks or chase the bigger fish and work on sophisticated transactions. In fact, even simple transactions need the expertise of lawyers. I've seen too many examples of poorly drafted contracts which will open an endless debate between the parties whenever their relationship goes sour, and yet, the transactions are not even that complicated.

One thing to remember though, while Indonesian lawyers might enjoy the current strong legal market, we should always remember that business always evolves. In the end the practice of lawyers will need to go with the applicable market practice and law firms must always be ready for such changes. As the law has evolved for thousands of years, lawyers should also do the same. That's why it is important to build an institution, a firm that will live on even when all of its founding partners have died or left the firm, a firm that can produce the next generation that will maintain the stability of the firm, generate new clients and income, and adapt to the ever changing world. Can Indonesian lawyers do this? Time will tell.

A very good source on various articles on Tort Law. I am still confused though, should we elaborate Tort Law based on the concept of justice or this is simply about pure economic matters? Hopefully you can find the answer in the articles listed there. Happy reading.

Here is an interesting article on coordination among government officials. Apparently, the United States faces the same problem with Indonesia, a lack of coordination between officials. I guess this is the problem when we have too many regulators. Some classical legal scholars argue that there are 3 pillars of a government: (i) the legislative (the house of representatives), (ii) the executive (the president), and (iii) the judicial authority (the court). However in this modern world, we need to add another pillar of government, the quasi-regulator a.k.a government agencies. Some examples in Indonesia: the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) and the Investment Coordinating Board (BKPM). Not to mention that specific ministries also have authorities to issue technical implementing regulations. The Ministry of Communication and Informatics could be a good example as this ministry governs many important sectors such as broadcasting and telecommunication.

From my experience, there is definitely a lack of coordination among government officials. To be honest, I don't understand why these guys don't meet and start to seriously work together in formulating clear and consistent policies, especially for sectors with high economic impacts. For ministries, this should be coordinated by the Coordinating Minister and supervised by the President, but I guess, that's still a dream in Indonesia.

By the way, the last time I joined a coordination meeting among different ministries for issuing a simple government regulation, it was a mess. Some officials only talk about the old precedent and don't want to make changes (which are actually necessary) simply because they need to discuss it again with their respective ministries. No coordination, no decision maker, and to add the problem, they don't want to listen to suggestions if those are not covered in their manual. Sometimes I wonder, with this kind of government officials, do we actually need a government to survive?

A couple of days ago I found this interesting article in Cafe Salemba. Their basic idea is that competition among law enforcers in fighting corruption, i.e. the Commission of Corruption Eradication ("KPK") and the General Attorney Office ("Kejaksaan") is good as it will increase the cost of bribery and the efficiency of the law enforcers. I beg to differ with this approach, since this will only work under 2 basic assumptions: (i) both law enforcers work in a professional and clean manner or both take bribes seriously; and (ii) cases can be easily transferred between law enforcers (though it seems impossible under the double jeopardy rule). Why do we need the above assumptions in order to ensure that the competition system will work? Because if not, one of the law enforcers can act as a save haven for the bad guys simply by guaranteeing the villains that their bribe will work and that they will be protected from the other law enforcer who don't receive any form of bribery, i.e. if you have been handled by the corrupted law enforcer, there is no way that you will be transferred to the other law enforcer. As a result of this, instead of creating healthy competition among law enforcers, we actually create another super criminal organization. Now this is what I called as a true "Law for Sale".

Designing anti corruption policy is indeed problematic and will need a thorough analysis. However, I would like to raise some general ideas that might be used in fighting corruption. Hopefully this can trigger a bigger discussion on how we can arrange the policy for the greater good of society. My post will deal with two designs, the design of penal sanctions and the design of the law enforcers (as a response to Cafe Salemba's post) Designing Penal Sanction for Anti Corruption Policy In my opinion, with respect to the anti corruption policy, the main focuses of our penal sanctions should be: (i) to ensure that the Government can retrieve all of the stolen assets (together with interests and any lost profits due to the inability to use those assets for certain period of time, and also the costs of investigating the cases); (ii) to prevent corruptors from repeating their criminal conduct and buying their freedom from any penal sanction; and (iii) to prevent the birth of new corruptors by imposing correct incentives. Does Indonesian anti corruption policy follow the above focuses? I don't think so.

What I see is that we only focus on sending the corruptors to prisons in the name of justice. I hate to say this, but it's useless. What's the purpose of sending these bad guys to the prison if you can't retrieve anything valuable from them and if they can still buy their way out of it? Prison only creates additional costs and expenses. It would be cheaper if we just give them death penalty. But then again, what for?

