Posted by: Ray Brescia | March 4, 2014

What Law Schools Can Learn from Google

In Thomas Friedman’s recent piece on the hiring practices at Google, he reveals some lessons that could teach law schools about their admissions practices.  It is not news that law school admissions numbers have fallen dramatically in recent years, as prospective students, concerned with mounting debt and diminishing employment opportunities after graduation, are shying away from law school for other pursuits.  Even with lowered enrollment, most law schools rely heavily on a few standard metrics to assess whether prospective students are worthy of admission: each applicant’s college grade point average and his or her score on the national Law School Admission Test (LSAT).  Not coincidentally, such metrics—when taken in the aggregate for each law school’s incoming class—are also used to rank law schools as part of the talismanic U.S. News & World Report ranking of the nation’s best law schools.  Because law schools are graded on these metrics, they, too, must assess their students along the same lines.

Perhaps Google’s own hiring metrics offer a better approach.

From a previous interview done of Google exec Laszlo Block, Friedman identifies those metrics Google considers when hiring for some of the most coveted positions in the world.  Such metrics include learning ability, together with the ability to “process on the fly” and pull together disparate information.  They also look at leadership, the ability to work with others effectively, problem solving skills, and intellectual humility.

As Friedman concludes:

The world only cares about — and pays off on — what you can do with what you know (and it doesn’t care how you learned it). And in an age when innovation is increasingly a group endeavor, it also cares about a lot of soft skills — leadership, humility, collaboration, adaptability and loving to learn and re-learn. This will be true no matter where you go to work.

Using similar metrics as Google for law school admissions might attract a student body that is more diverse in many ways.  Such students might also be able to weather the employment challenges law school graduates face in today’s economic climate.

Today, many students currently enrolled in law school already have these attributes.  Once in law school, students must learn to seek out opportunities to develop and hone them.  And employers must look to students who both possess them and have exhibited them in a range of settings.  As more employers follow Google’s lead, they will see the value of law students who are strong in the Google attributes, which will only improve law graduates’ job prospects.

But it all starts with law schools.  Law schools can help improve their graduates’ job prospect by developing broader metrics that identify those student attributes that are also qualities innovative and successful employers seek in their employees.

Posted by: Ray Brescia | March 2, 2014

And the Creativity Oscar Goes to…

On Oscar Night, perhaps it is a bit odd to talk about a film that is not up for consideration this year and will never win an Oscar (except, perhaps, for Best Original Song), but next year’s award in the category “Best Film About Creativity”, were there one, would definitely go to The Lego Movie.  This film, which had all the makings of a 90-minute infomercial for small, interlocking plastic blocks, is just a joyous romp through pop culture and cinematic inside jokes, as well as a sustained homage to children’s toys and Marvel comics characters.  It is so much more than that.  It also explores the meaning of creativity and art, and the fact that everyone has the ability to design and inspire works of art, while also leading world-changing social movements.

The Lego Movie tells the tale of Emmet Brickowoski, an average guy/construction worker who does whatever he can to “fit in.”  He follows the rules, watches the right television show, listens to the right music, and never questions authority, something he seems completely incapable of even imagining doing.  Throughout the course of the film, he is convinced he is a “master builder” and “the special”: i.e., the chosen one who is destined for greatness and will upset the social order, bring about justice and freedom, and liberate the world from the clutches of its corporate overlord.  What evolves over the course of the film—without giving too much away—is that Emmet, like everyone, has the ability to tap into his or her creative side, break some rules, and change society.

Artist Kevin Lahvic observes that one can “ask a class of first graders if there are any artists in the room, and they will all raise their hands.”  This doesn’t happen in later grades.  What is it about our educational system that brings this about?  As I teach in a law school, where students are far removed from first grade and their artistic roots, I am constantly looking for ways to revive the artist in my students, to help them tap into what Dan Pink calls the six senses needed for today’s economy: design, story, “symphony,” empathy, play and meaning.

Law schools, by their very nature, teach their students about rules.  We also lay down rules for how they must behave during law school, and we require them to take tests to make sure they have learned the rules.  To enter the legal profession, law school graduates must take the bar exam, which, in most states is a two-day affair, and in some, even three.  That test requires students to know a lot of rules on a range of subjects, and to be able to apply them to particular situations.  What law schools and the bar exam do less of is test students’ creativity quotient: their ability to engage in creative problem solving to address the thorny issues with which our clients, and society, present.

If there is one takeaway from The Lego Movie it is that we need more Emmet Brickowoskis, in life and the law: individuals who understand the rules, but also know when the time is right to mix things up, try something different, and maybe break them a little.

