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.

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.

To be honest, I've practiced as a lawyer for more than 6 years and still, I don't know exactly what's the true meaning of thinking like a lawyer. Apparently, Prof. Bainbridge thinks that to enable more lawyers to think like a lawyer, law schools require more experienced lawyers than PhDs to teach at those schools. See the article here. You can also see a nice law review article on thinking like a lawyer here.

I have to disagree with some of his premises though. My gut feeling says that the main problem with those PhDs is not that they can't teach lawyers about other fields that can enrich a lawyer's ways of thinking but simply because the quality of those PhDs are mediocre. On the other hand, I am quite certain that asking more experienced lawyers to teach at law schools seems like a good proposal, especially if you're talking about corporate laws. Like it or not, in Indonesia, the development of corporate laws lies mostly in the hand of corporate lawyers instead of theoretical lecturers. The problem is, most of these lawyers don't have the time to share their knowledge to law students, which is a pity.

Why do I say that the teaching of corporate laws needs corporate lawyers? Corporate law is not only about legal issues per se. There is an economic structure behind the corporate laws and to understand such structure, lawyers need to have sufficient experience handling various corporate transactions. These experiences will enable lawyers to gain knowledge on the commercial issues of their clients which will further help them in understanding the economic structure of the corporate laws and how to improve such laws.

Some thought provoking questions: Why there should be a limited liability concept for companies? Why directors have fiduciary duties toward the company? Why do we need commissioners for supervising the management of the company? Why we tend to limit a company to enter into affiliated party transactions? And many more.

As you may see, the above questions pose certain economic rationales. There is no simple right or wrong answer in corporate laws as in the end, it depends on the economic structure that the regulators choose to build the foundations of corporate laws. There are virtually unlimited ways to improve our corporate laws, promote efficiency and create more preferences to the society. We need to always remember that corporations are essential institutions of the market, and therefore, it is natural if the laws that govern corporations should be designed carefully and thoughtfully.

Stay tune as I will uncover some of these economic structures in my future posts.

Here is a very interesting article from Prof. Stephen M. Bainbridge on the absurdity of the new SEC's Shareholder Proposal Policy which basically gives the right to minority shareholders of a publicly listed company to force a vote in a general meeting of shareholders. The absurdity lies in the fact that according to a US court precedent, the tests for granting the validity of such proposal include matters on ethical and social significance, and not only economic matters.

Of course this would be problematic for companies as this is the same with providing the minority shareholders with the ammunition to control the company for matters which are not directly related to its financial and business performance. In this case, I fully agree with Prof. Bainbridge analysis on the importance of materiality principle in securities laws. If the shareholders want to be involved in the company's management, it should be done only for material transactions that may economically affect the investment value of the relevant shareholders in such company. If the shareholders can actively use the company for their own personal and political needs, why bother to have the concept of limited liabilities?

Luckily, Indonesia does not adopt this kind of rule, though I am surprised that the development of shareholders protection law in the United States has already reached a position where it is difficult to differentiate the role of shareholders and management.