The biggest problem of corruption is that it diminishes the state assets. Those assets are supposed to be used for the greater good of the society, and we pay some of those assets from our taxes. Now, if the end result of our anti corruption policy is only to spend additional money to conduct the investigation for the purpose of paying the living expenses of these evil men in the prison, the entire policy is a big failure! It would be cheaper if we just let these corruptors run free. At least we don't need to pay for the expensive investigation process. If we really want to eradicate the corruption in accordance with the above focuses, the penal sanctions should be, among others: (i) taking over the entire assets of the corruptors (thus getting back the missing assets together with all of the interets and the lost profits); (ii) kicking out the corruptors from their official position and preventing them from getting any governmental position for their entire life (thus preventing their ability to repeat their criminal activities); and (iii) announcing the name of the corruptors in publicly accessed media (such as major newspapers) as a sample for their comrades (thus providing a good incentive for other would born corruptors to not follow the same path). Should we send the corruptors to the prison with the sanctions above? I believe, no. Our main interests have been satisfied, why bother imposing additional costs to the tax payer by sending these guys to the prison? What harm can these people do if they don't have any funds and access to perform their criminal activities? Designing Law Enforcers for Anti Corruption Policy In designing the policy for Anti Corruption Law Enforcers, our main focuses should be: (i) to create a task force that can deal with anti corruption cases quickly and efficiently; and (ii) to provide a better incentives for these law enforcers to perform properly. My first suggestion would be: adding more resources to the law enforcers which means that we don't need competition among law enforcers.

What we need is cooperation and collaboration! If there are 2 law enforcers, their performances should be linked. So a bad or good performance of one law enforcer will affect the other law enforcer. This can be implemented through the financial compensation of both law enforcers. I would prefer one single law enforcer though and add more resources to such body. My second suggestion: we can provide a good financial incentive in the form of granting a portion of the recovered state assets to the law enforcer who can successfully secure those assets from the corruptors. By doing this, we increase the cost of bribery to a new level. Imagine how much a corruptor must pay now to save his ass if he must compete with a portion of his own entire assets? This is also a good incentive to increase the performance of the law enforcers. Now, other than receive an honor as clean and professional law enforcers, they can receive a better financial benefit which is connected with their actual performance. It's time to bring this anti corruption fighting to a whole new business. This is my version of "Law for Sale".

From all the existing theories in the world, I bet conspiracy theories are the most long lasting ones. But why? Why people love conspiracy theories so much? What's the effect of these conspiracy theories and how the government should deal with it? A short paper from Cass Sunstein and Adrian Vermeule could give some hints to answer that. Download it here.

According to them, one of the distinctive characteristics of conspiracy theories is their "self sealing" quality, meaning, conspiracy theorists are not likely to be persuaded by an attempt to dispel their theories; they may even characterize that very attempt as further proof of the conspiracy. I begin to think that these conspiracy theorists are acting like religious fundamentalists, resistant to correction and living in denial :p.

In any way, the case of conspiracy theories is pretty relevant for Indonesia. The paper argues that conspiracy theories are more powerful in societies with systematical malfunctioning or skewed institutions of knowledge. Some simple questions, do you believe your own government, that they really work for the benefit of the society? Do you even believe that all of the cases related to "religious violence" are a part of bigger schemes?

Conspiracy theories can also be dangerous. We wouldn't have any problem if they stay as nice gossips material to be discussed at "warung kopi". The problem is, they are not as simple as that. In some cases, conspiracy theories can produce an imminent threat to the society. Consider the case of zionist-american conspiracy to control the world, that everything that happen in this world until today are the result of their control? Do you believe this? Personally, I don't buy it, especially with the current economic crisis in America. But as you may see, some people believe that. Try the terrorists who think that they are in a holy war with Americans because of such conspiracy theories. Or if we look nearby, the case of Ahmadiya persecution can be a solid example of the danger of conspiracy theories. Ahmadiya has existed in Indonesia for more than 75 years, why the dispute occurs now? What's behind all of this? Will the violence stop?

The paper further argues that the Government should carefully deal with conspiracy theories. Remember the "self-sealing" quality? Therefore, not all conspiracy theories should be rebutted, only the ones who pose the most serious danger. And even if it is the case, the rebuttal should not always be made by the Government, especially if the Government is the subject of the conspiracy theories. Independent think thank institutions can also help. Of course, these institutions must have solid credibilities to gain the trust of the people (and I must say, the case of establishing these trusted institutions is quite challenging in Indonesia).