Posted by: Ray Brescia | January 6, 2014

What Design School Can Teach Law School

Please read my latest post on the Huffington Post: “What D School Can Teach L School and the Law.”

Posted by: Ray Brescia | December 24, 2013

On Inequality and Trust

In Nobel-prize-winning economist Joseph Stiglitz’s wonderful op-ed from the New York Times, published earlier this week, he traces the connection between rising inequality and decreased trust.  He’s certainly on to something.  In his 2002 work, The Moral Foundations of Trust, Eric Uslaner compared the level of trust in the United States in recent years against the level of inequality, and found a negative correlation: as inequality has increased, trust has decreased.

 

inequality

 

I explore these connections in greater depth here and here.  Bottom line: inequality erodes trust because it increases social distance.  An increase in social distance, in turn, tends to lead to more predatory conduct and rent seeking, exacerbating inequality.

Posted by: Ray Brescia | December 17, 2013

Inequality’s (New) Moment

For the second time now, President Obama has stated that he intends to make tackling economic inequality the focus of his remaining years as President. The Pope is on it too.  Yesterday, Paul Krugman, who is not new to the inequality party, re-iterated his opinion that inequality matters for economic growth and well-being.  He also stated that “inequality probably played an important role in creating our economic mess, and has played a crucial role in our failure to clean it up.”  In research I conducted several years ago, I tried to draw a connection between economic inequality and the foreclosure crisis gripping the nation.  I cross-matched state inequality data against mortgage delinquency rates in each state and here’s the graphic result of that analysis:

inequalityimage

Admittedly, it’s a “scattered” scatter-point graph, but a clear trend emerges.  States with higher inequality tended to have higher delinquency rates, a connection I explored in greater detail here.  In sum, higher inequality means greater social distance, and greater social distance means more predatory conduct: i.e., more people trying to take advantage of each other, something that was quite evident in the lead up to the financial crisis.  Today’s ongoing conversation about inequality is an important one.  One aspect of that conversation must be the extent to which inequality exacerbates social distance, which, in turn, leads to more abusive practices.

What if a simple trick could both drive television viewers to watch shows when they air, to the delight of their advertisers, and drive more social media traffic, which would, in turn, drive up the price of advertising on those shows?  Turns out, there’s a simple way to seamlessly integrate social media into television shows in such a way that would increase social media buzz and raise all important advertising dollars.

The integration of smart phones into television characters’ lives, as in the culture itself,  is ubiquitous.  Try counting how many times your favorite star of one of the many police-procedural-spy-thriller-docudramas goes to his or her cell phone for the latest text, email or call.  It is now a common trope that we watch the character as he or she writes a text message, instinctively craning forward to read the text as it’s being written on the screen on the other side of the living room.  Smart phones have practically become characters in the shows. 

At the same time, these shows are trying to draw their viewers into conversations over social media, by, among other things, having characters engage on social media as characters.  Roger Sterling from Mad Men sends great tweets, for example.  Viewers are also using designated hashtags to tweet about shows as they unfold, provided those viewers are watching the shows in real time, and not through their DVR.  In fact, the social media buzz around shows may be driving devoted fans to watch shows when they actually air, instead of on a time delay, to the delight of the network, because this can drive up ad revenue.  The social media buzz a show creates is itself driving a new Nielsen rating: Twitter TV Ratings.

Here’s a simple thing television shows could do that would both drive viewers to watch shows in real time AND get them to tune into what’s happening around the show via social media: have the characters send out their texts and other communications as tweets, in real time.  And don’t show the viewers on the television what’s being said.  Viewers would have to follow on Twitter to learn what’s going on.  So, the next time Scandal’s Olivia Pope texts the president, you’ll have to follow her on Twitter to find out what she’s saying.

Just a simple idea.  Could be fun.  And profitable.

Posted by: Ray Brescia | November 14, 2013

Risky Bank Practices: More Toxic Financially than Asbestos

Read my latest post on Huffington Post in which I compare the cumulative cost of litigation against the banks in the wake of the financial crisis to asbestos litigation.  Spoiler alert: the cost of financial crisis litigation is now higher than estimates of the cost of asbestos litigation.

In a recent post in the American Banker, Rep. Jeb Hensarling (R-TX), Chairman of the House Financial Services Committee, once again trotted out a favorite saw of those who think too much regulation caused the Financial Crisis of 2008.  In addition to blaming Too Big To Fail bailouts and the Government-Sponsored Entities (GSEs) for the financial crisis, which certainly raises legitimate questions, he also criticizes the Community Reinvestment Act for helping to lead to risky lending:

One of the most damaging of those initiatives has been the Community Reinvestment Act, which was undertaken with good intentions but is today in need of repeal. Proponents of CRA-like mandates have maintained that only a small portion of subprime mortgage originations are related to the CRA. However, though they may be small in volume, CRA loan mandates remain large in precedent. They inherently required lending institutions to abandon their traditional underwriting standards to comply with this government mandate. CRA implicitly put the government’s “Good Housekeeping Seal of Approval” on such loans.

