In the rarified interactions between elite law firm partners and
elite law schools, the former usually fall all over themselves
to shower the latter with praise, and, even more importantly,
money. It's a heartwarming tale of romance between Mr. White
Shoe Alumnus and Ms. Ivy League 3L (or vice versa). But even
perfect -- and perfectly codependent -- relationships have their
bumps, which is perhaps the mildest way to describe a post by
Wachtell, Lipton, Rosen & Katzon Harvard Law School's blog on corporate governance and financial regulation on March 23. As
you'll see, the Wachtell memo was no mash note. Of course,
there's nothing that draws attention quite like a high-profile
lovers' quarrel. On Tuesday, Columbia Law School professor
Jeffrey Gordon rushed to defend his alma mater with a response to Wachtell at the HLS blog.
The original post, authored by Wachtell partners Martin
Lipton, Theodore Mirvis (HLS '76), Daniel Neff, and David Katz,
was entitled "Harvard's Shareholder Rights Project is Wrong." It
detailed the Wachtell partners' dissatisfaction with a new HLS
clinic in which participating students assist public pension
funds "in improving governance arrangements at publicly traded
firms." Wachtell highlighted two purported problems with the
Shareholder Rights Project, or SRP. First, Lipton and crew took
issue with the SRP's goal of persuading companies to move away
from staggered boards to boards in which all directors stand for
election at the same time. (SRP has reported that in the latest
proxy season, it worked with five institutional investors to
convince 42 companies to "declassify" their boards.) Perhaps not
surprisingly, Lipton, who created the poison pill, disputed the
notion that staggered boards are not consistent with good
corporate governance.
Lipton, Mirvis and crew also said it's not the role of a law
school clinic to promote an anti-corporate agenda. Well, that's
not exactly what they said -- the precise language is "It is
surprising that a major legal institution would countenance the
formation of a clinical program to advance a narrow agenda that
would exacerbate the short-term pressures under which American
companies are forced to operate" -- but we think it's what they
meant. Plus, they wrote, clinics are supposed to provide legal
help for the underprivileged, a category that presumably doesn't
include pension funds.
Columbia's Gordon, who also serves on the advisory board of
the SRP, didn't take Wachtell's critique of his law school and
it s clinic lying down. "The Wachtell memo-writers' strongly held
belief about the virtue of classified boards ... has spilled
over into an unfair attack on the Harvard SRP clinic based on a
straitjacketed conception of clinical legal education not
followed by leading American law schools," he wrote in Tuesday's
post.
Gordon pointed out what many parents frustrated with law
school tuition bills have known for years: There's quite a
variety of clinical training out there. At New York University
School of Law (where Lipton is a trustee), students get class
credit for a clinic that has promoted campaign finance reform
and another that focuses on improving environmental, public
health, and consumer protection, Gordon wrote. These and other
clinical causes "are all neither universally supported nor
focused on the protection of the underprivileged or
impoverished," he wrote.
Gordon also notes a fact that did not make it into the
Wachtell partners' memo: Harvard and other law schools operate
clinics to give students hands-on experience, and many of those
students will eventually pursue careers that are not dedicated
to serving the underserved members of society. Gordon didn't say
this, but perhaps instead of criticizing the Harvard shareholder
project, Wachtell actually owes the clinic a debt of gratitude
for teaching future Wachtell associates a little bit about
real-world securities and corporate governance work.
For his part, the SRP's director, Harvard law professor
Lucian Bebchuk, told Reuters that the clinic's "agenda is
neither narrow nor mine" and said there is a "body of empirical
evidence documenting an association between staggered boards and
lower firm valuation." Investors, he said, find the evidence
persuasive, even if the Wachtell partners do not.
We don't know what will happen with this quarrel, but
universities don't generally pull coursework of any variety
because someone disagrees with the content. Perhaps the school
could do what law schools do best -- host a debate between the
Bebchuk and a Wachtell partner on the pros and cons of board
declassification, a debate that would probably end happily ever
after with dinner in Harvard Square.
Wachtell partners Lipton, Neff and Katz did not respond to
our request for comment; Mirvis declined to comment. We also did
not hear back from Columbia's Gordon.
(Reporting by Erin Geiger Smith)
Follow us on Twitter: @erin_gs@AlisonFrankel, @ReutersLegal