I would suggest you to read the entire paper by yourself. This is a very short paper, consisting of 30 pages only and has summarized the basic issues of conspiracy theories. Hopefully, the paper can open our eyes on how easy we can fall into the prey of conspiracy theories.

I've just found this rather gloomy article accusing that some US law schools (mostly third and fourth tiers law schools) were tricking people to think that the super expensive tuition fee of those law schools is a good investment for their future, since in reality, many new law graduates later find out that they are succumbed to excessive amount of debt without any proper job to support the repayment. A pity indeed!

Based on the data provided in this site and my own personal research, the general annual cost for studying at a US private university law school, whether it is a top tier or low tier one, is around US$65,000-US$70,000 (meaning that a law student needs to spend around US$200,000 to finish a 3 years JD course!). The cost can be cheaper though if it is a public university, but still, it's expensive from any point of view. If you are interested, you can see the data of various US law schools ranking here.

With such huge amount of tuition fee and living expenses, no wonder law graduates are expecting to find a decent job that can help them to repay the loan as soon as possible. But, with a decline market for lawyers and the economic recession in the US (somehow the case is still the same for 2011), finding jobs are getting harder and harder for law graduates, and the situation is far worse for low tier graduates. Now, what surprises me is the fact that there are many people in the US who actually think that being enrolled in low ranked law schools can actually give them some advantages in competing with top tier graduates, especially when the tuition fees' discrepancy is relatively small. Are these people overestimated themselves, or are they simply the victims of an organized scam by law schools? Time will tell.

If you ask me, I am more interested to know why US law schools are very expensive and whether the same will someday happen in Indonesia. As a comparison, the total tuition fee of my law education for 3.5 years (2001-2005) at the University of Indonesia, an Indonesian public university, is only US$980 (with an exchange rate of US$1 = Rp9,000). Try to compare this with the current annual tuition fee of the University of Washington School of Law, a public university in the US, which reaches US$22,267 for residents and US$32,777 for non-residents. I know that University of Indonesia's tuition fee has increased significantly for the last few years, but I am certain that the total amount is far cheaper than its counterparts in the US.

Another interesting question, does the overall quality of top tier US law schools justify the expensive tuition fee? Hopefully yes, since I'll be going to one of them in September. Wish me luck :p

I've just found an interesting case from the Supreme Court of the Unites States on whether corporations have the so called "personal privacy". You can review the opinion here and a brief commentary from the SCOTUS Blog here. Apparently, according to the Supreme Court, while in legal terms the word "person" may include corporations, the word "personal privacy" is not applicable for corporations since the word itself pertains to the privacy interest of individuals, it suggests a type of privacy evocative of human concerns, and this is not the sort usually associated with an entity like corporations. To put it simply, can you actually hurt the feeling of a corporation?

The case itself is about the request from a US trade organization asking the US Federal Communications Commission to disclose information related to its investigation upon AT&T on the basis of the Freedom of Information Act ("FOIA"). The request was rejected due to some exemptions under FOIA, i.e. (i) trade secrets and commercial or financial information, and (ii) records or information compiled for law enforcement purposes that could reasonably be expected to constitute an unwarranted invasion of personal privacy. The main issue came from the second exemption. While in the end no information was shared, the exemption was made by FCC on the basis that some of the information may attack the personal privacy of AT&T's employees. AT&T cannot accept that reasoning and further asked the court to protect the information on the basis that the disclosure of such information may attack the personal privacy of AT&T. Yes, this is a game of words.

As discussed above, the Supreme Court finally decided that personal privacy is not applicable for corporations. They have already received enough protection from the restriction to disclose trade secrets and commercial or financial information. So why bother asking protection for personal privacy information? However, it should be noted that the above opinion was made on the basis of a strict grammatical interpretation on the words "personal privacy". While I mostly concur with the use of grammatical interpretation when the text of the laws is clear, I think it would be better if the US Supreme Court can also provide an economic insight on their decision.

Sure, companies do not have any feeling and no board of directors are crazy enough to claim that a disclosure of certain information can hurt the feeling of their company. BUT, any company would do almost anything to maintain its reputation and disclosure of certain information can surely hurt the reputation of the company, which is bad for the business. Can we cover this issue of reputation within the context of personal privacy? Maybe, but for now, the United States Supreme Court will stick with their latest concept of personal privacy, and I will reserve that question for another time.

I would love to know what Indonesian jurists will do if a similar case is happening here. This might open an engaging discussion on the limit of imposing human attributes to legal entities.