In order to assess this statement, one needs to know how the law works, and how it worked in relation to subprime lending during the height of the subprime frenzy of the last decade.

First, the CRA, passed in 1977, requires only that federal bank regulators assess certain financial institutions’ records of meeting the banking needs of low- and moderate-income communities.  The regulators give grades to banks covered by the law in periodic reviews, and then the regulators are supposed to take these grades into account when considering requests by covered banks to engage in certain transactions, like to merge with another bank.  Nearly ninety-nine percent of bank grades are passing, and less than one-tenth of one percent of bank applications are rejected on grounds related to the CRA.  Given this reality, it is hard to argue that the law is a significant threat to banks, given that regulators are hardly aggressive in handing out failing grades or reining in bank behavior through the regulatory enforcement mechanisms of the law.  What’s more, during the height of subprime lending in the mid-2000s, the overwhelming majority of this type of lending took place outside the purview of the CRA.  Even putting aside the way the law has traditionally been enforced (i.e., not that aggressively), the CRA only covers depository institutions, and it only looks at those institutions’ activities in low- and moderate-income communities.  What’s more, non-depository subsidiaries of banks (think Countrywide and Bank of America), are covered by the CRA only at the discretion of the parent bank.  So, stand-alone mortgage banks, many subprime subsidiaries, and bank lending outside of low- and moderate-income communities are not even within the regulators’ review of bank practices under the CRA.  Because of these features of the law, ninety-four percent of subprime lending during the mid-2000s was beyond the CRA’s reach.  (For more on the scope of the CRA and its role in the Financial Crisis, read here and here.)

Thus, Hensarling is correct in stating that CRA-related loans are, in fact, “small in volume.”  It’s not quite clear what “large in precedent” means and whether, as Hensarling argues, the CRA “inherently required lending institutions to abandon their traditional underwriting standards.”  If there is any factual support for this position, i.e., that banks engaged in any lending in accordance with the CRA’s terms outside of the its narrowly drawn geographic and demographic requirements, Rep. Hensarling should come forward with it.  The problem is, none exists.  Like the arguments of others who have asserted that the CRA is to blame for encouraging banks to engage in risky lending, Hensarling’s statements are simply unsupported by the facts.

Posted by: Ray Brescia | September 30, 2013

Courts Still the Best Hope for Cleaning Up the Mortgage Mess

In her weekend piece in the New York Times, Gretchen Morgenson writes how judges are “scowling” at banks.  As cases from the financial crisis work their way through the judicial system, judges are given a chance to see bank misbehavior up close.  In one ruling, a federal judge in Massachusetts required Wells Fargo to produce a resolution signed by its president and board stating that the company stands by the conduct of its lawyers.  In another, Bank of America was sanctioned for its conduct in failing to honor protections afforded a borrower from the bankruptcy court.  Since the financial crisis hit, the inability of political or regulatory bodies to truly address the worst misconduct of the banks means the courts are the last bastion of hope for many homeowners saddled with predatory loans.  Unfortunately, these case-by-case instances of courts addressing bank misconduct offer some hope for individual borrowers but cannot address broader issues.  As we saw with the resolution of the Robo-Sign Scandal, however, bank misconduct can be addressed through broad settlements that offer homeowners who have been harmed a chance to get some relief from such misbehavior.  Three years ago, I wrote about the need for a “mass torts approach” to mortgage litigation in a piece I authored for the Cincinnati Law Review: Tainted Loans: The Value of a Mass Torts Approach in Subprime Mortgage Litigation.  In it, I explored the possibility that litigants–borrowers, investors, the federal government–could bring actions against banks and pursue global settlements that can get relief to homeowners and other plaintiffs.  The Federal Housing Finance Agency has pursued such an approach by suing 17 big banks for over $200 billion.  There’s talk now that JPMorgan Chase may seek some form of settlement of a range of claims against it.  If judges are willing to take banks to task in individual cases, it will be interesting to see what they do with the cases that may start to come before them that allege systemic misconduct.

Posted by: Ray Brescia | September 3, 2013

Organizing without Social Media

A great piece in Next City on how they organized the March on Washington, all without Twitter, Facebook, or other forms of social media.

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